<PAGE>   1

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

                                  FORM 10-QSB


                               (Amendment No. 1)


________________________________________________________________________________

[X]  Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

               For the quarterly period ended September 30, 1999


[_]  Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
     of 1934


                    AMERICAN INTERNATIONAL INDUSTRIES, INC.
            (Exact name of registrant as specified in its charter)


                       Commission file number: 000-25223

                 Nevada                                88-0326480
                 ------                                ----------
      (State or Other Jurisdiction                  (I.R.S. Employer
     of Incorporation or Organization)            Identification No.)


  601 Cien Street, Suite 235, Kemah, Texas             77565-3065
  ----------------------------------------             ----------
  (Address of Principal Executive Office)              (Zip Code)


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


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [_]

As of November 30, 1999 registrant had 124,182,018 shares of Common Stock
outstanding.
<PAGE>   2
                                    PART I

ITEM 1.  FINANCIAL STATEMENTS

AMERICAN INTERNATIONAL INDUSTRIES, INC.

Consolidated Balance Sheets

------------------------------------------------------------------------
                                                               Audited
                                                                 1998
                                                Unaudited     (Restated-
September 30, and December 31,                     1999         Note 8)
------------------------------------------------------------------------
Assets

Current

  Cash                                        $    705,755  $  2,149,916
  Trading securities                             1,160,829       418,770
  Marketable securities available-for-sale               -       115,884
  Restricted certificate of deposit                150,000             -
  Accounts receivable, net of allowance
    for doubtful accounts                        1,847,975     1,641,469

  Accounts receivable, related party               261,131             -

  Notes receivable                                  87,190       116,190

  Inventories, net of reserve                    1,272,973     1,055,091

  Other                                            108,290       141,996
------------------------------------------------------------------------
Total current assets                             5,594,143     5,639,316

Real estate held for sale                          939,584       939,584

Property and equipment, net of
  accumulated depreciation                       4,912,234     5,060,372

Goodwill, net of amortization                    1,797,842     1,085,616

Non-compete agreements, net of amortization        320,000       417,500

Restricted certificate of deposit                1,000,000             -

Other                                               48,327       125,793
------------------------------------------------------------------------
Total  assets                                 $ 14,612,130  $ 13,268,181
------------------------------------------------------------------------

<PAGE>   3
AMERICAN INTERNATIONAL INDUSTRIES, INC.

Consolidated Balance Sheets

------------------------------------------------------------------------
                                                               Audited
                                                                 1998
                                                Unaudited     (Restated-
September 30, and December 31,                     1999         Note 8)
------------------------------------------------------------------------
Liabilities and Stockholders' Equity

Current liabilities
  Accounts payable                            $ 2,394,851    $ 1,451,717
  Accrued expenses                                632,662        481,227
  Margin loan from a financial institution        454,208        195,645
  Accrued property taxes                          370,729        386,601
  Notes payable, current portion                  666,461        116,144
  Notes payable to related parties,
    current portion                               621,912        459,972
  Capital lease obligations, current portion    1,029,984        584,552
------------------------------------------------------------------------
Total current liabilities                       6,170,807      3,675,858

Notes payable, less current portion             1,732,459      1,599,909

Notes payable to related parties, less
  current portion                                 175,828        320,324

Capital lease obligations, less current portion   188,286        776,388

Other                                              21,674              -
------------------------------------------------------------------------
Total Liabilities                               8,289,054      6,372,479
------------------------------------------------------------------------
Minority interest                                 (57,387)             -

Stockholders' equity:
  Preferred stock, $.001 par value:
    10,000,000 shares authorized, none issued           -              -
  Common stock, $.001 par value; 200,000,000
    shares authorized                             124,971        121,116
  Additional paid-in capital                   15,022,910     15,726,799
  Deficit                                      (8,634,918)    (8,345,998)
------------------------------------------------------------------------
                                                6,512,963      7,501,917

Less:  Common stock subscriptions receivable     (100,000)      (550,000)
Treasury stock, at cost                           (32,500)       (37,251)
Accumulated other comprehensive gain (loss)             -        (18,964)
------------------------------------------------------------------------
Total stockholders' equity                      6,380,463      6,895,702
------------------------------------------------------------------------
Total liabilities and stockholders equity    $ 14,612,130    $13,268,181
========================================================================


                    See accompanying notes to consolidated financial statements.
<PAGE>   4
AMERICAN INTERNATIONAL INDUSTRIES, INC.

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Operations

------------------------------------------------------------------------
                                              Unaudited       Unaudited
For the three months ended September 30,        1999            1998

Net Sales                                   $  3,011,305    $  4,606,533

Cost of sales                                  2,497,548       3,746,820
------------------------------------------------------------------------
Gross Profit                                     513,757         859,713

Operating Expenses                               983,979         617,124
------------------------------------------------------------------------
Operating Income (Loss)                         (470,222)        242,589
------------------------------------------------------------------------
Other Income (Expense):

  Interest and dividend income                    20,915          19,791
  Investment gains                                34,411               -
  Interest expense                               (42,503)        (20,202)
  Other expenses                                (311,785)        (22,950)
  Other income                                     8,151          36,016
  Increase (decrease) in market value of
    trading securities                          (956,397)         37,845
------------------------------------------------------------------------
Total other income (expense), net             (1,247,208)         50,500

Income (Loss) from continuing operations      (1,717,430)        293,089
------------------------------------------------------------------------
Loss From Discontinued Operations               (532,370)              -
------------------------------------------------------------------------
Net income (loss)                             (2,249,800)        293,089
------------------------------------------------------------------------
Loss per common share - basic and diluted          (0.02)          (0.00)
Weighted average shares outstanding          124,947,982     110,540,835
========================================================================



                    See accompanying notes to consolidated financial statements.
<PAGE>   5
AMERICAN INTERNATIONAL INDUSTRIES, INC.

