Chairman’s Letter

Dear fellow shareholders,

Our asset portfolio, now primarily consists of two publicly traded partially-owned subsidiaries and a real estate portfolio as follows: 

·        Brenham Oil & Gas Corp. (OTCQB:BRHM) -  a 53.2% owned publicly traded subsidiary, owner of overriding royalty interests, interests in new oil & gas fields in West Africa and presently engaged in negotiations with financial institutions for the purpose of financing potential acquisitions of existing oil and gas properties and reserves.   

·       Real Estate Portfolio - American International Texas Properties, Inc., our real estate subsidiary owns a portfolio of strategically located parcels of land primarily in Houston, Texas and vicinity.  The portfolio includes: 

1)   6 units - The Dawn Condominiums in

Galveston County, Texas,                                                   $894,000

2)   65 acres in Galveston County, Texas,                       *$2,000,000

3)   96 acres in Galveston County, Texas,                         $4,500,000

4)   34 acres on Airport Blvd. in Houston, Texas,         **$2,000,000

5)   1.7 acres in Galveston County, Texas,                       **$500,000

6)   2 lots on I-59 in Houston, Texas,                               **$100,000


*    This property is carried on the Company's books for an amount substantially less than the market value, because it was acquired through a related party transaction.  Under G.A.A.P. accounting, this property must be booked at original cost to the related party contributor.

**   Each valuation provided above is based on at least one of the following: a professional appraisal, a pending offer, or management opinion. 

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.

Recent developments

·      Brenham acquired a 10% working interest in the 90 acres Pierce Junction Oil Field in Houston, Texas on March 18, 2013.  The Company acquired a 437 acres lease on April 4, 2013 in the Gillock Oil Field in Dickinson, Texas.  Brenham acquired on January 16, 2014 a 332 lease "The Inez Prospect" in Victoria, Texas.  The Company is entertaining offers and negotiating possible development of its leases. 

·     Sale of Delta Seaboard Well Service, Inc. (“DSWSI”) - On April 3, 2012, the assets and associated liabilities of DSWSI were sold, resulting in a gain to American of approximately $1.2 million.  DSWSI became a subsidiary of American approximately 8 years ago and in line with our corporate business strategy, we took advantage of an opportunity to increase shareholder value by selling this subsidiary. 

Looking forward to 2015 and beyond 

Of course, no one can predict what the economy will do in 2015; however, we anticipate increased revenues and profitability from operations in 2015 over those of 2014, despite the slowdown in the economy. 

American International Industries, Inc. is a diversified holding company with a business model emphasis on enhancing assets and stockholders’ equity to increase future revenues and earnings per share.

We remain focused on further strengthening our financial profile in 2015 and beyond. We believe that we can achieve growth and add shareholder value by continuing to pursue opportunities to acquire additional and complementary businesses and by expanding the operations of our existing properties and oil and gas business. We will evaluate whether businesses can be acquired at reasonable terms and conditions, 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.