| **  **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **UNITED STATES**SECURITIES AND EXCHANGE    COMMISSION**Washington, D.C. 20549      **FORM 10-QSB** **
              (Mark one)
[X] QUARTERLY REPORT UNDER    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period    ended: June 30, 2001    
[  ] TRANSITION REPORT    UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1994
For the transition period    from _______ to _______  
COMMISSION FILE NUMBER:    0-25223    
**AMERICAN INTERNATIONAL    INDUSTRIES, INC.**
(Exact name of small    business issuer as specified in its charter)    
Nevada
88-0326480
(State or Other Jurisdiction    of Incorporation)
(IRS Employer Identification    No.)**  ****  **
601 Cien    Street, Suite 235, Kemah, TX
77565-3077
(Address of    Principal Executive Offices)
(Zip Code)    
(281)    334-9479
(Issuer's    telephone number)   
Check    whether the issuer: (i) 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 (ii) has been subject to the filing requirements    for the past 90 days. Yes [X] No [  ]
APPLICABLE    ONLY TO CORPORATE ISSUERS
State    the number of shares outstanding of each of issuer's classes of common equity outstanding    as of the latest practicable date:
Common    Stock, $.001 par value, 155,632,398 outstanding as of August 3, 2001.
 

 

 

 

 

 

 

 

TABLE OF CONTENTS

**PART I. CONSOLIDATED    FINANCIAL INFORMATION**
Page
Item 1. Financial Statements (Unaudited)
2
Item 2. Management’s Discussion and Analysis of    Financial Condition and Results of Operations
7  
**PART II. OTHER    INFORMATION**
Item 1. Legal Proceedings
9
Item 2. Changes in Securities
9
Item 3. Default Upon Senior Securities
9
Item 4. Submission of Matters to a Vote of Security    Holders
10
Item 5. Other Information
10
Item 6. Exhibits and Reports on Form 8-K
10
Forward-Looking Statements:This Form 10-QSB and other statements issued or made from time to time by AmericanInternational Industries, Inc. contain statements which may constitute"Forward-Looking Statements" within the meaning of the Securities Act of 1933,as amended and the Securities Exchange Act of 1934 by the Private Securities LitigationReform Act of 1995, 15 U.S.C.A. Sections  77Z-2 and 78U-5 (SUPP. 1996). Thosestatements include statements regarding the intent, belief or current expectations of theCompany, its officers and directors and the officers and directors of the Company'ssubsidiaries as well as the assumptions on which such statements are based. Prospectiveinvestors are cautioned that any such forward-looking statements are not guarantees offuture performance and involve risks and uncertainties, and that actual results may differmaterially from those contemplated by such forward-looking statements. 

**PART I.  FINANCIAL INFORMATION**

**Item 1. Financial Statements**
   PageIndependent Accountants' Report3
Consolidated Financial    Statements
    Balance    Sheets – June 30, 2001and December 31, 2000 (Audited)3
    Statements    of Operations – Three and six  months ended June 30, 2001and 20004
    Statements    of Cash Flows – Six months ended June 30, 2001 and 20005
    Notes to    Consolidated Financial Statements6
 

 

 

 

 

 

 

 

