UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549


___________________




FORM 10-Q


_________________________




ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934




For the
quarterly period ended March 31, 2009




OR




 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934




For the
transition period from _________ to _________




Commission
File No.: 1-33640




AMERICAN INTERNATIONAL INDUSTRIES,
INC.




(Exact
Name Of Registrant As Specified In Its Charter)




Nevada
            88-0326480(State
      of Incorporation)
            (I.R.S.
      Employer Identification No.)601
      Cien Street, Suite 235, Kemah, TX
            77565-3077(Address
      of Principal Executive Offices)
            (ZIP
      Code)




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




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No  ̈
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a smaller reporting
company.  See the definitions of "large accelerated filer, "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.
  Large
      accelerated filer  ̈
              Accelerated filer ̈Non-accelerated
      filer  ̈ (Do not check if a
      smaller reporting company)
              Smaller
      reporting company x
  Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ̈ Nox
 At May
8, 2009, the Registrant had 8,503,615 shares of common stock
outstanding.





TABLE OF
CONTENTS




Item
            Description
            PagePART I - FINANCIAL
      INFORMATIONITEM
      1.
            FINANCIAL
      STATEMENTS
            3ITEM
      2.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            24ITEM
      3.
            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
      RISKS
            27ITEM
      4.
            CONTROLS AND PROCEDURES
            27PART II -
      OTHER INFORMATIONITEM
      1.
            LEGAL PROCEEDINGS
            28ITEM
      1A.
            RISK FACTORS
            28ITEM
      2.
            UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
            28ITEM
      3.
            DEFAULT UPON SENIOR SECURITIES
            28ITEM
      4.
            SUBMISSION OF MATERS TO A VOTE OF SECURITY
      HOLDERS
            28ITEM
      5.
            OTHER INFORMATION
            28ITEM
      6.
            EXHIBITS
            28






2


PART I - FINANCIAL
INFORMATION






ITEM 1. FINANCIAL
STATEMENTS




Consolidated
      Financial StatementsUnauditedConsolidated
      Balance Sheets - March 31, 2009 and December 31,
      2008
            4Unaudited Consolidated Statements of
      Operations - Three Months Ended March 31, 2009 and
2008
            5Unaudited Consolidated Statements of Cash Flows -
      Three Months Ended March 31, 2009 and 2008
            6Notes to Unaudited Consolidated Financial
      Statements
            8
















3


AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
      SUBSIDIARIESConsolidated
      Balance Sheets (Unaudited)March
      31, 2009
                
                
                December
      31, 2008AssetsCurrent
      assets:Cash and cash equivalents
                
                $
                1,912,918
                
                
                $
                3,114,575Certificate of deposit
                
                
                4,015,000
                
                
                
                4,315,000Trading securities
                
                
                636,872
                
                
                
                718,442Accounts receivable, less allowance for doubtful accountsof $138,217
                
                
                4,603,318
                
                
                
                4,956,941Current portion of notes receivable
                
                
                4,667,737
                
                
                
                4,392,211Accounts and notes receivable from related parties
                
                
                339,806
                
                
                
                98,606Inventories
                
                
                4,809,556
                
                
                
                3,889,052Real estate held for sale
                
                
                2,449,066
                
                
                
                2,449,066Deposits for pipe inventory purchases
                
                
                1,569,644
                
                
                
                2,221,932Prepaid expenses and other current assets
                
                
                156,036
                
                
                
                205,096Total current assets
                
                
                25,159,953
                
                
                
                26,360,921Long-term
      notes receivable, less current portion
                
                
                86,690
                
                
                
                95,522Property
      and equipment, net of accumulated depreciation and
      amortization
                
                
                7,700,201
                
                
                
                7,769,833Goodwill
                
                
                674,539
                
                
                
                674,539Intangible
      assets, net of amortization
                
                
                691,231
                
                
                
                717,817Other
      assets
                
                
                169,550
                
                
                
                359,312Total assets
                
                $
                34,482,164
                
                
                $
                35,977,944Liabilities
      and Stockholders' EquityCurrent
      liabilities:Accounts payable and accrued expenses
                
                $
                2,539,831
                
                
                $
                2,395,721Short-term notes payable
                
                
                131,287
                
                
                
                1,213,332Current installments of long-term capital lease obligations
                
                
                74,138
                
                
                
                71,680Current installments of long-term debt
                
                
                729,022
                
                
                
                4,484,161Total current liabilities
                
                
                3,474,278
                
                
                
                8,164,894Long-term
      debt, less current installments
                
                
                13,210,772
                
                
                
                9,653,598Long-term
      capital lease obligations, less current installments
                
                
                147,319
                
                
                
                166,762Minority
      interest
                
                
                1,935,804
                
                
                
                2,085,573Total liabilities
                
                
                18,768,173
                
                
                
                20,070,827Commitments
      and contingencies
                
                
                -
                
                
                
                -Stockholders'
      equity:Preferred stock, $0.001 par value, 1,000,000 authorized: none
      issued
                
                
                -
                
                
                
                -Common stock, $0.001 par value, 50,000,000
    authorized:8,763,771
      and 8,738,771 shares issued, respectively8,668,429 and 8,676,461
      shares outstanding, respectively
                
                
                8,668
                
                
                
                8,676Additional paid-in capital
                
                
                33,105,008
                
                
                
                33,063,750Accumulated deficit
                
                
                (17,104,897
                )
                
                
                (16,911,758
                )Less
      treasury stock, at cost95,342 and
      62,310 shares, respectively
                
                
                (294,788
                )
                
                
                (253,551
                )Total stockholders' equity
                
                
                15,713,991
                
                
                
                15,907,117Total liabilities and stockholders' equity
                
                $
                34,482,164
                
                
                $
                35,977,944The
      accompanying notes are an integral part of these unaudited consolidated
      financial statements.
 Back to Table of Contents
 4


AMERICAN
      INTERNATIONAL INDUSTRIES, INC. AND
  SUBSIDIARIESConsolidated Statements of
      Operations(Unaudited)


Three Months Ended March
      31,2009
                  
                  
                  2008Revenues
                  
                  $
                  6,195,014
                  
                  
                  $
                  3,510,905Costs
      and expenses:Cost of sales
                  
                  
                  3,994,002
                  
                  
                  
                  2,124,749Selling, general and administrative
                  
                  
                  2,653,086
                  
                  
                  
                  2,813,000Total
      operating expenses
                  
                  
                  6,647,088
                  
                  
                  
                  4,937,749Operating loss
                  
                  
                  (452,074
                  )
                  
                  
                  (1,426,844
                  )Other
      income (expenses):Interest and dividend income
                  
                  
                  131,438
                  
                  
                  
                  176,450Realized gains (losses) on the sale of trading securities
                  
                  
                  (82,941
                  )
                  
                  
                  44,573Unrealized gains (losses) on trading securities
                  
                  
                  96,815
                  
                  
                  
                  (1,376,539
                  )Interest expense
                  
                  
                  (218,608
                  )
                  
                  
                  (113,030
                  )Texas Emissions Reduction Plan Grant
                  
                  
                  -
                  
                  
                  
                  57,589Other income
                  
                  
                  195,146
                  
                  
                  
                  21,438Total other income (expense)
                  
                  
                  121,850
                  
                  
                  
                  (1,189,519
                  )Net loss before income tax
                  
                  
                  (330,224
                  )
                  
                  
                  (2,616,363
                  )Income
      tax expense
                  
                  
                  12,684
                  
                  
                  
                  14,132Net loss from operations before minority interest
                  
                  
                  (342,908
                  )
                  
                  
                  (2,630,495
                  )Minority interest
                  
                  
                  149,769
                  
                  
                  
                  248,242Net loss from continuing operations
                  
                  $
                  (193,139
                  )
                  
                  $
                  (2,382,253
                  )Net loss from discontinued operations, net of taxes
                  
                  
                  -
                  
                  
                  
                  (798,559
                  )Net
      loss
                  
                  $
                  (193,139
                  )
                  
                  $
                  (3,180,812
                  )Net
      loss per common share - basic and diluted:Continuing operations
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.33
                  )Discontinued
      operations
                  
                  $
                  -
                  
                  
                  $
                  (0.11
                  )Total
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.45
                  )Weighted
      average common shares -basic and
    diluted
                  
                  
                  8,689,074
                  
                  
                  
                  7,112,258
 The
accompanying notes are an integral part of these unaudited consolidated
financial statements.






Back to Table of Contents
 5


AMERICAN INTERNATIONAL INDUSTRIES, INC. AND
      SUBSIDIARIESConsolidated
      Statements of Cash Flows(Unaudited)
  Three
      Months Ended March 31,2009
              
              
              2008Cash
      flows from operating activities:Net
      loss
              
              $
              (193,139
              )
              
              $
              (3,180,812
              )Net loss from discontinued operations
              
              
              -
              
              
              
              (798,559
              )Net loss from continuing operations
              
              
              (193,139
              )
              
              
              (2,382,253
              )Adjustments to reconcile net loss from continuing operations to net
      cash provided (used in) operating activities from continuing
      operations:Depreciation and amortization
              
              
              293,557
              
              
              
              115,722Share-based compensation
              
              
              41,250
              
              
              
              139,833Realized (gains) losses on the sale of trading securities
              
              
              82,941
              
              
              
              (44,573
              )Unrealized (gains) losses on trading securities
              
              
              (96,815
              )
              
              
              1,376,539Texas
      Emissions Reduction Plan Grant
              
              
              -
              
              
              
              (57,589
              )Minority
      interest in net loss of consolidated
    subsidiary
              
              
              (149,769
              )
              
              
              (483,442
              )Change
      in operating assets and liabilities:Accounts receivable
              
              
              353,624
              
              
              
              1,288,312Trading
      securities
              
              
              95,443
              
              
              
              (225,479
              )Inventories
              
              
              (268,216
              )
              
              
              (672,872
              )Deposits for pipe inventory purchases
              
              
              -
              
              
              
              -Prepaid
      expenses and other current assets
              
              
              49,060
              
              
              
              98,893Other
      assets
              
              
              17,970
              
              
              
