UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)1
American International Industries, Inc.
(Name of Issuer)
Common Stock, Par Value $0.001 Per Share
(Title of Class of Securities)
02686Y201
(CUSIP Number)
SCOTT WOLINSKY
10522 Rosehaven Street, Apt. 415
Fairfax, VA 22030
(215) 896-8788
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 1, 2014 – Default of Issuer’s $200,000 Note
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
1 The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
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CUSIP No. 02686Y201
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| 13D
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| Page 2 of 4 Pages
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1.
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| NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
SCOTT WOLINSKY
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2.
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| CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions)
(a) ¨
(b) ¨
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3.
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| SEC USE ONLY
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4.
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| SOURCE OF FUNDS (see instructions)
PF
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5.
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| CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨
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6.
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| CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
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| SOLE VOTING POWER
17,940
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| SHARED VOTING POWER
0
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| 9.
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| SOLE DISPOSITIVE POWER
17,940
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| SHARED DISPOSITIVE POWER
17,940
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11.
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| AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,940
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12.
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| CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(see instructions)
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13.
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| PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
less than 1%
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14.
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| TYPE OF REPORTING PERSON (see instructions)
IN
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CUSIP No. 02686Y201
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| 13D
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| Page 3 of 4 Pages
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The following constitutes Amendment No. 2 (“Amendment No. 2”) to the Schedule 13D initially filed by the Reporting Person on March 11, 2013 (the “Initial Schedule 13D”), which relates to shares of the Common Stock, par value $0.001 per share (the “Shares”), of American International Industries, Inc. (the “Issuer”). The address of the principal executive offices of the Issuer is 601 Cien Street, Suite 235, Kemah, Texas 77565.
This Amendment No. 2 is required in order to comply with Securities and Exchange Commission (“SEC”) regulations, which specify that if any material decrease (1% or greater) occurs in the percentage of the class of securities beneficially owned, the Reporting Person is required to promptly file or cause to be filed with the SEC an amendment disclosing that material decrease.
This Amendment No. 2 amends Items 5 and 6 of the initial Schedule 13D as specifically set forth below.
Item 5 is hereby amended and restated to read as follows:
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person is holding 17,940 Shares due to the Issuer’s default of a non-interest bearing promissory note, executed by the Issuer and guaranteed by Daniel Dror, an officer of the Issuer, promising to pay the sum of $200,000 on or before September 30, 2014 (the “Maturity Date”). Upon payment of the $200,000 non-interest bearing promissory note on or before the Maturity Date, the Reporting Person would have sold a total of 63,540 Shares. The aggregate percentage of Shares held by the Reporting Person is now believed to be less than 1%.
(b) The Reporting Person has 17,940 Shares for which, due to the Issuer’s default, there is sole power to dispose or to direct the disposition of the Shares.
(c) From July 1, 2014 through September 15, 2014, the Reporting Person sold 45,600 Shares into the open market at the direction of the Issuer for a total of $68,918.79 in net proceeds.
(d) no change.
(e) no change.
Item 6 is hereby amended and restated to read as follows:
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.
Relationships
The Reporting Person was appointed to the Board of Directors of the Issuer on July 14, 2010. The Reporting Person resigned as Director of the Board of the Issuer on March 7, 2013.
Contracts
On October 1, 2013, the Reporting Person and Maria T. Wolinsky entered into a contract with the Issuer to sell 89,540 of the Issuer’s Shares (ticker: AMIN) for $330,000 in two stages. The first stage was completed on November 7, 2013 when the Issuer paid $130,000 to the Reporting Person for 26,000 AMIN shares. The Issuer failed to complete the second stage and, on October 1, 2014, the Issuer defaulted on payment of the above-mentioned $200,000 non-interest bearing promissory note.
Demand for Arbitration
On October 1, 2014, the Reporting Person and Maria T. Wolinsky (“Claimants”) filed a Demand for Arbitration (copy attached) requesting that American International Industries, Inc. and Daniel Dror, the President and CEO of American International Industries, Inc. (“Respondents”), be cited and required to appear and answer, and that Claimants have recovery against Respondents for:
a.
Actual damages;
b.
Pre-judgement and post-judgement interest;
c.
Attorneys’ fees and costs;
d.
Punitive or exemplary damages; and
e.
All other relief to which they may be justly entitled.
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CUSIP No. 02686Y201
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| 13D
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| Page 4 of 4 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
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October 7, 2014
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Date
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/s/Scott Wolinsky
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Signature
Scott Wolinsky
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Name
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Attachment: Claimants’ Demand for Arbitration
American Arbitration Association
Arbitration Proceeding
Scott Wolinsky and Maria T.
Wolinsky,
Claimants
v.
AAA Case No.
American International Industries,
Inc., and Daniel Dror,
Respondents
Claimants’ Demand for Arbitration
Claimants Scott Wolinsky and Maria T. Wolinsky file this Demand for Arbitration,
complaining of Respondents American International Industries, Inc. and Daniel Dror.
Discovery Control Plan
1.
