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Previous: AMERICAN INTERNATIONAL INDUSTRIES INC, 10QSB/A, 2000-12-21 |
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UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM 10-QSB |
(Mark one) |
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2000 |
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1994 |
For the transition period from _______ to _______ |
COMMISSION FILE NUMBER: 0-25223 |
AMERICAN INTERNATIONAL INDUSTRIES, INC. |
(Exact name of small business issuer as specified in its charter) |
Nevada |
88-0326480 |
(State or Other Jurisdiction of Incorporation) |
(IRS Employer Identification No.) |
601 Cien Street, Suite 235, Kemah, TX |
77565-3077 |
(Address of Principal Executive Offices) |
(Zip Code) |
(281) 334-9479 |
|
(Issuer's telephone number) |
|
Check whether the issuer: (i) 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 (ii) has been subject to the filing requirements for the past 90 days. Yes [ ] No [X ] APPLICABLE ONLY TO CORPORATE ISSUERS |
|
State the number of shares outstanding of each of issuer's classes of common equity outstanding as of the latest practicable date: |
|
Common Stock, $.001 par value, 139,868,991 outstanding as of December 20, 2000. |
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Page 1 of 12 |
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TABLE OF CONTENTS
PART I. CONSOLIDATED FINANCIAL INFORMATION |
Page |
2 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 |
PART II. OTHER INFORMATION |
|
11 |
|
11 |
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11 |
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11 |
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11 |
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11 |
FORWARD LOOKING STATEMENTS: THIS FORM 10-QSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY AMERICAN INTERNATIONAL INDUSTRIES, INC. OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT") BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. 15 U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO OUR FORM 10-QSB/A FOR THE PERIOD ENDED JUNE 30, 2000 FILED ON DECEMBER 18, 2000, AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
| Page | |
| 3 | |
Consolidated Financial Statements (Quarter ended September 30, 2000 Reviewed) |
|
Balance Sheets – September 30, 2000 and December 31, 1990 (Audited) |
4 |
Statements of Operations – Three and nine months ended September 30, 2000 and 1999 |
5 |
Statements of Cash Flows – Nine months ended September 30, 2000 and 1999 |
6 |
| 8 |
| R. E. Bassie & Co., P.C. | |
| Certified Public Accountants | |
| A Professional Corporation | |
7171 Harwin Drive, Suite 306 |
|
Houston, Texas 77036-2197 |
|
Tel: (713) 266-0691 Fax: (713) 266-0692 |
|
E-Mail: [email protected] |
|
The Board of Directors and Stockholders |
American International Industries, Inc.: |
We have reviewed the accompanying condensed consolidated balance sheet of American International Industries, Inc. and subsidiaries as of September 30, 2000, and the related condensed consolidated statements of operations and cash flows for the three-month and nine-month periods ended September 30, 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of American International Industries, Inc. and subsidiaries as of December 31, 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated July 7, 2000, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. |
/s/ R. B. Bassie & Co., P.C. |
Houston, Texas |
December 20, 2000 |
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES |
|||
September 30, 2000 and December 31, 1999 |
|||
(Unaudited - see accompanying accountants' review report) |
|||
2000 |
1999 |
||
Assets |
(Reviewed) Restated | (Audited) Restated |
|
| Current assets: | |||
| Cash | $ 969,886 |
$ 639,396 |
|
| Restricted certificates of deposit | - | 1,150,000 |
|
| Trading securities | 283,588 | 1,006,779 |
|
