On August 13, 2012, AMIH effected a reverse stock split whereby all outstanding shares of its common stock were subject to a reverse split on a one for one hundred (1:100) basis. All share and per share amounts contained in this Form 10-Q have been adjusted retroactively to reflect the reverse stock split.
During the three months ended March 31, 2012 preferred dividends of $20,000 were accrued and unpaid.
On June 29, 2011, AMIH entered into an agreement, with an effective date of July 1, 2011, with Vision Opportunity Master Fund, Ltd. (VOMF), pursuant to which VOMF agreed to convert 3,769,626 shares of the Companys preferred stock, constituting all of AMIHs outstanding preferred stock, into 37,696 shares (3,769,626 shares pre-split) of common stock and also agreed to waive all accrued dividends payable on the preferred stock upon the payment of $250,000. In consideration for the conversion, AMIH agreed to pay VOMF total consideration of $250,000, $50,000 of which was paid on July 1, 2011, and the $200,000 remainder was due and payable at the rate of $20,000 per month. On February 23, 2012, AMIH completed the agreement with VOMF. VOMF accepted a payment of $65,000 in full satisfaction of this note, and the difference of $15,000 was recognized as other income from forgiveness of debt. On February 29, 2012, 3,769,626 shares of AMIH's preferred stock were converted into 37,696 shares (3,769,626 shares pre-split) of AMIH's common stock. Upon satisfaction of the agreement with VOMF, the Companys obligation for previously recorded preferred dividends was released and AMIH reversed the dividends payable of $1,055,000.
AMIH has 5,000,000 authorized, 0 issued and outstanding, Preferred Shares consisting of Series A and Series B convertible into one share of AMIH's common stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
American International Holdings Corp. (AMIH), formerly Delta Seaboard International, Inc. ("Delta"), at March 31, 2013, was a 92.3% owned subsidiary of American International Industries, Inc. ("American") (OTCBB: AMIN). At March 31, 2013, AMIH also had a wholly-owned subsidiary, Delta Seaboard Well Service, Inc., a Texas corporation ("DSWSI").
On August 13, 2012, AMIH effected a reverse stock split whereby all outstanding shares of its common stock were subject to a reverse split on a one for one hundred (1:100) basis. All share and per share amounts contained in this Form 10-Q have been adjusted retroactively to reflect the reverse stock split.
On April 3, 2012, AMIH entered into an Asset Purchase Agreement (Agreement) by and among Delta Seaboard, LLC (the "Purchaser"), a Texas limited liability company that is owned and controlled by Robert W. Derrick, Jr. and Ronald D. Burleigh, who were AMIH's president and director and vice-president and director, respectively, on the date of the Agreement, DSWSI, and American. Pursuant to the terms of the Agreement, AMIH: (i) sold all of the assets of DSWSI to the Purchaser; (ii) Messrs. Derrick and Burleigh resigned as executive officers and as members of AMIHs board of directors; (iii) Mr. Derrick resigned as a director of American; and (iv) Messrs. Derrick and Burleigh transferred and assigned all of their 319,258 AMIH shares to American. In consideration for the sale of the DSWSI assets to Purchaser, Purchaser paid AMIH $1,600,000 in cash and executed a 5 year note bearing interest at 5% per annum in the face amount of $1,400,000. On December 19, 2012, this note was sold to Messrs. Derrick and Burleigh for $1,020,000. Total consideration for the sale was $2,620,000. On February 27, 2013, AMIH received $800,000 in payment of the balance due on the note receivable from Messrs. Derrick and Burleigh.
Upon the closing of the Agreement on April 3, 2012, American then held an aggregate, including previous holdings, of 647,858 shares of AMIH's issued and outstanding common stock, representing approximately 86.7% of AMIH's shares. At the same date, AMIH ceased to be an operating company and became a non-operating "shell company", as that term is defined in Rule 144(i) under the Securities Act of 1933, as amended.
Results of Operations for AMIH
Three months ended March 31, 2013 Compared to the Three months ended March 31, 2012
General and administrative expenses were $38,478 for the three months ended March 31, 2013, compared to $22,000 for the three months ended March 31, 2012. General and administrative expenses for the three months ended March 31, 2013 consisted primarily of executive compensation and legal and professional expenses. General and administrative expenses for the three months ended March 31, 2012 consisted of legal and professional expenses.
Other income during the three months ended March 31, 2013 and 2012 was $17,500 and $15,000, respectively. Interest income for the three months ended March 31, 2013 was $17,500, representing 5% interest on the $1,400,000 note receivable from the sale of DSWSIs assets. Vision Opportunity Master Fund, Ltd. accepted a payment of $65,000 in full satisfaction of a note with a balance of $80,000, and the difference of $15,000 was recognized as other income from forgiveness of debt for the three-month period ended March 31, 2012.
AMIH had a net loss of $20,978, or $0.03 per share, for the three months ended March 31, 2013. AMIH had a net loss of $929,517 for the three months ended March 31, 2012, which includes a loss from discontinued operations for DSWSI's net loss of $922,517. During the three months ended March 31, 2012 preferred dividends of $20,000 were accrued and unpaid. In February 2012, the holder of the preferred shares waived all accrued dividends payable of $1,055,000. During the three months ended March 31, 2012, the impact of the preferred dividends decreased the loss per share by $1.43. During the three months ended March 31, 2012, AMIH had net income per share of $0.15, consisting of net income from continuing operations of $1.43 per share and a net loss from discontinued operations of $1.28 per share.
Liquidity and Capital Resources for AMIH
As of March 31, 2013, AMIH had total assets of $2,475,400 consisting of $150,768 in cash and cash equivalents and $2,324,632 in related party receivables due from our parent, American.
As of March 31, 2013, AMIH had total liabilities of $7,500 which is for accounts payable.
AMIH had working capital and total stockholders equity of $2,467,900 as of March 31, 2013.
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Net cash used in operating activities was $37,812 for the three months ended March 31, 2013, which was derived from a net loss of $20,978 and a decrease in accounts payable of $16,834. Net cash used in operating activities was $0 for the three months ended March 31, 2012, which was derived from a net loss of $7,000 and other income from forgiveness of debt of $15,000, offset by an increase in accounts payable of $22,000.
Net cash provided by investing activities during the three months ended March 31, 2013 was $800,000 for the receipt of proceeds from the sale of DSWSIs assets.
Net cash used in financing activities during the three months ended March 31, 2013 was $1,049,944, compared to $0 during the three months ended March 31, 2012. Net cash used in financing activities during the three months ended March 31, 2013 was for loans to related parties. Net cash used in financing activities during the three months ended March 31, 2012 included the receipt of $65,398 in loans from related parties, $65,000 in principal payments on debt and $398 for the acquisition of 35 common shares as treasury stock
Off-Balance Sheet Arrangements
As of March 31, 2013 and December 31, 2012, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
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