EX-99.1 2 exhibit991.htm PRO FORMA FINANCIAL STATEMENTS exhibit991.htm
Exhibit 99.1:  Pro Forma Financial Information
 
On December 31, 2008, the board of directors of American International Industries, Inc. ("Company") approved the deconsolidation of Hammonds Industries, Inc. (“Hammonds”) from the Company.
 
The unaudited pro forma consolidated balance sheet as of September 30, 2008 and the statement of operations for the nine months ended September 30, 2008 assume the deconsolidation occurred on September 30, 2008.  The unaudited pro forma financial statements presented herein are for illustrative purposes and are not designed to represent, and do not represent, what the financial position or operating results would have been had the deconsolidation been completed as of September 30, 2008, nor are they intended to project our future financial position or results of operations.
 
 
 
 
 
Pro Forma Consolidated Balance Sheet
(Unaudited)
  
   
   
September 30, 2008
(As Reported)
        Elimination of Hammonds Industries, Inc.    
Pro Forma without Hammonds Industries, Inc.
  
Assets
                   
Current assets:
                   
   Cash and cash equivalents
  
$
3,630,761
     $  (103,657 )   
$
3,527,104
  
   Certificate of deposit
    
3,975,000
        -      
3,975,000
  
   Trading securities
    
2,615,358
        2,009,546      
4,624,904
  
   Accounts receivable, less allowance for doubtful accounts
    
9,466,052
        (1,010,809
) 
    
8,455,243
  
   Current portion of notes receivable
    
4,463,843
        773,063      
5,236,906
  
   Accounts and notes receivable from related parties
    
31,606
        -      
31,606
  
   Inventories
    
5,778,185
      
 (2,090,270
) 
    
3,687,915
  
   Real estate held for sale
    
1,909,066
        -      
1,909,066
  
   Deposits for pipe inventory purchases      1,748,601        -       1,748,601  
   Drilling rigs held for sale
    
1,734
        -      
1,734
  
   Prepaid expenses and other current assets
    
452,336
        (85,637
) 
    
366,699
  
     Total current assets
    
34,072,542
       (507,764
) 
    
33,564,778
  
  
                        
Long-term notes receivable, less current portion
    
133,181
        -      
133,181
  
Investment in Las Vegas Premium Gold Products
    
250,000
      
-
      
250,000
  
Property and equipment, net of accumulated depreciation and amortization
    
4,718,625
        (1,362,979
) 
    
3,355,646
  
Goodwill
    
674,539
        -      
674,539
  
Patents and trademarks, net of amortization
    
5,014,719
        (5,014,719
) 
    
-
  
Other assets
    
145,414
        (101,486
) 
    
43,928
  
       Total assets
  
$
45,009,020
     $   (6,986,948
) 
  
$
38,022,072
  
Liabilities and Stockholders' Equity
                        
Current liabilities:
                        
   Accounts payable and accrued expenses
  
$
7,023,247
     $ 
(2,243,796
) 
  
$
4,779,451
  
   Margin loans from financial institutions
    
1,319,112
       -      
1,319,112
  
   Short-term notes payable
    
1,917,015
        (310,999
) 
    
1,606,016
  
   Property dividend payable     654,364       (654,364
) 
      -  
   Current installments of long-term capital lease obligations
    
67,762
      
 (67,762
 )     
-
  
   Current installments of long-term debt
    
3,016,638
        (60,530
) 
    
2,956,108
  
     Total current liabilities
    
13,998,138
        (3,337,451
) 
    
10,660,687
  
                         
Long-term debt, less current installments
    
9,360,247
        (2,615,379
) 
    
6,744,868
  
Long-term capital lease obligations, less current installments
    
242,748
      
 (242,748
 )    
-
  
Deferred tax liability
    
156,535
        (156,535
) 
    
-
  
Minority interest
    
2,217,756
        -      
2,217,756
  
     Total liabilities
    
25,975,424
        (6,352,113
) 
    
19,623,311
  
                         
Commitments and contingencies       -      
-
        -  
                         
Stockholders' equity:
                        
   Preferred stock, $0.001 par value, 1,000,000 authorized: none issued
      -      
-
        -  
   Common stock, $0.001 par value, 50,000,000 authorized: 
                        
     8,702,031 and 7,107,842 shares issued, respectively
                        
     8,651,697 and 7,070,480 shares outstanding, respectively
    
8,702
        -      
8,702
  
   Additional paid-in capital - common stock
    
47,091,679
        (13,902,267
) 
    
33,189,412
  
   Accumulated deficit
    
(27,852,097
) 
      13,267,432      
(14,584,665
) 
   Less treasury stock, at cost
                       
         50,334 and 37,362 shares, respectively
    
(214,688
) 
      -      
(214,688
) 
     Total stockholders' equity
    
19,033,596
        (634,835
) 
    
18,398,761
  
     Total liabilities and stockholders' equity
  
 $
45,009,020
     $   (6,986,948
) 
  
$
38,022,072
  
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements
  
Pro Forma Consolidated Statement of Operations
(Unaudited)
   
  
  
Nine Months Ended
September 30, 2008
(As Reported)
  
Elimination of Hammonds Industries, Inc.
    
