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Previous: NEON SYSTEMS INC, 4, 2001-01-10 |
Next: AMERICAN INTERNATIONAL INDUSTRIES INC, 10QSB/A, 2001-01-10 |
UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM 10-QSB/A-2 |
(Mark one) |
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 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 |
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(Issuer's telephone number) |
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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 |
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State the number of shares outstanding of each of issuer's classes of common equity outstanding as of the latest practicable date: |
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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 |
10 |
PART II. OTHER INFORMATION |
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12 |
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12 |
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12 |
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12 |
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12 |
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12 |
FORWARD LOOKING STATEMENTS: THIS FORM 10-QSB/A 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 March 31, 2000 Reviewed) |
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Balance Sheets – March 31, 2000 and December 31, 1990 (Audited) |
4 |
Statements of Operations – Three months ended March 31, 2000 and 1999 |
5 |
Statements of Cash Flows – Three months ended March 31, 2000 and 1999 |
6 |
| 8 |
| R. E. Bassie & Co., P.C. | |
| Certified Public Accountants | |
| A Professional Corporation | |
7171 Harwin Drive, Suite 306 |
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Houston, Texas 77036-2197 |
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Tel: (713) 266-0691 Fax: (713) 266-0692 |
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E-Mail: [email protected] |
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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 March 31, 2000, and the related condensed consolidated statements of operations and cash flows for the three-month period ended March 31, 2000. These financial statements are the responsibility of the Corporation'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. As discussed in Note 4, the Company's financial statements as of March 31, 2000 have been restated to reflect the restatement of the 1999 financial statements. |
/s/ R. B. Bassie & Co., P.C. |
Houston, Texas |
August 4, 2000, except with respect to Note 4 to which the date is December 12, 2000 |
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES |
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March 31, 2000 and December 31, 1999 |
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(Unaudited - see accompanying accountants' review report) |
|||
2000 |
1999 |
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Assets |
Restated |
(Audited) Restated |
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| Current assets: | |||
| Cash | $ 791,042 |
$ 639,396 |
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| Restricted certificate of deposit | 1,000,000 | ||
| Trading securities | 1,155,282 | 1,150,000 |
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| Accounts receivable, less allowance for doubtful accounts of | |||
| $138,066 at March 31, 2000 and $135,614 at December 31, 1999 | 1,628,589 | 1,609,561 |
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| Notes receivable | 190,458 | 181,691 |
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| Inventories | 1,163,307 | 1,199,947 |
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| Prepaid expenses and other current assets | 33,858 | 45,510 |
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| Total current assets | 5,962,536 | 5,832,884 |
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| Note receivable, net of allowance for doubtful accounts of $1,200,000 at March 31, 2000 and December 31, 1999 | - | - |
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| Real estate held for sale | 939,584 | 939,584 |
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| Property and equipment, net of accumulated | |||
| depreciation and amortization | 1,596,257 | 1,588,222 |
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| Excess of cost over net assets of businesses | |||
| acquired, less accumulated amortization of | |||
| $153,002 at March 3, 2000 and $132,729 at December 31, 1999 | 1,583,758 | 1,604,031 |
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| Non-compete agreements, net of accumulated amortization of | |||
| $350,000 at March 31, 2000 and $325,000 at December 31, 1999 | 150,000 |
175,000 |
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| Other assets | 21,113 |
18,793 |
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| Total assets | $ 10,253,248 |
$ 10,158,514 |
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Liabilities and Stockholders' Equity |
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| Current liabilities: | |||
| Accounts payable and accrued expenses | 2,522,843 | 2,448,261 |
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| Margin loan from financial institution | 549,494 | 523,863 |
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| Current installments of notes payable to related parties | 471,000 | 471,000 |
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| Current installments of notes payable | 355,239 | 487,444 |
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| Current installments of capital lease obligations | 43,988 | 45,109 |
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| Net assets from discontinued operations | 1,200,000 | 1,200,000 |
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| Total current liabilities | 5,142,574 | 5,175,677 |
