American International Industries (AMIN) 10-Q 2009 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-Q

_________________________

ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

OR

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File No.: 1-33640

AMERICAN INTERNATIONAL INDUSTRIES, INC.

(Exact Name Of Registrant As Specified In Its Charter)

Nevada	88-0326480
(State of Incorporation)	(I.R.S. Employer Identification No.)
601 Cien Street, Suite 235, Kemah, TX	77565-3077
(Address of Principal Executive Offices)	(ZIP Code)

 Registrant's Telephone Number, Including Area Code: (281) 334-9479

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer, "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At May 8, 2009, the Registrant had 8,503,615 shares of common stock outstanding.

TABLE OF CONTENTS

Item	Description	Page
	PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS	27
ITEM 4.	CONTROLS AND PROCEDURES	27
	PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	28
ITEM 1A.	RISK FACTORS	28
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	28
ITEM 3.	DEFAULT UPON SENIOR SECURITIES	28
ITEM 4.	SUBMISSION OF MATERS TO A VOTE OF SECURITY HOLDERS	28
ITEM 5.	OTHER INFORMATION	28
ITEM 6.	EXHIBITS	28

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Financial Statements
Unaudited Consolidated Balance Sheets - March 31, 2009 and December 31, 2008	4
Unaudited Consolidated Statements of Operations - Three Months Ended March 31, 2009 and 2008	5
Unaudited Consolidated Statements of Cash Flows - Three Months Ended March 31, 2009 and 2008	6
Notes to Unaudited Consolidated Financial Statements	8

3

AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)
	March 31, 2009			December 31, 2008
Assets
Current assets:
Cash and cash equivalents	$	1,912,918		$	3,114,575
Certificate of deposit		4,015,000			4,315,000
Trading securities		636,872			718,442
Accounts receivable, less allowance for doubtful accounts
of $138,217		4,603,318			4,956,941
Current portion of notes receivable		4,667,737			4,392,211
Accounts and notes receivable from related parties		339,806			98,606
Inventories		4,809,556			3,889,052
Real estate held for sale		2,449,066			2,449,066
Deposits for pipe inventory purchases		1,569,644			2,221,932
Prepaid expenses and other current assets		156,036			205,096
Total current assets		25,159,953			26,360,921
Long-term notes receivable, less current portion		86,690			95,522
Property and equipment, net of accumulated depreciation and amortization		7,700,201			7,769,833
Goodwill		674,539			674,539
Intangible assets, net of amortization		691,231			717,817
Other assets		169,550			359,312
Total assets	$	34,482,164		$	35,977,944
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	2,539,831		$	2,395,721
Short-term notes payable		131,287			1,213,332
Current installments of long-term capital lease obligations		74,138			71,680
Current installments of long-term debt		729,022			4,484,161
Total current liabilities		3,474,278			8,164,894
Long-term debt, less current installments		13,210,772			9,653,598
Long-term capital lease obligations, less current installments		147,319			166,762
Minority interest		1,935,804			2,085,573
Total liabilities		18,768,173			20,070,827
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:
8,763,771 and 8,738,771 shares issued, respectively
8,668,429 and 8,676,461 shares outstanding, respectively		8,668			8,676
Additional paid-in capital		33,105,008			33,063,750
Accumulated deficit		(17,104,897	)		(16,911,758	)
Less treasury stock, at cost
95,342 and 62,310 shares, respectively		(294,788	)		(253,551	)
Total stockholders' equity		15,713,991			15,907,117
Total liabilities and stockholders' equity	$	34,482,164		$	35,977,944
The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,
		2009			2008
Revenues		$	6,195,014		$	3,510,905
Costs and expenses:
Cost of sales			3,994,002			2,124,749
Selling, general and administrative			2,653,086			2,813,000
Total operating expenses			6,647,088			4,937,749
Operating loss			(452,074	)		(1,426,844	)
Other income (expenses):
Interest and dividend income			131,438			176,450
Realized gains (losses) on the sale of trading securities			(82,941	)		44,573
Unrealized gains (losses) on trading securities			96,815			(1,376,539	)
Interest expense			(218,608	)		(113,030	)
Texas Emissions Reduction Plan Grant			-			57,589
Other income			195,146			21,438
Total other income (expense)			121,850			(1,189,519	)
Net loss before income tax			(330,224	)		(2,616,363	)
Income tax expense			12,684			14,132
Net loss from operations before minority interest			(342,908	)		(2,630,495	)
Minority interest			149,769			248,242
Net loss from continuing operations		$	(193,139	)	$	(2,382,253	)
Net loss from discontinued operations, net of taxes			-			(798,559	)
Net loss		$	(193,139	)	$	(3,180,812	)
Net loss per common share - basic and diluted:
Continuing operations		$	(0.02	)	$	(0.33	)
Discontinued operations		$	-		$	(0.11	)
Total		$	(0.02	)	$	(0.45	)
Weighted average common shares - basic and diluted			8,689,074			7,112,258

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

AMERICAN INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
		2009			2008
Cash flows from operating activities:
Net loss		$	(193,139	)	$	(3,180,812	)
Net loss from discontinued operations			-			(798,559	)
Net loss from continuing operations			(193,139	)		(2,382,253	)
Adjustments to reconcile net loss from continuing operations to net cash provided (used in) operating activities from continuing operations:
Depreciation and amortization			293,557			115,722
Share-based compensation			41,250			139,833
Realized (gains) losses on the sale of trading securities			82,941			(44,573	)
Unrealized (gains) losses on trading securities			(96,815	)		1,376,539
Texas Emissions Reduction Plan Grant			-			(57,589	)
Minority interest in net loss of consolidated subsidiary			(149,769	)		(483,442	)
Change in operating assets and liabilities:
Accounts receivable			353,624			1,288,312
Trading securities			95,443			(225,479	)
Inventories			(268,216	)		(672,872	)
Deposits for pipe inventory purchases			-			-
Prepaid expenses and other current assets			49,060			98,893
Other assets			17,970			9,861
Accounts payable and accrued expenses			144,109			(61,340	)
Net cash provided by (used in) operating activities from continuing operations			370,015			(898,388	)
Cash flows from investing activities from continuing operations:
Purchase of property and equipment			(25,546	)		(61,025	)
Proceeds from sale of drilling rigs			-			200,000
Investment in rigs held for sale			-			(14,123	)
Redemption of certificate of deposit			1,000,000			1,500,000
Investment in certificate of deposit			(700,000	)		(244,800	)
Purchase of note receivable from bank			(300,000	)		-
Proceeds from notes receivable			33,306			61,815
Loans to related parties			(241,200	)		(3,277	)
Net cash provided by (used in) investing activities from continuing operations			(233,440	)		1,438,590
Cash flows from financing activities from continuing operations:
Principal payments under capital lease obligations			(16,985	)		-
Payments on margin loans			-			(149,836	)
Net borrowings under lines of credit agreements and short-term notes			3,112			598,000
Principal payments on debt			(1,283,122	)		(130,530	)
Payments for acquisition of treasury stock			(41,237	)		(19,790	)
Net cash provided by (used in) financing activities from continuing operations			(1,338,232	)		297,844

6

	Three Months Ended March 31,
		2009			2008
Net increase (decrease) in cash and cash equivalents from continuing operations		$	(1,201,657	)	$	838,046
Cash and cash equivalents at beginning of period from continuing operations			3,114,575			2,293,795
Cash and cash equivalents at end of period from continuing operations		$	1,912,918		$	3,131,841
Discontinued operations:
Net cash used in operating activities		$	-		$	(1,076,236	)
Net cash used in investing activities			-			(137,221	)
Net cash used in financing activities			-			(32,124	)
Net increase in cash and cash equivalents from discontinued operations			-			(1,245,581	)
Cash and cash equivalents at beginning of period from discontinued operations			-			1,597,361
Cash and cash equivalents at end of period from discontinued operations		$	-		$	351,780
Supplemental schedule of cash flow information:
Interest paid		$	185,076		$	122,336
Taxes paid		$	-		$	-
The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

American International Industries, Inc.

