10-year

Don't Miss This Only Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

American International Industries Inc Reports Operating Results (10-Q)

August 14, 2012 | About:
insider

10qk

18 followers
American International Industries Inc (AMIN) filed Quarterly Report for the period ended 2012-06-30.

American International Industries, Inc. has a market cap of $2.8 million; its shares were traded at around $0.17 with and P/S ratio of 0.1.

Highlight of Business Operations:

Net revenues. Revenues from continuing operations were $979,027 for the three months ended June 30, 2012, compared to $2,419,031 for the three months ended June 30, 2011, representing a decrease of $1,440,004, or 59.5%. Revenues from continuing operations were $2,132,441 for the six months ended June 30, 2012, compared to $4,021,340 for the six months ended June 30, 2011, representing a decrease of $1,888,899, or 47.0%. NPI's revenues decreased by $1,453,904, or 60.1%, to $964,906 for the three months ended June 30, 2012, compared to $2,418,810 for the same period in the prior year. NPI's revenues decreased by $1,910,109, or 47.5%, to $2,110,560 for the six months ended June 30, 2012, compared to $4,020,669 for the same period in the prior year. NPI's revenues decreased primarily because of lower revenues with one of its principal customers. NPI has added several new customers to replace this business and expects to add additional medium to large customers during in the year 2012. For the three and six months ended June 30, 2012 and June 30, 2011, Brenham's revenues were $132, $411, $221, and $671, respectively. For the three and six months ended June 30, 2012, AITP's revenues were $13,989 and $21,470, respectively. Cost of sales and margins. Cost of sales for the three months ended June 30, 2012 was $699,483, compared to $1,762,961 for the three months ended June 30, 2011. Cost of sales for the six months ended June 30, 2012 was $1,500,299, compared to $2,925,013 for the six months ended June 30, 2011. Our gross margins for the three and six months ended June 30, 2012 were 28.6% and 29.6%, respectively, compared to gross margins for the three and six months ended June 30, 2011 of 27.1% and 27.3%. The increase in margins was primarily due to a better product mix at NPI. NPI has been able to move away from commodity-based products and toward more unique items, for which NPI receives higher margins. 24 Selling, general and administrative. Consolidated selling, general and administrative expenses for the three months ended June 30, 2012 were $1,079,870, compared to $1,048,047 in the prior year, representing an increase of $31,823, or 3.0%. Consolidated selling, general and administrative expenses for the six months ended June 30, 2012 were $2,062,715, compared to $2,619,542 in the prior year, representing a decrease of $556,827, or 21.3%. General and administrative expenses for the three and six months ended June 30, 2012 decreased from the same periods in the prior year primarily due to a decrease in stock-based compensation. General and administrative expenses for the three and six months ended June 30, 2012 and June 30, 2011 included non-cash stock-based compensation of $22,600, $22,600, $263,759, and $771,308, respectively. Selling, general and administrative expenses for the three and six months ended June 30, 2011 included higher than normal legal costs related to the Botts lawsuit settlement and one-time costs incurred for Brenham to become a public company. Gain (loss) on sale of assets. Loss on sale of assets for the three and six months ended June 30, 2012 was $55,272 and $68,010, respectively, compared to $0 and $0, respectively, for the three and six months ended June 30, 2011. During the three months ended June 30, 2012, one Dawn Condominium unit was sold for $122,269, resulting in a loss on sale of assets of $55,272. During the six months ended June 30, 2012, four Dawn Condominium units were sold for $462,471, resulting in a loss on sale of assets of $68,010. (see Note 6 to the consolidated financial statements).