| Accounts receivable, less allowance for doubtful accounts of | |||
| $130,399 at September 30, 2000 and $135,614 in 1999 | 3,697,546 | 1,609,561 |
|
| Notes receivable | 502,835 | 181,691 |
|
| Inventories | 1,149,220 | 1,199,947 |
|
| Prepaid expenses and other current assets | 1,992 | 45,510 |
|
| Total current assets | 4,222,199 | 5,832,884 |
|
| Note receivable, net of allowance for doubtful accounts of $1,200,000 at September 30, 2000 and December 31, 1999 | 128,200 | - |
|
| Real estate held for sale | 939,584 | 939,584 |
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| Property and equipment, net of accumulated | |||
| depreciation and amortization | 1,397,177 | 1,588,222 |
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| Excess of cost over net assets of businesses | |||
| acquired, less accumulated amortization of | |||
| $230,900 in 2000 and $132,729 in 1999 | 1,435,565 | 1,604,031 |
|
| Non-compete agreements, net of accumulated amortization of | |||
| $400,000 in 2000 and $325,000 in 1999 | 100,000 |
175,000 |
|
| Other assets | 13,165 |
18,793 |
|
| Total assets | $ 10,618,758 |
$ 10,158,514 |
|
Liabilities and Stockholders' Equity |
|||
| Current liabilities: | |||
| Accounts payable and accrued expenses | 3,644,480 | 2,448,261 |
|
| Margin loan from financial institution | 101,679 | 523,863 |
|
| Current installments of notes payable to related parties | 500,800 | 471,000 |
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| Current installments of notes payable | 597,045 | 487,444 |
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| Current installments of capital lease obligations | 13,396 | 45,109 |
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| Net assets from discontinued operations | - | 1,200,000 |
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| Total current liabilities | 4,857,400 | 5,175,677 |
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| Notes payable to related parties, less current installments | - | - |
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| Notes payable, less current installments | 996,308 | 703,596 |
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| Capital lease obligations, less current installments | - | 46,132 |
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| Total liabilities | 5,853,708 | 5,925,405 |
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| Stockholders' equity: | |||
| Preferred stock, $.001par value. Authorized | |||
| 10,000,000 shares: none issued | - |
||
| Common stock, $.001 par value. Authorized 200,000,000 shares: | |||
| 140,120,991shares issued and 138,868,991 shares outstanding at | |||
| September 30, 2000, 125,972,971shares issued and 125,720,971 | |||
| shares outstanding at December 31, 1999 | 139,869 | 125,721 |
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| Additional paid-in capital | 17,389,244 | 16,393,094 |
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| Accumulated deficit | (12,730,035) | (12,251,678) |
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| Total stockholders 'equity | 4,799,078 | 4,267,137 |
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| Less treasury stock, at cost (252,000 shares) | (34,028) | (34,028) |
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| Accumulated other comprehensive loss | - | - |
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| Total stockholders' equity | 4,765,050 | 4,233,109 |
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| Commitments and contingent liabilities | - | - |
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| Total liabilities and stockholders' equity | $ 10,618,758 |
$ 10,158,514 |
|
| See accompanying notes to consolidated financial statements | |||
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES |
Three and nine months ended September 30, 2000 and 1999 |
(Unaudited - see accompanying accountants' review report) |
Three months ended September 30, |
Nine months ended September 30, |