Notes to Unaudited Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements of American International Industries, Inc. (“American”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in American's latest Annual Report filed with the SEC on Form 10-K for the year ended December 31, 2008. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted.

Organization, Ownership and Business

American International Industries, Inc. ("American"), a Nevada corporation, operates as a diversified holding company with a number of wholly-owned subsidiaries and one majority-owned subsidiary. American is a diversified corporation with interests in industrial/commercial companies and an oil and gas service business. American's business strategy is to acquire controlling equity interests in businesses that it considers undervalued. American's management takes an active role in providing its subsidiaries with access to capital, leveraging synergies and providing management expertise in order to improve its subsidiaries' growth.

Principles of Consolidation

The consolidated financial statements include the accounts of American and its wholly-owned subsidiaries, Northeastern Plastics, Inc. and Shumate Energy Technologies, Inc., and its majority owned subsidiary, Delta Seaboard Well Service, Inc.  All significant intercompany transactions and balances have been eliminated in consolidation.

Certain reclassifications have been made to amounts in prior periods to conform with the current period presentation.  All reclassifications have been applied consistently to the periods presented.

Revenue Recognition

Revenue is recognized when the earning process is completed, the risks and rewards of ownership have transferred to the customer, which is generally the same day as delivery or shipment of the product, the price to the buyer is fixed or determinable, and collection is reasonably assured. Delta receives purchase orders for all of its service work and related pipe sales. All sales are recorded when the work is completed or when the pipe is sold.  SET receives purchase orders for machining of oil field drilling parts, components and tools.  Customers have the right to inspection and acceptance for generally up to five days after taking delivery.  Returns are not accepted due to the custom specifications of each product, but rework on items is necessary if the product was not within the original order specifications.  Customer requests for rework and customer rejection of shipments has been historically low.  NPI has purchase orders for all sales, of which many of the items are requested to be container shipped and shipped directly to the end users. All sales are recorded when the inventory items are shipped. Taxes assessed by a governmental authority that are incurred as a result of a revenue transaction are not included in revenues. American has no significant sales returns or allowances.

Net Loss Per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of shares outstanding during a period. Diluted net loss per common share is computed by dividing the net loss, adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the three months ended March 31, 2009 and 2008, potential dilutive securities that had an anti-dilutive effect were not included in the calculation of diluted net loss per common share. These securities include options to purchase shares of common stock that were not "in the money".

Management's Estimates and Assumptions

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

8

Fair Value of Financial Instruments

Effective January 1, 2008, American adopted SFAS 157 for financial assets and liabilities. SFAS 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements by establishing a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under SFAS 157 are described below:

Basis of Fair Value Measurement

Level 1	Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2	Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3	Unobservable inputs reflecting American's own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

American believes that the fair value of its financial instruments comprising cash, certificates of deposit, accounts receivable, notes receivable, accounts payable, and notes payable approximate their carrying amounts.  The interest rates payable by American on its notes payable approximate market rates.  The fair values of American's Level 1 financial assets, trading securities that primarily include shares of common stock in various companies, are based on quoted market prices of the identical underlying security.  As of March 31, 2009, American did not have any significant Level 2 or 3 financial assets or liabilities.  The following table provides fair value measurement information for American's trading securities:

	As of March 31, 2009
					Fair Value Measurements Using:
	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Trading Securities	$	636,872	$	636,872	$	636,872	$	-	$	-

Recent Accounting Pronouncements

In addition to the pronouncements noted above, there were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our consolidated financial position, operations or cash flows.

Note 2 - Trading Securities

Investments in marketable securities primarily include shares of common stock in various companies that are bought and held principally for the purpose of selling them in the near term with the objective of generating profits on short-term differences in price. These investments are classified as trading securities and, accordingly, any unrealized changes in market values are recognized in the consolidated statements of operations.  For the three months ended March 31, 2009 and 2008, American had unrealized trading gains of $96,815 and losses of $1,376,539, respectively, related to securities held on those dates.  American recorded realized losses of $82,941 for the three months ended March 31, 2009 and realized gains of $44,573 on the sales of trading securities and for the three months ended March 31, 2008.

On November 27, 2007, American acquired 1,000,000 restricted shares, or approximately 9% of Rubicon Financial Incorporated’s (OTCBB: RBCF.OB) common stock for a $1,000,000 cash payment and the issuance of 200,000 restricted shares of American's common stock, valued at $4.90 per common share based upon the closing market price on that date, for a total purchase price of $1,980,000. The closing market price on the date of this transaction for RBCF was $2.87 per common share. During 2008, American purchased an additional 38,900 shares at an average purchase price of $0.17 per share. During the three months ended March 31, 2009, American purchased an additional 28,000 shares at an average purchase price of $0.12 per share.  At March 31, 2009, our investment in the 1,066,900 shares of RBCF common stock is classified as trading securities on the balance sheet and was valued at $277,394, or $0.26 per share, based upon the closing market price on that date. At December 31, 2008, our investment in the 1,038,900 shares of RBCF common stock is classified as trading securities on the balance sheet and was valued at $311,670, or $0.30 per share, based upon the closing market price on that date. Rubicon Financial Incorporated is a development stage company, operating as a full service insurance agency offering personal and commercial lines, health, and life insurance products to individuals and companies in California.

9

Equity markets can experience significant volatility and therefore are subject to changes in value. Based upon the current volatile nature of the U.S. securities markets and the decline in the U.S. economy, we believe that it is possible, that the market values of our marketable equity securities could decline in the near term. We have a policy in place to review our equity holdings on a regular basis. Our policy includes, but is not limited to, reviewing each company’s cash position, earnings/revenue outlook, stock price performance, liquidity and management/ownership. American seeks to manage exposure to adverse equity returns in the future by pursuing to increase the diversity our securities portfolios.

Note 3 - Acquisition of the assets of Shumate Machine Works by Shumate Energy Technologies

On October 8, 2008, a subsidiary of American completed the purchase of 100% of the assets and assumed certain liabilities of Shumate Machine Works Corporation, a subsidiary of Shumate Industries, Inc. ("SHMT").  The terms of the agreement provided for a purchase price of $5.0 million funded by the simultaneous closing of a $5.0 million term note by Shumate Machine Works and the receipt of SHMT common stock with a value equivalent to any negative working capital at the closing date of the transaction.  In connection with the negative working capital provision of the agreement, American received 1,401,170 restricted shares of SHMT common stock valued at $0.30 per share for a total value of $420,351.  These shares represented approximately 6.4% of SHMT’s outstanding shares as of October 8, 2008.   The assets are now owned by a wholly-owned American subsidiary, Shumate Energy Technologies, Inc.

As required by SFAS No. 141, American's subsidiary has recorded the acquisition using the purchase method of accounting with the purchase price allocated to the acquired assets and liabilities based on their respective estimated fair values at the acquisition date. The purchase price of $5,000,000 has been allocated at follows:

Current assets	$	1,066,864
Property and equipment, net		4,472,130
Intangible assets		744,403
Trading securities - Restricted common shares of Shumate Industries, Inc. received for negative working capital assumed		420,351
Total assets acquired		6,703,748
Current liabilities		(1,487,215	)
Equipment notes payable		(216,533	)
Total liabilities acquired		(1,703,748	)
Net assets acquired	$	5,000,000

The  $744,403 of acquired intangible assets includes $729,000 assigned to CNC programs and $15,403 assigned to the acquired name and logo.  These intangible assets have a weighted average useful life of 7 years.

Revenues and expenses of Shumate Energy Technologies, Inc. are included in American's statement of operations from October 8, 2008 through March 31, 2009.

Note 4 - - Inventory and Deposits for Pipe Inventory Purchases

Inventories consisted of the following:

	March 31, 2009			December 31, 2008
Work in process	$	623,130		$	549,954
Finished goods		4,281,659			3,434,361
Less reserve		(95,233	)		(95,263	)
	$	4,809,556		$	3,889,052

During the year ended December 31, 2008, American entered into various agreements to purchase pipe inventory from vendors.  At December 31, 2008 and March 31, 2009, American had cash deposits of $2,221,932 and $1,569,644, respectively, for inventory purchases under these agreements that had not been received.