 
   **R. E. Bassie & Co., P.C.*****Certified Public Accountants*****A    Professional Corporation**  
6776 Southwest Freeway, Suite 580
Houston, Texas 77074-2115
Tel: (713) 266-0691 Fax: (713) 266-0692
E-Mail: Rebassie@aol.com**Independent    Auditors’ Report  
The    Board of Directors and Stockholders
American    International Industries, Inc.:  
We    have reviewed the accompanying condensed consolidated balance sheet of American    International Industries, Inc. and subsidiaries as of June 30, 2001, and the related    condensed consolidated statements of operations and cash flows for the three and six month    periods ended June 30, 2001 and 2000. These financial statements are the responsibility of    the Corporation's management.    We conducted our review in accordance with standards established by the American Institute    of Certified Public Accountants. A review of interim financial information consists    principally of applying analytical procedures to financial data and of making inquiries of    persons responsible for financial and accounting matters. It is substantially less in    scope than an audit conducted in accordance with generally accepted auditing standards,    the objective of which is the expression of an opinion regarding the financial statements    taken as a whole. Accordingly, we do not express such an opinion.    Based on our review, we are not aware of any material modifications that should be made to    such condensed consolidated financial statements for them to be in conformity with    generally accepted accounting principles.    We have previously audited, in accordance with generally accepted auditing standards, the    consolidated balance sheet of American International Industries, Inc. and subsidiaries as    of December 31, 2000, and the related consolidated statements of operations, stockholders'    equity, and cash flows for the year then ended (not presented herein); and in our report    dated March 23, 2001, we expressed an unqualified opinion on those consolidated financial    statements. In our opinion, the information set forth in the accompanying condensed    consolidated balance sheet as of December 31, 2000 is fairly stated, in all material    respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ R. E. Bassie & Co., P.C.
Houston, Texas
August 1, 2001   
 

**AMERICAN INTERNATIONAL INDUSTRIES,    INC. AND SUBSIDIARIES**
Consolidated Balance Sheets
June 30, 2001 and December 31, 2000
(Unaudited - see accompanying accountants' review report)      
2001
2000
Assets(Reviewed)
(Audited)Current    assets:   Cash
$
641,293
$
709,502   Trading securities
60,000
120,000   Available for sale    securities700,000
-   Accounts    receivable, less allowance for doubtful accounts of           $234,669 at June 30, 2001 and $229,668 at December 31, 2000
747,277
1,186,758   Notes receivable    from related parties
207,542
65,676      Inventories
917,203
1,204,663      Prepaid expenses and other current assets
1,846
10,721        Total current assets
3,275,161
3,297,320      Note    receivable, net of allowance for doubtful accounts      of $1,200,000 at June 30, 2001 and December 31, 2000
2,055,182
60,000Real    estate held for sale
939,584
939,584Property    and equipment, net of accumulated      depreciation and amortization
225,267
1,380,536Excess    of cost over net assets of businesses acquired, less accumulated         amortization of $303,582 at June 30, 2001and $254,664 in 2000
1,341,941
1,411,801Non-compete    agreements, net of accumulated amortization of   $475,000 at June    30, 2001 and $425,000 in 2000
25,000
75,000Other assets
9,673
12,815          Total assets$
7,871,808$
7,177,056  
Liabilities and Stockholders' EquityCurrent liabilities:   Accounts payable    and accrued expenses$
1,061,851$
1,822,405   Short-term notes    payable to bank
64,542
472,220   Short-term notes    payable to related parties
2,000
471,000   Current    installments of long-term debt
26,613
115,365   Current    installments of capital lease obligations
4,347
9,003     Total    current liabilities
1,159,353
2,889,993Long-term    notes payable to related parties387,000
-Long-term    debt, less current installments
424,615
514,549        Total liabilities
1,970,968
3,404,542      Stockholders'    equity:      Preferred stock, $.001par value. Authorized 10,000,000 shares: none issued
-
-      Common stock, $.001 par value. Authorized 200,000,000 shares:        155,449,334 shares issued and 155,197,334 shares outstanding        at June 30, 2001, 149,149,334 shares issued and 148,897,334        shares outstanding at December 31, 2000
155,197
148,897      Additional paid-in capital
17,885,618
17,462,918      Accumulated deficit
(12,305,947)
(13,805,273)        Total stockholders 'equity
5,734,868
3,806,542      Less treasury stock, at cost (252,000)
(34,028)
(34,028)      Accumulated other comprehensive gain200,000
-     Total    stockholders' equity
5,900,840
3,772,514Commitments and contingent    liabilities
- 
-      Total    liabilities and stockholders' equity
$
7,871,808$
7,177,056See accompanying notes to consolidated financial statements
 