              9,861Accounts
      payable and accrued expenses
              
              
              144,109
              
              
              
              (61,340
              )Net
      cash provided by (used in) operating activities from continuing
      operations
              
              
              370,015
              
              
              
              (898,388
              )Cash
      flows from investing activities from continuing
operations:Purchase of property and equipment
              
              
              (25,546
              )
              
              
              (61,025
              )Proceeds from sale of drilling rigs
              
              
              -
              
              
              
              200,000Investment in rigs held for sale
              
              
              -
              
              
              
              (14,123
              )Redemption of certificate of deposit
              
              
              1,000,000
              
              
              
              1,500,000Investment in certificate of deposit
              
              
              (700,000
              )
              
              
              (244,800
              )Purchase
      of note receivable from bank
              
              
              (300,000
              )
              
              
              -Proceeds from notes receivable
              
              
              33,306
              
              
              
              61,815Loans to related parties
              
              
              (241,200
              )
              
              
              (3,277
              )Net
      cash provided by (used in) investing activities from continuing
      operations
              
              
              (233,440
              )
              
              
              1,438,590Cash
      flows from financing activities from continuing
operations:Principal payments under capital lease obligations
              
              
              (16,985
              )
              
              
              -Payments on margin loans
              
              
              -
              
              
              
              (149,836
              )Net borrowings under lines of credit agreements and short-term
      notes
              
              
              3,112
              
              
              
              598,000Principal payments on debt
              
              
              (1,283,122
              )
              
              
              (130,530
              )Payments for acquisition of treasury stock
              
              
              (41,237
              )
              
              
              (19,790
              )Net
      cash provided by (used in) financing activities from continuing
      operations
              
              
              (1,338,232
              )
              
              
              297,844
 Back to Table of Contents
 6
 Three
      Months Ended March 31,2009
              
              
              2008Net
      increase (decrease) in cash and cash equivalents from continuing
      operations
              
              $
              (1,201,657
              )
              
              $
              838,046Cash
      and cash equivalents at beginning of period from continuing
      operations
              
              
              3,114,575
              
              
              
              2,293,795Cash
      and cash equivalents at end of period from continuing
      operations
              
              $
              1,912,918
              
              
              $
              3,131,841Discontinued
      operations:Net cash used in operating activities
              
              $
              -
              
              
              $
              (1,076,236
              )Net cash used in investing activities
              
              
              -
              
              
              
              (137,221
              )Net cash used in financing activities
              
              
              -
              
              
              
              (32,124
              )Net
      increase in cash and cash equivalents from discontinued
      operations
              
              
              -
              
              
              
              (1,245,581
              )Cash
      and cash equivalents at beginning of period from discontinued
      operations
              
              
              -
              
              
              
              1,597,361Cash
      and cash equivalents at end of period from discontinued
    operations
              
              $
              -
              
              
              $
              351,780Supplemental
      schedule of cash flow information:Interest paid
              
              $
              185,076
              
              
              $
              122,336Taxes
      paid
              
              $
              -
              
              
              $
              -The
      accompanying notes are an integral part of these unaudited consolidated
      financial statements.






Back to Table of Contents
 7
 American
International Industries, Inc.


Notes to
Unaudited Consolidated Financial Statements






Note
1 - Summary of Significant Accounting Policies
  The
accompanying unaudited interim consolidated financial statements of
American International Industries, Inc. (“American”) have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission and should be
read in conjunction with the audited consolidated financial statements and notes
thereto contained in American's latest Annual Report filed with the SEC on Form
10-K for the year ended December 31, 2008. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the unaudited interim consolidated financial statements
that would substantially duplicate the disclosures contained in the audited
financial statements for the most recent fiscal year as reported in the Form
10-K have been omitted.
 Organization,
Ownership and Business
  American
International Industries, Inc. ("American"), a Nevada corporation, operates as a
diversified holding company with a number of wholly-owned subsidiaries and one
majority-owned subsidiary. American is a diversified corporation with
interests in industrial/commercial companies and an oil and gas service
business. American's business strategy is to acquire controlling equity
interests in businesses that it considers undervalued. American's management
takes an active role in providing its subsidiaries with access to capital,
leveraging synergies and providing management expertise in order to improve its
subsidiaries' growth.
  Principles
of Consolidation
  The
consolidated financial statements include the accounts of American and its
wholly-owned subsidiaries, Northeastern Plastics, Inc. and Shumate Energy
Technologies, Inc., and its majority owned subsidiary, Delta Seaboard Well
Service, Inc.  All significant intercompany transactions and balances have
been eliminated in consolidation.
 Certain
reclassifications have been made to amounts in prior periods to conform with the
current period presentation.  All reclassifications have been applied
consistently to the periods presented.
 Revenue
Recognition
 Revenue
is recognized when the earning process is completed, the risks and rewards of
ownership have transferred to the customer, which is generally the same day as
delivery or shipment of the product, the price to the buyer is fixed or
determinable, and collection is reasonably assured. Delta receives purchase
orders for all of its service work and related pipe sales. All sales are
recorded when the work is completed or when the pipe is sold.  SET
receives purchase orders for machining of oil field drilling parts, components
and tools.  Customers have the right to inspection and acceptance for
generally up to five days after taking delivery.  Returns are not accepted
due to the custom specifications of each product, but rework on items is
necessary if the product was not within the original order specifications. 
Customer requests for rework and customer rejection of shipments has been
historically low.NPI has purchase orders for all sales, of which
many of the items are requested to be container shipped and shipped directly to
the end users. All sales are recorded when the inventory items are shipped.
Taxes assessed by a governmental authority that are incurred as a result of a
revenue transaction are not included in revenues. American has no significant
sales returns or allowances.
 Net
Loss Per Share
 The
basic net loss per common share is computed by dividing the net loss by the
weighted average number of shares outstanding during a period. Diluted net loss
per common share is computed by dividing the net loss, adjusted on an as if
converted basis, by the weighted average number of common shares outstanding
plus potential dilutive securities. For the three months ended March 31, 2009
and 2008, potential dilutive securities that had an anti-dilutive effect
were not included in the calculation of diluted net loss per common share. These
securities include options to purchase shares of common stock that were not "in
the money".
 Management's
Estimates and Assumptions
 The
preparation of consolidated financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses. Actual results
could differ from these estimates.
 Back to Table of Contents
 8
 Fair
Value of Financial Instruments
  Effective
January 1, 2008, American adopted SFAS 157 for financial assets and
liabilities. SFAS 157 establishes a framework for measuring fair value and
expands disclosures about fair value measurements by establishing a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1
measurements) and lowest priority to unobservable inputs (Level 3
measurements). The three levels of the fair value hierarchy under SFAS 157
are described below:
  Basis of Fair Value
Measurement
  Level 1
                  
                  Observable
      inputs that reflect quoted prices (unadjusted) for identical assets or
      liabilities in active markets.Level 2
                  
                  Inputs
      reflect quoted prices for identical assets or liabilities in markets that
      are not active; quoted prices for similar assets or liabilities in active
      markets; inputs other than quoted prices that are observable for the asset
      or the liability; or inputs that are derived principally from or
      corroborated by observable market data by correlation or other
      means.Level 3
                  
                  Unobservable
      inputs reflecting American's own assumptions incorporated in valuation
      techniques used to determine fair value. These assumptions are required to
      be consistent with market participant assumptions that are reasonably
      available.
 
 American
believes that the fair value of its financial instruments comprising cash,
certificates of deposit, accounts receivable, notes receivable, accounts
payable, and notes payable approximate their carrying amounts.  The
interest rates payable by American on its notes payable approximate market
rates.  The fair values of American's Level 1 financial assets,
trading securities that primarily include shares of common stock in various
companies, are based on quoted market prices of the identical underlying
security.  As of March 31, 2009, American did not have any
significant Level 2 or 3 financial assets or liabilities.  The following
table provides fair value measurement information for American's trading
securities:
  As
      of March 31, 2009Fair
      Value Measurements Using:Carrying
                      Amount
                    
                    
                    Total
                      Fair
      Value
                    
                    
                    Quoted
      Prices
                      in
      Active Markets
                      (Level
      1)
                    
                    
                    Significant
      Other
                      Observable
      Inputs
                      (Level
      2)
                    
                    
                    Significant
                      Unobservable
      Inputs
                      (Level
      3)Financial
      Assets:Trading
      Securities
                    
                    $
                    636,872
                    
                    
                    $
                    636,872
                    
                    
                    $
                    636,872
                    
                    
                    $
                    -
                    
                    
                    $
                    -
 Recent
Accounting Pronouncements
  In
addition to the pronouncements noted above, there were various other accounting
standards and interpretations issued recently, none of which are expected to a
have a material impact on our consolidated financial position, operations or
cash flows.
  Note
2 - Trading Securities
 Investments
in marketable securities primarily include shares of common stock in various
companies that are bought and held principally for the purpose of selling them
in the near term with the objective of generating profits on short-term
differences in price. These investments are classified as trading securities
and, accordingly, any unrealized changes in market values are recognized in the
consolidated statements of operations.  For the three months ended
March 31, 2009 and 2008, American had unrealized trading gains of $96,815 and
losses of $1,376,539, respectively, related to securities held on those
dates.  American recorded realized losses of $82,941 for the
three months ended March 31, 2009 and realized gains of $44,573 on the sales of
trading securities and for the three months ended March 31, 2008.
 On
November 27, 2007, American acquired 1,000,000 restricted shares, or
approximately 9% of Rubicon Financial Incorporated’s (OTCBB: RBCF.OB) common
stock for a $1,000,000 cash payment and the issuance of 200,000 restricted
shares of American's common stock, valued at $4.90 per common share based upon
the closing market price on that date, for a total purchase price of $1,980,000.
The closing market price on the date of this transaction for RBCF was $2.87 per
common share. During 2008, American purchased an additional 38,900 shares
at an average purchase price of $0.17 per share. During the three months
ended March 31, 2009, American purchased an additional 28,000 shares at an
average purchase price of $0.12 per share.  At March 31, 2009, our
investment in the 1,066,900 shares of RBCF common stock is classified as
trading securities on the balance sheet and was valued at $277,394, or $0.26 per
share, based upon the closing market price on that date. At December 31, 2008,
our investment in the 1,038,900 shares of RBCF common stock is classified as
trading securities on the balance sheet and was valued at $311,670, or $0.30 per
share, based upon the closing market price on that date. Rubicon Financial
Incorporated is a development stage company, operating as a full service
insurance agency offering personal and commercial lines, health, and life
insurance products to individuals and companies in California
 Back to Table of Contents
 9
 Equity
markets can experience significant volatility and therefore are subject to
changes in value. Based upon the current volatile nature of the U.S. securities
markets and the decline in the U.S. economy, we believe that it is possible,
that the market values of our marketable equity securities could decline in the
near term. We have a policy in place to review our equity holdings on a regular
basis. Our policy includes, but is not limited to, reviewing each company’s cash
position, earnings/revenue outlook, stock price performance, liquidity and
management/ownership. American seeks to manage exposure to adverse equity
returns in the future by pursuing to increase the diversity our securities
portfolios.
 