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Note 5 - - Real Estate Transactions

During the fourth quarter of 2008, American received a 1.705 acre tract of land in Galveston County appraised at $540,000 as a guarantor's fee.  In connection with this fee, American has pledged $1,750,000 in certificates of deposit for a $4,000,000 loan to Dawn Condominiums L.P. at Texas Community Bank.  As the principal of the loan is reduced, the bank will release portions of the pledged certificates of deposit until the loan is paid in full.

During 2007, American purchased for investment a 174 acre tract of land in Waller County, Texas for $1,684,066. This property is listed for sale with a real estate broker.  American continues to own 287 undeveloped acres of waterfront property on Dickinson Bayou and Galveston Bay in Galveston County, Texas. American is carrying this property on the balance sheet at its historical book value of $225,000.  American has engaged an independent broker on an exclusive basis to sell the property.  These properties are not going to be developed by nor are they being held as inventory by American.

Note 6 - - Long-term Notes Receivable

Long-term notes receivable consists of the following:

	March 31, 2009			December 31, 2008
Net note receivable from sale of real estate, principal balance due on or before July 30, 2009, secured by property lien (a)	$	3,020,044		$	3,020,044
Unsecured note receivable for sale of former subsidiary, Marald, Inc., principal and interest due monthly through June 5, 2012		121,111			126,617
Unsecured note receivable for sale of former subsidiary, Marald, Inc., principal and interest due monthly through July 2012 (b)		200,000			200,000
Unsecured note receivable for sale of drilling rig, principal and interest due monthly through December 31, 2009		86,209			114,009
Unsecured note receivable, principal balance due on April 30, 2008, interest at 6% through maturity and at 10% thereafter (c)		552,063			552,063
Unsecured note receivable, principal balance due on December 31, 2008, interest at 10% through maturity and at 15% thereafter (c)		250,000			250,000
Note secured by property and shares of stock, interest due monthly at 18%, principal payment due on or before May 9, 2009		225,000			225,000
Unsecured note receivable purchased from Texas Community Bank, interest at 8% due monthly, principal due January 2009 (d)		300,000			-
Notes receivable		4,754,427			4,487,733
Less current portion		(4,667,737	)		(4,392,211	)
Notes receivable, less current portion	$	86,690		$	95,522

(a) Net note receivable from sale of real estate, principal payment due on or before July 30, 2009.  On July 30, 2004, American sold real estate to an unaffiliated third party for a cash payment equal to the first lien and $250,000 owed to Orion HealthCorp, Inc. and a note receivable in the amount of $5,000,000 secured by a lien on the real estate. The note is being amortized over a 20 year period, with a balloon payment at the end of five years in the amount of $4,012,084, and bears interest of 3% per annum. The note was discounted by $1.6 million to the present value of the lowest level of annual payments required by the sales contract, or $3.4 million, over the maximum period specified by SFAS No. 66.  Principal payments have reduced the note balance to $3.0 million as of March 31, 2009.  American recorded a gain, using the reduced profit method for recording the sale of land, in the amount of $1,815,070 on the sale of this real estate based on discounting the $5,000,000 note at a 7.6% interest rate (approximating the market rate for real estate transactions by the buyer).  The borrower is in the process of refinancing this note with a new lender.  The property securing this note was appraised for $9,175,000 by an independent appraiser.

11

(b) Sale of former subsidiary, Marald, Inc., principal and interest due monthly through July 2012.  The original note was for $300,000 and was discounted to $200,000 for the receipt of full payment on or before October 25, 2007.  New payment terms are being negotiated for this note receivable.  Since the loan is reflected at a $100,000 discount to the original note face value and payments are currently being made on the other note receivable with Marald in accordance with note terms, American believes payment terms will be successfully negotiated and no further discounting of the loan was deemed necessary as of March 31, 2009.

(c) Unsecured notes receivable due April 30 and December 31, 2008.  These delinquent notes were due from Hammonds Industries, Inc.  Since the assets of the Hammonds' companies were sold on April 16, 2009 (see note 20), several alternatives are being pursued for the use of the public company.  The adoption of any of these alternatives is contingent upon the new entity assuming the public company's liabilities.  Management has assessed these notes for impairment and feels that collectability is reasonably possible based on the alternatives being pursued for the public company.

(d) Note purchased from Texas Community Bank with a face amount of $300,000.  This delinquent note was purchased on March 31, 2009 and new payment terms are being negotiated for this note receivable with the debtors, Las Vegas Premium Gold.  This note was purchased as an investment to receive the interest income from the note.  Management has assessed this note for impairment and feels that collectability is reasonably possible based on the personal guarantees of the principals.

Interest income on notes receivable is recognized principally by the simple interest method.  During the three months ended March 31, 2009 and 2008, American recognized interest income of $72,812 and $81,357, respectively.

Note 7 - - Property and Equipment

Major classes of property and equipment together with their estimated useful lives, consisted of the following:

	Years	March 31, 2009			December 31, 2008
Land		$	892,945		$	892,945
Building and improvements	20		943,200			933,200
Machinery and equipment	7-15		7,570,619			7,386,789
Office equipment and furniture	7		388,402			384,893
Automobiles	5		768,151			768,151
			10,563,317			10,365,978
Less accumulated depreciation and amortization			(2,863,116	)		(2,596,145	)
Net property and equipment		$	7,700,201		$	7,769,833

During the three months ended March 31, 2009, $171,793 of equipment that was classified as other assets as of December 31, 2008, was placed in service and reclassified to property and equipment.

Depreciation expense for the three months ended March 31, 2009 and 2008 was $266,971 and $115,722, respectively.

SET has entered into a capital lease agreement for the acquisition of machinery and equipment.  The asset acquired under such financing arrangement included in property and equipment is as follows:

	March 31, 2009
Machinery and equipment	$	301,000
Less accumulated depreciation and amortization		(15,050	)
Net property and equipment	$	285,950

Principal repayment provisions of this long-term capital lease are as follows at March 31, 2009:

2009	$	54,695
2010		81,758
2011		85,004
Total	$	221,457

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Note 8 - - Intangible Assets

Intangible assets at March 31, 2009 consisted of the following:

	Gross Carrying Amount		Accumulated Amortization			Intangibles, net	Average Weighted Lives
Goodwill					$	674,539	N/A
CNC Programs	$	729,000	$	52,072	$	676,928	7 years
Name and logo		15,403		1,100		14,303	7 years
Intangible assets	$	744,403	$	53,172	$	691,231	7 years

Intangible assets at December 31, 2008 consisted of the following:

	Gross Carrying Amount		Accumulated Amortization			Intangibles, net	Average Weighted Lives
Goodwill					$	674,539	N/A
CNC Programs	$	729,000	$	26,036	$	702,964	7 years
Name and logo		15,403		550		14,853	7 years
Intangible assets	$	744,403	$	26,586	$	717,817	7 years

Amortization expense for the three months ended March 31, 2009 and 2008 was $26,586 and $-0-, respectively.

Note 9 - - Short-term Notes Payable

	March 31, 2009		December 31, 2008
Delta lawsuit settlement with no interest,  principal due in monthly payments of $25,000 through August 1, 2009	$	100,000	$	175,000
Insurance note payable with interest at 5.24%, principal and interest due in monthly payments of $31,288 through May 1, 2009		31,287		125,150
Note payable with interest at 6%, principal and interest due monthly, with a balloon payment due April 2009		-		913,182
	$	131,287	$	1,213,332

Each of American's subsidiaries that have outstanding notes payable has secured such notes by that subsidiary’s inventory, accounts receivable, property and equipment and guarantees from American.

At March 31, 2009 and December 31, 2008, the average annual interest rates of our short-term borrowings were approximately 5.97% and 5.91%, respectively.