Claimants request that the arbitrator enter a discovery control plan.
Parties
2.
Claimants Scott Wolinsky and Maria T. Wolinsky (“Claimants” or the
“Wolinskys”) are residents of Fairfax County, Virginia. Claimants are represented by Andrew K.
Meade and Jeremy M. Masten of HAWASH MEADE GASTON NEESE & CICACK LLP, whose
contact information is set forth below.
3.
Respondent American International Industries, Inc. (“American”) is a Nevada
corporation, whose principal office is located at 601 Cien Street, Suite 235, Kemah, Texas
77565. This respondent is authorized to do business in Texas and may be served with process by
serving its registered agent for service of process, Rebekah Laird-Ruthstrom, 601 Cien Street,
Suite 235, Kemah, Texas 77565. American’s representative is not known at this time. This
respondent’s telephone number is (281) 334-9479, email addresses are amin@americanii.com
and rruthstrom@americanii.com, and fax number is (281) 334-9508.
4.
Respondent Daniel Dror (“Dror”) is an individual resident of Texas and may be
served with process at his usual place of business, 601 Cien Street, Suite 235, Kemah, Texas
77565. Dror’s representative is not known at this time. Dror’s business telephone number is
(281) 334-9479, cell telephone number is (281) 330-9311, fax number is (281) 334-9508, and
email address is ddror@americanii.com. Dror’s home address is 1412 North Boulevard,
Houston, Texas 77006.
Jurisdiction & Venue
5.
Claimants and Respondents (the “Parties”) have contractually agreed to submit
this dispute to binding arbitration held in Harris County, Texas, in accordance with the rules of
the American Arbitration Association. Pursuant to the terms of the Parties’ Share Purchase and
Sale Agreement dated October 1, 2013, Paragraph 5.8 states:
5.8
Governing Law. This Agreement is executed and performable in Harris
County, Texas. The Parties expressly agree that this Agreement shall be enforced,
governed and construed in all respects in accordance with the laws of the State of
Texas, and exclusive venue for all claims and causes of action for enforcement
or interpretation of this Agreement shall be subject to binding arbitration or
mediation upon the agreement of the Parties to be held in accordance with the
rules and regulations of the American Arbitration Association in Harris
County, Texas.
Additionally, Paragraph 7 of the Parties’ Settlement, Release and Confidentiality Agreement
states:
7. Governing Law; Waiver of Jury Trial; Arbitration. This Agreement shall in all
respects be interpreted, governed, and construed by and under the laws of the
State of Texas without regard to any conflict-of-law provisions. The Parties
hereby waive, to the extent permitted by applicable law, trial by jury in any
litigation in any court with respect to, arising out of or relating to this Agreement.
The Parties expressly further agree that any dispute arising hereunder shall be
determined by binding arbitration held in Harris County, State of Texas, in
accordance with the rules and regulations of the American Arbitration
Association. This provision is a material inducement for the parties to enter into
the Agreement.
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Background & Nature of the Claim
6.
Claimant Scott Wolinsky was a director of American International Industries, Inc.
from July 14, 2010 until he resigned on March 7, 2013. At all relevant times, Dror was an officer
of American.
7.
When Scott Wolinsky indicated his intent to resign, Dror and American asked to
purchase all of Claimants’ shares of common stock in American (ticker: AMIN).
8.
On October 1, 2013, to effectuate the share purchase/sale transaction, the Parties
entered into a Share Purchase and Sale Agreement (the “Agreement”). Pursuant to the
Agreement, Claimants agreed to sell their 89,540 AMIN shares (the “Wolinsky Shares”);
American agreed to buy the shares for a total of $330,000 in two stages; and Dror agreed to
guaranty American’s obligations.
9.
For the first stage of the Agreement, American was to pay $130,000 to the
Wolinskys for 26,000 of the Wolinsky Shares (the “First Payment”). Although the Agreement
specifies a Delivery versus Payment (“DVP”) transaction, it was later discovered by both parties
that the Wolinskys’ brokerage, TD Ameritrade, would not permit such a transaction.
Accordingly, the Wolinskys had to transfer their 26,000 AMIN shares to American via a stock
transfer service (Registrar and Transfer Company). On October 23, 2014, the Wolinskys
transferred title of 26,000 AMIN shares to American and two weeks later, on November 7, 2013,
American paid $130,000 to the Wolinskys’ account.
10.
For the second stage, American executed a non-interest bearing promissory note
(the “Note”) in the amount of $200,000 (the “Second Payment”). Dror personally guaranteed the
Note and the Second Payment. The Second Payment was due and payable by American on or
before September 30, 2014 (the “Maturity Date”). Under the Agreement, American had two
options to make the Second Payment:
Option 1: Pay Claimants $200,000 in full on or before the Maturity Date,
in exchange for the Wolinskys’ remaining 63,540 AMIN shares; or
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Option 2: Pay Claimants the difference between $200,000 and net
proceeds (“Net Proceeds”) received by Claimants from the sale of a
portion or all of 63,540 of the Wolinsky Shares into the public market as
directed by American over a period not to exceed sixty (60) trading days
(the “Trading Period”), prior to the Maturity Date.