Net revenues. Revenues from continuing operations were $979,027 for the three months ended June 30, 2012, compared to $2,419,031 for the three months ended June 30, 2011, representing a decrease of $1,440,004, or 59.5%. Revenues from continuing operations were $2,132,441 for the six months ended June 30, 2012, compared to $4,021,340 for the six months ended June 30, 2011, representing a decrease of $1,888,899, or 47.0%. NPI's revenues decreased by $1,453,904, or 60.1%, to $964,906 for the three months ended June 30, 2012, compared to $2,418,810 for the same period in the prior year. NPI's revenues decreased by $1,910,109, or 47.5%, to $2,110,560 for the six months ended June 30, 2012, compared to $4,020,669 for the same period in the prior year. NPI's revenues decreased primarily because of lower revenues with one of its principal customers. NPI has added several new customers to replace this business and expects to add additional medium to large customers during in the year 2012. For the three and six months ended June 30, 2012 and June 30, 2011, Brenham's revenues were $132, $411, $221, and $671, respectively. For the three and six months ended June 30, 2012, AITP's revenues were $13,989 and $21,470, respectively. Cost of sales and margins. Cost of sales for the three months ended June 30, 2012 was $699,483, compared to $1,762,961 for the three months ended June 30, 2011. Cost of sales for the six months ended June 30, 2012 was $1,500,299, compared to $2,925,013 for the six months ended June 30, 2011. Our gross margins for the three and six months ended June 30, 2012 were 28.6% and 29.6%, respectively, compared to gross margins for the three and six months ended June 30, 2011 of 27.1% and 27.3%. The increase in margins was primarily due to a better product mix at NPI. NPI has been able to move away from commodity-based products and toward more unique items, for which NPI receives higher margins. 24 Selling, general and administrative. Consolidated selling, general and administrative expenses for the three months ended June 30, 2012 were $1,079,870, compared to $1,048,047 in the prior year, representing an increase of $31,823, or 3.0%. Consolidated selling, general and administrative expenses for the six months ended June 30, 2012 were $2,062,715, compared to $2,619,542 in the prior year, representing a decrease of $556,827, or 21.3%. General and administrative expenses for the three and six months ended June 30, 2012 decreased from the same periods in the prior year primarily due to a decrease in stock-based compensation. General and administrative expenses for the three and six months ended June 30, 2012 and June 30, 2011 included non-cash stock-based compensation of $22,600, $22,600, $263,759, and $771,308, respectively. Selling, general and administrative expenses for the three and six months ended June 30, 2011 included higher than normal legal costs related to the Botts lawsuit settlement and one-time costs incurred for Brenham to become a public company. Gain (loss) on sale of assets. Loss on sale of assets for the three and six months ended June 30, 2012 was $55,272 and $68,010, respectively, compared to $0 and $0, respectively, for the three and six months ended June 30, 2011. During the three months ended June 30, 2012, one Dawn Condominium unit was sold for $122,269, resulting in a loss on sale of assets of $55,272. During the six months ended June 30, 2012, four Dawn Condominium units were sold for $462,471, resulting in a loss on sale of assets of $68,010. (see Note 6 to the consolidated financial statements).