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| Notes payable to related parties, less current installments | - | - |
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| Notes payable, less current installments | 703,596 | 703,596 |
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| Capital lease obligations, less current installments | 36,012 | 46,132 |
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| Total liabilities | 5,882,182 | 5,925,405 |
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| Stockholders' equity: | |||
| Preferred stock, $.001par value. Authorized | |||
| 10,000,000 shares: none issued | - |
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| Common stock, $.001 par value. Authorized 200,000,000 shares: | |||
| 128,472,971shares issued and 128,220,971 shares outstanding at | |||
| March 31, 2000, 125,972,971shares issued and 125,720,971 | |||
| shares outstanding at December 31, 1999 | 128,221 | 125,721 |
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| Additional paid-in capital | 16,430,594 | 16,393,094 |
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| Accumulated deficit | (12,153,721) | (12,251,678) |
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| Total stockholders 'equity | 4,405,094 | 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 | 4,371,066 | 4,233,109 |
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| Commitments and contingent liabilities | - | - |
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| Total liabilities and stockholders' equity | $ 10,253,248 |
$ 10,158,514 |
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| See accompanying notes to consolidated financial statements | |||
AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES |
Three months ended March 31, 2000 and 1999 |
(Unaudited - see accompanying accountants' review report) |
Three months ended March 31, |
2000 |
1999 |
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| Revenues | $ |
3,198,003 |
$ |
4,214,020 |
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| Costs and expenses: |
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| Cost of sales | 2,645,790 |
2,934,465 |
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| Selling, general and administrative | 736,636 |
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1,191,505 |
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| Total operating expenses | 3,382,426 |
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4,125,970 |
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| Operating income (loss) | (184,423) |
88,050 |
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| Other income (expenses): |
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| Interest income | 22,985 |
16,785 |
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| Realized gains on investments | 47,371 |
48,905 |
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| Unrealized gain and (losses) on investments | 258,374 |
(91,398) |
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| Gain on the sale of assets | 52,881 |
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| Other Income | 2,915 |
66,206 |
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| Interest expense | (49,265) |
- |
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| Total other income (expenses) | 282,380 |
(87,273) |
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| Net earnings before income tax | 97,957 |
41,275 |
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| Provision for income tax | ||||
| Net earnings | $ |
97,957 |
$ |
41,275 |
| Net earnings per common share - basic and diluted: | ||||
| Net earnings applicable to common shareholders | $ |
0.00 |
$ |
0.00 |
| Weighted average common shares - basic and diluted | 128,140,221 |
124,785,971 |
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| Consolidated statements of comprehensive income: | ||||
| Net earnings | $ |
97,957 |
$ |
41,275 |
| Unrealized gain on shares available-for-sale: | - |
- |
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| Unrealized holding gain arising during the period | - |
987,792 |
||
| Less: reclassification adjustment for gain included in net income | - |
(1,032,756) |
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| Comprehensive income (loss) | $ |
97,957 |
$ |
1,029,067 |
See accompanying notes to consolidated financial statements |
| AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES |
| Consolidated Statements of Cash Flows |
| Three months ended March 31, 2000 and 1999 |
| (Unaudited - see accompanying accountants' review report) |
| 2000 | 1999 |
|||
| Cash flows from operating activities: | ||||
| Net earnings | $ |
97,957 | $ | 41,275 |
| Adjustments to reconcile net earnings (loss) | ||||
| to net cash used in operating activities: | ||||
| Depreciation and amortization | 92,398 | 249,747 |
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| Realized gain on sale of securities | (47,371) | (48,905) |
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| (Increase) decrease in market value of equity securities | (258,374) | 91,398 |
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| (Increase) decrease in operating assets: | ||||
| Accounts receivable | (19,028) | 323,194 |
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| Inventories | 36,640 | 2,415 |
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| Prepaid expenses and other current assets | 11,652 | (50,084) |
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| (Purchase) sale of trading securities, net | 182,873 | (482,953) |
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| Other assets | (2,320) | 48,768 |
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| (Increase) decrease in operating liabilities: | ||||
| Accounts payable and accrued expenses | 74,582 | (243,299) |
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| Deferred revenues | - | 122,766 |
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| Net cash provided by operating activities | 169,009 | 54,322 |