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Note 10 - Long-term Debt

Long-term debt consisted of the following:

	March 31, 2009			December 31, 2008
Note payable to a bank, due in monthly installments of interest only of $25,000 for the first three months, principal and interest of $44,000 due in monthly installments thereafter, interest at the greater of prime plus 1% or 6%, but no greater than 7%, with a principal balance due on September 30, 2013, secured by the assets of Shumate Energy Technologies, Inc.	$	4,961,931		$	5,000,000
Note payable to a bank, interest due quarterly at prime plus 1%, principal balance due March 2014, secured by real property		1,000,000			1,000,000
Note payable to a bank, which allows Delta to borrow up to $2,000,000, due in monthly payments of interest only, with interest at prime floating rate, with the principal balance due in April 2010, secured by assets of Delta Seaboard Well Service, Inc. (a)		1,225,066			1,379,106
Note payable to a bank, due in monthly installments of interest only, principal balance due June 13, 2010 with interest at 1% above the prime rate secured by real property		943,500			943,500
Note payable to a bank, due in quarterly installments of interest only at 7%, with a principal balance due on October 8, 2010, secured by a certificate of deposit		500,000			500,000
Note payable to a bank, due in monthly installments of interest only at the greater of prime plus 1% or 6%, but no greater than 7%, with a principal balance due on September 30, 2010, secured by the assets of Shumate Energy Technologies, Inc.		750,239			625,087
Note payable to a bank, due in monthly installments of $6,170, including interest at 6.6% through May 2018, secured by real property		504,084			514,165
Note payable to a bank, which allows Northeastern Plastics to borrow up to $5,000,000, interest due monthly at the prime rate, principal balance due July 31, 2010, secured by assets of Northeastern Plastics, Inc.		1,151,000			1,119,000
Note payable to a bank, due in quarterly installments of interest only at 7.5%, with a principal balance due February 2009, secured by a certificate of deposit		-			1,000,000
Note payable to a bank, due in quarterly payments of interest only, with interest at 8.0%, with a principal balance due on May 2011, secured by real property (a)		1,740,000			1,740,000
Note payable due in monthly payments of $19,373, including interest at 6%, through March 2013, secured by assets of Delta Seaboard Well Service, Inc. (a)		868,566			-
Note payable to a bank, due in monthly payments of $6,120, including interest at 8.25%, through August 9, 2012, secured by assets of Delta Seaboard Well Service, Inc.		213,086			226,929
Other secured notes with various terms		82,322			89,972
		13,939,794			14,137,759
Less current portion		(729,022	)		(4,484,161	)
	$	13,210,772		$	9,653,598

(a)  During the three months ended March 31, 2009, the due dates for these notes were extended and the balances have been reclassified to long-term.

14

Each of American's subsidiaries that have outstanding notes payable has secured such notes by that subsidiary’s inventory, accounts receivable, property and equipment and guarantees from American.

Principal repayment provisions of long-term debt are as follows at March 31, 2009:

2009	$	607,410
2010		5,146,522
2011		2,173,269
2012		597,086
2013		4,138,132
Thereafter		1,277,375
Total	$	13,939,794

Note 11 - Capital Stock and Stock Options

American is authorized to issue up to 1,000,000 shares of Preferred Stock, $0.001 par value per share, of which no shares are presently outstanding. The Preferred Stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors, without further action by stockholders, and may include voting rights (including the right to vote as a series on particular matters), preferences as to dividends and liquidation, conversion, redemption rights and sinking fund provisions.

American is authorized to issue up to 50,000,000 shares of Common Stock, $0.001 par value per share, of which 1,036,800 are reserved for issuance pursuant to the exercise of options pursuant to an employment agreement with American's Chairman and CEO.

On March 30, 2007, American issued 144,000 stock options to American's Chairman and CEO, with an exercise price of $7.00 per share, expiring in 2 years.  In connection with American's 20% stock dividends to all shareholders on September 19, 2007 and July 16, 2008, the terms of these options were adjusted to reflect the dividends, resulting in the option being exercisable to buy 207,360 shares for $4.86 per share.  These options expired worthless on March 30, 2009.

On March 30, 2008, American issued 172,800 stock options to American's Chairman and CEO, with an exercise price of $5.83 per share, expiring in 2 years, valued at of $88,063 and recorded as share-based compensation.  In connection with American's 20% stock dividend to all shareholders on July 16, 2008, the terms of these options were adjusted to reflect the dividend, resulting in the option being exercisable to buy 207,360 shares for $4.86 per share.

American estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2008 as follows:

	March 30, 2008
Dividend yield		0.00	%
Expected volatility		38.64	%
Risk free interest		2.5	%
Expected lives	2 years

A summary of the status of American's stock options to employees as of March 31, 2009 is presented below:

	Shares			Weighted Average Exercise Price March 31, 2009
Outstanding at beginning of period		414,720		$	4.86
Granted		-			N/A
Exercised		-			N/A
Canceled / Expired		(207,360	)		N/A
Outstanding and exercisable at end of period		207,360		$	4.86
Weighted average fair value of options granted during the period		207,360		$	4.86

15

The following table summarizes information about fixed stock options to employees outstanding at March 31, 2009:

Exercise Price		Number Outstanding and Exercisable at March 31, 2009
$	4.86		207,360

Stock-based compensation consists of the following:

	March 31, 2009		March 31, 2008
Common shares issued for services	$	41,250	$	51,770
Stock options issued for services		-		88,063
Stock-based compensation	$	41,250	$	139,833

Note 12 - Concentration of Credit Risk

American maintains its cash and certificates of deposit in commercial accounts at major financial institutions. Although the financial institutions are considered creditworthy, at March 31, 2009, American's cash and certificates of deposit balances held in banks exceeded the limit covered by the Federal Deposit Insurance Corporation by approximately $4.9 million. The terms of these deposits are on demand to minimize risk. American has not incurred losses related to these deposits.

Trade accounts receivable subject American to the potential for credit risk with customers in the retail and distribution sectors. To reduce credit risk, American performs ongoing evaluations of its customer’s financial condition but generally does not require collateral. As of, and during, the three months ended March 31, 2009, American had one customer that accounted for 15% of trade accounts receivable and 15% of revenues on a consolidated basis.  Additionally, American had two customers that accounted for 13% and 14% of revenues on a consolidated basis.

Note 13 - Texas Emissions Reduction Plan Grant

Delta Seaboard Well Service, Inc. is the recipient of a Texas Emissions Reduction Plan ("TERP") grant from the Texas Commission on Environmental Quality in the amount of $1,157,273. TERP is a comprehensive set of incentive programs aimed at improving air quality in Texas. Through this grant, Delta’s rig engines are being replaced with engines certified to emit 25% less nitrogen oxide (“NOx”) than required under the current federal standard for the horsepower of the engines. The old engines must be destroyed or rendered permanently inoperable.

International Accounting Standard No. 20 (IAS 20): Accounting for Government Grants and Disclosure of Government Assistance provides guidance on recognizing, measuring and disclosing government grants, which requires that grants related to assets be presented in the balance sheet either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset. However, IAS 20 is under review because it is inconsistent with the "Framework" for International Accounting Standards. The "Framework" states that "Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets . . ., other than those relating to contributions from equity participants." The International Accounting Standards Board (IASB) noted that recognizing an amount in the balance sheet as a deferred credit is inconsistent with the "Framework" in that the entity has no liability. The IASB has decided to replace the guidance in IAS 20 for accounting for government grants with the guidance in IAS 41: Agriculture. Also, the IASB noted that SFAS No. 116: Accounting for Contributions Received and Contributions Made, while exempting government grants to business entities from its scope, provides an accounting model that can be applied to government grants and that is consistent with the "Framework." In both IAS 41 and SFAS No. 116, the guidance calls for establishing an asset and recording the grant (contribution) as income. American applied this guidance and during the three months ended March 31, 2008, Delta increased machinery and equipment and recognized other income for this grant in the amount of $57,589.