Consolidated Statements of Operations and Comprehensive Loss


Consolidated Statements of Operations

------------------------------------------------------------------------
                                                               Audited
                                                                 1998
                                                Unaudited     (Restated-
For the nine months ended September 30,            1999         Note 8)
------------------------------------------------------------------------
Net Sales                                   $ 10,913,870    $  5,756,615

Cost of sales                                  8,647,569       4,523,919
------------------------------------------------------------------------
Gross Profit                                   2,266,301       1,232,696

Operating Expenses                             3,012,502       1,388,411
------------------------------------------------------------------------
Operating Loss                                  (746,201)       (155,715)
------------------------------------------------------------------------
Other Income (Expense):

  Interest and dividend income                    58,588          22,935
  Investment gains                             1,179,447               -
  Interest expense                              (140,251)        (47,301)
  Other expenses                                (311,785)        (22,950)
  Other income                                    76,312          72,278
  Increase (decrease) in market value of
    trading securities                          (624,001)         37,845
------------------------------------------------------------------------
Total other income (expense), net                238,310          62,807

Loss before deemed dividends                    (507,891)        (92,908)

Deemed dividends                                       -      (2,338,038)
------------------------------------------------------------------------
Loss applicable to common stockholders      $   (507,891)   $ (2,430,946)
Loss from discontinued operations             (1,331,554)              -
------------------------------------------------------------------------
Net loss                                      (1,839,445)   $ (2,430,946)
------------------------------------------------------------------------
Loss per common share - basic and diluted          (0.01)          (0.03)
Weighted average shares outstanding          124,883,901      82,124,429
========================================================================

Consolidated Statements of Comprehensive Loss

Net loss                                      (1,839,445)     (2,430,946)
Unrealized gain on securities available
  for sale
  Unrealized holding gain arising during
    the period                                 1,051,720               -
  Less: reclassification adjustment for gains
    included in net income                    (1,032,756)              -
------------------------------------------------------------------------
Comprehensive Loss                          $ (1,820,481)   $ (2,430,946)
========================================================================


         See accompanying notes to consolidated financial statements.
<PAGE>   6
AMERICAN INTERNATIONAL INDUSTRIES, INC.

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                                Unaudited         Unaudited
For the nine months ended September 30,        Increase (Decrease) in Cash         1999              1998
-----------------------------------------------------------------------------------------------------------
<S>                                                                          <C>             <C>
Cash Flows From Operating Activities:
  Net Loss                                                                    $ (1,839,445)    $    (92,908)

  Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                                783,203          162,141
      Bad debt reserve                                                             (50,779)               -
      Inventory reserve                                                             (8,468)               -
      Realized gain on sale of securities                                       (1,179,445)               -
      Loss on disposal of equipment                                                                     210
      Common stock issued for services                                                   -           55,700
      Decrease in market value of equity securities                                624,001          (37,845)
      Changes in assets and liabilities, net of acquired assets and liabilities:
        Accounts receivable                                                       (361,865)          24,490
        Inventories                                                               (142,957)        (111,699)
        Other current assets                                                       (17,073)               -
        Purchase of trading securities, net                                     (1,374,676)        (176,945)
        Other assets                                                               125,143          (11,233)
        Accounts payable and accruals                                            1,070,279         (450,241)
        Deferred revenue                                                            20,539                -
        Accrued property taxes                                                     (15,870)               -
        Cash received from sale of options                                               -           49,785
        Cash received from broker                                                        -           40,000
-----------------------------------------------------------------------------------------------------------
Net cash used in operating activities                                           (2,367,413)        (548,545)
-----------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
  Proceeds (purchase) of available-for sale securities, net                      1,167,605          (54,540)
  Capital expenditures                                                            (290,269)        (143,131)
  Notes receivable                                                                 143,000                -
  Cash paid in acquisitions                                                       (141,306)               -
  Purchase of restricted certificates of deposit                                (1,150,000)               -
  Cash received in acquisition                                                         570        1,036,242
  Disposition of assets                                                            130,155                -
  Purchase of real estate properties                                                               (164,800)
-----------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                             (140,245)         673,771
-----------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
  Proceeds from issuance of stock                                                  456,900        2,217,500
  Proceeds from notes payable                                                    3,309,357        1,105,909
  Repayments of notes payable                                                   (2,415,608)        (979,477)
  Principal payments on capital lease obligations                                 (296,342)          (5,006)
  Purchase of treasury stock                                                         4,190                -
  Repayment on note receivable                                                       5,000
-----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                     $  1,063,497      $ 2,338,926
</TABLE>


         See accompanying notes to consolidated financial statements.
<PAGE>   7
AMERICAN INTERNATIONAL INDUSTRIES, INC.

Consolidated Statements of Cash Flow

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                                Unaudited         Unaudited
For the nine months ended September 30,        Increase (Decrease) in Cash         1999              1998
-----------------------------------------------------------------------------------------------------------
<S>                                                                          <C>               <C>
Net increase (decrease) in cash                                               $ (1,444,161)     $ 2,464,152

Cash at beginning of period                                                      2,149,916           62,991

Cash at end of period                                                              705,755        2,527,143
-----------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
  Interest paid                                                               $    288,366      $    49,500
-----------------------------------------------------------------------------------------------------------
Non-Cash Transactions:

Acquisition of land for common stock                                                     -        2,401,000
-----------------------------------------------------------------------------------------------------------
Deemed dividend                                                                          -        2,338,838
-----------------------------------------------------------------------------------------------------------
Issuance of securities on margin                                                         -         (303,300)
-----------------------------------------------------------------------------------------------------------
Stockholder debt forgiveness                                                       365,158                -
-----------------------------------------------------------------------------------------------------------
Subscriptions of common stock                                                            -          710,000
-----------------------------------------------------------------------------------------------------------

Purchase of subsidiary assets and liabilities through
 the issuance of common stock and options:
   Accounts receivable                                                        $          -      $ 2,632,551
   Inventory                                                                             -        1,096,528
   Other current assets                                                                  -          112,664
   Property, plant and equipment                                                         -        3,800,000
   Other assets                                                                          -           80,227
   Non-compete agreements                                                                -          150,000
   Goodwill                                                                              -        1,057,970
   Accounts payable                                                                      -       (2,681,466)
   Accrued expenses                                                                      -         (514,434)
   Notes payable                                                                         -         (975,000)
   Capital lease obligations                                                             -       (1,498,601)
   Long-term debt to related parties                                                     -         (466,381)
   Other liabilities                                                                     -          (95,000)
===========================================================================================================

                                                       See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>   8
American International Industries, Inc.

Notes to Consolidated
Financial Statements (Unaudited)

Note 1
Presentation of Interim Financial Statements

The accompanying consolidated financial statements include the accounts of
American International Industries, Inc. and its wholly owned subsidiaries. All
significant intercompany transactions and balances have been eliminated in
consolidation. The consolidated balance sheet as of December 31, 1998 has been
audited. The consolidated balance sheet as of September 30, 1999, the
consolidated statements of operations for the three months and nine months ended
September 30, 1999 and September 30, 1998, and the consolidated statements of
cash flows for the three months and nine months ended September 30, 1999 and
September 30, 1998, have been prepared by the Company, without audit. In the
opinion of management, all adjustments necessary to present fairly the financial
condition, results of operations and cash flows have been reflected in the
accompanying financial statements.


Effective October 1, 1999 the Company sold Modern Film Effects, Inc. d/b/a
Cinema Research Corporation ("CRC"). Accordingly, the Consolidated Statements of
Operations have been revised to present the results of operations from
continuing operations separate from those of discontinued operations.