**AMERICAN    INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated    Statements of Operations
Three and six    months ended June 30, 2001 and 2000
(Unaudited -    see accompanying accountants' review report)  
Three    months ended     June 30,
Six    months ended     June 30,   20012000
  2001
2000Revenues 
$1,648,467
$3,865,112
$
3,535,223
$
7,063,115   
  
  Costs and expenses: 
     Cost of sales 1,232,4923,329,343
2,659,387
5,975,133   Selling, general    and administrative 538,251751,227
1,420,331
  
1,487,863     Total    costs and expenses 1,770,7434,080,570
4,079,718
  
7,462,996   
    Operating income (loss)(122,276)(215,458)
(544,495)
(399,881)   
  Other income (expenses): 
     Interest income 64,41410,259
70,578
33,244   Realized gains on    investments -131,437
- 
178,808   Unrealized gain    and (losses) on investments (7,500)(529,017)
(60,000)
(270,643)   Gain on sale on    subsidiary--
1,682,435-    Gain on sale of    assets--
15,000-    Other Income    (expenses)80,000(1,081)
379,637
1,834   Interest expense(10,300)(36,927)
(43,829)
(86,192)     Total    other income (expenses)126,614(425,329)
2,043,821
(142,949)        Net    earnings (loss) before income taxes4,338(640,787)
1,499,326
(542,830)Provision for income taxes--
- 
-      Net    earnings (loss)
$4,338
$(640,787)
$
1,499,326
$
(542,830)   Net earnings per share - basic    and diluted:    Net earnings    (loss)
$0.00
$(0.00)
$
0.01 
$
(0.00)    Weighted average common shares    - basic and diluted154,740,334133,235,350
143,461,334
131,347,238  Consolidated statements of    comprehensive income   Net earnings$4,338$(640,787)$
1,499,326$(542,830)   Unrealized gain on    securities available-for-sale:        Unrealized holding gain arising during the period--200,000-   Comprehensive    income$4,338$(640,787)$1,699,326$(542,830)
See accompanying    notes to consolidated financial statements
 
**AMERICAN INTERNATIONAL    INDUSTRIES, INC. AND SUBSIDIARIES**Consolidated Statements of    Cash FlowsSix months ended June 30,    2001 and 2000(Unaudited - see    accompanying accountants' review report)        2001
2000Cash flows from operating    activities:    Net earnings    (loss)
$ 1,499,326
$
(542,830)   Adjustments to    reconcile net earnings (loss)      to net    cash used in operating activities:           Depreciation and amortization 171,129194,062          Common stock issued for services168,000-           Realized gain on sale of securities - 
(178,808)          (Increase) decrease in market value of equity securities 60,000
270,643          Gain on sale of subsidiary(1,682,435)-           Gain on sale of equipment(15,000)-           Gain on write-off of note payable to related party(250,000)-           (Increase) decrease in operating assets:              Accounts receivable 294,824
(464,504)             Inventories 86,980
63,621             Prepaid expenses and other current assets 2,405
25,088             Other assets (44,220)
(1,971)              (Purchase) sale of trading securities, net - 
99,874          (Increase) decrease in operating liabilities:              Accounts payable and accrued expenses (531,510)
237,951             Net liabilities from discontinued operations-(1,200,000)                         Net cash used in operating activities (240,501)
(1,496,874)Cash flows from investing    activities:    Purchase of    property and equipment (8,873)
(39,675)   Proceeds from the    sale of equipment15,000-    Payments received    on notes for sale of subsidiary4,818-    Redemption of    certificate of deposit -
1,150,000   Cash sold in sale    of subsidiary(29,666)-    Notes receivable    from related party(141,866)
88,765               Net cash provided by (used in) investing activities (160,587)
1,199,090   Cash flows from financing    activities:    Proceeds from sale    of common stock 40,00072,000   Proceeds from    borrowings from related party389,000-    Proceeds from    short-term borrowings- 200,000   Repayment of    short-term notes payable(60,178)
-       Principal payments    on long-term debt(31,287)
(199,053)   Principal payments    on capital lease obligations (4,656)
(24,035)               Net cash provided by financing activities 332,879
48,912                 Net decrease in cash (68,209)
(248,872)  Cash at beginning of year 709,502
639,396Cash at end of period 
$641,293
$
390,524Supplemental schedule of cash    flow information:    Interest paid 
$43,829
$
86,192
See accompanying notes to consolidated financial    statements
**AMERICAN INTERNATIONAL INDUSTRIES, INC. ANDSUBSIDIARIES**