 Note 3 - Acquisition of the assets of
Shumate Machine Works by Shumate Energy Technologies
 On
October 8, 2008, a subsidiary of American completed the purchase of 100% of the
assets and
assumed certain liabilities of Shumate Machine Works Corporation, a subsidiary
of Shumate Industries, Inc. ("SHMT").  The terms of the agreement
provided for a purchase price of $5.0 million funded by the simultaneous closing
of a $5.0 million term note by Shumate Machine Works and the receipt of SHMT
common stock with a value equivalent to any negative working capital at the
closing date of the transaction.  In connection with the negative
working capital provision of the agreement, American received 1,401,170
restricted shares of SHMT common stock valued at $0.30 per share for a
total value of $420,351.  These shares represented approximately 6.4%
of SHMT’s outstanding shares as of October 8, 2008.   The assets
are now owned by a wholly-owned American subsidiary, Shumate Energy
Technologies, Inc.
 As
required by SFAS No. 141, American's subsidiary has recorded the acquisition
using the purchase method of accounting with the purchase price allocated to the
acquired assets and liabilities based on their respective estimated fair values
at the acquisition date. The purchase price of $5,000,000 has been allocated at
follows:
  Current
      assets
                          
                          $
                          1,066,864Property
      and equipment, net
                          
                          
                          4,472,130Intangible
      assets
                          
                          
                          744,403Trading
      securities - Restricted common shares of Shumate Industries, Inc. received
      for negative working capital assumed
                          
                          
                          420,351Total assets acquired
                          
                          
                          6,703,748Current
      liabilities
                          
                          
                          (1,487,215
                          )Equipment
      notes payable
                          
                          
                          (216,533
                          )Total liabilities acquired
                          
                          
                          (1,703,748
                          )Net
      assets acquired
                          
                          $
                          5,000,000
  The  $744,403
of acquired intangible assets includes $729,000 assigned to CNC programs and
$15,403 assigned to the acquired name and logo.  These intangible
assets have a weighted average useful life of 7 years.
  Revenues
and expenses of Shumate Energy Technologies, Inc. are included
in American's statement of operations from October 8, 2008 through March
31, 2009.
 Note 4
- Inventory and Deposits for Pipe Inventory Purchases
  Inventories
consisted of the following:
  March
      31, 2009
                  
                  
                  December
      31, 2008Work
      in process
                  
                  $
                  623,130
                  
                  
                  $
                  549,954Finished
      goods
                  
                  
                  4,281,659
                  
                  
                  
                  3,434,361Less
      reserve
                  
                  
                  (95,233
                  )
                  
                  
                  (95,263
                  )$
                  4,809,556
                  
                  
                  $
                  3,889,052
  During
the year ended December 31, 2008, American entered into various agreements to
purchase pipe inventory from vendors.  At December 31, 2008 and March
31, 2009, American had cash deposits of $2,221,932 and $1,569,644,
respectively, for inventory purchases under these agreements that had not
been received.


Back to Table of Contents
 10


Note 5
- Real Estate Transactions
 During
the fourth quarter of 2008, American received a 1.705 acre tract of land in
Galveston County appraised at $540,000 as a guarantor's fee.  In connection
with this fee, American has pledged $1,750,000 in certificates of
deposit for a $4,000,000 loan to Dawn Condominiums L.P. at Texas Community
Bank.  As the principal of the loan is reduced, the bank will release
portions of the pledged certificates of deposit until the loan is paid in
full.
  During
2007, American purchased for investment a 174 acre tract of land in
Waller County, Texas for $1,684,066. This property is listed for sale with a
real estate broker.  American continues to own 287 undeveloped acres of
waterfront property on Dickinson Bayou and Galveston Bay in Galveston County,
Texas. American is carrying this property on the balance sheet at its historical
book value of $225,000.  American has engaged an independent broker on
an exclusive basis to sell the property.  These properties are not
going to be developed by nor are they being held as inventory by
American.
 Note 6
- Long-term Notes Receivable
  Long-term
notes receivable consists of the following:
  March
      31, 2009
                  
                  
                  December
      31, 2008Net
      note receivable from sale of real estate, principal balance due on or
      before July 30, 2009, secured by property lien (a)
                  
                  $
                  3,020,044
                  
                  
                  $
                  3,020,044Unsecured
      note receivable for sale of former subsidiary, Marald, Inc., principal and
      interest due monthly through June 5, 2012
                  
                  
                  121,111
                  
                  
                  
                  126,617Unsecured
      note receivable for sale of former subsidiary, Marald, Inc., principal and
      interest due monthly through July 2012 (b)
                  
                  
                  200,000
                  
                  
                  
                  200,000Unsecured
      note receivable for sale of drilling rig, principal and interest due
      monthly through December 31, 2009
                  
                  
                  86,209
                  
                  
                  
                  114,009Unsecured
      note receivable, principal balance due on April 30, 2008, interest at 6%
      through maturity and at 10% thereafter (c)
                  
                  
                  552,063
                  
                  
                  
                  552,063Unsecured
      note receivable, principal balance due on December 31, 2008, interest at
      10% through maturity and at 15% thereafter (c)
                  
                  
                  250,000
                  
                  
                  
                  250,000Note
      secured by property and shares of stock, interest due monthly at 18%,
      principal payment due on or before May 9, 2009
                  
                  
                  225,000
                  
                  
                  
                  225,000Unsecured
      note receivable purchased from Texas Community Bank, interest at 8% due
      monthly, principal due January 2009 (d)
                  
                  
                  300,000
                  
                  
                  
                  -Notes
      receivable
                  
                  
                  4,754,427
                  
                  
                  
                  4,487,733Less
      current portion
                  
                  
                  (4,667,737
                  )
                  
                  
                  (4,392,211
                  )Notes
      receivable, less current portion
                  
                  $
                  86,690
                  
                  
                  $
                  95,522
  (a) Net note receivable from sale of
real estate, principal payment due on or before July 30,
2009.  On July 30, 2004, American sold real estate to an
unaffiliated third party for a cash payment equal to the first lien and $250,000
owed to Orion HealthCorp, Inc. and a note receivable in the amount of $5,000,000
secured by a lien on the real estate. The note is being amortized over a 20 year
period, with a balloon payment at the end of five years in the amount of
$4,012,084, and bears interest of 3% per annum. The note was discounted by $1.6
million to the present value of the lowest level of annual payments required by
the sales contract, or $3.4 million, over the maximum period specified by SFAS
No. 66.  Principal payments have reduced the note balance to $3.0
million as of March 31, 2009.  American recorded a gain, using the
reduced profit method for recording the sale of land, in the amount of
$1,815,070 on the sale of this real estate based on discounting the $5,000,000
note at a 7.6% interest rate (approximating the market rate for real estate
transactions by the buyer).  The borrower is in the process of
refinancing this note with a new lender.  The property securing this
note was appraised for $9,175,000 by an independent
appraiser.
 Back to Table of Contents
 11
 (b) Sale of former subsidiary, Marald,
Inc., principal and interest due monthly through July
2012.  The original note was for $300,000 and was discounted to
$200,000 for the receipt of full payment on or before October 25,
2007.  New payment terms are being negotiated for this note
receivable.  Since the
loan is reflected at a $100,000 discount to the original note face value and
payments are currently being made on the other note receivable with Marald in
accordance with note terms, American believes payment terms will be successfully
negotiated and no further discounting of the loan was deemed necessary as of
March 31, 2009.
 (c) Unsecured notes receivable due April
30 and December 31, 2008.  These delinquent notes were due from
Hammonds Industries, Inc.  Since the assets of the Hammonds' companies were
sold on April 16, 2009 (see note 20), several alternatives are being pursued for
the use of the public company.  The adoption of any of these alternatives
is contingent upon the new entity assuming the public company's
liabilities.  Management has assessed these notes for impairment and
feels that collectability is reasonably possible based on the alternatives being
pursued for the public company.
  (d)Note purchased from Texas Community Bank with a face
amount of $300,000.  This delinquent note was purchased on March 31,
2009 and new payment terms are being negotiated for this note receivable with
the debtors, Las Vegas Premium Gold.  This note was purchased as an
investment to receive the interest income from the note.  Management has
assessed this note for impairment and feels that collectability is reasonably
possible based on the personal guarantees of the principals.
 Interest
income on notes receivable is recognized principally by the simple interest
method.  During the three months ended March 31, 2009 and 2008,
American recognized interest income of $72,812 and $81,357,
respectively.
 