||||||
2000 (Reviewed) |
1999 (Unaudited) |
2000 (Reviewed) |
1999 (Unaudited) |
||||
| Revenues | $ 5,170,647 |
$ 3,011,305 |
$ 12,233,762 |
$ 10,913,870 |
|||
| Costs and expenses: | |||||||
| Cost of sales | 4,585,487 | 2,497,548 | 10,560,620 | 8,647,569 | |||
| Selling, general and administrative | 470,773 | 983,979 | 1,958,636 |
3,012,502 |
|||
| Total operating expenses | 5,056,260 | 3,481,527 | 12,519,256 |
11,660,071 |
|||
| Operating income (loss) | 114,387 | (470,222) | (285,494) |
(746,201) |
|||
| Other income (expenses): | |||||||
| Interest income | 13,414 | 20,915 | 46,658 |
58,588 |
|||
| Realized gains on investments | 86,731 | 34,411 | 265,539 |
1,179,447 |
|||
| Unrealized gain and (losses) on investments | (180,313) | (956,397) | (450,956) |
(624,001) |
|||
| Gain on the sale of assets | 52,881 | - | 52,881 | - | |||
| Other Income | 36,420 | (303,634) | 38,254 |
(235,473) |
|||
| Interest expense | (59,047) | (42,503) | (145,239) |
(140,251) |
|||
| Total other income (expenses) | (49,914) | (1,247,208) | (192,863) |
238,310 |
|||
| Net earnings (loss) before income tax | 64,473 | (1,717,430) | (478,357) |
(507,891) |
|||
| Provision for income tax | - | - | - |
- |
|||
| Net earnings (loss) from continuing operations | 64,473 | (1,717,430) | (478,357) |
(507,891) |
|||
| Loss from discontinued operations | - | (532,370) | - |
(1,331,554) |
|||
| Net earnings (loss) | $ 64,473) |
$ (2,249,800) |
$ (478,357) |
$ (1,839,445) |
|||
| Net earnings (loss) per common share - basic and diluted: | |||||||
| Net earnings (loss) from continuing operations | $ (0.00) |
$ (0.01) |
$ (0.00) |
$ (0.00) |
|||
| Net earnings (loss) from discontinued operations | $ (0.00) |
$ (0.00) |
$ (0.00) |
$ (0.01) |
|||
| Net earnings (loss) applicable to common shareholders | $ (0.00) |
$ (0.02) |
$ (0.00) |
$ (0.01) |
|||
| Weighted average common shares - | |||||||
| basic and diluted | 140,803,774 | 124,947,982 | 134,604,117 |
124,883,901 |
|||
| Consolidated statements of comprehensive income (loss): | |||||||
| Net earnings (loss) | $ 64,473 |
$ (2,249,800) |
$ (478,357) |
$ (1,839,445) |
|||
| Unrealized gain (loss) on shares available-for-sale: | |||||||
| Unrealized holding gain (loss) arising during the period | - | - | - |
1,051,720 |
|||
| Less: reclassification adjustment for gain included in net income | - | - | - |
(1,032,756) |
|||
| Comprehensive income (loss) | $ 64,473 |
$ (2,249,800) |
$ (478,357) |
$ (1,820,481) |
|||
| See accompanying notes to consolidated financial statements | |||||||
| AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES |
| Consolidated Statements of Cash Flows |
| Nine months ended September 30, 2000 and 1999 |
| (Unaudited - see accompanying accountants' review report) |
| 2000 | 1999 |
|||
(Review Restated |
(Unaudited) |
|||
| Cash flows from operating activities: | ||||
| Net earnings (loss) | $ |
(478,357) | $ | (1,839,445) |
| Adjustments to reconcile net earnings (loss) | ||||
| to net cash used in operating activities: | ||||
| Depreciation and amortization | 304,024 | 783,203 |
||
| Realized gain on sale of securities | (265,539) | (1,179,445) |
||
| (Increase) decrease in market value of equity securities | 405,956 | 624,001 |
||
| (Increase) decrease in operating assets: | ||||
| Accounts receivable | (1,996,650) | (412,644) |
||
| Inventories | 53,972 | (151,425) |
||
| Prepaid expenses and other current assets | 47,868 | (17,073) |
||
| (Purchase) sale of trading securities, net | 160,590 | (1,374,676) |
||
| Other assets | 12,879 | 125,143 |
||
| (Increase) decrease in operating liabilities: | ||||
| Accounts payable and accrued expenses | 1,278,523 | 1,054,409 |
||
| Decrease in net liabilities from discontinued operations | (1,200,000) | - |
||
| Deferred revenues | - | 20,539 |
||
| Net cash used in operating activities | (1,676,734) | (2,367,413) |
||
| Cash flows from investing activities: | ||||