Certain information and disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted. These financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's amendment to Form 10-KSB for the year ended December 31, 1998. The
results of operations for the three-month and nine-month periods ended September
30, 1999 are not necessarily indicative of the operating results for the full
year.

Note 2
Acquisition World Wide Net, Inc.


In May, 1999, the Company purchased for investment purposes, 400,000 freely
tradable shares (giving effect to a 1 for 5 reverse split), representing 20% of
the total outstanding common shares of World Wide Net, Inc. ("WWN"), for a total
of $300,000. WWN, an inactive public company with nominal assets, is traded in
the over-the-counter- bulletin-board (OTCBB). Of the total of 400,000 freely
tradable shares, approximately 50,500 have been sold, and an additional 1,200
shares have been purchased, in several transactions. The remaining shares are
categorized as trading securities and are accounted for in accordance with SFAS
No. 115. The fair market value of the unsold shares at September 30, 1999 was
$241,078. Unrealized losses amounted to $599,224 for the three month period
ended September 30, 1999. Management determines the fair market value of these
shares based on quoted market prices as reflected on the OTCBB. All sales of WWN
shares have been made in the open market to non-related third parties.


On June 28, 1999, the Company entered into a definitive agreement to acquire
100% of the optical and digital title, special effects and the scan and record
operations of Pacific Title/ Mirage Studios (Pac Title).


On September 12, 1999, the Company signed an agreement to acquire 3,100,000
newly issued, restricted, common shares of WWN, constituting approximately 60.8%
of the then outstanding total of 5,100,000 common shares of WWN. The shares of
WWN were received by AIII in exchange for 100% of the shares of CRC. Prior to
the merger with CRC, WWN had only nominal assets and no operations during the
three preceding years. Accordingly, the investment in WWN was recorded at the
historical cost basis of CRC at the effective date of the transaction. Since the
purchase of the 3.1 million shares acquired in September 1999 resulted in
majority ownership of WWN, the Company consolidated WWN as of September 30,
1999.


On September 29, 1999 the Company announced that it has discontinued
negotiations regarding the acquisition of the assets and operations of Pac
Title. Due to unforeseen circumstances the Company decided not to proceed with
the acquisition.

Note 3
Discontinued Operations - Sale of CRC


On November 15, 1999 WWN reached an agreement to sell its 100% ownership of CRC
to Cinema Investment Group, Inc. Pursuant to the terms of that agreement, WWN
will exchange its ownership in CRC for $250,000 cash at closing.



The purchaser will assume liability for the notes of CRC, approximately
$1,200,000, although those notes remain guaranteed by the pledge of certificates
of deposit owned by AII. It is anticipated that the total consideration received
in the transaction will exceed the book value of CRC and such excess will be
treated as a contribution of capital, rather than as a gain.

<PAGE>   9

CRC, acquired in the fourth quarter of 1998, comprised the Media/Entertainment
segment of the Company's total operations. Shown below is a summary of certain
elements of CRC's operations, financial position and cash flows reflected in
the Company's consolidated financial statements from the period of acquisition
in 1998 to the date of disposition in 1999.


                                                        1999          1998
                                                     ----------    ----------
Income statement data:
        Revenues                                     $2,685,251    $  N/A
        Costs and expenses                            3,869,026       N/A
        Operating loss                                1,183,775       N/A
          Loss from discontinued operations           1,331,554       N/A
--------------------------------------------------------------------------------

Balance sheet data:
      (at September 30, 1999 and December 31, 1998)
        Current assets                                  381,860       592,044
        Property and equipment - net                  3,274,026     3,564,036
        Total assets                                  3,766,131     4,391,898
        Current liabilities                           2,353,539     2,123,279
        Other liabilities                             1,306,520     1,196,152
           Net assets of discontinued operations        106,072     1,072,467

Cash flow data:
        Cash flows from operations                      221,250           N/A
        Cash flows from investing activities           (126,013)          N/A
        Cash flows from financing activities            (80,735)          N/A
           Net cash flows from discontinued operations   14,502           N/A
--------------------------------------------------------------------------------


Note 4
Allowance for Doubtful Accounts

The allowance for doubtful accounts was increased by provisions for bad debts of
$41,200 and recoveries of $85, and was reduced by specific write-offs of $92,064
for the nine months ended September 30, 1999.



Note 5


In March, 1999, the Company acquired a minority interest in Signal Products,
Inc. (Signal), a California corporation, which owns the exclusive license to
market handbags and leather accessories bearing the "Guess" trademark. The
shares related to that transaction were placed in escrow pending a business
evaluation of Signal. Release of the shares from escrow was contingent upon
satisfactory determination of Signal's value. Such evaluation has not been
completed and the Company has rescinded the transaction.


Note 6
Litigation


The Company has been involved in litigation through the suit it filed against
the former principal stockholder of Acqueren. That action, filed in Galveston
County, Texas, related to representations made by those selling shareholders of
Acqueren, prior to the acquisition. On August 17, 1999, those selling
shareholders filed an action in New York, alleging misrepresentations by AIII.
Management expects the outcome of such litigation will not have a material
adverse effect on the Company.


Note 7



Segment Information
                               Three Months Ended        Nine Months Ended
                                 September 30              September 30
Net sales:                     1999         1998         1999         1998
                               ----         ----         ----         ----
   Industrial/Commercial    3,003,948     4,562,203   10,306,513    5,712,285
   Real Estate                  7,357             -      607,357            -
   Oil & Gas                        -        44,330            -       44,330
-----------------------------------------------------------------------------
Consolidated net sales      3,011,305     4,606,533   10,913,870    5,756,615
-----------------------------------------------------------------------------

<PAGE>   10

Income (loss) from operations:
   Industrial/Commercial      (98,798)      347,189       69,419      269,941
   Real Estate                 (5,661)       (4,882)     445,941      (27,026)
   Oil & Gas                      (12)       44,330       (5,026)      36,048
   Corporate                 (365,752)     (144,048)  (1,256,535)    (434,678)
-----------------------------------------------------------------------------
Consolidated operating
 income (loss)               (470,223)     (242,589)    (746,201)    (155,715)
-----------------------------------------------------------------------------



A summary of identifiable assets
   Industrial/Commercial                               8,129,243    1,924,311
   Media/Entertainment(1)                              3,916,701            0
   Real Estate                                           996,631      906,306
   Oil & Gas                                              67,528        9,863
   Corporate                                           1,502,027    1,335,822
-----------------------------------------------------------------------------
Consolidated assets                                   14,612,130    4,176,302
-----------------------------------------------------------------------------
(1) CRC comprised this segment whose operations were discontinued effective
    October 1, 1999.