 Note 7
- Property and Equipment
  Major
classes of property and equipment together with their estimated useful lives,
consisted of the following:
  Years
                  
                  March
      31, 2009
                  
                  
                  December
      31, 2008Land
                  
                  
                  $
                  892,945
                  
                  
                  $
                  892,945Building
      and improvements
                  20
                  
                  
                  943,200
                  
                  
                  
                  933,200Machinery
      and equipment
                  7-15
                  
                  
                  7,570,619
                  
                  
                  
                  7,386,789Office
      equipment and furniture
                  7
                  
                  
                  388,402
                  
                  
                  
                  384,893Automobiles
                  5
                  
                  
                  768,151
                  
                  
                  
                  768,15110,563,317
                  
                  
                  
                  10,365,978Less
      accumulated depreciation and amortization
                  
                  
                  
                  (2,863,116
                  )
                  
                  
                  (2,596,145
                  )Net
      property and equipment
                  
                  
                  $
                  7,700,201
                  
                  
                  $
                  7,769,833
 
 During
the three months ended March 31, 2009, $171,793 of equipment that was classified
as other assets as of December 31, 2008, was placed in service and reclassified
to property and equipment.
  SET has
entered into a capital lease agreement for the acquisition of machinery and
equipment.  The asset acquired under such financing arrangement included in
property and equipment is as follows:
  March
      31, 2009Machinery
      and equipment
                      
                      $
                      301,000Less
      accumulated depreciation and amortization
                      
                      
                      (15,050
                      )Net
      property and equipment
                      
                      $
                      285,950
 Principal
repayment provisions of this long-term capital lease are as follows at March 31,
2009:
  2009
                    
                    $
                    54,6952010
                    
                    
                    81,7582011
                    
                    
                    85,004Total
                    
                    $
                    221,457
 Back to Table of Contents
 12
 Note 8
- Intangible Assets
  Intangible
assets at March 31, 2009 consisted of the following:
  Gross
      Carrying Amount
                        
                        
                        Accumulated
      Amortization
                        
                        
                        
                        Intangibles,
      net
                        
                        Average
      Weighted LivesGoodwill
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        $
                        674,539
                        
                        N/ACNC
      Programs
                        
                        $
                        729,000
                        
                        
                        $
                        52,072
                        
                        
                        $
                        676,928
                        
                        7
      yearsName and
      logo
                        
                        
                        15,403
                        
                        
                        
                        1,100
                        
                        
                        
                        14,303
                        
                        7
      yearsIntangible
      assets
                        
                        $
                        744,403
                        
                        
                        $
                        53,172
                        
                        
                        $
                        691,231
                        
                        7 years
 Intangible
assets at December 31, 2008 consisted of the following:
  Gross
      Carrying Amount
                          
                          
                          Accumulated
      Amortization
                          
                          
                          
                          Intangibles,
      net
                          
                          Average
      Weighted LivesGoodwill
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          $
                          674,539
                          
                          N/ACNC
      Programs
                          
                          $
                          729,000
                          
                          
                          $
                          26,036
                          
                          
                          $
                          702,964
                          
                          7
      yearsName and
      logo
                          
                          
                          15,403
                          
                          
                          
                          550
                          
                          
                          
                          14,853
                          
                          7
      yearsIntangible
      assets
                          
                          $
                          744,403
                          
                          
                          $
                          26,586
                          
                          
                          $
                          717,817
                          
                          7 years
 Amortization
expense for the three months ended March 31, 2009 and 2008 was $26,586 and
$-0-, respectively.
  Note 9
- Short-term Notes Payable
  March
      31, 2009
                    
                    
                    December
      31, 2008Delta
      lawsuit settlement with no interest,  principal due in
      monthly payments of $25,000 through August 1, 2009
                    
                    $
                    100,000
                    
                    
                    $
                    175,000Insurance
      note payable with interest at 5.24%, principal and interest due in monthly
      payments of $31,288 through May 1, 2009
                    
                    
                    31,287
                    
                    
                    
                    125,150Note
      payable with interest at 6%, principal and interest due monthly, with a
      balloon payment due April 2009
                    
                    
                    -
                    
                    
                    
                    913,182$
                    131,287
                    
                    
                    $
                    1,213,332
  Each
of American's subsidiaries that have outstanding notes payable has secured
such notes by that subsidiary’s inventory, accounts receivable, property and
equipment and guarantees from American.
 
 At March
31, 2009 and December 31, 2008, the average annual interest rates of our
short-term borrowings were approximately 5.97% and 5.91%,
respectively.
 Back to Table of Contents
 13
 Note
10 - Long-term Debt
  Long-term
debt consisted of the following:
  March
      31, 2009
                
                
                December
      31, 2008Note
      payable to a bank, due in monthly installments of interest only of $25,000
      for the first three months, principal and interest of $44,000 due in
      monthly installments thereafter, interest at the greater of prime plus 1%
      or 6%, but no greater than 7%, with a principal balance due on September
      30, 2013, secured by the assets of Shumate Energy Technologies,
      Inc.
                
                $
                4,961,931
                
                
                $
                5,000,000Note
      payable to a bank, interest due quarterly at prime plus 1%, principal
      balance due March 2014, secured by real property
                
                
                1,000,000
                
                
                
                1,000,000Note
      payable to a bank, which allows Delta to borrow up to $2,000,000, due in
      monthly payments of interest only, with interest at prime floating rate,
      with the principal balance due in April 2010, secured by assets
      of Delta Seaboard Well Service, Inc. (a)
                
                
                1,225,066
                
                
                
                1,379,106Note
      payable to a bank, due in monthly installments of interest only, principal
      balance due June 13, 2010 with interest at 1% above the prime
      rate secured by real property
                
                
                943,500
                
                
                
                943,500Note
      payable to a bank, due in quarterly installments of interest only at 7%,
      with a principal balance due on October 8, 2010, secured by a certificate
      of deposit
                
                
                500,000
                
                
                
                500,000Note
      payable to a bank, due in monthly installments of interest only at the
      greater of prime plus 1% or 6%, but no greater than 7%, with a principal
      balance due on September 30, 2010, secured by the assets of Shumate Energy
      Technologies, Inc.
                
                
                750,239
                
                
                
                625,087Note
      payable to a bank, due in monthly installments of $6,170, including
      interest at 6.6% through May 2018, secured by real
property
                
                
                504,084
                
                
                
                514,165Note
      payable to a bank, which allows Northeastern Plastics to borrow
      up to $5,000,000, interest due monthly at the prime rate, principal
      balance due July 31, 2010, secured by assets of Northeastern Plastics,
      Inc.
                
                
                1,151,000
                
                
                
                1,119,000Note
      payable to a bank, due in quarterly installments of interest only at 7.5%,
      with a principal balance due February 2009, secured by a certificate of
      deposit
                
                
                -
                
                
                
                1,000,000Note
      payable to a bank, due in quarterly payments of interest only, with
      interest at 8.0%, with a principal balance due on May
      2011, secured by real property (a)
                
                
                1,740,000
                
                
                
                1,740,000Note
      payable due in monthly payments of $19,373, including interest at 6%,
      through March 2013, secured by assets of Delta Seaboard Well Service, Inc.
      (a)
                
                
                868,566
                
                
                
                -Note
      payable to a bank, due in monthly payments of $6,120, including interest
      at 8.25%, through August 9, 2012, secured by assets of Delta
      Seaboard Well Service, Inc.
                
                
                213,086
                
                
                
                226,929Other
      secured notes with various terms
                
                
                82,322
                
                
                
                89,97213,939,794
                
                
                
                14,137,759Less
      current portion
                
                
                (729,022
                )
                
                
                (4,484,161
                )$
                13,210,772
                
                
                $
                9,653,598
 Back to Table of Contents
 14
 Each
of American's subsidiaries that have outstanding notes payable has secured
such notes by that subsidiary’s inventory, accounts receivable, property and
equipment and guarantees from American.
 
 Principal
repayment provisions of long-term debt are as follows at March 31,
2009:
  2009
                  
                  $
                  607,4102010
                  
                  
                  5,146,5222011
                  
                  
                  2,173,2692012
                  
                  
                  597,0862013
                  
                  
                  4,138,132Thereafter
                  
                  
                  1,277,375Total
                  
                  $
                  13,939,794
  Note
11 - Capital
Stock and Stock Options
  American is
authorized to issue up to 1,000,000 shares of Preferred Stock, $0.001 par value
per share, of which no shares are presently outstanding. The Preferred Stock may
be issued in one or more series, the terms of which may be determined at the
time of issuance by the Board of Directors, without further action by
stockholders, and may include voting rights (including the right to vote as a
series on particular matters), preferences as to dividends and liquidation,
conversion, redemption rights and sinking fund provisions.
  American is
authorized to issue up to 50,000,000 shares of Common Stock, $0.001 par value
per share, of which 1,036,800 are reserved for issuance pursuant to the
exercise of options pursuant to an employment agreement with American's Chairman
and CEO.
  On March
30, 2007, American issued 144,000 stock options to American's Chairman
and CEO, with an exercise price of $7.00 per share, expiring in 2
years.  In connection with American's 20% stock dividends to all
shareholders on September 19, 2007 and July 16, 2008, the terms of these
options were adjusted to reflect the dividends, resulting in the option
being exercisable to buy 207,360 shares for $4.86 per share.  These
options expired worthless on March 30, 2009.
    American estimates
the fair value of each stock option at the grant date by using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants in 2008 as follows:
 March
      30, 2008Dividend
      yield
                  
                  
                  0.00
                  %Expected
      volatility
                  
                  
                  38.64
                  %Risk
      free interest
                  
                  
                  2.5
                  %Expected
      lives
                  
                  2
      years
  A summary
of the status of American's stock options to employees as of March 31, 2009
is presented below:
  Shares
                  
                  
                  Weighted
      Average Exercise Price
                    March
      31, 2009Outstanding
      at beginning of period
                  
                  
                  414,720
                  
                  
                  $
                  4.86Granted
                  
                  
                  -
                  
                  
                  
                  N/AExercised
                  
                  
                  -
                  
                  
                  
                  N/ACanceled
      / Expired
                  
                  
                  (207,360
                  )
                  
                  
                  N/AOutstanding
      and exercisable at end of period
                  
                  
                  207,360
                  
                  
                  $
                  4.86Weighted
      average fair value of options granted during the period
                  
                  
                  207,360
                  
                  
                  $
                  4.86
 Back to Table of Contents
 15
 The
following table summarizes information about fixed stock options to employees
outstanding at March 31, 2009:
 Exercise
      Price
                        
                        
                        Number
      Outstanding and Exercisable at March 31, 2009$
                        4.86
                        
                        
                        