| Proceeds from sale of available-for-sale investment securities | - | 1,167,605 |
||
| Purchase of property and equipment | (58,214) | (290,269) |
||
| Redemption (purchase) of restricted certificate of deposit | 1,150,000 | (1,500,000) |
||
| Disposition of assets | - | 130,155 | ||
| Cash paid (sold) for acquisitions (dispositions) | (8,428) | (140,736) |
||
| Notes receivable | (54,010) | 143,000 |
||
| Net cash provided by (used in) investing activities | 1,029,348 | (140,245) |
||
| Cash flows from financing activities: | ||||
| Proceeds from stock subscriptions | 490,000 | 456,900 |
||
| Repayments of notes receivable | - | 5,000 |
||
| Proceeds from note payable | 500,000 | 3,309,357 |
||
| Proceeds from note payable to related party | 29,800 | - | ||
| Principal payments of notes payable | (13,588) | (2,415,608) |
||
| Principal payments on capital lease obligations | (28,356) | (296,342) |
||
| Sale of treasury stock | - | 4,190 |
||
| Net cash provided by financing activities | 977,856 | 1,063,497 |
||
| Net increase (decrease) in cash | 330,470 | (1,444,161) |
||
| Cash at beginning of year | 639,396 | 2,149,916 |
||
| Cash at end of period | $ |
969,866 | $ | 705,755 |
| Supplemental schedule of cash flow information: | ||||
| Interest paid | $ |
145,239 | $ | 288,366 |
| Non-cash transactions: | ||||
| Purchase of securities on margin | $ |
- | $ | 149,072 |
| Stockholder debt forgiveness | $ | - | $ | 365,158 |
See accompanying notes to consolidated financial statements |
||||
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(1) General
American International Industries, Inc. (the "Company" or "AIII"), formerly Black Tie Affair, Incorporated, operates as a diversified holding company with a number of wholly-owned subsidiaries and one majority-owned subsidiary.The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation for each of the periods presented. The results of operations for interim periods are not necessarily indicative of results to be achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission (SEC) under Rules of Regulation S-B, the accompanying consolidated financial statements and related footnotes have been condensed and do not contain certain information that will be included in the Company's annual consolidated financial statements and footnotes thereto. For further information, refer to the Company's 1999 audited consolidated financial statements and related footnotes.
(2) Industry Segments
The Company has three reportable segments and corporate overhead: industrial/commercial, oil and gas, and real estate. The industrial/commercial segment includes (1) a supplier of automotive after-market products; (2) a manufacturer and distributor of barbecue pits and custom sheet metal products for customers predominately in the energy industry; (3) distributors of specialty chemicals for the automotive after-market, including specializing in the application of spray-on bed liners for truck beds; and (4) a holding company for future commercial ventures. The oil and gas segment owns an oil, gas and mineral royalty interest in Washington County, Texas. Prior to 1999, the Company had a media/entertainment segment, which they sold in 1999. The comparative segment information for 1999 had been restated to delete the media entertainment data, which had been treated as a loss from discontinued operations in 1999. The corporate overhead includes the Company's investment holdings including financing current operations and expansion of its current holdings as well as evaluating the feasibility of entering into additional businesses.The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performances based on profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.
The Company's reportable segments are strategic business units that offer different technology and marketing strategies. Most of the businesses were acquired as subsidiaries and the management at the time of the acquisition was retained.