TERP grant recipients are required to monitor and track the total NOx emission reductions and cost-effectiveness. The grant contract includes provisions for the return of a prorated share of the grant if the NOx emission reductions originally projected are not achieved. American has not recorded any liabilities in connection with this matter because management has determined that return of any grant receipts is not likely.  Based on the advice of the State of Texas authorities who administer the grant, the taxability of this grant has not been determined and the advice of the Internal Revenue Service has been inconsistent.  American is still determining the effect this will have, but believes it will not materially affect American because of the tax loss carryforwards explained in Note 15 below.

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Note 14 - Related Party Transactions

At December 31, 2008, American had a note receivable from the CEO in the amount of $105,000.  During the three months ended March 31, 2009, American advanced an additional $227,000, resulting in a total receivable from the CEO of $332,000 at March 31, 2009.

Note 15 - Income Taxes

The provision for income taxes consists of the following:

	March 31, 2009
Current taxes	$	-
Deferred tax benefit		(1,395,086	)
Benefits of operating loss carryforwards		1,395,086
Current Federal Taxes		-
Texas Margin Tax estimate - 2009		12,684
Income tax expense	$	12,684

The tax provision differs from amounts that would be calculated by applying federal statutory rates to income before income taxes primarily because:

- American consolidates subsidiaries for financial statements which cannot be consolidated for income tax purposes; therefore, some subsidiaries may pay federal income tax despite the accumulated net operating losses of American as a whole;

- no tax benefits have been recorded for nondeductible expenses totaling $128,439 and

- the valuation allowance for deferred tax assets increased by $2,662,555.

The following table sets forth a reconciliation of statutory income taxes:

	March 31, 2009			March 31, 2008
Net loss before taxes	$	(330,224	)	$	(2,616,363	)
Income tax benefit computed at statutory rate	$	(112,276	)	$	(723,326	)
Permanent differences		(36,693	)		(61,825	)
Net effects of temporary differences		-			105,058
Effect of federal graduated rates		148,969			1,269,415
Increase in valuation allowance		-			(589,322	)
Texas Margin Tax estimate - 2009		12,684			14,132
	$	12,684		$	14,132

American has loss carryforwards totaling $7,919,069 available at March 31, 2009 that may be offset against future taxable income.  If not used, the carryforwards will expire as follows:

Operating Losses
Amount		Expires
$	128,093	2017
$	566,409	2018
$	1,028,302	2019
$	1,551,019	2020
$	288,855	2022
$	4,356,391	2023

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Note 16 - Loss Per Share

Basic loss per share is calculated on the basis of the weighted average number of common shares outstanding. Diluted loss per share, in addition to the weighted average determined for basic loss per share, includes common stock equivalents, which would arise from the conversion of the preferred stock to common shares.

	Three Months Ended
	March 31, 2009			March 31, 2008
Basic loss per share:
Net loss from continuing operations	$	(193,139	)	$	(2,382,253	)
Net loss from discontinued operations net of taxes		-			(798,559	)
Net loss applicable to common shareholders	$	(193,139	)	$	(3,180,812	)
Weighted average common shares outstanding - basic and diluted		8,689,074			7,112,258
Net loss per share - basic and diluted:
Continuing operations	$	(0.02	)	$	(0.33	)
Discontinued operations		-			(0.11	)
Total	$	(0.02	)	$	(0.45	)

Note 17 - Commitments and Contingencies

Various key officials of American have entered into employment agreements with American. In March 2007, the CEO of American entered into a five-year employment agreement which provides for a monthly salary of $10,000 plus a bonus as determined by the Board of Directors. Also, the agreement provides for the grant of 144,000 options (207,360 options after the effect of the 20% stock dividends issued in 2007 and 2008) per year with an exercise price of $7.00 ($4.86 after the effect of the 20% stock dividends), beginning March 15, 2007. Additionally, beginning January 2008, the CEO will receive 2,200 shares of American common stock on a monthly basis for the remaining term of the agreement.  The CFO of American entered into a three-year employment agreement beginning June 1, 2008, which provides for an annual salary of $95,000 plus a bonus as determined by the Board of Directors. The president of NPI previously entered into an at-will employment agreement that provides an annual salary of $195,000 plus a bonus based upon operating results of this subsidiary. The employment agreement also grants the president of NPI an option to purchase NPI common stock equal to 5% of NPI's equity at an exercise price of 5% of the total stockholder's equity, if NPI conducts an initial public offering of its common stock during the time of his employment. Delta’s president and vice president entered into an employment agreement that provides for an annual base salary of $150,000 each.  On October 7, 2008, Larry C. Shumate entered into a three-year employment agreement with SET to serve as President of SET, which provides for an annual salary of $185,000 plus a bonus as determined by the Board of Directors.  The employment agreement provides for health and life insurance coverage and a vehicle allowance of $800 per month.  After two consecutive years of Earnings Before Interest, Depreciation and Amortization (EBITDA) of greater than one million dollars ($1,000,000) for the years ended December 31, 2009 and 2010, based on the financial statements of SET included in the Company’s audited consolidated financial statements, Mr. Shumate shall be entitled to a non-qualified option to purchase for one hundred dollars ($100) unencumbered shares of common stock of SET equal to ten (10%) percent of all shares outstanding of SET, which option would be exercisable thirty (30) days after the issuance of the December 31, 2010 audited financial statements of the Company.

On July 23, 2008, Delta Seaboard Well Service, Inc., our 51% owned subsidiary negotiated a settlement in the Fort Apache Energy, Inc. v. Delta Seaboard Well Service, Inc. lawsuit for $1,450,000. After minority interest, the net impact of this settlement on American's net income is $739,500. Management believes that the settlement amount will be recoverable through insurance as described below.

Delta Seaboard Well Service, Inc. v. Houstoun, Woodard, Eason, Gentle Tomforde and Anderson, Inc., D/B/A Insurance Alliance and Robert Holman (“Broker Lawsuit”). Delta is in negotiations to settle its claims in the Broker Lawsuit for approximately $2,400,000, including $1,600,000 of actual damages plus interest, attorney’s fees, and statutory damages. Delta had a CGL insurance policy with Gemini Insurance Company ("Gemini") for 2003, naming Delta as an insured, which policy was in effect at such time as Delta began the plugging operation referenced in the Fort Apache Lawsuit. Delta made a claim under the policy for a defense in the Fort Apache case.  In October 2008, in the Gemini Insurance Company v. Delta Seaboard Well Service, Inc. case, the court granted Gemini's motion for summary judgment and declared that the insurance policy provides no coverage for the claims made against Delta in the Fort Apache case.  Delta’s position is that its broker failed to obtain appropriate insurance coverage and misrepresented the coverage it did obtain.  Delta is aggressively pursuing its claims in the Broker Lawsuit.

As part of the attorney’s work on the Broker Lawsuit, Delta filed a claim for coverage with American Specialty Lines Insurance Company (AISLIC). Delta is suing AISLIC for denying coverage for the Fort Apache Lawsuit, seeking $445,000 plus interest and attorney’s fees.  Delta is vigorously pursuing the AISLIC Lawsuit.

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Delta is a co-defendant in a personal injury lawsuit, Karen Duke and as next friend of her minor son, George Duke v. Delta Seaboard Well Service, Inc. and Jimmy Newcomb.  This lawsuit arises out of a motor vehicle accident that occurred on July 31, 2006.  The plaintiffs claim to have incurred $54,533 in medical expenses to date and Ms. Duke claims lost wages of approximately $6,820.  The plaintiffs are claiming an unspecified amount of claimed actual and consequential economic damages (for medical expenses and lost wages / diminished earnings capacity), plus an unspecified amount of claimed damages for their alleged “pain & suffering.”  The company has liability insurance policy with applicable policy limits of $1,000,000.00.  This case has not yet been scheduled for trial and discovery remains pending. Delta’s attorneys anticipate that the matter will be referred to an agreed mediation during the summer of 2009. Management believes that Delta has a more than adequate amount of available liability insurance coverage to fund any settlement that might be reached in this case, or to respond to any judgment that might be entered after a jury trial. Delta intends to vigorously defend this case though trial, unless some reasonable settlement can be reached before then.  An evaluation of the outcome of this case cannot be made at this time.  Delta expects to prevail in these matters and has not recorded any liabilities in connection with this lawsuit.

