AMERICAN INTERNATIONAL HOLDINGS CORP. - Quarter Report: 2013 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended September 30, 2013

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 number: 0-50912

AMERICAN INTERNATIONAL HOLDINGS CORP.

(Exact Name Of Registrant As Specified In Its Charter)

 

Nevada	88-0225318
(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  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 ¨	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 x No ¨

 

The number of shares outstanding of each of the issuer’s classes of equity as of November 14, 2013 is 746,945 shares of common stock.

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PART I - FINANCIAL INFORMATION

 

 

ITEM 1. FINANCIAL STATEMENTS

 

 

Financial Statements

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AMERICAN INTERNATIONAL HOLDINGS CORP.

(Formerly “DELTA SEABOARD INTERNATIONAL, INC.”)

Consolidated Balance Sheets

(Unaudited)

	September 30, 2013		December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$ -		$ 438,524
Receivable – related party	2,405,403		1,274,688
Note receivable	-		800,000
Total assets	$ 2,405,403		$ 2,513,212
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 7,800		$ 24,334
Bank overdraft	22		-
Total liabilities	7,822		24,334
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding	-		-
Common stock, $0.0001 par value, 195,000,000 shares authorized; 747,355 shares issued; 746,945 shares outstanding	75		75
Additional paid-in capital	4,284,829		4,284,829
Accumulated deficit	(1,883,429)		(1,792,132)
Less treasury stock, at cost; 410 shares	(3,894)		(3,894)
Total stockholders’ equity	2,397,581		2,488,878
Total liabilities and stockholders’ equity	$ 2,405,403		$ 2,513,212

See accompanying notes to unaudited consolidated financial statements.

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AMERICAN INTERNATIONAL HOLDINGS CORP.

(Formerly “DELTA SEABOARD INTERNATIONAL, INC.”)

Consolidated Statements of Operations

(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

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AMERICAN INTERNATIONAL HOLDINGS CORP.

(Formerly “DELTA SEABOARD INTERNATIONAL, INC.”)

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended September 30,
	2013	2012
Cash flows from operating activities:
Net income (loss)	$ (91,297)	$ 498,085
Income from discontinued operations, net of income taxes	-	575,810
Net loss from continuing operations	(91,297)	(77,725)
Adjustments to reconcile net loss to cash used in operating activities:
Debt forgiveness income	-	(15,000)
Changes in operating assets and liabilities:
Accounts payable	(16,534)	19,833
Net cash used in operating activities from continuing operations	(107,831)	(72,892)
Cash flows from investing activities
Proceeds from the sale of subsidiary	-	1,600,000
Proceeds from note receivable	800,000	-
Net cash provided by investing activities from continuing operations	800,000	1,600,000
Cash flows from financing activities
Loans to related parties, net	(1,130,715)	(489,591)
Bank overdrafts	22	-
Principal payments on debt	-	(65,000)
Payments for acquisition of treasury stock	-	(3,154)
Net cash used in financing activities from continuing operations	(1,130,693)	(557,745)
Net increase (decrease) in cash and cash equivalents from continuing operations	(438,524)	969,363
Cash and cash equivalents at beginning of period	438,524	-
Cash and cash equivalents at end of period	$ -	$ 969,363
Discontinued operations
Net cash provided by operations	$ -	$ 300,902
Net cash used in investing activities	-	(125,399)
Net cash used in financing activities	-	(186,158)
Net decrease in cash and cash equivalents from discontinued operations	-	(10,655)
Cash and cash equivalents at beginning of period from discontinued operations	-	10,655
Cash and cash equivalents at end of period from discontinued operations	$ -	$ -
Supplemental disclosures:
Interest paid	$ -	$ -
Income taxes paid	$ -	$ -
Non-cash transactions:
Preferred dividends declared and unpaid	$ -	$ 20,000
Conversion of preferred stock to common stock	$ -	$ 377
Reversal of preferred dividends	$ -	$ 1,055,000
Note receivable received from sale of subsidiary	$ -	$ 1,400,000

See accompanying notes to unaudited consolidated financial statements.

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AMERICAN INTERNATIONAL HOLDINGS CORP.

(Formerly “DELTA SEABOARD INTERNATIONAL, INC.”)