Pro Forma without Hammonds Industries, Inc.
  
                 
Revenues
 $ 
28,844,385
   $ (6,428,157 )    $
22,416,228
  
Costs and expenses:
                    
   Cost of sales
  
 19,093,309
     (5,149,527 )     
13,943,782
  
   Selling, general and administrative
  
 11,759,281
     (3,487,746 )     
8,271,535
  
     Total operating expenses
  
 30,852,590
     (8,637,273 )     
22,215,317
  
                     
Operating profit (loss)
  
 (2,008,205
 )   2,209,116       200,911  
  
                    
Other income (expenses):
                    
   Interest and dividend income
  
 464,732
     59,910      
524,642
  
   Gain on property dividend distribution  
 2,945,133
     1,980,498       4,925,631  
   Delta lawsuit settlement  
  (1,450,000
 )   -       (1,450,000 ) 
   Realized gains (losses) on investments
  
 (20,447
 )    100,000      
79,553
  
   Unrealized gains (losses) on trading securities
  
 (4,160,535
 )    (71,686 )      (4,232,221 ) 
   Interest expense
  
 (780,298
 )    165,033       (615,265 )
   Texas Emissions Reduction Plan Grant
  
 57,589
     -       57,589  
   Other income (expense)
  
 49,616
     29,571      
79,187
  
     Total other income (expenses)
  
 (2,894,210
 )    2,263,326      
(630,884
 ) 
  
                    
     Net loss before income tax
  
 (4,902,415
 )    4,472,442      
(429,973
 ) 
        Income tax expense (benefit)
  
 (50,476
 )   19,987       (30,489 ) 
                     
     Net loss before minority interest and discontinued operations
  
 (4,851,939
 )    4,452,455      
(399,484
 ) 
        Minority interest
  
 (189,909
 )    -       (189,909 )
     Net loss from continuing operations
  
 (5,041,848
 )   4,452,455       (589,393 )
        Discontinued operations  
-
     11,298,515      
 11,298,515
  
     Net income (loss)  
(5,041,848
 )     15,750,970        10,709,122  
                     
     Preferred dividends of subsidiary  
 (165,000
 )     165,000       -  
     Net loss applicable to common shareholders
 $ 
(5,206,848
 ) $ 15,915,970     $ 10,709,122  
  
                    
Net income (loss) per common share - basic and diluted:                    
  Continuing operations $ 
(0.69
 )          $   (0.08 ) 
  Discontinued operations  
-
             1.50  
    Total
 $ 
(0.69
)
         $ 1.42  
  
                    
Weighted average common shares - basic and diluted
  
 7,546,963
            
7,546,963
  
   
The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
  
AMERICAN INTERNATIONAL INDUSTRIES, INC.
Notes to Unaudited Pro Forma Consolidated Financial Statements
 
Note 1 - Deconsolidation of Hammonds Industries, Inc.
 
These pro forma financial statements have been prepared to give effect to the deconsolidation of Hammonds Industries, Inc. ("Hammonds") from American International Industries, Inc. ("American") that occurred on December 31, 2008.
 
Note 2 - Pro forma adjustments
 
The pro forma Balance Sheet as of September 30, 2008, contains certain adjustments.  In the column labeled "Elimination of Hammonds Industries, Inc.", adjustments are included for all of Hammonds' assets, liabilities, and equity.  Additionally, adjustments are included to reflect the effect of the special dividend distribution of Hammonds’ common stock to American shareholders and the reclassification of American's remaining investment in Hammonds' common stock to trading securities of approximately 6.7 million shares at $0.30, based upon the closing market price on September 30, 2008.
 
The pro forma adjustments to the Statement of Operations for the nine months ended September 30, 2008, include the elimination of all income and expense related to the operations of Hammonds.  The row labeled "Discontinued operations" includes the gain on deconsolidation of $13,935,472, offset by Hammonds' net loss of $2,636,957 for the nine months ended September 30, 2008.