                        207,360
  Stock-based
compensation consists of the following:
  March
      31, 2009
                    
                    
                    March
      31, 2008Common
      shares issued for services
                    
                    $
                    41,250
                    
                    
                    $
                    51,770Stock
      options issued for services
                    
                    
                    -
                    
                    
                    
                    88,063Stock-based
      compensation
                    
                    $
                    41,250
                    
                    
                    $
                    139,833
 
 Note
12 - Concentration of Credit Risk
 American maintains
its cash and certificates of deposit in commercial accounts at major financial
institutions. Although the financial institutions are considered creditworthy,
at March 31, 2009, American's cash and certificates of deposit balances held in
banks exceeded the limit covered by the Federal Deposit Insurance Corporation by
approximately $4.9 million. The terms of these deposits are on demand to
minimize risk. American has not incurred losses related to these
deposits.
 Trade
accounts receivable subject American to the potential for credit risk with
customers in the retail and distribution sectors. To reduce credit
risk, American performs ongoing evaluations of its customer’s financial
condition but generally does not require collateral. As of, and during, the
three months ended March 31, 2009, American had one customer that accounted
for 15% of
trade accounts receivable and 15% of revenues on a consolidated
basis.  Additionally, American had two customers that accounted
for 13% and 14% of revenues on a consolidated
basis.
 Note
13 - Texas Emissions Reduction Plan Grant
  Delta
Seaboard Well Service, Inc. is the recipient of a Texas Emissions Reduction Plan
("TERP") grant from the Texas Commission on Environmental Quality in the amount
of $1,157,273. TERP is a comprehensive set of incentive programs aimed at
improving air quality in Texas. Through this grant, Delta’s rig engines are
being replaced with engines certified to emit 25% less nitrogen oxide (“NOx”)
than required under the current federal standard for the horsepower of the
engines. The old engines must be destroyed or rendered permanently
inoperable.
  International
Accounting Standard No. 20 (IAS 20): Accounting for Government Grants and
Disclosure of Government Assistance provides guidance on recognizing,
measuring and disclosing government grants, which requires that grants related
to assets be presented in the balance sheet either by setting up the grant as
deferred income or by deducting the grant in arriving at the carrying amount of
the asset. However, IAS 20 is under review because it is inconsistent with the
"Framework" for International Accounting Standards. The "Framework" states that
"Income is increases in economic benefits during the accounting period in the
form of inflows or enhancements of assets . . ., other than those relating to
contributions from equity participants." The International Accounting Standards
Board (IASB) noted that recognizing an amount in the balance sheet as a deferred
credit is inconsistent with the "Framework" in that the entity has no liability.
The IASB has decided to replace the guidance in IAS 20 for accounting for
government grants with the guidance in IAS 41: Agriculture. Also, the IASB
noted that SFAS No. 116: Accounting for Contributions
Received and Contributions Made, while exempting government grants to
business entities from its scope, provides an accounting model that can be
applied to government grants and that is consistent with the "Framework." In
both IAS 41 and SFAS No. 116, the guidance calls for establishing an asset and
recording the grant (contribution) as income. American applied this
guidance and during the three months ended March 31, 2008, Delta increased
machinery and equipment and recognized other income for this grant in the amount
of $57,589.
  TERP
grant recipients are required to monitor and track the total NOx emission
reductions and cost-effectiveness. The grant contract includes provisions for
the return of a prorated share of the grant if the NOx emission reductions
originally projected are not achieved. American has not recorded any liabilities
in connection with this matter because management has determined that return of
any grant receipts is not likely.  Based on the advice of the State of
Texas authorities who administer the grant, the taxability of this grant has not
been determined and the advice of the Internal Revenue Service has been
inconsistent.  American is still determining the effect this will
have, but believes it will not materially affect American because of the
tax loss carryforwards explained in Note 15
below.


Back to Table of Contents
 16
 Note
14 - Related Party Transactions
  At December 31, 2008,
 Note
15 - Income Taxes
  The
provision for income taxes consists of the following:
  March
      31, 2009Current
      taxes
                      
                      $
                      -Deferred
      tax benefit
                      
                      
                      (1,395,086
                      )Benefits
      of operating loss carryforwards
                      
                      
                      1,395,086Current
      Federal Taxes
                      
                      
                      -Texas
      Margin Tax estimate - 2009
                      
                      
                      12,684Income
      tax expense
                      
                      $
                      12,684
  The tax
provision differs from amounts that would be calculated by applying federal
statutory rates to income before income taxes primarily
because:
 -
American consolidates subsidiaries for financial statements which cannot be
consolidated for income tax purposes; therefore, some subsidiaries may pay
federal income tax despite the accumulated net operating losses of American
as a whole;
 - no tax
benefits have been recorded for nondeductible expenses totaling
$128,439 and
 - the
valuation allowance for deferred tax assets increased by
$2,662,555.
  The
following table sets forth a reconciliation of statutory income
taxes:
 March
      31, 2009
                        
                        
                        March
      31, 2008Netloss before
      taxes
                        
                        $
                        (330,224
                        )
                        
                        $
                        (2,616,363
                        )Income
      tax benefit computed at statutory rate
                        
                        $
                        (112,276
                        )
                        
                        $
                        (723,326
                        )Permanent
      differences
                        
                        
                        (36,693
                        )
                        
                        
                        (61,825
                        )Net
      effects of temporary differences
                        
                        
                        -
                        
                        
                        
                        105,058Effect
      of federal graduated rates
                        
                        
                        148,969
                        
                        
                        
                        1,269,415Increase
      in valuation allowance
                        
                        
                        -
                        
                        
                        
                        (589,322
                        )Texas
      Margin Tax estimate - 2009
                        
                        
                        12,684
                        
                        
                        
                        14,132$
                        12,684
                        
                        
                        $
                        14,132
  
 Operating
      LossesAmount
                        
                        Expires$
                        128,093
                        
                        2017$
                        566,409
                        
                        2018$
                        1,028,302
                        
                        2019$
                        1,551,019
                        
                        2020$
                        288,855
                        
                        2022$
                        4,356,391
                        
                        2023
 Back to Table of Contents
 17
 Note
16 - Loss Per Share
  Basic
loss per share is calculated on the basis of the weighted average number of
common shares outstanding. Diluted loss per share, in addition to the weighted
average determined for basic loss per share, includes common stock equivalents,
which would arise from the conversion of the preferred stock to common
shares.
 Three
      Months EndedMarch
      31, 2009
                      
                      
                      March
      31, 2008Basic
      loss per share:Net
      loss from continuing operations
                      
                      $
                      (193,139
                      )
                      
                      $
                      (2,382,253
                      )Net
      loss from discontinued operations net of taxes
                      
                      
                      -
                      
                      
                      
                      (798,559
                      )Net
      loss applicable to common shareholders
                      
                      $
                      (193,139
                      )
                      
                      $
                      (3,180,812
                      )Weighted
      average common shares outstanding - basic and diluted
                      
                      
                      8,689,074
                      
                      
                      
                      7,112,258Net
      loss per share - basic and diluted:Continuing operations
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.33
                      )Discontinued
      operations
                      
                      
                      -
                      
                      
                      
                      (0.11
                      )Total
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.45
                      )
 Note
17 - Commitments and Contingencies
  Various
key officials of American have entered into employment agreements
with American. In March 2007, the CEO of American entered into a five-year
employment agreement which provides for a monthly salary of $10,000 plus a bonus
as determined by the Board of Directors. Also, the agreement provides for the
grant of 144,000 options (207,360 options after the effect of the 20% stock
dividends issued in 2007 and 2008) per year with an exercise price of $7.00
($4.86 after the effect of the 20% stock dividends), beginning March 15, 2007.
Additionally, beginning January 2008, the CEO will receive 2,200 shares of
American common stock on a monthly basis for the remaining term of the
agreement.  The CFO of American entered into a three-year employment
agreement beginning June 1, 2008, which provides for an annual salary of $95,000
plus a bonus as determined by the Board of Directors. The president of NPI
previously entered into an at-will employment agreement that provides an annual
salary of $195,000 plus a bonus based upon operating results of this subsidiary.
The employment agreement also grants the president of NPI an option to purchase
NPI common stock equal to 5% of NPI's equity at an exercise price of 5% of the
total stockholder's equity, if NPI conducts an initial public offering of its
common stock during the time of his employment. Delta’s president and vice
president entered into an employment agreement that provides for an annual base
salary of $150,000 each.  On October 7, 2008, Larry C. Shumate entered into
a three-year employment agreement with SET to serve as President of SET,
which provides for an annual salary of $185,000 plus a bonus as determined by
the Board of Directors.  The employment agreement provides for health and
life insurance coverage and a vehicle allowance of $800 per month.  After two
consecutive years of Earnings Before Interest, Depreciation and Amortization
(EBITDA) of greater than one million dollars ($1,000,000) for the years ended
December 31, 2009 and 2010, based on the financial statements of SET included in
the Company’s audited consolidated financial statements, Mr. Shumate shall be
entitled to a non-qualified option to purchase for one hundred dollars ($100)
unencumbered shares of common stock of SET equal to ten (10%) percent of all
shares outstanding of SET, which option would be exercisable thirty (30) days
after the issuance of the December 31, 2010 audited financial statements of the
Company.
 On July
23, 2008, Delta Seaboard Well Service, Inc., our 51% owned subsidiary negotiated
a settlement in the Fort
Apache Energy, Inc. v. Delta Seaboard Well Service, Inc.lawsuit for
$1,450,000. After minority interest, the net impact of this settlement on
American's net income is $739,500. Management believes that the settlement
amount will be recoverable through insurance as described below.
  Delta Seaboard Well Service, Inc. v.
Houstoun, Woodard, Eason, Gentle Tomforde and Anderson, Inc., D/B/A Insurance
Alliance and Robert Holman (“Broker Lawsuit”). Delta is in negotiations
to settle its claims in the Broker Lawsuit for approximately $2,400,000,
including $1,600,000 of actual damages plus interest, attorney’s fees, and
statutory damages. Delta had a CGL insurance policy with Gemini Insurance
Company ("Gemini") for 2003, naming Delta as an insured, which policy was in
effect at such time as Delta began the plugging operation referenced in the Fort
Apache Lawsuit. Delta made a claim under the policy for a defense in the Fort
Apache case.  In October 2008, in the Gemini Insurance Company v. Delta
Seaboard Well Service, Inc.case,the court granted Gemini's
motion for summary judgment and declared that the insurance policy provides no
coverage for the claims made against Delta in the Fort Apache
case.  Delta’s position is that its broker failed to obtain
appropriate insurance coverage and misrepresented the coverage it did
obtain.  Delta is aggressively pursuing its claims in the Broker
Lawsuit.
  As part
of the attorney’s work on the Broker Lawsuit, Delta filed a claim for coverage
with American Specialty Lines Insurance Company (AISLIC). Delta is suing AISLIC
for denying coverage for the Fort Apache Lawsuit, seeking $445,000 plus interest
and attorney’s fees.  Delta is vigorously pursuing the AISLIC
Lawsuit.
 Back to Table of Contents
 18
 Delta is
a co-defendant in a personal injury lawsuit, Karen Duke and as next friend of her
minor son, George Duke v. Delta Seaboard Well Service, Inc. and Jimmy
Newcomb.  This lawsuit arises out of a motor vehicle accident
that occurred on July 31, 2006.  The plaintiffs claim to have incurred
$54,533 in medical expenses to date and Ms. Duke claims lost wages of
approximately $6,820.  The plaintiffs are claiming an unspecified
amount of claimed actual and consequential economic damages (for medical
expenses and lost wages / diminished earnings capacity), plus an unspecified
amount of claimed damages for their alleged “pain &
suffering.”  The company has liability insurance policy with
applicable policy limits of $1,000,000.00.  This case has not yet been
scheduled for trial and discovery remains pending. Delta’s attorneys anticipate
that the matter will be referred to an agreed mediation during the summer of
2009. Management believes that Delta has a more than adequate amount of
available liability insurance coverage to fund any settlement that might be
reached in this case, or to respond to any judgment that might be entered after
a jury trial. Delta intends to vigorously defend this case though trial, unless
some reasonable settlement can be reached before then.  An evaluation
of the outcome of this case cannot be made at this time.  Delta
expects to prevail in these matters and has not recorded any liabilities in
connection with this lawsuit.
 