Notes to Unaudited Consolidated Financial Statements

 

Note 1 - Summary of Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements of American International Holdings Corp. (“AMIH”), formerly Delta Seaboard International, Inc. (“Delta”) 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 AMIH’s latest Annual Report filed with the SEC on Form 10-K for the year ended December 31, 2012. 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 Holdings Corp. at September 30, 2013, was a 93.2%-owned subsidiary of American International Industries, Inc. ("American") (OTCBB: AMIN). At September 30, 2013, AMIH also had a wholly-owned subsidiary, Delta Seaboard Well Service, Inc. ("DSWSI"), a Texas corporation and formerly a subsidiary of Delta.

On April 3, 2012, AMIH entered into an Asset Purchase Agreement (“Agreement”) by and among Delta Seaboard, LLC (the "Purchaser"), a Texas limited liability company that is owned and controlled by Robert W. Derrick, Jr. and Ronald D. Burleigh, who were AMIH’s president and director and vice-president and director, respectively, on the date of the Agreement, DSWSI, and American.  Pursuant to the terms of the Agreement, AMIH: (i) sold all of the operating assets and liabilities of DSWSI to the Purchaser; (ii) Messrs. Derrick and Burleigh resigned as executive officers and as members of AMIH’s board of directors; (iii) Mr. Derrick resigned as a director of American; and (iv) Messrs. Derrick and Burleigh transferred and assigned all of their 319,258 AMIH shares, representing approximately 45% of AMIH's outstanding common stock to American. In consideration for the sale of the DSWSI net assets to Purchaser, Purchaser paid AMIH $1,600,000 in cash and executed a 5 year note bearing interest at 5% per annum in the face amount of $1,400,000.  On December 19, 2012, this note was sold to Messrs. Derrick and Burleigh for $1,020,000. Total consideration for the sale was $2,620,000.  On February 27, 2013, AMIH received $800,000 in payment of the balance due on the note receivable from Messrs. Derrick and Burleigh.

 

Upon the closing of the Agreement on April 3, 2012, American then held an aggregate, including previous holdings, of 647,858 shares of AMIH's issued and outstanding common stock, representing approximately 86.7% of AMIH's shares. At the same date, AMIH ceased to be an operating company and became a non-operating "shell company", as that term is defined in Rule 144(i) under the Securities Act of 1933, as amended.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of American International Holdings Corp. and its wholly-owned subsidiary, Delta Seaboard Well Service, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.

 

Reclassifications

 

Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented.

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Net Income (Loss) Per Common Share

 

The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares outstanding during a period. Diluted net income (loss) per common share is computed by dividing the net income (loss), adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities.

The Company does not have any dilutive financial instruments outstanding.

 

Income Taxes

 

AMIH is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized.  Interest and penalties associated with income taxes are included in selling, general and administrative expense.

 

AMIH evaluates the tax benefits from uncertain positions and determines if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. As of September 30, 2013, AMIH had not recorded any tax benefits from uncertain tax positions.

 

Management's Estimates and Assumptions

 

The preparation of 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.

 

Subsequent Events

 

AMIH has evaluated all subsequent events from September 30, 2013 through the issuance date of the consolidated financial statements for subsequent event disclosure consideration.

 

New Accounting Pronouncements

 

There were various 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 – Discontinued operations

 

On April 3, 2012, AMIH sold all of the operating assets and liabilities of DSWSI, as discussed in Note 1.

Discontinued operations for the nine months ended September 30, 2012 includes a gain on disposal of DSWSI of $1,498,327 for the initial consideration of $3,000,000 less DSWSI's operating assets and associated liabilities of $1,501,673. DSWSI's net loss of $922,517 for the nine months ended September 30, 2012 is included in discontinued operations.

The gain on disposal of DSWSI is summarized below:

(1)

On December 19, 2012, this note was sold to Messrs. Derrick and Burleigh for $1,020,000, and the gain on disposal of DSWSI was reduced by $380,000 to $1,118,327.

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DSWSI's revenues and net loss before income tax and gain on disposal of discontinued operations are summarized below:

Note 3 - Equity

 

On August 13, 2012, AMIH effected a reverse stock split whereby all outstanding shares of its common stock were subject to a reverse split on a one for one hundred (1:100) basis. All share and per share amounts contained in this Form 10-Q have been adjusted retroactively to reflect the reverse stock split.

During the nine months ended September 30, 2012, preferred dividends of $20,000 were accrued and unpaid.