American International Industries, Inc. v. William W. Botts.  American filed this lawsuit against William W. Botts (“Botts”) seeking damages as a result of a Stock Purchase Agreement and Consulting Agreement that American entered into with Botts on September 12, 2007.  Under the Stock Purchase Agreement, American gave Botts $1,000,000 in cash and 288,000 shares of restricted AMIN stock (240,000 original shares plus a 20% stock dividend) for 170,345 shares of OI Corporation.  As part of the original agreement, Botts had the right to sell the 288,000 shares back to American for $4.17 per share.  Under the Consulting Agreement, American agreed to pay Botts $14,000 per month, plus expenses for performing consulting services.  On or about November 5, 2008, American paid Botts $100,000 to terminate the Consulting Agreement to stop the accrual of monthly consulting payments to Botts.  In this suit, American has sued Botts for $2,500,000 in damages, alleging fraud-misrepresentation, fraud-failure to disclose material information, violation of Section 27.01 of the Texas Business and Commerce Code – fraud in a stock transaction, and breach of fiduciary duty.  Botts has filed a breach of contract counter-claim against American, alleging damages of $78,000 for consulting fee payments and expenses, $1,200,000 for stock purchase guarantee option payments, and an unspecified amount of attorneys fees.  The parties attempted to settle this matter during December 2008, but were unable to do so.  If the outcome of this case is unfavorable, then the value of the 288,000 shares of AMIN stock and of the 576,000 shares of Hammonds Industries, Inc. stock that Botts is entitled to receive as a stock dividend will be credited against any loss incurred by American, and American's common shares outstanding will be reduced by 288,000 shares, or approximately 3%.  Because the case is very new, an evaluation of the outcome of this case cannot be made at this time.  American expects to prevail in these matters and has not recorded any liabilities in connection with this lawsuit.

Delta Seaboard Well Service, Inc. is the recipient of a TERP grant from the Texas Commission on Environmental Quality in the amount of $1,157,273, of which $781,728 has been recognized through March 31, 2009. TERP grant recipients are required to monitor and track the total NOx emission reductions and cost-effectiveness. The grant contract includes provisions for the return of a prorated share of the grant if the NOx emission reductions originally projected are not achieved. American has not recorded any liabilities in connection with this matter because management has determined that return of any grant receipts is not likely.

Delta leases space under a commercial lease which expires in June 2010. Future minimum lease payments are as follows:

Year December 31,	Amount
2009	$	83,250
2010		55,500
Total	$	138,750

SET leases space under a commercial lease which expires in October 2013. Future minimum lease payments are as follows:

Year December 31,	Amount
2009	$	198,900
2010		265,200
2011		265,200
2012		265,200
2013		221,000
Total	$	1,215,500

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Note 18 - Segment Information

We have three reporting segments and corporate overhead:

· Northeastern Plastics (NPI) - a wholly-owned subsidiary, is a supplier of automotive after-market products and consumer durable goods products to retailers and wholesalers in the automotive after-market and in the consumer durable electrical products markets;

· Shumate Energy Technologies, Inc. (SET) - a wholly-owned subsidiary, manufactures highly specialized equipment for energy industry customers, including expandable tubing technology products that are used in field service operations for oil and gas exploration under extreme environmental conditions. SET manufactures large-diameter products and close tolerance machined parts that range up to thirty-four feet in length using state of the art, large part CNC equipment.

· Delta Seaboard Well Services (Delta) - a 51% owned subsidiary, is an onshore rig-based well-servicing contracting company providing services to the oil and gas industry;

· Corporate overhead - - American's investment holdings including financing current operations and expansion of its current holdings as well as evaluating the feasibility of entering into additional businesses.  Corporate overhead also includes Brenham Oil & Gas, a division that owns an oil, gas and mineral royalty interest in Washington County, Texas, which is carried on American's balance sheet at $0.  American received income from the royalty interest of $4,396 in 2008 and $4,859 in 2007.  Through Brenham Oil & Gas, American is engaged in negotiations with financial institutions for the purpose of financing potential acquisitions of existing oil and gas properties and reserves.  American is seeking to enter into arrangements with third-party owners and potential partners with proven oil and gas reserves, but who lack the financial resources and/or the technical expertise possessed by American, to assist them with the resources required to develop their reserves.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. American evaluates performances based on profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses.  American'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.  American's areas of operations are principally in the United States. No single foreign country or geographic area is significant to the consolidated financial statements.

Consolidated revenues from external customers, operating income (loss), identifiable assets, depreciation and amortization expense, and capital expenditures were as follows:

	Three Months Ended March 31,
	2009			2008
Revenues:
Northeastern Plastics	$	1,644,282		$	1,427,956
Shumate Energy Technologies		2,086,821			-
Delta Seaboard		2,463,911			2,082,949
Total revenues	$	6,195,014		$	3,510,905
Operating income (loss) from continuing operations:
Northeastern Plastics	$	(24,505	)	$	(139,925	)
Shumate Energy Technologies		164,281			-
Delta Seaboard		(177,243	)		(529,800	)
Corporate		(414,607	)		(757,119	)
Operating loss from continuing operations		(452,074	)		(1,426,844	)
Other income (expenses) from continuing operations		121,850			(1,189,519	)
Net loss from continuing operations before income tax	$	(330,224	)	$	(2,616,363	)
		March 31, 2009			December 31, 2008
Identifiable assets:
Northeastern Plastics	$	5,640,757		$	5,836,635
Shumate Energy Technologies		6,850,441			6,871,304
Delta Seaboard		7,397,858			7,771,609
Corporate		14,593,108			15,498,396
Total identifiable assets	$	34,482,164		$	35,977,944

20

	Three Months Ended March 31,
	2009		2008
Depreciation and amortization:
Northeastern Plastics	$	15,635	$	15,525
Shumate Energy Technologies		163,174		-
Delta Seaboard		112,365		96,843
Corporate		2,383		3,354
Depreciation and amortization from continuing operations		293,557		115,722
Depreciation and amortization from discontinued operations		-		223,375
Total depreciation and amortization	$	293,557	$	339,097
Capital expenditures:
Northeastern Plastics	$	527	$	24,062
Shumate Energy Technologies		1,628		-
Delta Seaboard		12,038		36,963
Corporate		11,353		-
Capital expenditures for continuing operations		25,546		61,025
Capital expenditures for discontinued operations		-		127,243
Total capital expenditures	$	25,546	$	188,268

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Note 19 - Discontinued operations

On December 31, 2008, the board of directors of American approved the deconsolidation of Hammonds Industries, Inc. (“Hammonds”) from American. To effect the deconsolidation of Hammonds, American was required to reduce its ownership percentage, board membership, and guarantee of Hammonds’ debt. After the distribution of the special dividend of approximately 17.4 million shares of Hammonds’ common stock to American's shareholders of record on December 31, 2008, American's ownership is approximately 13% of Hammonds' issued and outstanding common stock. Effective December 31, 2008, Carl Hammonds was appointed Chairman and CEO and John Stump, III was appointed CFO. Hammonds accepted the resignations of Daniel Dror, as Chairman of the Board and CEO, Sherry L. Couturier, as Director, CFO and Vice President, and Charles R. Zeller, as Director, and appointed Richard C. Richardson as a new board member unrelated to American. As a result, the majority of Hammonds’ board of directors is no longer controlled by American. Additionally, a reduction of American's guarantee of Hammonds’ debt to $1,000,000 was obtained from Texas Community Bank.