Income (loss) from operations. We had an operating loss of $855,598 and $1,498,583, respectively, for the three and six months ended June 30, 2012, compared to an operating loss of $391,977 and $1,523,215, respectively, for the three and six months ended June 30, 2011. Total other income/expenses. Other expenses were $154,350 for the three months ended June 30, 2012, compared to $171,442 for the three months ended June 30, 2011. Other expenses were $124,504 for the six months ended June 30, 2012, compared to other expenses of $501,800 for the six months ended June 30, 2011. Other expenses for the three and six months ended June 30, 2012 included an expense of $49,281 for the Botts lawsuit settlement entered into on July 31, 2012. Other expenses for the three months ended June 30, 2012 included non-cash unrealized losses on trading securities of $78,604, compared to gains of $316,112 for the three months ended June 30, 2011. Realized gains on trading securities for the three months ended June 30, 2012 were $12,764 compared to losses of $401,655 for the three months ended June 30, 2011. Interest expense was $58,504 during the three-month period ended June 30, 2012, compared to $89,300 during the same period in the prior year. Other expenses for the six months ended June 30, 2012 included non-cash unrealized losses on trading securities of $8,458, compared to losses of $83,433 for the six months ended June 30, 2011. Realized gains on trading securities for the six months ended June 30, 2012 were $12,764 compared to losses of $256,843 for the six months ended June 30, 2011. Interest expense was $117,512 during the six-month period ended June 30, 2012, compared to $168,819 during the same period in the prior year. Net loss. We had a net loss from continuing operations of $1,023,588, or $0.08 per share, for the three months ended June 30, 2012, compared to a net loss of $566,314, or $0.04 per share, for the three months ended June 30, 2011. We had a net loss from continuing operations of $1,596,529, or $0.08 per share, for the six months ended June 30, 2012, compared to a net loss of $2,030,025, or $0.17 per share, for the six months ended June 30, 2011. We had net income from discontinued operations of $1,498,327, or $0.10 per share, for the three months ended June 30, 2012, compared to a net loss of $2,167, or $0.00 per share, for the three months ended June 30, 2011. We had net income from discontinued operations of $575,810, or $0.04 per share, for the six months ended June 30, 2012, compared to net income of $82,623, or $0.01 per share, for the six months ended June 30, 2011. Discontinued operations for the three and six months ended June 30, 2012 includes a gain on disposal of DSWSI of $1,498,327 for the total consideration of $3,000,000 less DSWSI's assets and associated liabilities of $1,501,673 (see Note 7). Net income from discontinued operations for the six months ended June 30, 2012 and 2011 includes DSWSI's net loss of $922,517 and net income of $137,033, respectively. Net loss from discontinued operations for the three months ended June 30, 2011 includes DSWSI's net loss of $7,167. DCP's net loss of $4,410 for the six months ended June 30, 2011 is included in discontinued operations. During the three months ended June 30, 2011, American received the $5,000 for the purchase of DCP. This is included as income from discontinued operations for the three and six months ended June 30, 2011. American forgave the $55,000 promissory note owed by Joe Hoover and this is included as a loss in discontinued operations for the six months ended June 30, 2011. Our net income was $308,545, or $0.02 per share, for the three months ended June 30, 2012, compared to a net loss of $545,951, or $0.04 per share, for the three months ended June 30, 2011. Our net loss was $657,356, or $0.04 per share, for the six months ended June 30, 2012, compared to a net loss of $1,924,901, or $0.16 per share, for the six months ended June 30, 2011. 