 

On June 29, 2011, AMIH entered into an agreement, with an effective date of July 1, 2011, with Vision Opportunity Master Fund, Ltd. (“VOMF”), pursuant to which VOMF agreed to convert 3,769,626 shares of the Company’s preferred stock, constituting all of AMIH’s outstanding preferred stock, into 37,696 shares (3,769,626 shares pre-split) of common stock and also agreed to waive all accrued dividends payable on the preferred stock upon the payment of $250,000. In consideration for the conversion, AMIH agreed to pay VOMF total consideration of $250,000, $50,000 of which was paid on July 1, 2011, and the $200,000 remainder was due and payable at the rate of $20,000 per month.  On February 23, 2012, AMIH completed the agreement with VOMF. VOMF accepted a payment of $65,000 in full satisfaction of this note, and the difference of $15,000 was recognized as other income from forgiveness of debt. On February 29, 2012, 3,769,626 shares of AMIH's preferred stock were converted into 37,696 shares (3,769,626 shares pre-split) of AMIH's common stock. Upon satisfaction of the agreement with VOMF, the Company’s obligation for previously recorded preferred dividends was released and AMIH reversed the dividends payable of $1,055,000.

 

AMIH has 5,000,000 authorized, 0 issued and outstanding, Preferred Shares consisting of Series A and Series B convertible into one share of AMIH's common stock.

Note 4 – Related Parties

At September 30, 2013 and December 31, 2012, the Company had $2,405,403 and $1,274,688, respectively, receivable from American.  This receivable is owed to the Company largely as a result of the sale of DWSI in which the Company transferred the proceeds received in connection with this sale to American.  The Company expects this receivable to be paid in full by American within the next twelve months and has accordingly classified the receivable as a current asset in the consolidated balance sheet as of September 30, 2013.

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

American International Holdings Corp. (“AMIH”), formerly Delta Seaboard International, Inc. ("Delta"), at September 30, 2013, was  a 93.2%-owned subsidiary of American International Industries, Inc. ("American") (OTCBB: AMIN). At September 30, 2013, AMIH also had a wholly-owned subsidiary, Delta Seaboard Well Service, Inc., a Texas corporation ("DSWSI").

On April 3, 2012, AMIH entered into an Asset Purchase Agreement (“Agreement”) by and among Delta Seaboard, LLC (the "Purchaser"), a Texas limited liability company that is owned and controlled by Robert W. Derrick, Jr. and Ronald D. Burleigh, who were AMIH's president and director and vice-president and director, respectively, on the date of the Agreement, DSWSI, and American. Pursuant to the terms of the Agreement, AMIH: (i) sold all of the assets of DSWSI to the Purchaser; (ii) Messrs. Derrick and Burleigh resigned as executive officers and as members of AMIH’s board of directors; (iii) Mr. Derrick resigned as a director of American; and (iv) Messrs. Derrick and Burleigh transferred and assigned all of their 319,258 AMIH shares to American.  In consideration for the sale of the DSWSI assets to Purchaser, Purchaser paid AMIH $1,600,000 in cash and executed a 5 year note bearing interest at 5% per annum in the face amount of $1,400,000.  On December 19, 2012, this note was sold to Messrs. Derrick and Burleigh for $1,020,000. Total consideration for the sale was $2,620,000. On February 27, 2013, AMIH received $800,000 in payment of the balance due on the note receivable from Messrs. Derrick and Burleigh.

 

Upon the closing of the Agreement on April 3, 2012, American then held an aggregate, including previous holdings, of 647,858 shares of AMIH's issued and outstanding common stock, representing approximately 86.7% of AMIH's shares. At the same date, AMIH ceased to be an operating company and became a non-operating "shell company", as that term is defined in Rule 144(i) under the Securities Act of 1933, as amended.

 

Results of Operations for AMIH

 

Three and Nine months ended September 30, 2013 Compared to the Three and Nine months ended September 30, 2012

 

General and administrative expenses were $34,153 for the three months ended September 30, 2013, compared to $50,848 for the three months ended September 30, 2012. General and administrative expenses were $108,797 for the nine months ended September 30, 2013, compared to $127,725 for the nine months ended September 30, 2012. General and administrative expenses for the three and nine months ended September 30, 2013 and 2012 consisted primarily of executive compensation and legal and professional expenses.

