American International Industries, Inc. Continues Losses In 1st Quarter Of 2010

May 18, 2010

While not really unexpected, American International Industries, Inc. (AMIN) has once again disappointed shareholders with a loss and sharp decline in shareholders equity. EBITDA was a loss of $580,355 for the three months ended March 31, 2010. Gross margins for the period softened to 29% from 36% the previous year. Shareholders equity fell nearly 9% to $13,347,810.

Revenues for the period were also down sharply to $4,996,513 a drop of over 19%. Much of this decline can be attributed to lower revenue at the Shumate Energy Technologies, Inc. subsidiary. Currently, revenues for AMIN are closely tied to oil & gas drilling activity which was soft during 2009.

There was further dilution of the stock during the period as AMIN issued 1,000,000 to related parties at $1.01 per share. This was a roughly 10% increase in the shares outstanding.

While the Company’s operations are not performing nor showing any improvement, the Company does own real estate that is currently supporting the stock price. The Company foreclosed on 78 acres in the Houston area and recently entered two separate contracts to sell a total of 42 acres of the foreclosed property for a total purchase price of $2,000,000. There are still 36 acres remaining from the foreclosed properties.

Shortly after the Company released earnings, they declared a special property dividend of its subsidiary Brenham Oil & Gas which had been previously announced. The only known asset of this subsidiary is an oil & gas mineral royalty interest in a unit operated by Anadarko Petroleum Corporation in Brenham, Texas. The value of this interest is unknown and not producing income. A newly independent Brenham Oil & Gas plans acquire oil & gas interest in North America and the African continent. It is hard to say where this this is really going and how any acquisitions would be financed.

Time will tell if value can be realized from the subsidiaries and real estate.

Disclosure: The author holds a long position in AMIN at the time of this article.

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