Consolidated revenues, net operating losses for the nine months ended September 30, 2000 and 1999, and identifiable assets as of September 30, 2000 and 1999, were as follows:
| 2000 | 1999 | ||
| Revenues: | |||
| Industrial/Commercial | $ 12,202,321 |
$ 10,306,513 |
|
| Real estate | 22,854 | 607,357 | |
| Oil and gas | 8,587 | - | |
| $ 12,233,762 | $ 10,913,870 | ||
| Operating income (loss): | |||
| Industrial/Commercial | $ 249,430 | $ 69,419 | |
| Real estate | (48,233) | 445,941 | |
| Oil and gas | 8,276 | (5,026) | |
| Corporate expenses | (494,967) | (1,256,535) | |
| $ (285,494) | $ (746,201) | ||
| Identifiable assets: | |||
| Industrial/Commercial | $ 9,510,975 | $ 8,129,243 | |
| Media/Entertainment | - | 3,916,701 | |
| Real estate | 949,380 | 996,631 | |
| Oil and gas | 78,298 | 67,528 | |
| Corporate | 80,105 | 1,502,027 | |
| $ 10,618,758 | $ 14,612,130 | ||
The Company's areas of operations are principally in the United States. No single foreign country or geographic area is significant to the consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements; Market Data
As used in this Quarterly Report, the terms "we", "us", "our" "AIII" and the "Company" means American International Industries, Inc., a Nevada corporation. To the extent that we make any forward-looking statements in the "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report, we emphasize that forward-looking statements involve risks and uncertainties and our actual results may differ materially from those expressed or implied by our forward-looking statements. All forward-looking statements in this Quarterly Report reflect our current views about future events and are based on assumptions and are subject to risks and uncertainties. Except as required by applicable law, including the securities laws of the United States, we do not intend to update or revise any forward-looking statements, which forward-looking statements may include, but not be limited to, statements about our plans, objectives, expectations, intentions and assumptions and other statements that are not historical facts. Generally, forward-looking statements include phrases with words such as "expect", "anticipate", "intend", "plan", "believe", "seek", "estimate" and similar expressions to identify forward-looking statements.
Overview
We are a holding company and currently have six wholly owned operating subsidiaries and one majority-owned (consolidating) subsidiary. The historical financial statements of AIII include the acquisitions of acquired companies as of the effective dates of the purchases and the results of these companies subsequent to closing, as these transactions were accounted for under the purchase method of accounting.The acquisitions of certain subsidiaries were accounted for using the purchase method of accounting, whereby the purchase price of the acquisition was allocated based on the fair market value of the assets acquired and liabilities assumed. If the purchase price exceeded the net fair market value of the assets acquired, any remaining purchase price was allocated to goodwill. In addition, certain subsidiaries were accounted for using the historical cost basis of the predecessor. Reference is made to our Form 10-KSB/A for our year ended December 31, 1999 filed with the Securities and Exchange Commission ("SEC") on December 15, 2000 for a full discussion of our business and subsidiaries under "Description of Business" and Note 2 of the Notes to Consolidated Financial Statements which were filed as part of the Form 10-KSB/A.
We have three reportable segments and corporate overhead: industrial/commercial, oil and gas, and real estate. The industrial/commercial segment includes (1) a supplier of automotive after-market products; (2) a manufacturer and distributor of barbecue pits and custom sheet metal products for customers predominately in the energy industry; (3) distributors of specialty chemicals for the automotive after-market, including specializing in the application of spray-on bed liners for truck beds; and (4) a holding company for future commercial ventures. The oil and gas segment owns an oil, gas and mineral royalty interest in Washington County, Texas. Prior to 1999,we had a media/entertainment segment, which we sold in 1999. The comparative segment information for 1999 had been restated to delete the media entertainment data, which had been treated as a loss from discontinued operations in 1999. The corporate overhead includes our investment holdings including financing current operations and expansion of its current holdings as well as evaluating the feasibility of entering into additional businesses. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. We evaluate performances based on profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses. Our discussion under "Results of Operations" and "Liquidity and Capital Resources" below is on a consolidated basis. For reference to "Industry Segments" see Note 2 to the Consolidated Notes to Financial Statements in Item 1, Consolidated Financial Statements above.
Results of Operations - American International Industries, Inc. Consolidated
Three Months and Nine Months Ended September 30, 2000 Compared to Three Months and Nine Months Ended September 30, 1999
Net revenues for the nine months and three months ended September 30, 2000 increased by $1,317,892 or 10.8% and $2,159,342 or 41.8%, respectively, compared to the same periods in the prior year. For the nine-month periods ended September 30, 2000 and 1999, revenues increased from $10,913,870 to $12,233,762, respectively and for the three-month periods revenues increases from $3,011,305 to $5,170,647, respectively. The increase in revenue was primarily the result of increased sales of approximately $2,100,000 at Northeastern Plastic Inc. ("NPI") for the nine months ended September 30, 2000.