NOTE 8 - Restatement of Prior Periods



The Company's financial statement for the period ended December 31, 1998, has
been restated to reflect the acquisitions of TRE, Brenham, Midtowne and real
estate held for sale at the Seller's historical cost plus assumed liabilities.
The acquisitions were previously recorded at fair value. The transactions have
been recorded at carry-over cost since the shareholders of the entities of all
these acquisition transactions are under common control. Accordingly, the
Company restated its financial statements to reflect the real estate held for
sale and natural gas and minerals interests at the seller's carry-over cost. The
Company recorded a deemed dividend which represents the fair value of the assets
acquired in excess of the predecessor carry-over historical cost.


    The effects of the restatements are as follows:

<TABLE>
<CAPTION>
                                    As Previously Reported         As Restated
                                      December 31, 1998         December 31, 1998
                                    ----------------------      -----------------
<S>                                 <C>                         <C>
Consolidated Balance Sheets:
Real estate held for sale........      $ 4,910,140                 $   939,584
Natural gas and mineral interests
 net of amortization of $105,000.          240,000                           -
Deficit..........................       (4,192,960)                 (8,345,998)


                                       Nine Months ended      Nine Months ended
                                       September 30, 1998     September 30, 1998
                                       ------------------     ------------------
Consolidated Statements of Loss:
Operating expenses...............      $ 1,433,411                $ 1,338,411
Operating loss...................         (176,085)                  (155,715)
Net loss applicable to common
 stockholder.....................         (137,908)                (2,430,946)

Loss per share - basic and
 diluted.........................     $       (.00)               $      (.03)
</TABLE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The statements contained herein and other information contained in this report
may be based, in part, on management's estimates, projections, plans and
judgments. As such, these are forward looking statements and involve a number of
risks and uncertainties. A number of factors, which could cause actual results
to differ significantly, include general economic conditions, competitive market
influences, technology changes, and other influences beyond the control of
management.

In order to make this document easier to read, the following defined terms are
used: Northeastern Plastics, Inc. ("NPI"), Modern Film Effects, Inc., d/b/a
Cinema Research Corporation ("CRC"), Marald, Inc. ("Marald"), Tough Truck and
Accessories, Inc., d/b/a Armor Linings ("Armor Linings"), Har-Whit / Pitt's &
Spitt's, Inc. ("Har-Whit"), Texas Real Estate Enterprises, Inc. ("TREE"),
Brenham Oil & Gas, Inc. ("Brenham"), and Acqueren, Inc. ("Acqueren").

Results of Operations - Consolidated AIII - Continuing Operations


Three months ended September 30, 1999 compared to three months ended September
30, 1998. Consolidated net loss for the three-month period ended September 30,
1999 from continuing operations was $1,717,430 and the loss from discontinued
operations of $532,370 brought the consolidated loss to $2,249,800, as compared
to net income for the three months ended September 30, 1998 of $293,089. The
factors contributing to the consolidated net loss for the periods are discussed
below:



The net sales from continuing operations for the three months ended September
30, 1999, were $3,011,305 as compared to $4,606,533 for September 30, 1998. NPI
sales for the three-month period ended September 30, 1999 were $1,888,653, as
compared to $3,935,820 during the comparable quarter in 1998. CRC revenues for
the three month period ended September 30,1999 were $673,930. During the
quarter, CRC experienced a decline in revenues due to a general downturn in
movie production and unfavorable effects of the attempted merger with Pac Title.
Marald had revenues of  $471,182, Armor Linings sales were $177,168. Har-Whit
sales for the three months ended September  30, 1999 were $516,205 as compared
to $626,383 for the three months ended September 30, 1998. TREE had no sales
during the three-month period ended September 30, 1999, and had no sales
activity for the comparable three months of 1998. Brenham reported  $1,651
royalty income in the current quarter, as compared to $44,330 during the
comparable three months of 1998. The activity of Acqueren during the three
months ended September 30, 1999, consisted of investments and trading in various
investment and available for sale equity securities; such activity resulting in
unrealized investment losses of $513,897 and realized investment income of
$33,713. Cost of sales as a percentage of net sales for the three months ended
September 30, 1999 was approximately 83%, with gross margins of 17%, as compared
to approximately 81.4% cost of sales and 18.6% gross margins during the three-
month period ended September 30, 1998. The change is the result of the inclusion
of NPI, which sustained gross margins averaging 13.6% during this quarter. CRC
posted negative margins averaging 33% during the three months ended September
30, 1999. Har-Whit sustained 11.8% margins in 1999 as compared to 35.5% margins
in 1998. Marald sustained margins during the current quarter of 29.1%, while
Armor Lining's margin was 28.6% of sales.

<PAGE>   11
Operating expenses for the three months ended September 30, 1999 were $983,979
as compared to $617,124 for the three months ended September 30, 1998. This
increase is primarily the result of acquisitions.  NPI had operating expenses of
$270,690 during the current quarter. CRC incurred operating expenses of
$267,556. Marald incurred $137,325 in operating expenses during the three months
ended September 30, 1999. Armor Linings operating expenses during the quarter
were $39,742. TREE incurred operating expenses, primarily property taxes, of
$13,018. Har-Whit sustained operating expenses of $143,978 during the three-
months ended September 30, 1999 as compared to $192,827 during the comparable
period last year.  AIII incurred operating expenses at the corporate level of
$365,752 for the three months ended September 30, 1999, including $58,376 of
legal & professional fees and $25,000 amortization of goodwill. During the
comparable period of 1998, AIII sustained operating expenses of $144,048.


Other expense amounted to $1,247,207 for the three-month period ended September
30, 1999 including interest income of $20,675 and dividend income of $240.
Acqueren reported unrealized investment losses of $513,897 and realized
investment income of $33,713. AIII reported unrealized investment losses of
$442,500 and realized investment income of $699. Interest expense during the
current quarter amounted to $42,503. A $311,785 loss was recorded related to
the Company's investment in the attempted acquisition of Pacific Title/Mirage
Studios. During the comparable three months last year, other income of $50,500
and $22,950 of interest expense were incurred.


Nine months ended September 30, 1999 compared to nine months ended September 30,
1998.