 American International Industries,
Inc. v. William W. Botts.  American filed this lawsuit against
William W. Botts (“Botts”) seeking damages as a result of a Stock Purchase
Agreement and Consulting Agreement that American entered into with Botts on
September 12, 2007.  Under the Stock Purchase Agreement, American gave
Botts $1,000,000 in cash and 288,000 shares of restricted AMIN stock (240,000
original shares plus a 20% stock dividend) for 170,345 shares of OI
Corporation.  As part of the original agreement, Botts had the right
to sell the 288,000 shares back to American for $4.17 per
share.  Under the Consulting Agreement, American agreed to pay Botts
$14,000 per month, plus expenses for performing consulting
services.  On or about November 5, 2008, American paid Botts $100,000
to terminate the Consulting Agreement to stop the accrual of monthly consulting
payments to Botts.  In this suit, American has sued Botts for
$2,500,000 in damages, alleging fraud-misrepresentation, fraud-failure to
disclose material information, violation of Section 27.01 of the Texas Business
and Commerce Code – fraud in a stock transaction, and breach of fiduciary
duty.  Botts has filed a breach of contract counter-claim against
American, alleging damages of $78,000 for consulting fee payments and expenses,
$1,200,000 for stock purchase guarantee option payments, and an unspecified
amount of attorneys fees.  The parties attempted to settle this matter
during December 2008, but were unable to do so.  If the outcome of
this case is unfavorable, then the value of the 288,000 shares of AMIN stock and
of the 576,000 shares of Hammonds Industries, Inc. stock that Botts is entitled
to receive as a stock dividend will be credited against any loss incurred by
American, and American's common shares outstanding will be reduced by 288,000
shares, or approximately 3%.  Because the case is very new, an evaluation
of the outcome of this case cannot be made at this time.  American
expects to prevail in these matters and has not recorded any liabilities in
connection with this lawsuit.
 Delta
Seaboard Well Service, Inc. is the recipient of a TERP grant from the Texas
Commission on Environmental Quality in the amount of $1,157,273, of which
$781,728 has been recognized through March 31, 2009. TERP grant
recipients are required to monitor and track the total NOx emission reductions
and cost-effectiveness. The grant contract includes provisions for the return of
a prorated share of the grant if the NOx emission reductions originally
projected are not achieved. American has not recorded any liabilities in
connection with this matter because management has determined that return of any
grant receipts is not likely.
  Delta
leases space under a commercial lease which expires in June 2010. Future minimum
lease payments are as follows:
  Year
      December 31,
                  
                  Amount2009
                  
                  $
                  83,2502010
                  
                  
                  55,500Total
                  
                  $
                  138,750
  SET
leases space under a commercial lease which expires in October 2013. Future
minimum lease payments are as follows:
  Year
      December 31,
                    
                    Amount2009
                    
                    $
                    198,9002010
                    
                    
                    265,2002011
                    
                    
                    265,2002012
                    
                    
                    265,2002013
                    
                    
                    221,000Total
                    
                    $
                    1,215,500
 Back to Table of Contents
 19
 Note
18 - Segment Information
 We have
three reporting segments and corporate overhead:
  · Northeastern Plastics (NPI) -
a wholly-owned subsidiary, is a supplier of automotive after-market products and
consumer durable goods products to retailers and wholesalers in the automotive
after-market and in the consumer durable electrical products
markets;
 · Shumate Energy Technologies, Inc.
(SET) - a wholly-owned subsidiary, manufactures highly specialized
equipment for energy industry customers, including expandable tubing technology
products that are used in field service operations for oil and gas exploration
under extreme environmental conditions. SET manufactures large-diameter products
and close tolerance machined parts that range up to thirty-four feet in length
using state of the art, large part CNC equipment.
 · Delta Seaboard Well Services
(Delta) - a 51% owned subsidiary, is an onshore rig-based well-servicing
contracting company providing services to the oil and gas industry;
 · Corporate overhead
- American's investment holdings including financing current operations and
expansion of its current holdings as well as evaluating the feasibility of
entering into additional businesses.  Corporate overhead also includes
Brenham Oil & Gas, a division that owns an oil, gas and mineral royalty
interest in Washington County, Texas, which is carried on American's
balance sheet at $0.  American received income from the royalty interest of
$4,396 in 2008 and $4,859 in 2007.  Through Brenham Oil &
Gas, American is engaged in negotiations with financial institutions for
the purpose of financing potential acquisitions of existing oil and gas
properties and reserves.  American is seeking to enter into arrangements
with third-party owners and potential partners with proven oil and gas reserves,
but who lack the financial resources and/or the technical expertise possessed by
American, to assist them with the resources required to develop
their reserves.
 The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. American evaluates performances
based on profit or loss from operations before income taxes, not including
nonrecurring gains and losses and foreign exchange gains and losses. American's reportable
segments are strategic business units that offer different technology and
marketing strategies. Most of the businesses were acquired as subsidiaries and
the management at the time of the acquisition was retained. American's areas
of operations are principally in the United States. No single foreign country or
geographic area is significant to the consolidated financial
statements.
 Consolidated
revenues from external customers, operating income (loss), identifiable assets,
depreciation and amortization expense, and capital expenditures were as
follows:
  Three
      Months Ended March 31,2009
                  
                  
                  2008Revenues:Northeastern
      Plastics
                  
                  $
                  1,644,282
                  
                  
                  $
                  1,427,956Shumate
      Energy Technologies
                  
                  
                  2,086,821
                  
                  
                  
                  -Delta
      Seaboard
                  
                  
                  2,463,911
                  
                  
                  
                  2,082,949Total
      revenues
                  
                  $
                  6,195,014
                  
                  
                  $
                  3,510,905Operating
      income (loss) from continuing operations:Northeastern
      Plastics
                  
                  $
                  (24,505
                  )
                  
                  $
                  (139,925
                  )Shumate
      Energy Technologies
                  
                  
                  164,281
                  
                  
                  
                  -Delta
      Seaboard
                  
                  
                  (177,243
                  )
                  
                  
                  (529,800
                  )Corporate
                  
                  
                  (414,607
                  )
                  
                  
                  (757,119
                  )Operating
      loss from continuing operations
                  
                  
                  (452,074
                  )
                  
                  
                  (1,426,844
                  )Other
      income (expenses) from continuing operations
                  
                  
                  121,850
                  
                  
                  
                  (1,189,519
                  )Net
      loss from continuing operations before income tax
                  
                  $
                  (330,224
                  )
                  
                  $
                  (2,616,363
                  )March
      31, 2009
                  
                  
                  
                  December
      31, 2008Identifiable
      assets:Northeastern
      Plastics
                  
                  $
                  5,640,757
                  
                  
                  $
                  5,836,635Shumate
      Energy Technologies
                  
                  
                  6,850,441
                  
                  
                  
                  6,871,304Delta
      Seaboard
                  
                  
                  7,397,858
                  
                  
                  
                  7,771,609Corporate
                  
                  
                  14,593,108
                  
                  
                  
                  15,498,396Total
      identifiable assets
                  
                  $
                  34,482,164
                  
                  
                  $
                  35,977,944
 Back to Table of Contents
 20
 
 Three
      Months Ended March 31,2009
                        
                        
                        2008Depreciation
      and amortization:Northeastern
      Plastics
                        
                        $
                        15,635
                        
                        
                        $
                        15,525Shumate
      Energy Technologies
                        
                        
                        163,174
                        
                        
                        
                        -Delta
      Seaboard
                        
                        
                        112,365
                        
                        
                        
                        96,843Corporate
                        
                        
                        2,383
                        
                        
                        
                        3,354Depreciation
      and amortization from continuing operations
                        
                        
                        293,557
                        
                        
                        
                        115,722Depreciation
      and amortization from discontinued operations
                        
                        
                        -
                        
                        
                        