Cost of goods sold for the nine and three months ended September 30, 2000 increased by $1,913,051 or 18.1% and by $2,087,939 or 45.5%, respectively, over the comparable periods in the prior year. Total cost of goods sold during the nine-month period increase from $8,647,569 in 1999 to $10,560,620 in 2000 and for the three-month period total cost of goods sold increased from $2,497,548 to $4,585,487. The increase in cost of goods sold for the nine months ended September 30, 2000 was primarily attributable to an increase in sales at NPI. Cost of goods sold as a percentage of net sales increased over the nine-month periods from 79.3% to 86.3%. This increase is primarily due to the sale of an option to purchase real estate in 1999. The cost of the option ($100,000) was recorded in 1998 and the sale of the option actually occurred in February 1999 for a price of $600,000. Cost of goods sold as a percentage of net sales increased by 82.9% to 88.2% for the three-month periods ended September 30, 2000 and 1999.
Selling, general and administrative expenses consisted primarily of management, clerical and administrative salaries and professional services. Selling, general and administrative expenses for the nine and three months ended September 30, 2000 decreased by $1,053,866 or 53.8% and by $513,206 or 109.0% over the same periods in the prior year. Selling, general and administrative expenses as a percentage of sales decreased from 32.7% to 16.0% for the comparable nine-month periods and from 26.7% to 9.1% for the comparable three-month periods. The decrease in selling, general and administrative expenses for the nine months and three months periods ended September 30, 2000 was attributable to the decrease in the cost of auditing and accounting services incurred during these periods in 2000.
Operating losses for the nine months ended September 30, 2000 decreased by $460,707 over the comparable period in 1999. Operating income for the three months ended September 30, 2000 increased by $584,609 over the comparable period in 1999.
Liquidity and Capital Resources
The Company's operations have been financed principally through internal growth and liquid assets on hand. At September 30, 2000, the Company's working capital was $1,747,667.
Net cash used by operating activities for the nine months ended September 30, 2000 of $1,676,734 was primarily due to an increase in accounts receivable by $1,996,6510 and the use of $1,200,000 to payoff notes payable related to CRC. This was a result of the discontinued operation and was reported during the three month period ended June 30, 2000 in the Company's Form 10-QSB/A for such period.
Net cash provided by investing activities for the nine months ended September 30, 2000 of $1,029,348 was primarily due to the redemption of restricted certificates of deposit in the amount of $1,150,000.
Net cash provided by financing activities for the nine months ended September 30, 2000 of $977,856 was primarily due to receipts of proceeds from the sale of restricted shares of the Company's common stock during the last quarter in the amount of $490,000 and proceeds from borrowing in the amount $529,800.
The Company believes that internally generated funds and the available borrowings under its exiting credit facilities will provide sufficient liquidity and enable it to meet current and foreseeable working capital requirements.
Part II
None, reference is made to Item 3. in Part I of the amended Form 10-KSB filed on December 15, 2000.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are to be filed or incorporated by reference as part of the Quarterly Report:
| Exhibit No. | Description |
| 13 | The Registrant's amended Form 10-KSB/A for the year ended 1999 is incorporated herein by reference. |
| 27 | Financial Data Schedule |
| 99.1 | Safe Harbor Compliance Statement for Forward-Looking Statements filed previously on Form 10-QSB/A, File No. 0-25223 |
(b) The Company filed a Form 8-k on July 5, 2000 and amended such report on August 4, 2000. The Company reports under Item 4. Changes in Registrant's Certifying Accountant.
SIGNATURES
In accordance with the Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
American International Industries, Inc.
| By /s/ Daniel Dror |
| Daniel Dror |
| President, Chief Executive Officer and Director |
| By /s/ John W. Stump, III |
| John W. Stump, III |
| Chief Financial Officer |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date |
| /s/ Daniel Dror | Chairman of the Board and Chief Executive Officer | December 20, 2000 |
| Daniel Dror | ||
| /s/ Erick Friedman | Director | December 20, 2000 |
| Erick Friedman |
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