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| Cash flows from investing activities: | ||||
| Purchase of available-for-sale investment securities | - | (116,949) |
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| Purchase of property and equipment | (55,160) | (99,174) |
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| Redemption of restricted certificate of deposit | 150,000 | - |
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| Disposition of assets | - | 130,155 | ||
| Notes receivable | (8,767) | (5,500) |
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| Net cash provided by (used in) investing activities | 86,073 | (221,623) |
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| Cash flows from financing activities: | ||||
| Proceeds from stock subscriptions | - | 420,000 |
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| Proceeds from issuance of stock | 40,000 | 6,000 | ||
| Repayment of notes receivable | - | 31,000 |
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| Proceeds from note payable | - | 607,900 |
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| Repayment of notes payable | (123,205) | (515,148) | ||
| Principal payments on capital lease obligations | (11,231) | (143,263) |
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| Net cash provided by (used in) financing activities | (103,436) | 406,489 |
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| Net increase in cash | 151,646 | 239,188 |
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| Cash at beginning of year | 639,396 | 999.916 |
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| Cash at end of period | $ |
791,043 | $ | 1,239,104 |
| Supplemental schedule of cash flow information: | ||||
| Interest paid | $ |
49,265 | $ | 87,273 |
| Non-cash transactions: | ||||
| Purchase of securities on margin | $ |
25,631 | $ | 172,040 |
| 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 | - | 18,853 | ||
| Goodwill | - | 674,764 | ||
| Accounts payable | - | 76,494 | ||
| Notes payable | - | 30.500 | ||
| Notes payable to related parties | - | 30,000 | ||
| Other liabilities | - | 220 | ||
| $ | - | $ | 997,546 | |
See accompanying notes to consolidated financial statements |
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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 reflects media entertainment data prior to restatement. 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 net revenues, net operating losses, and identifiable assets were as follows:
| 2000 | 1999 | |||
| Revenues: | ||||
| Industrial/Commercial | $ | 3,189,096 |
$ | 2,456,703 |
| Media/Entertainment | - | 1,157,317 | ||
| Real estate | 6,354 | 600,000 | ||
| Oil and gas | 2,553 | - | ||
| $ | 3,198,003 | $ | 4,214,020 | |
| Operating income (loss): | ||||
| Industrial/Commercial | $ | 16,790 | $ | 72,407 |
| Media/Entertainment | - | (218,415) | ||
| Real estate | (6,945) | 485,101 | ||
| Oil and gas | 2,517 | (5,014) | ||
| Corporate expenses | (196,785) | (246,029) | ||
| $ | (184,423) | $ | 88,050 | |
| Identifiable assets: | ||||
| Industrial/Commercial | $ | 8,549,086 | $ | 7,609,017 |
| Media/Entertainment | - | 4,483,456 | ||
| Real estate | 947,756 | 996,631 | ||
| Oil and gas | 72,527 | 63,610 | ||
| Corporate | 683,879 | 2,304,082 | ||
| $ | 10,253,248 | $ | 15,526,605 |
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.
(3) Subsequent Events
In May 2000, the Company sold 12,500,000 shares of the Company's restricted common stock to a company controlled by the brother of the CEO of AIII for total consideration of $500,000. Of this amount, $250,000 was paid by conversion of an existing debt. The Company received cash for the remaining $250,000. The company that purchased the restricted common stock agreed to a two-year lock-up agreement whereby the stock is restricted for a two-year period, without registration rights. In addition, the Company received a 12-month commitment to borrow up to $500,000 for working capital requirements.
In June 2000, the Company sold 3,636,363 shares of the Company's restricted common stock to a trust established for the benefit of the son of the Company's CEO for a total purchase price of $200,000.
(4) Restatement
The Company's financial statements for three months ended March 31, 2000 have been restated to reflect the restatement of the 1999 financial statements. As noted in Note 3 to the 1999 restated financial statements, certain transactions, which occurred subsequent to December 31, 1999, caused management to reevaluate the collectibility of the consideration received (note receivable in the amount of $250,000) for the sale of CRC and the assumption of liabilities related to CRC.
The effects of the restatement as of March 31, 2000 is a follows:
| As previously | As | |||||
| reported | Changes | restated | ||||
| Consolidated Balance Sheet: | ||||||
| Notes receivable, current | $ | 440,458 | $ | (250,000) | $ | 190,458 |
| Note receivable, long-term | - | 1,200,000 | 1,200,000 | |||
| Allowance for long-term note receivable | - | (1,200,000) | (1,200,000) | |||
| Net liabilities from discontinued operations | - | 1,200,000 | 1,200,000 | |||
| Minority interest | 70,298 | (70,298) | - | |||
| Accumulated deficit | (10,703,721) | (1,450,000) | (12,153,721) |
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 for the year ended December 31, 1999.
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
The following defined terms are used in this Quarterly Report: Northeastern Plastics, Inc. (NPI), 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), Acqueren, Inc. (Acqueren) and Modern Film Effects, Inc. d/b/a Cinema Research Corporation (CRC).
Three Months Ended March 31, 2000 Compared to Three Months Ended March 3, 1999
Consolidated net earnings for the three-month period ended March 31, 2000 was $97,957 as compared to $41,275 for the three months ended March 31, 1999. The factors contributing to the consolidated net earning are discussed below.
