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.
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| 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 | |
| | | 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 | |
| $ | (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.