Notes to the Consolidated Financial Statements

**(1) General**

American International Industries, Inc. (the"Company" or "AIII"), formerly Black Tie Affair, Incorporated,operates as a diversified holding company with a number of wholly-owned subsidiaries andone majority-owned subsidiary.

The accompanying unaudited financial statements havebeen prepared in accordance with generally accepted accounting principles for interimfinancial information and with the instructions to Form 10-QSB. Accordingly, they do notinclude all of the information and footnotes required by generally accepted accountingprinciples for complete financial statements. In the opinion of management, alladjustments (consisting of normal recurring adjustments) considered necessary for a fairpresentation have been included. Operating results for the three and six month periodsended June 30, 2001 are not indicative of the results that may be expected for the yearending December 31, 2001.

As contemplated by the Securities and ExchangeCommission (SEC) under Rules of Regulation S-B, the accompanying financial statements andrelated footnotes have been condensed and do not contain certain information that will beincluded in the Company's annual financial statements and footnotes thereto. For furtherinformation, refer to the Company's audited consolidated financial statements and relatedfootnotes thereto included in the Company's annual report on Form 10-KSB for the yearended December 31, 2000.
**(2) Sale of Subsidiary

Effective March 30, 2001, the Company sold its 100%interest in Har-Whit's/Pitt's & Spitt's, Inc. (Har-Whit), a manufacturer anddistributor of barbeque pits and custom sheet metal fabricator, to Oxford KnightInternational, Inc. (OKTI) in exchange for two long-term notes receivable (five years at 81/2% interest) in the amount of $1,000,000 each and 10,000,000 shares of restricted commonstock of OKTI, representing $2,500,000 in total consideration. In addition, OKTI assumed$495,000 in long-term debt. of Har-Whit The Company recorded a gain on the sale in theamount of $1,682,435 or $.01 per share, based on the Company's investment in Har-Whit inthe amount of $817,565 at March 30, 2001. Har-Whit had annual sales of approximately$1,900,000 and operating loss of approximately $182,000 in 2000.

**(3) Income Taxes**

Income taxes for the interimperiods were computed using the effective tax rate estimated to be applicable for the fullfiscal year, which is subject to ongoing review and evaluation by management. Theestimated federal income tax expense for the six-month periods ended June 30, 2001 and2000 is eliminated by net operating loss carry forwards.

**(4) Industry Segments**

The Company has three reportable segments and corporateoverhead: industrial/commercial, oil and gas, and real estate. The industrial/commercialsegment includes (1) a supplier of automotive after-market products; (2) a manufacturerand distributor of barbecue pits and custom sheet metal products for customerspredominately in the energy industry (sold at March 31, 2001, See Note 2); (3)distributors of specialty chemicals for the automotive after-market, includingspecializing in the application of spray-on bed liners for truck beds; and (4) a holdingcompany for future commercial ventures. The oil and gas segment owns an oil, gas andmineral royalty interest in Washington County, Texas. The corporate overhead includes theCompany's investment holdings including financing current operations and expansion of itscurrent holdings as well as evaluating the feasibility of entering into additionalbusinesses.

The Company's reportable segments are strategic businessunits that offer different technology and marketing strategies. Most of the businesseswere acquired as subsidiaries and the management at the time of the acquisition wasretained.