Consolidated net loss from continuing operations for the nine-month period ended
September 30, 1999 was $507,891 and the loss from discontinued operations of
$1,331,554 results in a consolidated loss of $1,839,445, as compared to a loss
during the nine months ended September 30, 1998 of $2,130,946. The factors
contributing to the consolidated net income for the period are discussed below:



The net sales for the nine months ended September 30, 1999, were $10,963,870 as
compared to $4,606,533 for September 30, 1998, such 138% increase being
primarily attributable to the inclusion of the sales of NPI, Marald, Armor
Linings and TREE. NPI had sales for the nine month period of $7,164,720. Marald
had revenues of  $1,445,741, while Armor Linings revenues amounted to $308,575.
Har-Whit sales for the nine months ended September 30, 1999 were $1,476,151 as
compared to $1,776,465 for the nine months ended September 30, 1998. TREE had
sales of $607,357 for the nine-month period ended September 30, 1999, while it
had no sales activity for the comparable nine months of 1998. Brenham reported
royalty income of $7,473 in the current nine months compared to $44,330 during
the first nine months of 1998. The activity of Acqueren during the nine months
ended September 30, 1999, consisted of investments and trading in various
investment and available for sale equity securities; such activity resulting in
unrealized investment losses of $756,501 and realized investment earnings of
$1,178,746. AIII reported unrealized investment income of $132,500 and reported
realized investment income of $699. Cost of sales as a percentage of net sales
for the nine months ended September 30, 1999 was approximately 79.3%, with gross
margins of 20.7%, as compared to approximately 78.6% cost of sales and 21.4%
gross margins during the nine-month period ended September 30, 1998. The change
is the result of the inclusion of NPI, which sustained gross margins averaging
11.9 % during the nine months.  Har-Whit sustained 24.1% margins in 1999, as
compared to 33.5% margins in 1998. During the first nine months of 1999, TREE
experienced margins of 83.5% on its sale of real estate rights, as the $100,000
cost associated with the contract constituted 16.7% of sales.


Operating expenses for the nine months ended September 30, 1999 were $3,012,502
as compared to $1,388,141 for the nine months ended September 30, 1998. NPI had
operating expenses of $781,047 during the nine months ended September 30, 1999.
Marald incurred $330,722 in operating expenses during the nine months ended
September 30, 1999. Armor Linings operating expenses during the nine months were
$77,939. TREE incurred operating expenses, primarily property taxes, of $61,415.
Har-Whit sustained operating expenses of $454,304 during the nine months ended
September 30, 1999 as compared to $643,057 during the comparable period last
year. During the nine months ended September 30, 1999 operating expenses of
Brenham totaled $5,026. During the nine months ended September 30, 1999, AIII
incurred expenses at the corporate level of $1,256,537, including $464,899 of
legal & professional fees and $75,000 amortization of goodwill, as compared to
$434,678 during the comparable period last year.


Other income amounted to $238,310 for the nine-month period ended September 30,
1999 including interest and dividend income of $58,588. Other expenses for the
period ended September 30, 1999 include the write-off of costs  amounting to
$311,785 in connection with the attempted acquisition of Pacific Title. Acqueren
and AIII reported unrealized investment losses of $624,001 and realized
investment income of $1,179,445 during the nine months. Interest expense of
$140,251 during the first nine months of 1999 compares to $22,935 of interest
expense in the comparable period last year. Other income (expense) for the
nine-month period ended September 30, 1998 was $62,807.


Net Income and Comprehensive Income


The consolidated net loss from continuing operations  for the three-month period
ended September 30, 1999 was $1,717,430 and the loss from discontinued
operations of $532,370 brings the consolidated net loss to $2,249,800, as

<PAGE>   12

compared to the net loss of $1,744,949 sustained in the three months ended
September 30, 1998. During the three months ended September 30, 1999, TREE had
net income of $95, as compared to a loss of $1,882 in the prior year.  NPI
posted a net loss of $16,643, Har-Whit had a net loss of $99,232, and Brenham
had net income of $1,956. Marald posted a loss of $5,634 and Armor Linings
reported income of $8,267. AIII sustained a loss of $1,106,925 at the corporate
level. Acqueren reported losses of $449,313, primarily attributable to its
unrealized losses on marketable securities. Of the prior period's loss, $124,257
was incurred by AIII at the corporate level, Brenham had income of $44,330, TREE
had losses of $1,882, NPI posted income of $311,205, and income of $22,474 was
attributable to the Har-Whit operations.



Consolidated net losses from continuing operations, for the nine-month period
ended September 30, 1999 were  $507,891, and losses from discontinued operations
of $1,331,554 brings the consolidated loss to $1,839,445. This compares to the
net loss of $2,430,946 sustained in the nine months ended September 30, 1998
after giving effect to the deemed dividend of $2,338,038. During the nine months
ended September 30, 1999, TREE had net income of $458,117, NPI posted net income
of $78,806, Har-Whit had a net loss of $143,266 and Brenham had  net income of
$3,765. Marald earned $97,937 and Armor Linings earned $21,390. AIII sustained a
loss of $1,417,438 at the corporate level. Acqueren reported income of $392,798.
Of the prior period's loss, $411,772 was incurred by AIII at the corporate
level in addition to the deemed dividend of $2,338,038, $60,693 income by
Brenham, $14,025 loss by TREE, offset by earnings of $311,205 by NPI while Har-
Whit experienced a loss of $80,242.


Liquidity and Capital Resources - Consolidated AIII


Total assets at September 30, 1999, were $14,612,130, as compared to $13,268,181
at December 31, 1998.  The increase is primarily attributable to increased
inventories and accounts receivable at NPI and Har-Whit, and the acquisition of
Marald, Inc. and Armor Linings.



Consolidated accounts receivable increased by $206,506 from December 31, 1998 to
September 30, 1999. Accounts receivable of NPI increased by $222,155 from
December 31, 1998 due primarily to sales increases during the period resulting
from the seasonal nature of NPI's business. Har-Whit experienced a decrease of
$41,986 in accounts receivable during the nine months ended September 30, 1999.
CRC's receivables decreased by $104,745 from December 31, 1998 due to a decrease
in sales during the summer months of 1999. Marald's receivables increased by
$81,151, while Armor's receivables increased by $49,931 during this same period.



Consolidated inventory increased by $217,882 from December 31, 1998 to
September 30, 1999. Inventory at NPI increased by $157,719 due primarily to the
increase in sales activity discussed above. Har-Whit's inventory increased by
$49,250 during this period. CRC's inventory decreased by $66,267 during the
nine months ended September 30, 1999, while Marald's inventory increased by
$47,180 and Armor's increased by $30,000 during the same period.



Total liabilities at September 30, 1999, were $8,289,054, as compared to
$6,372,479 at December 31, 1998. The increase is primarily attributable to
increased activity by NPI and the acquisitions of Marald and Armor Linings.



At September 30, 1999, AIII had negative working capital of $576,664 as
compared to $1,963,458 at December 31, 1998. The decrease in working capital is
primarily attributable to the purchase of restricted certificates of deposit
securing indebtedness of CRC and Har-Whit and increased debt by CRC . AIII's
consolidated cash position at September 30, 1999, was $705,755 as compared to
$2,149,916 at December 31, 1998. The value of investments in marketable
securities at September 30, 1999 was $1,160,828 compared to $534,654 at December
31, 1998. Accounts receivable at September 30, 1999 were $1,847,975 compared to
$1,641,469 at December 31 1998, the increase being attributable to the seasonal
increase in  sales of NPI and the acquisition of Marald and Armor. Inventories
were $1,272,973 at September 30, 1999 as compared to $1,055,091 at December 31,
1998.