                        223,375Total
      depreciation and amortization
                        
                        $
                        293,557
                        
                        
                        $
                        339,097Capital expenditures:Northeastern
      Plastics
                        
                        $
                        527
                        
                        
                        $
                        24,062Shumate
      Energy Technologies
                        
                        
                        1,628
                        
                        
                        
                        -Delta
      Seaboard
                        
                        
                        12,038
                        
                        
                        
                        36,963Corporate
                        
                        
                        11,353
                        
                        
                        
                        -Capital
      expenditures for continuing operations
                        
                        
                        25,546
                        
                        
                        
                        61,025Capital
      expenditures for discontinued operations
                        
                        
                        -
                        
                        
                        
                        127,243Total
      capital expenditures
                        
                        $
                        25,546
                        
                        
                        $
                        188,268
 
 Back to Table of Contents
 21
 
 Note
19 - Discontinued operations
  On
December 31, 2008, the board of directors of American approved the
deconsolidation of Hammonds Industries, Inc. (“Hammonds”) from American. To effect
the deconsolidation of Hammonds, American was required to reduce its ownership
percentage, board membership, and guarantee of Hammonds’ debt. After the
distribution of the special dividend of approximately 17.4 million shares of
Hammonds’ common stock to American's shareholders of record on December 31,
2008, American's ownership is approximately 13% of Hammonds' issued
and outstanding common stock. Effective December 31, 2008, Carl Hammonds was
appointed Chairman and CEO and John Stump, III was appointed CFO. Hammonds
accepted the resignations of Daniel Dror, as Chairman of the Board and CEO,
Sherry L. Couturier, as Director, CFO and Vice President, and Charles R. Zeller,
as Director, and appointed Richard C. Richardson as a new board member unrelated
to American. As a result, the majority of Hammonds’ board of directors is no
longer controlled by American. Additionally, a reduction of American's
guarantee of Hammonds’ debt to $1,000,000 was obtained from Texas Community
Bank.
   Three
      Months Ended
                            March
      31, 2008Net
      loss from continuing operations
                          
                          $
                          (2,382,253
                          )Net
      loss from discontinued operations net of taxes
                          
                          
                          (798,559
                          )Net
      loss applicable to common shareholders
                          
                          $
                          (3,180,812
                          )Weighted
      average common shares outstanding - basic and diluted
                          
                          
                          7,112,258Net
      loss per share - basic and diluted:Continuing operations
                          
                          $
                          (0.33
                          )Discontinued
      operations
                          
                          
                          (0.11
                          )Total
                          
                          $
                          (0.45
                          )





Three
      Months Ended
                    March
      31, 2008Continuing
      operations:Net cash used in operating activities
                
                $
                (898,388
                )Net cash provided by investing activities
                
                
                1,438,590Net cash provided by financing activities
                
                
                297,844Net
      increase in cash and cash equivalents from continuing
      operations
                
                
                838,046Cash
      and cash equivalents at beginning of period from continuing
      operations
                
                
                2,293,795Cash
      and cash equivalents at end of period from continuing
      operations
                
                $
                3,131,841Discontinued
      operations:Net cash used in operating activities
                
                $
                (1,076,236
                )Net cash used in investing activities
                
                
                (137,221
                )Net cash provided by financing activities
                
                
                (32,124
                )Net
      increase in cash and cash equivalents from discontinued
      operations
                
                
                (1,245,581
                )Cash
      and cash equivalents at beginning of period from discontinued
      operations
                
                
                1,597,361Cash
      and cash equivalents at end of period from discontinued
    operations
                
                $
                351,780
    Three
      Months Ended
                      March
      31, 2008Revenues
                
                $
                2,205,157Net
      loss before income tax
                
                $
                (789,683
                )
 Back to Table of Contents
 22
 
 Note 20 - Subsequent
Events
  On April
16, 2009, Hammonds entered into an Asset Purchase Agreement with FabCorp, Inc.,
a Houston-based manufacturing company, pursuant to which Hammonds sold all of
its assets to a newly formed Texas company, Hammonds Technologies, LLC., a
wholly owned subsidiary of FabCorp, Inc.  Pursuant to the Asset
Purchase Agreement, FabCorp purchased all of the assets in consideration for the
payment of Hammonds’ debt owed to Texas Community Bank in the amount of $2.6
million.  The balance of Hammonds’ bank debt in the amount of $350,000
was paid by American and will be recorded as a net loss from discontinued
operations for the three and six months ended June 30, 2009.  American
was relieved of its $1,000,000 guarantee of Hammonds’ debt.
  repurchase
164,814 shares of its common stock.
 Back to Table of Contents
 23


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS




Forward-Looking
Statements; Market Data
  As used
in this Quarterly Report, the terms "we", "us", "our" 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 of Operations"in this
Quarterly Report, we emphasize that forward-looking statements involve risks and
uncertainties and our actual results may differ materially from those expressed
or implied by our forward-looking statements. Our forward-looking statements in
this Quarterly Report reflect our current views about future events and are
based 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-looking statements.
  Overview
  American
International Industries, Inc., organized under the laws of the State of Nevada
in September 1994, is a diversified corporation with interests in industrial
companies, oil and gas interests, oilfield supply and service companies, and
interests in undeveloped real estate in the Galveston Bay, TX area. The
Company’s business strategy is to acquire controlling equity interests in
undervalued companies and take an active role in its new subsidiaries to improve
their growth, by providing its subsidiaries with access to capital, leveraging
synergies and providing its subsidiaries with the Company's management
expertise. The Company is sometimes referred to as "we", "us", "our", and other
such phrases as provided in Regulation F-D (Fair Disclosure).
  American
International Industries, Inc. is a holding company and has three reporting
segments and corporate overhead:
  · Northeastern Plastics (NPI) -
a wholly-owned subsidiary, is a supplier of automotive after-market products and
consumer durable goods products to retailers and wholesalers in the automotive
after-market and in the consumer durable electrical products
markets;
 · Shumate Energy Technologies, Inc.
(SET) - a wholly-owned subsidiary, manufactures highly specialized
equipment for energy industry customers, including expandable tubing technology
products that are used in field service operations for oil and gas exploration
under extreme environmental conditions. SET manufactures large-diameter products
and close tolerance machined parts that range up to thirty-four feet in length
using state of the art, large part CNC equipment.
 · Delta Seaboard Well Services
(Delta) - a 51% owned subsidiary, is an onshore rig-based well-servicing
contracting company providing services to the oil and gas industry;
 · Corporate overhead - the
Company's investment holdings including financing current operations and
expansion of its current holdings as well as evaluating the feasibility of
entering into additional businesses.  Corporate overhead also includes
Brenham Oil & Gas, a division that owns an oil, gas and mineral royalty
interest in Washington County, Texas, which is carried on the Company's balance
sheet at $0.  Through Brenham Oil & Gas, the Company is engaged in
negotiations with financial institutions for the purpose of financing potential
acquisitions of existing oil and gas properties and reserves.  The Company
is seeking to enter into arrangements with third-party owners and potential
partners with proven oil and gas reserves, but who lack the financial resources
and/or the technical expertise possessed by the Company, to assist them with the
resources required to develop their reserves.
  The
historical financial statements of the Company include the acquisitions of
acquired companies as of the effective dates of the purchases, and the results
of those companies subsequent to closing, as these transactions were accounted
for under the purchase method of accounting.
  We intend
to continue our efforts to grow through the acquisition of additional and
complimentary businesses and by expanding the operations of our existing
businesses, especially in the energy sector. We will evaluate whether additional
and complimentary businesses can be acquired at reasonable terms and conditions,
at attractive earnings multiples and which present opportunity for growth and
profitability. These efforts will include the application of improved access to
financing and management expertise afforded by synergistic relationships between
the Company and its subsidiaries. Potential acquisitions are evaluated to
determine that they would be accretive to earnings and equity, that the
projected growth in earnings and cash flows are attainable and consistent with
our expectations to yield desired returns to investors, and that management is
capable of guiding the growth of operations, working in concert with others in
the group to maximize opportunity. Periodically as opportunities present
themselves, we may sell or merge the subsidiaries in order to bring value to the
holding company and our shareholders and to enable the Company to acquire larger
companies.
  The
Company’s real estate investment policy historically has been to acquire real
estate for resale based upon our view of market conditions. Such properties
are listed on the balance sheet as real estate acquired for resale. 
Real estate is not a segment of the Company's business.
 Back to Table of Contents
 24
 We expect
to face competition for acquisition candidates, which may limit the number of
acquisition opportunities and may lead to higher acquisition prices. There can
be no assurance that we will be able to identify, acquire or manage profitably
of additional businesses or to integrate any acquired businesses into the
Company without substantial costs, delays or other operational or financial
problems. Further, acquisitions involve a number of risks, including possible
adverse effects on our operating results, diversion of management's attention,
failure to retain key personnel of the acquired business and risks associated
with unanticipated events or liabilities. Some or all of which could have a
material adverse effect on our business, financial condition and results of
operations. The timing, size and success of our acquisition efforts and the
associated capital commitments cannot be readily predicted. It is our current
intention to finance future acquisitions by using shares of our common stock and
other forms of financing as the consideration to be paid. In the event that the
common stock does not have and maintain a sufficient market value, or potential
acquisition candidates are otherwise unwilling to accept common stock as part of
the consideration for the sale of their businesses, we may be required to seek
other forms of financing in order to proceed with our acquisition program. If we
do not have sufficient cash resources, our growth could be limited unless we are
able to obtain additional equity or debt financing at terms acceptable to the
Company.
 
