| Summary of Significant Accounting Policies | Note 1 - Summary of Significant Accounting
Policies The accompanying interim unaudited 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 AmericanÂ’s
latest Annual Report filed with the SEC on Form 10-K for the year ended December 31, 2014. 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., a
Nevada Corporation, operates as a diversified holding company with a number of wholly-owned subsidiaries and some partially owned
subsidiaries. American is a diversified corporation with interests in industrial/commercial companies and an oil and gas service
business. AmericanÂ’s business strategy is to acquire controlling equity interests in businesses that it considers undervalued.
AmericanÂ’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 subsidiariesÂ’ growth. Principles of Consolidation The consolidated financial statements include
the accounts of American and its wholly-owned subsidiaries American International Texas Properties, Inc. (“AITP”),
American International Holdings Corp. (“AMIH”), formerly Delta Seaboard International, Inc. (“Delta”),
in which American holds a 93.2% shareholder interest, and Brenham Oil & Gas Corp. (“BOG”), in which American holds
a 51.0% interest. All significant intercompany transactions and balances have been eliminated in consolidation. ManagementÂ’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. Cash and Cash Equivalents American considers cash and equivalents to
include cash on hand and certificates of deposits with banks with an original maturity of three months or less, that American intends
to convert. Notes Receivable Notes receivable are carried at the expected
net realizable value. Impairment of notes receivable is based on managementÂ’s continued assessment of the collectability
of debtors. Investment Securities American accounts for its investments in accordance
with ASC 320-10, “Investments in Debt and Equity Securities.” Management determines the appropriate classification
of its investments in marketable securities at the time of purchase and reevaluates such determination at each balance sheet date.
Securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities.
Debt securities for which American does not have the intent or ability to hold to maturity and equity securities not classified
as trading securities are classified as available-for-sale. The cost of investments sold is determined on the specific identification
or the first-in, first-out method. Trading securities are reported at fair value with unrealized gains and losses recognized in
earnings, and available-for-sale securities are also reported at fair value but unrealized gains and losses are included in stockholdersÂ’
equity. Management determines fair value of its investments based on quoted market prices at each balance sheet date. Oil and Gas Properties, Full Cost Method BOG uses the full cost method of accounting
for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory
wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related
asset retirement costs are capitalized. Under this method, all costs, including internal
costs directly related to acquisition, exploration and development activities, are capitalized as oil and gas property costs. Properties
not subject to amortization consist of exploration and development costs that are evaluated on a property-by-property basis. Amortization
of these unproved property costs begins when the properties become proved or their values become impaired. BOG assesses overall
values of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value
may have occurred. Impairment of unproved properties is assessed based on managementÂ’s intention with regard to future development
of individually significant properties and the ability of BOG to obtain funds to finance their programs. If the results of an assessment
indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. Under this method, sales of oil and natural
gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment
would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship
is significantly altered, the corresponding gain or loss will be recognized in the consolidated statements of operations. Ceiling Test In applying the full cost method, BOG performs
an impairment test (ceiling test) at each reporting date, whereby the carrying value of oil and gas properties is compared to the
“estimated present value” of its proved reserves, discounted at a 10-percent interest rate of future net revenues,
based on current economic and operating conditions at the end of the period, plus the cost of properties not being amortized, plus
the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related
to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment
expense. There was no ceiling test write-down recorded during the three Property, Plant, Equipment, Depreciation,
Amortization and Long-Lived Assets Long-lived assets include: Property, Plant and Equipment - Assets acquired
in the normal course of business are recorded at original cost and may be adjusted for any additional significant improvements
after purchase. We depreciate the cost evenly over the assetsÂ’ estimated useful lives. Upon retirement or sale, the cost
of the assets disposed of and the related accumulated depreciation are removed from the accounts, with any resultant gain or loss
being recognized as a component of other income or expense. Identifiable intangible assets - These assets
are recorded at acquisition cost. Intangible assets with finite lives are amortized evenly over their estimated useful lives. At least annually, we review all long-lived
assets for impairment. When necessary, we record changes for impairments of long-lived assets for the amount by which the present
value of future cash flows, or some other fair value measure, is less than the carrying value of these assets. Revenue Recognition Revenue is recognized when the earnings 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. Income Taxes American is a taxable entity and recognizes
deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets
and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change.
A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest
and penalties associated with income taxes are included in selling, general and administrative expense. American has adopted ASC 740-10 “Accounting
for Uncertainty in Income Taxes,” which prescribes a comprehensive model of how a company should recognize, measure, present,
and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return.
ASC 740-10 states that a tax benefit from an uncertain position may be recognized if it is “more likely than not” that
the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of
tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full
knowledge of all relevant information. As of June 30, 2015, American had not recorded any tax benefits from uncertain tax positions. Net Loss Per Common 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. During the six months ended June 30, 2015 and 2014, the Company had no potential
dilutive securities outstanding. Advertising Costs The cost of advertising is expensed as incurred. Stock-Based Compensation American sometimes grants shares of stock for
goods and services and in conjunction with certain agreements. These grants are accounted for based on the grant date fair
values. Fair Value of Financial Instruments Effective January 1, 2008, American adopted
the framework for measuring fair value that establishes 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 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 AmericanÂ’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, 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 AmericanÂ’s Level 1 financial assets, marketable securities - available for sale, are based on quoted market prices of
the identical underlying security. As of June 30, 2015 and December 31, 2014, American did not have any significant Level
2 or 3 financial assets or liabilities. The following tables provide fair value measurement information for AmericanÂ’s marketable
securities - available for sale:
As of June 30, 2015
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:
Marketable Securities - available for sale $ 1,950 $ 1,950 $ 1,950 $ — $ —
Marketable securities - trading $ 82,771 $ 82,771 $ 82,771 $ — $ —
As of December 31, 2014
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:
Marketable Securities - available for sale $ 63,250 $ 63,250 $ 63,250 $ — $ — Subsequent Events American has evaluated all transactions from June
30, 2015 through the financial statement issuance date for subsequent event disclosure consideration. Reclassifications Certain balances from the prior period have
been reclassified to conform to the current period presentation. New Accounting Pronouncements There were various 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. |