In July, 1999 an advance from a related party in the amount of $250,000 was used
to fund the deposit regarding the proposed acquisition of certain assets and
operations of Pacific Title/ Miraage Studios. As the negotiations have been
discontinued, such deposit has been written off as other expense in the period
ended September 30, 1999.


In May 1999, the Company purchased 400,000 shares of World Wide Net, Inc. (WWN)
for $300,000, representing 20% of the total outstanding common shares of WWN.
WWN is an inactive public company with nominal assets.



The Company purchased the shares of WWN for both investment purposes and
because it believed that the shares may have value due to the fact that WWN was
a publicly traded, if non-reporting, company. At the time of the purchase of
the WWN shares, the Company had approximately $1,247,000 of cash and cash
equivalents and $1,192,000 in marketable trading securities. In addition, the
Company had lines of credit available aggregating $105,000 to draw upon to meet
its short-term obligations. The Company's decision to make the $300,000 cash
investment in WWN was initially only for short-term investment purposes, given
that it was registered as a public trading entity and on the basis of the
general popularity of Internet businesses.


To date, the Company has no commitment for any additional financing and there
can be no assurance that any such financing will be available or, if it is
available, that it will be available on acceptable terms.  If adequate funds are
not available to satisfy either short or long-term capital requirements, the
Company may be required to limit its operations significantly.


Consolidated negative operating cash flows of $2,367,413 for the nine months
ended September 30, 1999 consisted of negative cash flows of $1,713,398 at the
holding company, $972,032 by Acqueren, $235 at Brenham, $349,459 at NPI, offset
by positive operating cash flows of $6,698 for Har-Whit and $18,680 for Marald,
$24,132 by Armor $421,305 by TRE, and $196,896 at CRC. Positive operating cash
flows by CRC primarily resulted due to the increase in accounts payable of
$796,526. The Company believes that the sale of CRC will substantially improve
the consolidated liquidity and operating performance of All. Acqueren's negative
operating cash flows were offset by positive flows from investing activities.
NPI reported negative operating cash flows as of September 30, 1999 due to the
seasonal nature of the business cycle, experiencing increases in accounts
receivable and inventories during the third quarter. During the fourth quarter
positive operating cash flows should result from reductions in receivables.



Presently, the Company has two lines of credit from Southwest Bank of Texas and
Sterling Bank. In addition, the Company's largest shareholder, Elk International
Corporation Ltd., has made available to the Company a $500,000 line of credit.
The Company has significant capital raising and financing capability through
its ability to sell or pledge unencumbered assets as collateral. The Company's
wholly owned subsidiary TREE received an offer of $1,200,000 from Weiner
Development Corporation for its 286 acres of land in Dickinson, Texas. Further,
TREE received an offer of $250,000 for 5 acres on another of one of its
properties in Houston, Texas. The Company did not accept the offers because it
believed it they were inadequate. In addition, the Company believes it has
further capital raising and financing capability through its ability to sell or
pledge (a) its additional portfolio of real estate, which is appraised at
greater values than its book carrying value, (b) investment securities, and (c)
other assets. Management believes that an inordinate amount of nonrecurring
expenses has been incurred in dealing with issues related to CRC, and that CRC
was the only subsidiary experiencing serious negative operating results.
Management believes that by the sale of CRC the Company ended the losses,
generated proceeds, and reduced costs. The Company experienced unusual, and
believes mostly non-recurring, one time professional, legal, and accounting
expenses related to the restatement of its financials as requested by the SEC
and the costs involved in order to become again a OTC Bulletin Board traded
Company. Based on the above, the Company believes that the financial statements
are correctly stated and should not be prepared under the liquidation basis of
accounting.





Media/Entertainment Segment: Discontinued Operations

Results of Operations - Modern Film Effects, Inc., dba Cinema Research
Corporation

For the three months ended September 30, 1999, CRC had net sales of $673,930,
operating expenses of $267,556 and sustained an operating loss of $490,261.
Sales for the period were adversely affected by general downturn affecting the
movie industry and seasonal influences as well as the anticipation by the
studios, of the merger with Pac Title. Expecting that the new work would be
performed at the Pac Title facilities, several of the studios began booking
their work at Pac Title. Those influences continue to be reflected in operating
results. In anticipation of the merger, staff reductions resulted in additional
payroll expense due to payment of severance and accrued vacation time. The net
loss for the September, 1999 quarter was $532,370.
<PAGE>   13
For the nine-month period ended September 30, 1999, CRC recorded sales of
$2,685,251, operating expenses of $1,115,743 and sustained an operating loss of
$1,183,775. Interest expense of $147,779 brings the year-to-date losses to
$1,331,554. In November, 1999 a decision was made to sell the CRC operations to
David Miller, a former owner of CRC. That transaction is expected to close
in December 1999. Accordingly, the results of operations of CRC are presented
separately as discontinued operations.

Liquidity and Capital Resources - CRC


Total assets of CRC at September 30, 1999, were $ 3,766,131, total liabilities
were $3,660,059 and CRC had negative current working capital of $ 1,971,679. For
nine months ended September 30, 1999, CRC had $196,896 net cash provided from
operations, $126,013 net cash used in investing activities, and $56,381 net cash
used by financing activities. Losses and costs associated with the attempted
merger with Pac Title added to the financing requirements of CRC. The contract
regarding the sale of CRC calls for a cash payment of $250,000 at closing and
assumption by the purchaser of all liabilities of CRC.



Accounts receivable turnover ratio is 7.19 and the inventory turnover ratio is
42.60 for the nine months ended September 30, 1999.


Industrial/ Commercial Segment

Results of Operations - Northeastern Plastics, Inc.

For the three months ended September 30, 1999 NPI had net sales of  $1,888,653,
operating expenses were $270,690, and operating loss was $13,828. Other expense
of $2,814 includes net interest expense. Net loss for the three months was
$16,642.


Sales of NPI are subject to seasonal influences and the buying patterns of
customers. Approximately 33% of sales are of items which are generated during
the Christmas season. Thus, the retailers buying from NPI will increase orders
in preparation for the selling season. During the second calendar quarter of
1999, NPI experienced significant increases in orders by a major customer,
Family Dollar Stores. Changes in the schedule of that customer's orders
resulted in a shift to the second quarter of sales that had been expected to
book in the third quarter.


For the nine months ended September 30, 1999 NPI had net sales of  $7,164,720,
operating expenses were $781,047, and operating income was $83,530. Other
expense of $4,724 includes net interest expense. Net income for the nine months
was $78,806.