25 Liquidity and Capital Resources Liquidity is our ability to generate sufficient cash flows to meet the Company s obligations and commitments, or obtain appropriate financing. Currently, our liquidity needs arise primarily from working capital requirements, debt service on indebtedness, and capital expenditures. We have funded these liquidity requirements from proceeds from the sale of Delta of $1,600,000, proceeds from net borrowings under lines of credit agreements of $1,094,000, and proceeds from the sale of real estate held for sale of $462,471. Capital expenditures for the six months ended June 30, 2012 were $3,510 compared to $2,297 for the same period in the prior year. The Company has no major capital expenditure commitments for the next 12 months. Net cash used in operating activities from continuing operations was $1,748,654 for the six months ended June 30, 2012, compared to $2,652,247 for the six months ended June 30, 2011. Net cash used in operating activities for the six months ended June 30, 2012 was derived primarily from our net loss from continuing operations of $1,596,529, an increase in inventories at NPI of $418,288, offset by a decrease in accounts receivable of $163,340, due to collections of the higher seasonal revenues at NPI during the fourth quarter of 2011. Net cash used in operating activities for the six months ended June 30, 2011 includes a one-time lump sum payment of $1,250,000 for a lawsuit settlement that was accrued as of December 31, 2010. Additionally, accounts payable decreased significantly due to payments made in the six months ended June 30, 2011 for expenses incurred during the six months ended December 31, 2010 in support of higher revenues at NPI. The Company's prospects for selling real estate from its portfolio have improved significantly due to infrastructure developments in close proximity to these properties. Management believes that demand and prices for real estate will increase during the next 12 to 24 months from the date of this report. The appraised values of the Company's portfolio of real estate are significantly higher than the value recorded on the books. For the six months ended June 30, 2012, our investing activities provided cash of $2,089,018, compared to $217,787 during the six months ended June 30, 2011. Our financing activities provided cash of $867,080 during the six months ended June 30, 2012, compared to $1,438,345 during the six months ended June 30, 2011. NPI has a line of credit from Trustmark Bank in the amount of $2,250,000, which had a maturity date in April 2013. We believe that our cash on hand, operating cashflows, and credit facilities will be sufficient to fund our operations, service our debt, and fund planned capital expenditures for at least 12 months from the date of this report. Total assets at June 30, 2012 were $17,928,195, compared to $20,866,526 at December 31, 2011, representing a decrease of $2,938,331. At June 30, 2012, consolidated working capital was $12,603,200, compared to working capital of $9,173,114 at December 31, 2011, representing an increase of $3,430,086. Total assets as of June 30, 2012, included real estate held for sale of $7,385,031 (see Note 6), inventories of $2,323,303, accounts receivable of $1,047,660, cash and cash equivalents of $2,076,690, $144,744 of trading securities, $1,996,300 in notes receivable, and $2,001,824 of property and equipment.