The consolidated statement of operations for the three months ended March 31, 2008 has been restated to reflect the discontinued operations of Hammonds as summarized below:

	Three Months Ended March 31, 2008
Net loss from continuing operations	$	(2,382,253	)
Net loss from discontinued operations net of taxes		(798,559	)
Net loss applicable to common shareholders	$	(3,180,812	)
Weighted average common shares outstanding - basic and diluted		7,112,258
Net loss per share - basic and diluted:
Continuing operations	$	(0.33	)
Discontinued operations		(0.11	)
Total	$	(0.45	)

The consolidated statement of cash flows for the three months ended March 31, 2008 has been restated to reflect the discontinued operations of Hammonds as summarized below:

	Three Months Ended March 31, 2008
Continuing operations:
Net cash used in operating activities	$	(898,388	)
Net cash provided by investing activities		1,438,590
Net cash provided by financing activities		297,844
Net increase in cash and cash equivalents from continuing operations		838,046
Cash and cash equivalents at beginning of period from continuing operations		2,293,795
Cash and cash equivalents at end of period from continuing operations	$	3,131,841
Discontinued operations:
Net cash used in operating activities	$	(1,076,236	)
Net cash used in investing activities		(137,221	)
Net cash provided by financing activities		(32,124	)
Net increase in cash and cash equivalents from discontinued operations		(1,245,581	)
Cash and cash equivalents at beginning of period from discontinued operations		1,597,361
Cash and cash equivalents at end of period from discontinued operations	$	351,780

Hammonds' revenues and net loss before income tax are summarized below:

	Three Months Ended March 31, 2008
Revenues	$	2,205,157
Net loss before income tax	$	(789,683	)

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Note 20 - Subsequent Events

On April 16, 2009, Hammonds entered into an Asset Purchase Agreement with FabCorp, Inc., a Houston-based manufacturing company, pursuant to which Hammonds sold all of its assets to a newly formed Texas company, Hammonds Technologies, LLC., a wholly owned subsidiary of FabCorp, Inc.  Pursuant to the Asset Purchase Agreement, FabCorp purchased all of the assets in consideration for the payment of Hammonds’ debt owed to Texas Community Bank in the amount of $2.6 million.  The balance of Hammonds’ bank debt in the amount of $350,000 was paid by American and will be recorded as a net loss from discontinued operations for the three and six months ended June 30, 2009.  American was relieved of its $1,000,000 guarantee of Hammonds’ debt.

Since April 1, 2009 through May 8, 2009, American paid $135,600 to repurchase 164,814 shares of its common stock.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Forward-Looking Statements; Market Data

As used in this Quarterly Report, the terms "we", "us", "our" and the "Company" means American International Industries, Inc., a Nevada corporation, and its subsidiaries. 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. Our 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. 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

American International Industries, Inc., organized under the laws of the State of Nevada in September 1994, is a diversified corporation with interests in industrial companies, oil and gas interests, oilfield supply and service companies, and interests in undeveloped real estate in the Galveston Bay, TX area. The Company’s business strategy is to acquire controlling equity interests in undervalued companies and take an active role in its new subsidiaries to improve their growth, by providing its subsidiaries with access to capital, leveraging synergies and providing its subsidiaries with the Company's management expertise. The Company is sometimes referred to as "we", "us", "our", and other such phrases as provided in Regulation F-D (Fair Disclosure).

American International Industries, Inc. is a holding company and has three reporting segments and corporate overhead:

· Northeastern Plastics (NPI) - a wholly-owned subsidiary, is a supplier of automotive after-market products and consumer durable goods products to retailers and wholesalers in the automotive after-market and in the consumer durable electrical products markets;

· Shumate Energy Technologies, Inc. (SET) - a wholly-owned subsidiary, manufactures highly specialized equipment for energy industry customers, including expandable tubing technology products that are used in field service operations for oil and gas exploration under extreme environmental conditions. SET manufactures large-diameter products and close tolerance machined parts that range up to thirty-four feet in length using state of the art, large part CNC equipment.

· Delta Seaboard Well Services (Delta) - a 51% owned subsidiary, is an onshore rig-based well-servicing contracting company providing services to the oil and gas industry;

· Corporate overhead - 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.  Corporate overhead also includes Brenham Oil & Gas, a division that owns an oil, gas and mineral royalty interest in Washington County, Texas, which is carried on the Company's balance sheet at $0.  Through Brenham Oil & Gas, the Company is engaged in negotiations with financial institutions for the purpose of financing potential acquisitions of existing oil and gas properties and reserves.  The Company is seeking to enter into arrangements with third-party owners and potential partners with proven oil and gas reserves, but who lack the financial resources and/or the technical expertise possessed by the Company, to assist them with the resources required to develop their reserves.

The historical financial statements of the Company include the acquisitions of acquired companies as of the effective dates of the purchases, and the results of those companies subsequent to closing, as these transactions were accounted for under the purchase method of accounting.

We intend to continue our efforts to grow through the acquisition of additional and complimentary businesses and by expanding the operations of our existing businesses, especially in the energy sector. We will evaluate whether additional and complimentary businesses can be acquired at reasonable terms and conditions, at attractive earnings multiples and which present opportunity for growth and profitability. These efforts will include the application of improved access to financing and management expertise afforded by synergistic relationships between the Company and its subsidiaries. Potential acquisitions are evaluated to determine that they would be accretive to earnings and equity, that the projected growth in earnings and cash flows are attainable and consistent with our expectations to yield desired returns to investors, and that management is capable of guiding the growth of operations, working in concert with others in the group to maximize opportunity. Periodically as opportunities present themselves, we may sell or merge the subsidiaries in order to bring value to the holding company and our shareholders and to enable the Company to acquire larger companies.

The Company’s real estate investment policy historically has been to acquire real estate for resale based upon our view of market conditions. Such properties are listed on the balance sheet as real estate acquired for resale.  Real estate is not a segment of the Company's business.

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We expect to face competition for acquisition candidates, which may limit the number of acquisition opportunities and may lead to higher acquisition prices. There can be no assurance that we will be able to identify, acquire or manage profitably of additional businesses or to integrate any acquired businesses into the Company without substantial costs, delays or other operational or financial problems. Further, acquisitions involve a number of risks, including possible adverse effects on our operating results, diversion of management's attention, failure to retain key personnel of the acquired business and risks associated with unanticipated events or liabilities. Some or all of which could have a material adverse effect on our business, financial condition and results of operations. The timing, size and success of our acquisition efforts and the associated capital commitments cannot be readily predicted. It is our current intention to finance future acquisitions by using shares of our common stock and other forms of financing as the consideration to be paid. In the event that the common stock does not have and maintain a sufficient market value, or potential acquisition candidates are otherwise unwilling to accept common stock as part of the consideration for the sale of their businesses, we may be required to seek other forms of financing in order to proceed with our acquisition program. If we do not have sufficient cash resources, our growth could be limited unless we are able to obtain additional equity or debt financing at terms acceptable to the Company.

On December 31, 2008, the board of directors of the Company approved the deconsolidation of Hammonds Industries, Inc. (“Hammonds”) from the Company. To effect the deconsolidation of Hammonds, the Company was required to reduce its ownership percentage, board membership, and guarantee of Hammonds’ debt. After the distribution of the special dividend of approximately 17.4 million shares of Hammonds’ common stock to the Company’s shareholders of record on December 31, 2008, the Company’s ownership is proximately 13% of Hammonds' issued and outstanding common stock. Effective December 31, 2008, Carl Hammonds was appointed Chairman and CEO and John Stump, III was appointed CFO. Hammonds accepted the resignations of Daniel Dror, as Chairman of the Board and CEO, Sherry L. Couturier, as Director, CFO and Vice President, and Charles R. Zeller, as Director, and appointed Richard C. Richardson as a new board member unrelated to the Company. As a result, the majority of Hammonds’ board of directors is no longer controlled by the Company. Additionally, a reduction of the Company’s guarantee of Hammonds’ debt was obtained from Texas Community Bank.

Corporate overhead includes our investment activities for financing current operations and expansion of our current holdings, as well as evaluating the feasibility of acquiring additional businesses.

Results of Operations

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008.

