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Chairmans
Letter
Dear fellow shareholders,
American
International Industries, Inc. reported that its earnings before
interest, taxes, depreciation and
amortization (EBITDA) significantly improved by $358,238 compared to
a loss from continuing operations of $426,263, or $0.04 per share, for the year ended December 31, 2010,
compared to EBITDA from continuing operations for the year ended
December 31, 2009, which reflected a loss of $784,501, or $0.09 per
share.
Our ongoing strategy of providing financing and management
expertise for our subsidiaries continues to enhance our financial
position and improve shareholder value.
Our asset portfolio, now primarily consists of one wholly-owned
operating subsidiary and a 46.4% owned operating subsidiary, as
follows:
· Northeastern Plastics, Inc. (NPI), a wholly-owned subsidiary, 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. NPI's diversified products are sold in the automotive and
consumer retail and after market channels. NPI currently markets its
diversified product assortment under the Good Choice® and MOTOR
TREND® brand names.
· Delta Seaboard International, Inc. (Delta), a 46.4% owned
subsidiary, an onshore rig-based well-servicing contracting company
providing services to the oil and gas industry.
Real Estate Portfolio
In addition, the Company continues to own 287 undeveloped acres of
waterfront property on Dickinson Bayou and Galveston Bay in
Galveston County, Texas. The book value for this property is
$225,000, based on its historic cost, and is listed with CBRE for
sale to developers for $25.0 million. Additionally, the Company’s
portfolio includes 174 acres in Waller County, approximately 50
acres in north Houston, and other properties in Galveston County.
All of these properties are listed for sale with brokers and have
appraised values that are significantly higher than their book
values. Management believes that these three properties should be
sold in the next 24 to 36 months, which will substantially increase
the Company’s cash and working capital positions.
Financial highlights of 2010
· We
reported revenues of $24,263,332 for the year ended December
31, 2010, compared to $18,463,407 for the year ended December 31,
2009, representing an increase of $5,799,925, or 31.4%. Revenues for
NPI during the year ended December 31, 2010 were $14,460,039,
compared to $9,673,598 for the year ended December 31, 2010,
representing an increase of $4,786,441, or 49.5%. NPI's revenues
increased primarily because NPI replaced a very large supplier for
one of its major accounts, substantially increasing its business
with this major customer. Additionally, NPI's revenues increased due
to the addition of several new accounts and increased orders for
existing accounts. During the year ended December 31, 2010, Delta
had revenues of $9,023,129, compared to $8,789,809 for the year
ended December 31, 2009, representing an increase of $233,320, or
2.7%. Pipe sales for the year ended December 31, 2010 were
$5,878,377 compared to $4,208,215 for the year ended December 31,
2009, representing an increase of $1,670,162, or 39.7%. Pipe sales
increased primarily due to significantly increased drilling
activities during 2010. Additionally, the cost of steel products
decreased, allowing Delta to be more competitive in the pipe market.
More pipe was sold to end-users, affording Delta larger pipe orders
with higher margins. Rig service revenues decreased for the year
ended December 31, 2010 by $1,436,842, or 31.4%, to $3,144,752
compared to $4,581,594 for the year ended December 31, 2009. Rig
service revenues have decreased due to major maintenance on two rigs
during 2010.
· Earnings
before interest, taxes, depreciation and amortization (EBITDA) and
excluding the non-controlling interest and discontinued operations
for the year ended December 31, 2010 reflected a loss of $426,263,
or $0.04 per share, an improvement of $358,238, compared to EBITDA
from continuing operations and excluding the non-controlling
interest for the year ended December 31, 2009, which reflected a
loss of $784,501, or $0.09 per share. We had a net loss from
continuing operations attributable to American of $1,334,681, or
$0.13 per share, for the year ended December 31, 2010, compared to a
net loss of $1,808,050, or $0.21 per share, for the same period in
2009. Our net loss from continuing operations for the year ended
December 31, 2010 included interest expense, a tax benefit,
depreciation and amortization, and loss attributable to
non-controlling interest of $459,436, $12,521, $461,503, and
$493,083, respectively. Our net loss from continuing operations for
the year ended December 31, 2009 included interest expense, taxes,
depreciation and amortization, and loss attributable to
non-controlling interest of $460,517, $36,782, $526,250 and
$635,348, respectively.
· Assets
from continuing operations were $25.9 million at December 31, 2010.
Looking forward to 2011 and beyond
Of course, no one can
predict what the economy will do in 2011; however, we anticipate
increased revenues and profitability from operations in 2011 over
those of 2010, despite the slow down in the economy.
Management believes that the properties mentioned above should be
sold in the next 24 to 36 months, which will substantially increase
the Company’s cash and working capital positions.
American International Industries, Inc. is a growing diversified
holding company with a business model emphasis on enhancing assets
and stockholders’ equity to facilitate substantial future revenues
and earnings per share.
We remain focused on further strengthening our financial profile in
2011 and beyond. We believe that we can achieve growth and add
shareholder value by continuing to pursue opportunities to acquire
additional and complimentary businesses and by expanding the
operations of our existing businesses. We will evaluate whether
businesses can be acquired at reasonable terms and conditions, at
attractive earnings multiples, and 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.
Periodically, as opportunities present themselves, we may sell or
merge the subsidiaries in order to bring value to our shareholders
and to enable the Company to acquire larger companies.
As stewards of the Company, our management team seeks opportunities
to improve working capital through a variety of financing options. A
key talent of our management team has been to acquire real estate
and sell it for a substantial profit. The Company may acquire real
estate for resale, based upon market conditions, location, and
development potential. We will use profits from these ventures and
continue to strengthen our relationships with financial institutions
and outside investors to improve our asset portfolio.
I wish to thank our management team and all of our employees for
their hard work and dedication. On behalf of our Board and
management, I wish to express our gratitude to our shareholders for
your continued support. We remain committed to delivering value to
our shareholders and look forward to a bright future.
Daniel Dror
Chairman and C.E.O. |