Consolidated revenues, net operating losses for themonths ended June 30, 2001 and 2000, and identifiable assets as of June 30, 2001 and 2000,were as follows:
   2001   2000Revenues:              Industrial/Commercial
$
3,515,417
     $
7,045,694   Real estate19,80612,654   Oil and gas-      4,767
$3,535,223
$7,063,115Operating income (loss):        Industrial/Commercial
$(99,105)
$(31,676)   Real estate15,251(15,631)   Oil and gas(5,103)4,644   Corporate expenses(455,538)(357,218)
$(544,495)
$(399,881)Identifiable assets:      Industrial/Commercial 
$4,661,831
$8,124,470   Real estate938,903948,638   Oil and gas77,79674,659   Corporate2,193,278(752,354)
$7,871,808
$8,395,413
The Company's areas of operations are principally in the United States.No single foreign country or geographic area is significant to the consolidated financialstatements. 

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

Forward-Looking Statements; Market Data

As used in this Quarterly Report,  the terms "we", "us", "our" "AIII" and the"Company" means American International Industries, Inc., a Nevada corporation,and its subsidiaries. To the extent that we make any forward-looking statements in the"Management’s Discussion and Analysis of Financial Condition and Results ofOperations" in this Quarterly Report, we emphasize that forward-looking statementsinvolve risks and uncertainties and our actual results may differ materially from thoseexpressed or implied by our forward-looking statements. Our  forward-lookingstatements in this Quarterly Report reflect our current views about future events and arebased on assumptions and are subject to risks and uncertainties.  Generally,forward-looking statements include phrases with words such as  "expect","anticipate", "intend", "plan", "believe","seek", "estimate" and similar expressions to identify forward-lookingstatements.

**Overview**

We are a holding company and during thethree-month period ended June 30, 2001 have six operating subsidiaries including onemajority-owned (consolidating) subsidiary. The historical financial statements of AIIIinclude the acquisitions of acquired companies as of the effective dates of the purchasesand the results of these companies subsequent to closing, as these transactions wereaccounted for under the purchase method of accounting.The acquisitions of certainsubsidiaries were accounted for using the purchase method of accounting, whereby thepurchase price of the acquisition was allocated based on the fair market value of theassets acquired and liabilities assumed. If the purchase price exceeded the net fairmarket value of the assets acquired, any remaining purchase price was allocated togoodwill. In addition, certain subsidiaries were accounted for using the historical costbasis of the predecessor. Reference is made to our Annual Reports on Form 10-KSB for ouryear ended December 31, 2000, filed with the SEC on April 2, 2001, and our Form 10-KSB/Afor our year ended December 31, 1999 filed with the SEC on December 15, 2000 and to ourfor a full discussion of our business and subsidiaries under "Description ofBusiness" and Note 2, "Acquisitions and Divestiture" of the Notes toConsolidated Financial Statements.

We have three reportable segments andcorporate overhead: industrial/commercial, oil and gas and real estate. Theindustrial/commercial segment includes (1) a supplier of automotive after-market products;(2) a manufacturer and distributor of barbecue pits and custom sheet metal products forcustomers predominately in the energy industry and effective at March 31, 2001, we soldthis subsidiary, Har-Whit/Pitt's and Spitt's Inc.,  to Oxford Knight InternationalInc., an unaffiliated third-party. We recognized a gain on the sale of this subsidiary of$1,682,435 for the period ended March 31, 2001; (3) distributors of specialty chemicalsfor the automotive after-market, including specializing in the application of spray-on bedliners for truck beds; and (4) a holding company for future commercial ventures. The oiland gas segment owns an oil, gas and mineral royalty interest in Washington County, Texas.We also have a real estate segment. See  Note 2 to the Notes to ConsolidatedFinancial Statements. The corporate overhead includes our investment holdings includingfinancing current operations and expansion of its current holdings as well as evaluatingthe feasibility of entering into additional businesses. We evaluate performances based onprofit or loss from operations before income taxes, not including nonrecurring gains andlosses. Our discussion under "Results of Operations" and "Liquidity andCapital Resources" below is on a consolidated basis. For reference to "IndustrySegments" see Note 4 to the  Notes to Consolidated Financial Statements underItem 1, Financial Statements above. 