Liquidity and Capital Resources NPI


Total assets of NPI at September 30, 1999, were $2,245,532, total liabilities
were $1,286,351 and current working capital was $1,024,551. For the nine months
ended September 30, 1999 NPI had $349,459 used by operations, used $10,507 in
investing activities and had $26,000 used in financing activities. During the
three-month period ended September 30, 1999 the accounts receivable of NPI
declined by $2,094,418, from $3,299,540 at June 30, 1999 to $1,205,122 at
September 30, 1999. The activities of NPI are very seasonal and subject to
pronounced peaks and valleys during the year. Thus the swing in volume during a
quarter can significantly influence measurement ratios such as the receivable
turnover ratio which moved from 2.53 at June 30, 1999 to .95 at September 30,
1999. Inventory levels also are driven by the seasonal influences and during
the three months ended September 30, 1999 increased from $770,597 at June 30,
1999 to $939,993 at September 30, 1999, in anticipation of fourth quarter
shipments. The inventory turnover ratio of NPI at September 30, 1999 was 8.21
as compared to 6.07 at June 30, 1999.



During the nine-month period ended September 30, 1999 the accounts receivable
of NPI increased by $177,995 from the balance of $1,027,127 at December 31,
1998 and inventories increased by $157,719 over the balance at December 31,
1998 of $782,274. The increases in both categories are attributable to seasonal
changes in the level of orders.


At September 30, 1999, NPI had retired an outstanding note payable to a former
stockholder of Acqueren of $300,000 at an interest rate of 6% per annum, with
payments of $100,000 due in August 1999 and 2000 and the remainder due in August
2001. The Company had been involved in litigation through the suit filed against
the former principal stockholder of Acqueren. That action, filed in Galveston
County, Texas, related to representations made by certain selling shareholders
of Acqueren, prior to the acquisition. On August 17, 1999, those selling
shareholders filed an action in New York alleging misrepresentations by AIII.
Related to that litigation, the Company was required to pay through the court,
the outstanding balance of the note and accrued interest. Funding for a portion
of that payment was provided through an advance from AIII.

Results of Operations - Har-Whit / Pitt's & Spitt's, Inc.

Har-Whit sales for the three months ended September 30, 1999 amounted to
$516,205, a decrease of 18% compared to the $626,383 sustained in 1998. The
decrease in sales is attributable to increased competitive pressures in bidding
for fabrication work, due to the downturn in oil & gas related work.

Har-Whit cost of sales amounted to $455,038 or 88% of sales and margins of
$61,166 represent 12.0% of sales during the three months ended September 30,
1999. During the three-month period ended September 30, 1998, Har-Whit cost of
sales of $404,167 constituted 64.5%, and margins of $222,216 were 35.5% of
sales. Operating expenses of $143,978 comprised 27.9% of sales during the three-
month period ended September 30, 1999 as compared to $192,827 in the comparable
period in 1998. The operating loss of $82,811 for the three months ended
September 30, 1999 compares to operating income of $29,389 during the three-
month period ended September 30, 1998. Interest

<PAGE>   14
expense in the three months ended September 30, 1999 of $17,159 compares to
$16,502 in the comparable period in 1998.

For the nine months ended September 30, 1999 sales amounted to $1,476,151, a
decrease of 17% compared to the $1,776,465 sustained in 1998. The decrease in
sales is attributable to increased competitive pressures in bidding for
fabrication work, due to the downturn in oil & gas related work.

Har-Whit cost of sales amounted to $1,119,919 or 75.8% of sales and margins of
$356,232 represent 24.2% of sales during the nine months ended September 30,
1999. During the nine-month period ended September 30, 1998, Har-Whit cost of
sales of $1,181,267 constituted 66.5%, and margins of  $595,198 were 33.5% of
sales. Operating expenses of $454,304 comprised 30.8 % of sales during the nine-
month period ended September 30, 1999 as compared to $643,057 in the comparable
period in 1998. The operating loss of $143,266 for the nine months ended
September 30, 1999 compares to an operating loss of  $47,859 during the nine-
month period ended September 30, 1998. Interest expense in the nine months ended
September 30, 1999 of $48,922 compares to $43,602 in the comparable period in
1998.

Liquidity and Capital Resources - Har-Whit


Har-Whit has arranged a $150,000 line of credit with a financial institution
secured by its accounts receivable and pledge of the parent company's
certificate of deposit.  The interest rate for the line of credit is at 7.75%
and the note matures in January 2001.  At September 30, 1999, Har-Whit had an
outstanding note payable to a financial institution of $542,280 at an interest
rate of 9.75% per annum due in monthly payments of $7,895 through February 2003
with the remaining amount due in March 2003. During the nine months ended
September 30, 1999, Har-Whit had $6,698 provided by operating activities, $7,608
used in investing activities, and provided $16,464 through financing activities.
During the three months ended September 30, 1999, accounts receivable of
Har-Whit increased from $150,945 to $167,270 and inventory levels decreased by
$53,861 from the $309,661 balance at June 30.  During the quarter, receivable
turnover ratios decreased to 3.24 from 3.39 at June 30, 1999 while inventory
turnover increased to 1.62 from 1.44 at June 30, 1999.


Results of Operations - Marald, Inc. dba Unlimited Coatings


During the three-month period ended September 30, 1999, Marald had sales of
$471,182, cost of sales of $333,637, comprising 70.8% of sales, and margins of
$137,545 represent 29.2% of sales. Operating expenses of $137,326 were 29.1% of
sales. Interest expense was $5,854 and net loss was $5,634.



During the nine-month period ended September 30, 1999, Marald had sales of
$1,445,741, cost of sales of $1,008,895 comprising 69.8% of sales, and margins
of $436,846 represent 30.2% of sales. Operating expenses of $330,722 were 22.9%
of sales. Interest expense was $8,189 and net income of $97,937 represented
6.8% of sales.


Liquidity and Capital Resources - Marald


Marald has arranged a $100,000 working capital line of credit, with interest at
prime plus two percent, secured by its inventory and accounts receivable and
parent guarantee, and a $125,000 line of credit secured by the parent, at prime
plus two percent.  Increasing sales levels may require additional working
capital financing.  Although there is no assurance, Marald expects to be able to
secure such financing on favorable terms. During the nine months ended September
30, 1999, Marald had $18,680 provided by operating activities, $91,767 used in
investing activities, and provided $162,992 through financing activities.
During the three-month period ended September 30, accounts receivable at Marald
decreased by $65,936 from the balance of $163,902 at June 30 to the balance of
$97,966 at September 30, 1999.  Inventories decreased $22,177 from the $69,357
balance at June 30, 1999.  The receivable turnover ratio for Marald at September
30, 1999 was 3.60 as compared to 3.53 at June 30, 1999. The inventory turnover
ratio was 6.16 as compared to 8.76 at June 30, 1999.