 

Other income during the three months ended September 30, 2013 and 2012 was $0 and $17,500, respectively.  Other income during the nine months ended September 30, 2013 and 2012 was $17,500 and $50,000, respectively.  Interest income was $17,500 for the nine months ended September 30, 2013, and $17,500 and $35,000, respectively, for the three and nine months ended September 30, 2012, representing 5% interest on the $1,400,000 note receivable from the sale of DSWSI’s assets. Vision Opportunity Master Fund, Ltd. accepted a payment of $65,000 in full satisfaction of a note with a balance of $80,000, and the difference of $15,000 was recognized as other income from forgiveness of debt for the nine-month period ended September 30, 2012.

AMIH had a net loss of $34,153, or $0.05 per share, for the three months ended September 30, 2013, compared to $33,348, or $0.04 per share, for the three months ended September 30, 2012.  AMIH had a net loss of $91,297, or $0.12 per share, for the nine months ended September 30, 2013, compared to net income of $1,533,085, or $2.08 per share, for the nine months ended September 30, 2012. The per share amounts reflect the impact of preferred dividends. During the nine months ended September 30, 2012 preferred dividends of $20,000 were accrued and unpaid.  In February 2012, the holder of the preferred shares waived all accrued dividends payable of $1,055,000.  During the nine months ended September 30, 2012, the impact of the preferred dividends increased income per share by $1.40. Income from discontinued operations for the nine months ended September 30, 2012 was $575,810, or $0.78 per share. Discontinued operations for the nine months ended September 30, 2012 includes a gain on disposal of DSWSI of $1,498,327 for the initial consideration of $3,000,000 less DSWSI's assets and associated liabilities of $1,501,673.  On December 19, 2012, the $1,400,000 note receivable from the sale of DSWSI’s assets was sold to Messrs. Derrick and Burleigh for $1,020,000, and the gain on disposal of DSWSI was reduced by $380,000 to $1,118,327 (See Note 2 to the consolidated financial statements).  Discontinued operations for the nine months ended September 30, 2012 includes DSWSI's net loss of $922,517.

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Liquidity and Capital Resources for AMIH

As of September 30, 2013, AMIH had total assets of $2,405,403 consisting of related party receivables due from our parent, American.

 

As of September 30, 2013, AMIH had total liabilities of $7,822, consisting of $7,800 for accounts payable and $22 for a bank overdraft.

 

AMIH had working capital and total stockholders’ equity of $2,397,581 as of September 30, 2013.

 

Net cash used in operating activities was $107,831 for the nine months ended September 30, 2013, which was derived from a net loss of $91,297 and a decrease in accounts payable of $16,534. Net cash used in operating activities was $72,892 for the nine months ended September 30, 2012, which was derived from a net loss of $77,725 and non-cash income for forgiveness of debt of $15,000, offset by an increase in accounts payable of $19,833.

Net cash provided by investing activities for the nine months ended September 30, 2013 was $800,000 for the receipt of proceeds from a note receivable. Net cash provided by investing activities for the nine months ended September 30, 2012 was $1,600,000 for the receipt of proceeds from the sale of DSWSI’s assets.

 

Net cash used in financing activities during the nine months ended September 30, 2013 was $1,130,693, compared to $557,745 during the nine months ended September 30, 2012. Net cash used in financing activities during the nine months ended September 30, 2013 was primarily for loans to related parties.  Net cash used in financing activities during the nine months ended September 30, 2012 included loans to related parties of $489,591, $65,000 in principal payments on debt, and $3,154 for the acquisition of 310 common shares as treasury stock.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2013 and December 31, 2012, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable

 

ITEM 4T. CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures. As of September 30, 2013, 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.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There have been no updates to any legal proceedings previously disclosed.

 

ITEM 1A. RISK FACTORS

 

For the nine months ended September 30, 2013, there were no material changes from risk factors as disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

None.

 

ITEM 5. OTHER INFORMATION

None.

 

ITEM 6. EXHIBITS

 

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.	Description
31.1	Certification of CEO Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002
32.1	Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2	Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

By /s/ Daniel Dror

Daniel Dror

Chief Executive Officer, President, and Chairman

November 14, 2013

 

 

By /s/ Sherry L. McKinzey

Sherry L. McKinzey

Director, Chief Financial Officer, and Vice-President

November 14, 2013

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