**Results of Operations - American InternationalIndustries, Inc. Consolidated**

The following defined terms are used in this QuarterlyReport: Northeastern Plastics, Inc. (NPI), Marald, Inc., which changed its name toUnlimited Coatings Corporation (UCCC), Har-Whit/Pitt's & Spitt's Inc. (Har-Whit),which was sold at the end of the quarter ended March 31, 2001, Texas Real EstateEnterprises, Inc. (TREE), Brenham Oil & Gas, Inc. (Brenham) and Acqueren, Inc.(Acqueren). As noted above, at the end of the first quarter, we sold Har-Whit, which was asubsidiary in our industrial/commercial segment, to a third party.

**Three Months Ended June 30, 2001 Compared to ThreeMonths Ended June 30, 2000**

Consolidated net earnings for the three-month periodended June 30,  2001 were $4,338 compared to a consolidated net loss of $640,787for the comparable period of the prior year.  The significant improvement inconsolidated net earnings for the three-month period ended June 30, 2001 is primarilyattributable to a the significant decrease in unrealized losses on our investmentportfolio. During the three-month period ended June 30, 2001, we also recognized $80,000in other income from a $250,000 receivable from our sale of CRC that had previously beenwritten-off. 

Net revenues for the three months ended June 30, 2001were $1,648,467 compared to $3,865,112 for the three-months period ended June 30, 2000.This decrease is mainly attributable to a decrease in revenues due to the sale of ourformer subsidiary, Har-Whit at the end of the first quarter of 2001, and from the decreasein sales by NPI during this period. Our consolidated gross profit margin for the threemonths ended June 30, 2001 was 25.3% as compared to 13.8% gross profit margin during thethree-month period ended June 30, 2000.Selling, general and administrative expenses during the period ended June 30, 2001 were$538,251, which compares to $751,227 for the three months ended June 30, 2000. Thisdecrease is primarily the result of the exclusion of the selling, general andadministrative costs of Har-Whit. AIII incurred corporate expenses of $455,538 during theperiod ending June 30, 2001compared to $357,218 for the same period in the prior year.Other income was $126,614 for the three months ended June 30, 2001 compared to otherexpenses of $425,329 during the same period in the prior year. Acqueren realizedunrealized losses on investments of $7,500 during the period ended June 30, 2001 comparedto losses of $529,017 during the three months ended June 30, 2000. These losses wereattributable to our trading securities. Our interest expense increased to $64,414 duringthe period ended June 30, 2001 compared to interest expense of $10,259. 

**Six Months Ended June 30, 2001Compared to Six MonthsEnded June 30, 2000**

The consolidated net earnings for the six-month periodended June 30, 2001 were $1,499,988 compared to a consolidated net loss of $542,830 forthe comparable six-month period of 2000. We recognized a gain of $1,682,435 in connectionwith the sale on March 31, 2001 of Har-Whit which resulted in a gain of$1,682,435. See "Liquidity and Capital Resources" below.Net revenues for the six-month period ended June 30, 2001 were $3,535,223 compared to$7,063,115 for the six-month period ended June 30, 2000. This decrease in revenues ismainly attributable to the sale on March 31, 2001 of our former subsidiary, Har-Whit,whose operations were included in our consolidated statement of operations for thesix-month periods ended June 30, 2001 and 2000.  As noted above, our revenues fromNPI also decreased during the second quarter of 2001 due to the timing of NPI revenuesthat we expect to recognize during the third quarter of 2001. Our consolidated grossprofit margin for the six- months ended June 30, 2001 was 24.8% as compared to 15.4% grossprofit margin during the six-month period ended June 30, 2000.Selling, general and administrative expenses during the six-months period ended June 30,2001 were $1,420,331, which compares to $1,487,863 for the six-months ended June 30, 2000.This insignificant decrease is primarily the result of the exclusion of the selling,general and administrative costs of Har-Whit. Other income was  $1,499,326 for the six months ended June 30, 2001compared to other expenses of $142,949 during the same period in the prior year. Thesignificant increase in total other income is mainly due to the gain on the sale of ourformer subsidiary, Har-Whit. Acqueren realized unrealized losses on investments of $60,000during the six-months period ended June 30, 2001 compared to losses of $270,643 during thesame period in the prior year. Our interest expenses decreased to $64,414 during thesix-month period ended June 30, 2001 compared to interest expenses of $86,192 for the sameperiod of the prior year. 