Results of Operations - Armor Linings, dba Tough Trucks & Accessories, Inc.

For the three months ended September 30, 1999, Armor Linings sales amounted to
$177,168, cost of sales of $126,342 were 71.3 % of sales, operating expenses
were $39,742 and net income was $8,267. For the period from its acquisition in
April, 1999 until September 30, 1999 Armor Linings sales were $308,575, cost of
sales were $207,286, margins were $101,289, 32.8 % of sales.  Operating expenses
were $77,939 and operating income was $23,350.

Liquidity and Capital Resources - Armor

At September 30, 1999 Armor had no financing requirements as its operations have
been financed through its internal cash flows. Although there is no assurance,
it is expected that working capital financing will be available at
<PAGE>   15

favorable terms when the growth of the company requires such arrangements. For
the period from acquisition through September 30, 1999, Armor generated $29,132
from operations, used $7,218 in investing activities, and used $12,962 in
financing activities. During the three months ended September 30, 1999, changes
in the accounts receivable and inventory levels of Armor were negligible. The
accounts receivable turnover ratio is 5.71 and the inventory turnover ratio is
6.91 for the nine months ended September 30, 1999.


Year 2000 Compliance

The Year 2000 issue is the result of computer systems that use two digits rather
than four to define the applicable year, which may prevent such systems from
accurately processing dates ending in the year 2000 and after. This could result
in system failures or in miscalculations causing disruption of operations,
including, but not limited to, an inability to process transactions, to send and
receive electronic data, or to engage in routine business activities and
operations.

Management has spoken to all management personnel at each of its subsidiaries
regarding their company's reliance on computer systems. Based upon these
discussions, management believes that the Company does not have significant
exposure to the Year 2000 issue. The subsidiaries operations do not rely on
computer operations for conducting the significant parts of their business, and
accordingly, the Company does not believe that its products and services involve
any material Year 2000 risks. In the first quarter of 1999, the Company
established a formal Year 2000 task force to develop and implement a Year 2000
readiness program.

The Company has implemented Year 2000 compliant accounting systems, policies and
procedures throughout all of the subsidiaries. The implementation of
standardized systems and procedures should facilitate improved and more
efficient reporting and analysis of data.

In addition to reviewing its internal systems, the Company is in communications
with its significant customers and vendors concerning Year 2000 compliance,
including electronic commerce. There can be no assurance that the systems of
other companies that interact with the Company will be sufficiently Year 2000
compliant so as to avoid an adverse impact on the Company's operations,
financial condition and results of operations.

The costs to address the Year 2000 issue did not have a material adverse effect
on the Company's financial condition, results of operations or liquidity.

The Company has substantially completed its Year 2000 remediations. However;
there can be no assurance that the Company will not be adversely affected by the
inability of other companies whose systems interact with the Company to become
Year 2000 compliant and by potential interruptions of utility, communication or
transportation systems as a result of Year 2000 issues.

Although the Company expects that its internal systems are Year 2000 compliant
as described above, the Company has prepared a contingency plan that  specifies
what it plans to do if it or important external companies are not Year 2000
compliant in a timely manner.

                                    PART II

Item 1.  Legal Proceedings

On December 10, 1998, the Company filed an Original Petition and Request for
Temporary Injunction for breach of contract and common law and stock fraud in
connection with the Company's acquisition of Acqueren, Inc. against TDA
Industries, Inc. and Fred Friedman in the 56th Judicial District Court of
Galveston, Texas. The Company has claimed the defendants misrepresented the
amount of equity in Acqueren as represented in the acquisition agreement.  The
Company is seeking actual damages in the amount of not less than $1,100,000, in
addition to further relief, which it may be entitled to.  On August 17, 1999,
TDA Industries, Inc. filed an action in the United District Court in the
Southern District of New York, alleging violations of various securities laws,
common law fraud, and breach of contract.  TDA Industries, Inc. has requested
monetary damages, and has requested a receiver be appointed for Acqueren, Inc.
pending litigation. The Company was required to pay to the Court the $300,000
note payable to TDA and accrued interest

Item 2.  Changes in Securities

The following information sets forth-certain information, as of November 30,
1999, for all securities the Company sold  without registration under the Act,
excluding any information "previously reported" as defined in Rule 12b-2
<PAGE>   16
of the Securities Exchange Act of 1934. There were no underwriters in any of
these transactions, nor were any sales commissions paid thereon.

In August, 1999 the Company issued 45,000 shares to an employee related to the
exercise of an option to purchase such shares at an exercise price of $ 0.02.
The Company believes that such issuance was exempt pursuant to Section 4(2) of
the Act.

Item 3.  Default upon Senior Securities

   Not applicable

Item 4.  Submission of Matters to a Vote of Security Holders

   Not applicable

Item 5.  Other Information

   Not applicable

Item 6.  Exhibits and Reports on Form 8-K

   (a) The following exhibits are to be filed as part of this Form 10-QSB:

     Exhibit No.  Identification of Exhibit

     3(i)(1)      Certificate of Incorporation of the Company, and Amendments
                  thereto.
     3(ii)(1)     Amended and Restated By-laws of the Company
     4.1(1)       Common Stock Certificate, American International
                  Industries, Inc.
     4.2(1)       Common Stock Certificate, Acqueren, Inc.
     4.3(1)       Common Stock Certificate, Har-Whit/Pitt's & Spitt's, Inc.
     10.1(1)      Daniel Dror, Sr. Employment Agreement dated May 14, 1998
     10.2(1)      Daniel Dror, Sr. Employment Agreement dated October 16, 1998
     10.3(1)      Marc Fields Employment Agreement
     10.4(1)      Jordan Friedberg Employment Agreement
     10.5(2)      Shabang!  Merchant Service Agreement
     10.6(3)      American International Industries, Inc. Lease
     10.7(2)      Brenham Oil and Gas, Inc. Royalty Interest
     10.8(2)      Brenham Oil and Gas Interest Lease
     10.9(2)      Modern Film Effects, Inc. Lease
     10.10(2)     Northeastern Plastics, Inc. Lease
     27(4)        Financial Data Schedule
____________________

(1) Filed previously on registration statement Form 10-SB SEC File
    No. 000-25223.
(2) Filed previously on the Company's annual report on Form 10-KSB SEC File
    No. 000-25223.
(3) Filed previously on registration statement Form 10-SB/A SEC File
    No. 000-25223.
(4) Filed herewith

    (b) There have been no reports filed on Form 8-K.

                                  SIGNATURES
                                  ----------

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the undersigned, thereunto duly authorized.



                                    American International Industries, Inc.


Date: November 11, 1999             By: /s/ Daniel Dror
                                        ----------------------------
                                        Daniel Dror