Total other income/expenses. Other expenses were $154,350 for the three months ended June 30, 2012, compared to $171,442 for the three months ended June 30, 2011. Other expenses were $124,504 for the six months ended June 30, 2012, compared to other expenses of $501,800 for the six months ended June 30, 2011. Other expenses for the three and six months ended June 30, 2012 included an expense of $49,281 for the Botts lawsuit settlement entered into on July 31, 2012. Other expenses for the three months ended June 30, 2012 included non-cash unrealized losses on trading securities of $78,604, compared to gains of $316,112 for the three months ended June 30, 2011. Realized gains on trading securities for the three months ended June 30, 2012 were $12,764 compared to losses of $401,655 for the three months ended June 30, 2011. Interest expense was $58,504 during the three-month period ended June 30, 2012, compared to $89,300 during the same period in the prior year. Other expenses for the six months ended June 30, 2012 included non-cash unrealized losses on trading securities of $8,458, compared to losses of $83,433 for the six months ended June 30, 2011. Realized gains on trading securities for the six months ended June 30, 2012 were $12,764 compared to losses of $256,843 for the six months ended June 30, 2011. Interest expense was $117,512 during the six-month period ended June 30, 2012, compared to $168,819 during the same period in the prior year. Net loss. We had a net loss from continuing operations of $1,023,588, or $0.08 per share, for the three months ended June 30, 2012, compared to a net loss of $566,314, or $0.04 per share, for the three months ended June 30, 2011. We had a net loss from continuing operations of $1,596,529, or $0.08 per share, for the six months ended June 30, 2012, compared to a net loss of $2,030,025, or $0.17 per share, for the six months ended June 30, 2011. We had net income from discontinued operations of $1,498,327, or $0.10 per share, for the three months ended June 30, 2012, compared to a net loss of $2,167, or $0.00 per share, for the three months ended June 30, 2011. We had net income from discontinued operations of $575,810, or $0.04 per share, for the six months ended June 30, 2012, compared to net income of $82,623, or $0.01 per share, for the six months ended June 30, 2011. Discontinued operations for the three and six months ended June 30, 2012 includes a gain on disposal of DSWSI of $1,498,327 for the total consideration of $3,000,000 less DSWSI's assets and associated liabilities of $1,501,673 (see Note 7). Net income from discontinued operations for the six months ended June 30, 2012 and 2011 includes DSWSI's net loss of $922,517 and net income of $137,033, respectively. Net loss from discontinued operations for the three months ended June 30, 2011 includes DSWSI's net loss of $7,167. DCP's net loss of $4,410 for the six months ended June 30, 2011 is included in discontinued operations. During the three months ended June 30, 2011, American received the $5,000 for the purchase of DCP. This is included as income from discontinued operations for the three and six months ended June 30, 2011. American forgave the $55,000 promissory note owed by Joe Hoover and this is included as a loss in discontinued operations for the six months ended June 30, 2011. Our net income was $308,545, or $0.02 per share, for the three months ended June 30, 2012, compared to a net loss of $545,951, or $0.04 per share, for the three months ended June 30, 2011. Our net loss was $657,356, or $0.04 per share, for the six months ended June 30, 2012, compared to a net loss of $1,924,901, or $0.16 per share, for the six months ended June 30, 2011. 25 Liquidity and Capital Resources Liquidity is our ability to generate sufficient cash flows to meet the Company s obligations and commitments, or obtain appropriate financing. Currently, our liquidity needs arise primarily from working capital requirements, debt service on indebtedness, and capital expenditures. We have funded these liquidity requirements from proceeds from the sale of Delta of $1,600,000, proceeds from net borrowings under lines of credit agreements of $1,094,000, and proceeds from the sale of real estate held for sale of $462,471. Capital expenditures for the six months ended June 30, 2012 were $3,510 compared to $2,297 for the same period in the prior year. The Company has no major capital expenditure commitments for the next 12 months. Net cash used in operating activities from continuing operations was $1,748,654 for the six months ended June 30, 2012, compared to $2,652,247 for the six months ended June 30, 2011. Net cash used in operating activities for the six months ended June 30, 2012 was derived primarily from our net loss from continuing operations of $1,596,529, an increase in inventories at NPI of $418,288, offset by a decrease in accounts receivable of $163,340, due to collections of the higher seasonal revenues at NPI during the fourth quarter of 2011. Net cash used in operating activities for the six months ended June 30, 2011 includes a one-time lump sum payment of $1,250,000 for a lawsuit settlement that was accrued as of December 31, 2010. Additionally, accounts payable decreased significantly due to payments made in the six months ended June 30, 2011 for expenses incurred during the six months ended December 31, 2010 in support of higher revenues at NPI. The Company's prospects for selling real estate from its portfolio have improved significantly due to infrastructure developments in close proximity to these properties. Management believes that demand and prices for real estate will increase during the next 12 to 24 months from the date of this report. The appraised values of the Company's portfolio of real estate are significantly higher than the value recorded on the books. For the six months ended June 30, 2012, our investing activities provided cash of $2,089,018, compared to $217,787 during the six months ended June 30, 2011. Our financing activities provided cash of $867,080 during the six months ended June 30, 2012, compared to $1,438,345 during the six months ended June 30, 2011. NPI has a line of credit from Trustmark Bank in the amount of $2,250,000, which had a maturity date in April 2013. We believe that our cash on hand, operating cashflows, and credit facilities will be sufficient to fund our operations, service our debt, and fund planned capital expenditures for at least 12 months from the date of this report. Total assets at June 30, 2012 were $17,928,195, compared to $20,866,526 at December 31, 2011, representing a decrease of $2,938,331. At June 30, 2012, consolidated working capital was $12,603,200, compared to working capital of $9,173,114 at December 31, 2011, representing an increase of $3,430,086. Total assets as of June 30, 2012, included real estate held for sale of $7,385,031 (see Note 6), inventories of $2,323,303, accounts receivable of $1,047,660, cash and cash equivalents of $2,076,690, $144,744 of trading securities, $1,996,300 in notes receivable, and $2,001,824 of property and equipment.