**Liquidity and Capital Resources - AIII**

Total assets at June 30, 2001 and December 31, 2000 were$7,871,808 and $7,177,056, respectively. Total liabilities at June 30, 2001 were$1,970,968 as compared to $3,404,542 at December 31, 2000. The decrease in totalliabilities is primarily the result of a significant reduction of in accounts payable andaccrued expenses and reduction in long-term debt payable to related parties.At June 30, 2001, AIII's current working capital was $1,304,193 as compared to a negativeworking capital of $107,222 at December 31, 2000. The increase in working capital isattributable to an insignificant decrease in accounts payable and long-term notes payableto related parties.AIII's consolidated cash position at June 30, 2001 was $641,293 as compared to $709,502 atDecember 31, 2000. Accounts receivable at June 30, 2001 were $747,277 compared to$1,186,758 at December 31, 2000, or a decrease of 37%. Inventories decreased to $917,203at June 30, 2001 as compared to $1,204,663 at December 31, 2000. The value of our tradingsecurities decreased to $60,000 at June 30, 2001 from $120,000 at December 31, 2000.Our non-current assets increase from $3,879,736 at December 31, 2000 to $4,596,647 mainlydue to two $1,000,000 long-term notes from OKTI related to the Har-Whit sale. Theavailable-for-sale securities of $500,000, also related to the sale of Har-Whit, arevalued at market. See Note 2.For the three months ended June 30, 2001, AIII used $240,501 in its operations compared tonet cash used in operating activities of   $1,496,874 during the same period in theprior year. We had net cash used in investing activities of $160,587 compared to net cashprovided by investing activities of $1,199,090 and $332,879 of net cash provided infinancing activities compared to net cash provided in financing activities of $48,912during the same period in the prior year.

 

**Part II**
**Item 1. Legal Proceedings**
None, reference is made to Item 3. in Part I of theamended Form 10-KSB filed on April 2, 2001. 
**Item 2. Changes in Securities

The following information sets forth certain informationas of June 30, 2000, for all restricted securities sold by AIII during the three-monthperiod ended June 30, 2001, without registration under the Act. Reference is also made toour Form 10-KSB for our year ended December 31, 2000 and specifically to the disclosure inPart II, Item 5 under "Recent Sales of Unregistered Securities" for informationregarding all unregistered shares sold by AIII during the prior three-year period.On June 21,  2001, we sold  500,000  restricted shares to Erick Friedman, adirector, for $20,000, or $.04 per share, the bid price of the shares on such date. Inaddition, on April 5, 2001 we issued as non-cash compensation 100,000 restricted shares toDaniel Dror, a director and  CEO, and 100,000 shares to both Erick Friedman andCharles Zeller, directors. The 300,000 shares were valued at $10,000 or $.06 per share,the bid price of the shares on April 5, 2001.

**Item 3. Default Upon Senior Securities**

None

**Item 4. Submission of Matters to a Vote ofSecurity Holders**

None

**Item 5. Other Information**

None
**Item 6. Exhibits and Reports onForm 8-K**
(a) Exhibits

The following exhibits are to be filed or incorporated by reference aspart of the Quarterly Report:
Exhibit No.Description13Registrant's Annual Report on Form    10-KSB for the year ended December 31, 2000 is incorporated herein by reference.
(b) We did not file a Form 8-Kduring the three-month period ended June 30, 2001.
**SIGNATURES**
In accordance with the Exchange Act, this report has been signed belowby the following persons in the capacities and on the date indicated.
SignatureTitleDate/s/ Daniel Dror Chairman of the Board and Chief Executive Officer August 6, 2001Daniel Dror/s/ John W. Stump, IIIChief Financial OfficerAugust 6, 2001John W. Stump, III**************** |