The following is derived from, and should be read in conjunction with, our unaudited consolidated financial statements, and related notes for the three months ended March 31, 2009 and 2008.

Net revenues. For the three months ended March 31, 2009, revenues from continuing operations were $6,195,014, compared to $3,510,905 for the three months ended March 31, 2008, representing an increase of $2,684,109, or 76%.

Delta reported revenues of $2,463,911 for the three months ended March 31, 2009, compared to 2,082,949 for the same period in 2008, representing an increase of $380,962, or 18%. The increase in revenues at Delta is due to an increase in pipe sales of $325,453 to the oil field service industry.  Pipe sales revenues have increased due to increased drilling activity creating a greater demand for pipe.

The results of SET for the three months ended March 31, 2009 are included in our results of operations. For the period ended March 31, 2009, SET's revenues were $2,086,821, gross margin was 20%, and net operating income was $164,281.

Revenues at NPI during the three months ended March 31, 2009 were $1,644,282, compared to $1,427,956 for the three months ended March 31, 2008, representing an increase of $216,326, or 15%.  During the three months ended March 31, 2008, NPI experienced a decline in revenues of 39%, compared to its revenues for the same period in 2007, due to an overstock position from the 2007 holiday season and the delay of a large order from the first quarter to the second quarter of 2008.  NPI's revenues for the three months ended March 31, 2009 were 30% lower than its revenues for the same period in 2007, due to the decline in the economy.  NPI's strategic plan for 2009 includes targeting three or more additional large accounts and reducing its dependence upon major customers by adding more mid-size accounts.  NPI is highly reliant upon a small customer base, with approximately 52% of its sales being generated through one principal customer. There is significant risk in having such a large portion of revenues concentrated to this extent and the loss of one or more principal customers could result in a reduction in NPI’s revenues.  The sales of NPI have historically been subject to sharp seasonal variations.

Loss from operations. Our operating loss for the three months ended March 31, 2009 was $452,074, compared to the operating loss of $1,426,844 for the three months ended March 31, 2008, representing an improvement of $974,770, or 68%.  The improvement was due to the increase in revenues and a decrease in selling, general and administration costs as a percentage of revenues to 43% for the three months ended March 31, 2009, compared to 80% for the same period in 2008.

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Total other income/expenses. Other income was $121,850 for the three months ended March 31, 2009, compared to other expenses of $1,189,519 for the three months ended March 31, 2008, representing an improvement of $1,311,369.  Net realized/unrealized gains on trading securities were $13,874 for the three months ended March 31, 2009, compared to net losses of $1,331,966 for the three months ended March 31, 2008.  The net unrealized losses on trading securities of $1,376,539 for the three months ended March 31, 2008, were due primarily to declines in the market values of our investments in OI Corporation and Rubicon Financial Incorporated of $1,191,080 (see note 2).  For the three months ended March 31, 2009, American recognized other income in the amount of $195,146, of which $175,000 was for providing right-of-way access on the 287 acres in Galveston County.  Interest expense was $218,608 for the three months ended March 31, 2009, compared to $113,030 for the three months ended March 31, 2008.  The increase in interest expense was due primarily to the $5 million in debt used to fund the acquisition of the assets of Shumate Machine Works.

Net loss. We had a net loss from continuing operations of $193,139, or $0.02 per share, for the three months ended March 31, 2009, compared to a net loss of $2,382,253, or $0.33 per share, for the same period in 2008.  We had a net loss from discontinued operations of $798,559, or $0.11 per share, for the three months ended March 31, 2008.  Our net loss was $193,139, or $0.02 per share, for the three months ended March 31, 2009, compared to a net loss of $3,180,812, or $0.45 per share, for the three months ended March 31, 2008.

Liquidity and Capital Resources

Total assets/working capital. Total assets at March 31, 2009 were $34,482,164, compared to $35,977,944 at December 31, 2008, representing a decrease of $1,495,780.  The primary reason for the decrease in total assets resulted from the use of cash and the redemption of certificates of deposit to reduce our debt by $1,280,010.  At March 31, 2009, consolidated working capital was $21,685,675, compared to working capital of $18,196,027 at December 31, 2008, representing an increase of $3,489,648, primarily due to the reclassification of debt from short-term to long-term.

Cash flow from operations. For the three months ended March 31, 2009, we had cash flow provided by operations of $370,015, compared to negative cash flow from operations of $898,388 during the same period in 2008.  Our net loss of $193,139 for the three months ended March 31, 2009 included non-cash expenses of $334,807, including depreciation and amortization of $293,557 and share-based compensation of $41,250.  Our net loss of $2,382,253 for the three months ended March 31, 2008 included non-cash expenses of $1,632,094, including depreciation and amortization of $115,722, share-based compensation of $139,833, and unrealized losses on trading securities of $1,376,539.  Our inventories increased by $268,216 for the three months ended March 31, 2009, compared to an increase of $672,872 during the three months ended March 31, 2008.  We decreased our investments in trading securities by $95,443 during the three months ended March 31, 2009, compared to an increase of $225,479 during the same period in 2008.  Accounts receivable decreased by $353,624 during the three months ended March 31, 2009, compared to a decrease of $1,288,312 during the same period in 2008.  Prepaid expenses decreased by $49,060, other assets decreased by $17,970, and accounts payable increased by $144,109 for the three months ended March 31, 2009.  For the three months ended March 31, 2008, prepaid expenses decreased by $98,893, other assets decreased by $9,861, and accounts payable decreased by $61,340.

Cash flow from investing activities. Our investing activities used cash of $233,440 during the three month period ended March 31, 2009, as a result of a the issuance of a note receivable of $300,000 and loans to related parties of $241,200, offset by a net decrease in investments in certificates of deposit of $300,000.  This is compared to cash provided by investing activities during the same period in the prior year in the amount of $1,438,590 during the three month period ended March 31, 2008, as a result of a net decrease in investments in certificates of deposit of $1,255,200 and proceeds from the sale of drilling rig equipment of $200,000.

Cash flow from financing activities. During the three months ended March 31, 2009, our financing activities used cash of $1,338,232 compared to cash provided of $297,844 during the same period in 2008.  During the three month period ended March 31, 2009, we made payments of $1,283,122 on debt and purchased 33,032 shares of treasury stock at a cost of $41,237.  During the 2008 period, we received net proceeds from line-of-credit agreements of $598,000. We made payments of $280,366 on debt and margin loans during the three month period ended March 31, 2008.

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Real estate. During the fourth quarter of 2008, American received a 1.705 acre tract of land in Galveston County appraised at $540,000 as a guarantor's fee.  In connection with this fee, American has pledged $1,750,000 in certificates of deposit for a $4,000,000 loan to Dawn Condominiums L.P. at Texas Community Bank.  As the principal of the loan is reduced, the bank will release portions of the pledged certificates of deposit until the loan is paid in full.  This property is pledged as collateral for loans owed by Hammonds Industries, Inc. to Texas Community Bank.  During 2007, American purchased for investment a 174 acre tract of land in Waller County, Texas for $1,684,066. This property is listed for sale with a real estate broker.  American continues to own 287 undeveloped acres of waterfront property on Dickinson Bayou and Galveston Bay in Galveston County, Texas. American is carrying this property on the balance sheet at its historical book value of $225,000.  American has engaged CBRE on an exclusive basis to sell the property for an increased listing price of $25,000,000.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. As of March 31, 2009, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in internal controls. During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material changes from Legal Proceedings as previously disclosed in the Registrant’s annual report for the year ended December 31, 2008.

ITEM 1A. RISK FACTORS

There have been no material changes from Risk Factors as previously disclosed in the Registrant’s annual report for the year ended December 31, 2008.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

Exhibit No.	Description
31.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K During the Period Covered by this Report: None.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

/s/ DANIEL DROR

   CEO, PRESIDENT AND CHAIRMAN

   Dated:  May 11, 2009

/s/ SHERRY L. COUTURIER

   CHIEF FINANCIAL OFFICER

   Dated:  May 11, 2009