11.
In other words, for American to satisfy the second stage, American could pay the
$200,000 in full, or direct the Wolinskys to sell all or part of their remaining 63,540 AMIN
shares into the public market and receive a credit against the $200,000 balance due for any
amounts the Wolinskys received from the sale of the Wolinsky shares after commissions.
12.
On July 1, 2014, Dror advised the Wolinskys by email indicating that American
elected Option 2 and would make the Second Payment. American and Dror then directed the
Wolinskys to sell all of the 63,540 Wolinsky Shares according to more specific instructions that
would follow. Dror’s email also instructed the Wolinskys to immediately sell 7,500 of the 63,540
Wolinsky Shares, thus establishing the first day of the Trading Period. From July 1, 2014 until
September 15, 2015, Dror instructed the Wolinskys by telephone or text to sell specific amounts
of AMIN shares into the public market at specific prices and at specific times, which resulted in
the Wolinskys receiving a total of $68,918.79 in Net Proceeds for selling 45,600 Wolinsky
Shares. The Trading Period expired on September 24, 2014, just prior to the Maturity Date.
13.
The last instructions that American sent to Claimants for selling Wolinsky Shares
was via a text message from Dror received on September 15, 2014, which was followed by an
email on same date from Dror requesting Claimants to provide an updated statement that
documents the Net Proceeds. Claimants sent the updated statement to Dror.
14.
As of this filing, Claimants still hold 17,940 Wolinsky Shares, and the balance of
the Second Payment totaling $131,081.21 is overdue. The 17,940 Wolinsky Shares remain in the
Wolinskys’ possession through no fault of their own, as American never provided instructions
for these remaining shares to be sold.
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15.
Respondents have ignored several attempts by the Claimants and their
representatives to arrange to sell the remaining 17,940 Wolinsky Shares and complete the
Second Payment.
16.
The Maturity Date has passed and the $131,081.21 balance is due on the Note
from the remainder of the Second Payment.
Count 1 – Breach of Contract by American and Fraudulent Inducement
17.
The Agreement is a valid and enforceable written contract. The Agreement
provided that American would purchase all of the Wolinsky Shares in two stages in exchange for
total consideration of $330,000.
18.
The Wolinskys have fully complied with their obligations under the Agreement.
19.
American breached the Agreement by failing to pay the full amount owed under
the Agreement, as well as not complying with section 2.2(c) of the Agreement requiring
American to email instructions to the Wolinskys on Monday or the first trading day of each week
following each statement provided by the Wolinskys.
20.
It now appears that American never intended to make the Second Payment and
Dror never intended to honor his personal guaranty. For example, American’s Form 10-Qs and
10-K filed with the Securities Exchange Commission for the quarters ended September 30, 2013,
December 31, 2013, March 31, 2014 and June 30, 2014 explicitly indicate that American may be
“unwilling” to pay the Note when it comes due on September 30, 2014.1
21.
The Wolinskys detrimentally relied on American’s and Dror’s representations that
they would pay pursuant to the terms of the Agreement.
22.
American’s breach and fraudulent inducement has caused injury to the
Wolinskys, which resulted in the following damages: the amount due and owing under the
1 In American’s Form 10-Q filed with the Securities Exchange Commission for the quarter ended June 30, 2014,
American reported that it had $12,852,124 in total current assets and $865,705 in cash and cash equivalents.
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contract ($131,081.21); legal costs and collection expenses incurred by the Wolinskys; punitive
or exemplary damages; and 5% interest.
Count 2 – Breach of Contract by Dror and Fraudulent Inducement
23.
The Agreement is a valid and enforceable contract. Dror personally guaranteed all
payments due from American as the primary obligor under the Agreement.
24.
The Wolinskys have fully complied with their obligations under the Agreement.
25.
Dror breached the contract by failing to pay the full amount owed under the
Agreement when American failed to do so by the Maturity Date.
26.
It now appears that American never intended to make the Second Payment and
Dror never intended to honor his personal guaranty.
27.
The Wolinskys detrimentally relied on American’s and Dror’s representations that
they would pay pursuant to the terms of the Agreement.
28.
Dror’s breach and fraudulent inducement caused injury to the Wolinskys, which
resulted in the following damages: the amount due and owing under the contract ($131,081.21);
legal costs and collection expenses incurred by the Wolinskys; punitive or exemplary damages;
and 5% interest.
Attorneys’ Fees
29.
The Wolinskys seek their reasonable attorneys’ fees, as provided for in the
parties’ contract and by section 38.001, TEX. CIV. PRAC. & REM. CODE.
Conditions Precedent
30.
All conditions precedent to recovery by the Wolinskys have been performed or
have occurred.
Conclusion & Prayer
Claimants Scott Wolinsky and Maria T. Wolinsky respectfully request that Respondents
American International Industries, Inc. and Daniel Dror be cited and required to appear and answer, and
that Claimants have recovery against Respondents for:
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