Net revenues for the three months ended March 31, 2000 was $3,198,003 as compared to $4,214,020 for March 31, 1999. Such 24.3% decrease is primarily due to discontinued operations of CRC at October 31, 1999. CRC had sales of $1,157,317 during the period ended March 31, 1999. TREE had no revenue for the three-month period ended March 31, 2000, compared to revenue of $600,000 for the same period in the prior year. NPI had sales of $1,887,967 during the period ended March 31, 2000 as compared to $1,545,390 for the same period ended March 31, 1999. Marald had sales of $561,432 during the period ended March 31, 2000 compared to $472,866 during the same period in the prior year. Armor Linings, acquired in April 1999, had sales of $188,907 during the three month-month period ended March 31, 2000. Har-Whit sales for the three months ended March 31, 2000 were $550,790 as compared to $438,447 for the three months ended March 31, 1999. Brenham reported royalty income of $2,553 in the current quarter. The activity of Acqueren during the three months ended March 31, 2000 consisted of investments and trading in various securities; such activities resulted in unrealized gains of $258,374 and a loss $91,398 during the period ended March 31, 2000 and 1999, respectively. Cost of sales as a percentage of net sales for the three months ended March 31, 2000 was approximately 83% with gross margin of 17%, as compared to approximately 69.6% cost of sales and 30.4% gross margin during the three-month period ended March 31, 1999. The change is primarily due to NPI's gross margin of 7.9% during this quarter as compared to 16.9% during the three months ended March 31, 1999. Har-Whit sustained a 31.4% margin in 2000 as compared to 30.4% in 1999. Marald posted margins averaging 32.5% during the quarter and Armor Linings sustained margins averaging 18% at March 31, 2000.
Selling, general and administrative expenses during the period ended March 31, 2000 were $736,636 which compares to $1,191,505 for the three months ended March 31, 1999. This decrease is primarily the result of discontinued operations of CRC, which had operating expenses during the three month period ended March 31, 1999 of $453,377. Armor Linings incurred $57,704 in operating expenses during the three months ended March 31, 2000. AIII incurred corporate expenses of $196,785, including $69,704 of legal and accounting fees and $25,000 of goodwill compared to total corporate expenses of $246,029 during the same quarter in the prior year. This represents a decrease of 20%.
Other income (expense) totaled $282,380 for the three months ended March 31, 2000 including interest income of $22,985, Acqueren's realized and unrealized gains on investments of $47,371 and $258,374, other income of $2,915 and $49,265 of interest expense. This compares to total other income (expense) for the three-month period ended March 31, 1999 of $(46,775). The primary reason for the difference is Acqueren's unrealized gain for the quarter as compared to an unrealized loss of $91,398 for the three-month period ended March 31, 1999.
Net Earnings and Comprehensive Income
Consolidated net earnings for the three-month period ended March 31, 2000 was $97,957 as compared to $41,275 during the period ended March 31, 1999. During the three months ended March 31, 2000, TREE had a net loss of $6,945, Brenham had net earnings of $2,517, Har-Whit had a net loss of $11,763, Armor Linings had a net loss of $24,094, and Marald had net earnings of $16,151. Acqueren (including NPI) had net earnings of $309,675. There was no adjustment from net earnings to comprehensive income, since there were no unrealized gain on securities available-for-sale in this quarter, . During the three month period ended March 31, 1999, comprehensive income included Acqueren's unrealized gains of $968,828 on available-for-sale equity securities, which were included as a component of stockholders' equity.
Liquidity and Capital Resources - AIII
Total assets at March 31, 2000 and December 31, 1999 were $10,253,248 and $10,158,514, respectively, an insignificant increase. Total liabilities at March 31, 2000 were $5,882,182 as compared to $5,925,405 at December 31, 1999. The decrease is primarily the result of the required reductions of long-term debt.
At March 31, 2000, AIII's current working capital was $819,962 as compared to $657,207 at December 31, 1999. The increase in working capital is attributable to an insignificant increase in current assets. AIII's consolidated cash position at March 31, 2000 was $791,042 as compared to $639,396 at December 31, 1999. Accounts receivable at March 31, 2000 were $1,628,589 compared to $1,609,561 at December 31, 1999. Inventories decreased to $1,163,307 at March 31, 2000 as compared to $1,199,947 at December 31, 1999. Investments in trading securities increased to $1,155,282 at March 31, 2000 from $1,006,779 at December 31, 1999.
For the three months ended March 31, 2000, AIII had $169,009 of net cash provided by operations, $86,073 of net cash provided by investing activities, and $103,436 of net cash used in financing activities. For the three-month period ended March 31, 1999, AIII had $54,322 of net cash provided by operation, $221,623 of net cash used in investing activities, and $406,444 of net cash provided from financing activities.
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
The following information sets forth certain information as of August 4, 2000, for all restricted securities the Company sold since December 31, 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 January 2000, the Company sold to Mr. Erick Friedman, a director, 2,500,000 shares of Common Stock for an aggregate of $40,000. The proceeds were used for corporate operating expenses and to increase our working capital.
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 for the period ended June 30, 2000. File No. 0-25223 |
(b) The Company did not file a Form 8-k during the period ended March 31, 1999.
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 | January 9, 2001 |
| Daniel Dror | ||
| /s/ Erick Friedman | Director | January 9, 2001 |
| Erick Friedman |
|
|