 On
December 31, 2008, the board of directors of the Company approved the
deconsolidation of Hammonds Industries, Inc. (“Hammonds”) from the Company. To
effect the deconsolidation of Hammonds, the Company was required to reduce its
ownership percentage, board membership, and guarantee of Hammonds’ debt. After
the distribution of the special dividend of approximately 17.4 million shares of
Hammonds’ common stock to the Company’s shareholders of record on December 31,
2008, the Company’s ownership is proximately 13% of Hammonds' issued and
outstanding common stock. Effective December 31, 2008, Carl Hammonds was
appointed Chairman and CEO and John Stump, III was appointed CFO. Hammonds
accepted the resignations of Daniel Dror, as Chairman of the Board and CEO,
Sherry L. Couturier, as Director, CFO and Vice President, and Charles R. Zeller,
as Director, and appointed Richard C. Richardson as a new board member unrelated
to the Company. As a result, the majority of Hammonds’ board of directors is no
longer controlled by the Company. Additionally, a reduction of the Company’s
guarantee of Hammonds’ debt was obtained from Texas Community
Bank.
  Corporate
overhead includes our investment activities for financing current operations and
expansion of our current holdings, as well as evaluating the feasibility of
acquiring additional businesses.


Results of
Operations




Three Months Ended
March 31, 2009 Compared to Three Months Ended March 31,
2008.




The
following is derived from, and should be read in conjunction with, our unaudited
consolidated financial statements, and related notes for the three months ended
March 31, 2009 and 2008.


Net revenues. For the
three months ended March 31, 2009, revenues from continuing operations were
$6,195,014, compared to $3,510,905 for the three months ended March 31, 2008,
representing an increase of $2,684,109, or 76%.




Delta
reported revenues of $2,463,911 for the three months ended March 31, 2009,
compared to 2,082,949 for the same period in 2008, representing an increase
of $380,962, or 18%. The increase in revenues at Delta is due to an
increase in pipe sales of $325,453 to the oil field service industry. Pipe
sales revenues have increased due to increased
drilling activity creating a greater demand for pipe.




The
results of SET for the three months ended March 31, 2009 are included
in our results of operations. For the period ended March 31, 2009, SET's
revenues were $2,086,821, gross margin was 20%, and net operating income was
$164,281.




Revenues
at NPI during the three months ended March 31, 2009 were $1,644,282, compared to
$1,427,956 for the three months ended March 31, 2008, representing an
increase of $216,326, or 15%.  During the three months ended
March 31, 2008, NPI experienced a decline in revenues of 39%, compared
to its revenues for the same period in 2007, due to an overstock
position from the 2007 holiday season and the delay of a large order from
the first quarter to the second quarter of 2008.  NPI's revenues for the
three months ended March 31, 2009 were 30% lower than its revenues for the same
period in 2007, due to
the decline in the economy.  NPI's strategic plan for 2009 includes
targeting three or more additional large accounts and reducing its dependence
upon major customers by adding more mid-size accounts.  NPI is
highly reliant upon a small customer base, with approximately 52% of its sales
being generated through one principal customer. There is significant risk in
having such a large portion of revenues concentrated to this extent and the loss
of one or more principal customers could result in a reduction in NPI’s
revenues.The sales
of NPI have historically been subject to sharp seasonal
variations.


Loss from operations.Our operating loss for the three months ended March 31, 2009
was $452,074, compared to the operating loss of $1,426,844 for the three months
ended March 31, 2008, representing an improvement of $974,770, or
68%.  The improvement was due to the increase in revenues and a
decrease in selling, general and administration costs as a percentage of
revenues to 43% for the three months ended March 31, 2009, compared to 80%
for the same period in 2008.


Back to Table of Contents
 25


Total other income/expenses.Other income was $121,850 for the three months ended March 31, 2009,
compared to other expenses of $1,189,519 for the three months ended March 31,
2008, representing an improvement of $1,311,369.  Net realized/unrealized
gains on trading securities were $13,874 for the three months ended March 31,
2009, compared to net losses of $1,331,966 for the three months ended March
31, 2008.  The net
unrealized losses on trading securities of $1,376,539 for the three months ended
March 31, 2008, were due primarily to declines in the market values of our
investments in OI Corporation and Rubicon Financial Incorporated of $1,191,080
(see note 2).  For the three months ended March 31, 2009, American
recognized other income in the amount of $195,146, of which $175,000
was for providing right-of-way access on the 287 acres in Galveston
County.  Interest expense was $218,608 for the three months ended March 31,
2009, compared to $113,030 for the three months ended March 31, 2008.  The
increase in interest expense was due primarily to the $5 million in debt used to
fund the acquisition of the assets of Shumate Machine Works.




Net loss.We had a net loss
from continuing operations of $193,139, or $0.02 per share, for the three months
ended March 31, 2009, compared to a net loss of $2,382,253, or $0.33 per
share, for the same period in 2008. We had a
net loss from discontinued operations of $798,559, or $0.11 per share, for the
three months ended March 31, 2008. Our net
loss was $193,139, or $0.02 per share, for the three months ended March 31,
2009, compared to a net loss of $3,180,812, or $0.45 per share, for the three
months ended March 31, 2008.





Liquidity
and Capital Resources




Total assets/working capital.Total assets at March 31, 2009 were $34,482,164, compared to $35,977,944
at December 31, 2008, representing a decrease of $1,495,780.  The
primary reason for the decrease in total assets resulted from the use of cash
and the redemption of certificates of deposit to reduce our debt by
$1,280,010.  At March 31, 2009, consolidated working capital was
$21,685,675, compared to working capital of $18,196,027 at December 31,
2008,
representing an increase of $3,489,648, primarily due to the reclassification of
debt from short-term to long-term.




Cash flow from operations.For the three months ended March 31, 2009, we had cash flow provided
by operations of $370,015, compared to negative cash flow from operations
of $898,388 during the same period in 2008.  Our net loss of
$193,139 for the three months ended March 31, 2009 included non-cash
expenses of $334,807, including depreciation and amortization of $293,557
and share-based compensation of $41,250.  Our net loss of $2,382,253
for the three months ended March 31, 2008 included non-cash expenses of
$1,632,094, including depreciation and amortization of
$115,722, share-based compensation of $139,833, and unrealized losses on
trading securities of $1,376,539.  Our inventories increased by
$268,216 for the three months ended March 31, 2009, compared to an increase of
$672,872 during the three months ended March 31, 2008.  We decreased
our investments in trading securities by $95,443 during the three months ended
March 31, 2009, compared to an increase of $225,479 during the same period in
2008.  Accounts receivable decreased by $353,624 during the three
months ended March 31, 2009, compared to a decrease of $1,288,312 during the
same period in 2008.  Prepaid expenses decreased by $49,060,
other assets decreased by $17,970, and accounts payable increased
by $144,109 for the three months ended March 31, 2009.  For the three
months ended March 31, 2008, prepaid expenses decreased by $98,893, other assets
decreased by $9,861, and accounts payable decreased by $61,340.





Cash flow from investing activities.Our investing activities used cash of $233,440 during the three
month period ended March 31, 2009, as a result of a the issuance of a note
receivable of $300,000 and loans to related parties of $241,200, offset by a net
decrease in investments in certificates of deposit of $300,000.  This is
compared to cash provided by investing activities during the same period in the
prior year in the amount of $1,438,590 during the three month period ended March
31, 2008, as a result of a net decrease in investments in certificates of
deposit of $1,255,200 and proceeds from the sale of drilling rig equipment of
$200,000.




Cash flow from financing activities.During the three months ended March 31, 2009, our financing activities
used cash of $1,338,232 compared to cash provided of $297,844 during the same
period in 2008.  During the three month period ended March 31, 2009, we
made payments of $1,283,122 on debt and
purchased 33,032 shares of treasury stock at a cost of $41,237. During
the 2008 period, we received net proceeds from line-of-credit
agreements of $598,000. We made payments of $280,366 on debt and margin loans
during the three month period ended March 31, 2008.


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 26


Real estate.During the
fourth quarter of 2008, American received a 1.705 acre tract of land in
Galveston County appraised at $540,000 as a guarantor's fee.  In connection
with this fee, American has pledged $1,750,000 in certificates of
deposit for a $4,000,000 loan to Dawn Condominiums L.P. at Texas Community
Bank.  As the principal of the loan is reduced, the bank will release
portions of the pledged certificates of deposit until the loan is paid in
full.  This
property is pledged as collateral for loans owed by Hammonds Industries, Inc. to
Texas Community Bank.During 2007, American purchased for
investment a 174 acre tract of land in Waller County, Texas for $1,684,066.
This property is listed for sale with a real estate broker.  American
continues to own 287 undeveloped acres of waterfront property on Dickinson Bayou
and Galveston Bay in Galveston County, Texas. American is carrying this property
on the balance sheet at its historical book value of $225,000.  American
has engaged CBRE on an exclusive basis to sell the property for an increased
listing price of $25,000,000.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS
    ITEM 4T. CONTROLS AND PROCEDURES
  Evaluation of disclosure controls
and procedures.As of March 31, 2009, the Company's chief executive
officer and chief financial officer conducted an evaluation regarding the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the
evaluation of these controls and procedures, our chief executive officer and
chief financial officer concluded that our disclosure controls and procedures
were effective as of the end of the period covered by this report.
  Changes in internal controls.During the quarterly period covered by this report, no changes occurred
in our internal control over financial reporting that materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
  Back to Table of Contents
 27
 PART
II - OTHER INFORMATION
  ITEM 1. LEGAL PROCEEDINGS
    ITEM 1A. RISK FACTORS
  There
have been no material changes from Risk Factors as previously disclosed in the
Registrant’s annual report for the year ended December 31, 2008.
  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
    ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  None.
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
    ITEM 5. OTHER INFORMATION


None.
  ITEM 6. EXHIBITS
  (a) The
following documents are filed as exhibits to this report on Form 10-Q or
incorporated by reference herein. Any document incorporated by reference is
identified by a parenthetical reference to the SEC filing that included such
document.
  Exhibit
      No.
              Description31.1
              Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted
      pursuant to the Sarbanes-Oxley Act of 200231.2
              Certification
      of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act
      of 200232.1
              Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted
      pursuant to the Sarbanes-Oxley Act of 200232.2
              Certification
      of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act
      of 2002
  (b)
Reports on Form 8-K During the Period Covered by this Report: None.


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 28




SIGNATURES






Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.






/s/ DANIEL
DROR


CEO, PRESIDENT AND CHAIRMAN


Dated:May 11,
2009






/s/ SHERRY L.
COUTURIER


CHIEF FINANCIAL OFFICER


Dated:May 11,
2009