Total other income/expenses. Other expenses were $154,350 for the three months ended June 30, 2012, compared to $171,442 for the three months ended June 30, 2011. Other expenses were $124,504 for the six months ended June 30, 2012, compared to other expenses of $501,800 for the six months ended June 30, 2011. Other expenses for the three and six months ended June 30, 2012 included an expense of $49,281 for the Botts lawsuit settlement entered into on July 31, 2012. Other expenses for the three months ended June 30, 2012 included non-cash unrealized losses on trading securities of $78,604, compared to gains of $316,112 for the three months ended June 30, 2011. Realized gains on trading securities for the three months ended June 30, 2012 were $12,764 compared to losses of $401,655 for the three months ended June 30, 2011. Interest expense was $58,504 during the three-month period ended June 30, 2012, compared to $89,300 during the same period in the prior year. Other expenses for the six months ended June 30, 2012 included non-cash unrealized losses on trading securities of $8,458, compared to losses of $83,433 for the six months ended June 30, 2011. Realized gains on trading securities for the six months ended June 30, 2012 were $12,764 compared to losses of $256,843 for the six months ended June 30, 2011. Interest expense was $117,512 during the six-month period ended June 30, 2012, compared to $168,819 during the same period in the prior year. Net loss. We had a net loss from continuing operations of $1,023,588, or $0.08 per share, for the three months ended June 30, 2012, compared to a net loss of $566,314, or $0.04 per share, for the three months ended June 30, 2011. We had a net loss from continuing operations of $1,596,529, or $0.08 per share, for the six months ended June 30, 2012, compared to a net loss of $2,030,025, or $0.17 per share, for the six months ended June 30, 2011. We had net income from discontinued operations of $1,498,327, or $0.10 per share, for the three months ended June 30, 2012, compared to a net loss of $2,167, or $0.00 per share, for the three months ended June 30, 2011. We had net income from discontinued operations of $575,810, or $0.04 per share, for the six months ended June 30, 2012, compared to net income of $82,623, or $0.01 per share, for the six months ended June 30, 2011. Discontinued operations for the three and six months ended June 30, 2012 includes a gain on disposal of DSWSI of $1,498,327 for the total consideration of $3,000,000 less DSWSI's assets and associated liabilities of $1,501,673 (see Note 7). Net income from discontinued operations for the six months ended June 30, 2012 and 2011 includes DSWSI's net loss of $922,517 and net income of $137,033, respectively. Net loss from discontinued operations for the three months ended June 30, 2011 includes DSWSI's net loss of $7,167. DCP's net loss of $4,410 for the six months ended June 30, 2011 is included in discontinued operations. During the three months ended June 30, 2011, American received the $5,000 for the purchase of DCP. This is included as income from discontinued operations for the three and six months ended June 30, 2011. American forgave the $55,000 promissory note owed by Joe Hoover and this is included as a loss in discontinued operations for the six months ended June 30, 2011. Our net income was $308,545, or $0.02 per share, for the three months ended June 30, 2012, compared to a net loss of $545,951, or $0.04 per share, for the three months ended June 30, 2011. Our net loss was $657,356, or $0.04 per share, for the six months ended June 30, 2012, compared to a net loss of $1,924,901, or $0.16 per share, for the six months ended June 30, 2011. 25 Liquidity and Capital Resources Liquidity is our ability to generate sufficient cash flows to meet the Company s obligations and commitments, or obtain appropriate financing. Currently, our liquidity needs arise primarily from working capital requirements, debt service on indebtedness, and capital expenditures. We have funded these liquidity requirements from proceeds from the sale of Delta of $1,600,000, proceeds from net borrowings under lines of credit agreements of $1,094,000, and proceeds from the sale of real estate held for sale of $462,471. Capital expenditures for the six months ended June 30, 2012 were $3,510 compared to $2,297 for the same period in the prior year. The Company has no major capital expenditure commitments for the next 12 months. Net cash used in operating activities from continuing operations was $1,748,654 for the six months ended June 30, 2012, compared to $2,652,247 for the six months ended June 30, 2011. Net cash used in operating activities for the six months ended June 30, 2012 was derived primarily from our net loss from continuing operations of $1,596,529, an increase in inventories at NPI of $418,288, offset by a decrease in accounts receivable of $163,340, due to collections of the higher seasonal revenues at NPI during the fourth quarter of 2011. Net cash used in operating activities for the six months ended June 30, 2011 includes a one-time lump sum payment of $1,250,000 for a lawsuit settlement that was accrued as of December 31, 2010. Additionally, accounts payable decreased significantly due to payments made in the six months ended June 30, 2011 for expenses incurred during the six months ended December 31, 2010 in support of higher revenues at NPI. The Company's prospects for selling real estate from its portfolio have improved significantly due to infrastructure developments in close proximity to these properties. Management believes that demand and prices for real estate will increase during the next 12 to 24 months from the date of this report. The appraised values of the Company's portfolio of real estate are significantly higher than the value recorded on the books. For the six months ended June 30, 2012, our investing activities provided cash of $2,089,018, compared to $217,787 during the six months ended June 30, 2011. Our financing activities provided cash of $867,080 during the six months ended June 30, 2012, compared to $1,438,345 during the six months ended June 30, 2011. NPI has a line of credit from Trustmark Bank in the amount of $2,250,000, which had a maturity date in April 2013. We believe that our cash on hand, operating cashflows, and credit facilities will be sufficient to fund our operations, service our debt, and fund planned capital expenditures for at least 12 months from the date of this report.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.5/5 (2 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK