UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q 

 

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

 EXCHANGE ACT OF 1934

        

For the Quarter ended March 31, 2020

 

Commission File Number: 000-56054

 

AMERAMEX INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		88-0501944
(State of organization)		(I.R.S. Employer Identification No.)

 

3930 Esplanade, Chico, CA 95973

(Address of principal executive offices)

 

(530) 895-8955 

Registrant’s telephone number, including area code

 

________________________________

Former address if changed since last report

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered.
Common Stock	AMMX	OTC Markets Pink

 

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    ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes     ☐No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐	Accelerated filer  ☐
Non-accelerated filer  ☐	Smaller reporting company  ☒
	Emerging growth company  ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐  Yes         ☒  No

 

There are 753,415,879 shares of common stock outstanding as of June 22, 2020.

 

 TABLE OF CONTENTS

 

		Page
	PART I - FINANCIAL INFORMATION		3
ITEM 1.	INTERIM FINANCIAL STATEMENTS		3
	BALANCE SHEETS AS OF MARCH 31, 2020 AND DECEMBER 31, 2019		3
	STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019		4
	STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019		5
	STATEMENTS OF CASH FLOWS FOR THE THREE  MONTHS ENDED MARCH 31, 2020 AND 2019		6
	NOTES TO FINANCIAL STATEMENTS		7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		13
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		15
ITEM 4.	CONTROLS AND PROCEDURES		16
	PART II - OTHER INFORMATION		17
ITEM 1.	LEGAL PROCEEDINGS		17
ITEM 1A.	RISK FACTORS		17
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES		17
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		18
ITEM 4.	MINE SAFETY DISCLOSURES		18
ITEM 5.	OTHER INFORMATION		18
ITEM 6.	EXHIBITS		18
SIGNATURES			19

 

PART I–FINANCIAL INFORMATION

ITEM 1. INTERIM FINANCIAL STATEMENTS

 

AMERAMEX INTERNATIONAL, INC.

BALANCE SHEETS -UNAUDITED  

 

		MARCH 31, 2020				DECEMBER 31, 2019
ASSETS
Current Assets
Cash		$	186,997			$	114,504
Accounts Receivable, Net			479,224				589,710
Inventory, Net			6,775,306				4,832,283
Other Current Assets			216,369				206,945
Total Current Assets			7,657,896				5,743,442
Property and Equipment, Net			1,110,843				1,179,794
Rental Equipment, Net			3,806,895				4,036,612
Other Assets			454,721				489,562
Total Other Assets			5,372,459				5,705,968
TOTAL ASSETS		$	13,030,355			$	11,449,410
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts Payable		$	638,903			$	531,806
Accrued Expenses			54,555				79,787
Joint Venture Liability			442,000				459,500
Line of Credit			345,575				408,033
Notes Payable, Current Portion			1,593,002				386,528
Total Current Liabilities			3,074,035				1,865,654
Long-Term Liabilities
Deferred Tax Liability			180,163				226,339
Notes Payable - Related Party			330,226				334,794
Notes Payable, Net of Current Portion			2,123,410				559,235
Line of Credit			5,300,840				6,313,628
Total Long-Term Liabilities			7,934,639				7,433,996
TOTAL LIABILITIES		$	11,008,674			$	9,299,650
Commitments and Contingencies (Note 12)
Stockholders’ Equity
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding			—				—
Common Stock, $0.001 par value, 1,000,000,000 shares authorized, 753,415,879 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively			753,416				753,416
Additional Paid-In Capital			20,781,087				20,781,087
Accumulated Deficit			(19,512,822	)			(19,384,743	)
Total Stockholders’ Equity			2,021,681				2,149,760
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	13,030,355			$	11,449,410

 

 

The accompanying notes are an integral part of these unaudited financial statements.

 

 

AMERAMEX INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS - UNAUDITED

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

 

		MARCH 31, 2020				MARCH 31, 2019
REVENUES
Sales of Equipment and Other Revenues		$	912,315			$	1,770,053
Rentals and Leases			526,154				673,839
Total Revenues			1,438,469				2,443,892
COST OF REVENUES
Sales of Equipment and Other Revenues			745,952				1,565,536
Rentals and Leases			248,306				236,186
Total Cost of Revenues			994,258				1,801,722
GROSS PROFIT			444,211				642,170
OPERATING EXPENSES
Sales and Marketing			88,833				81,233
General and Administrative			268,523				204,617
Total Operating Expenses			357,356				285,850
Income From Operations			86,855				356,320
OTHER INCOME (EXPENSE)
Interest Expense			(261,110	)			(263,175	)
Loss from Early Extinguishment of Debt			—				(482,908	)
Other Income			—				517
Total Other Expense			(261,110	)			(745,566	)
LOSS BEFORE BENEFIT FOR INCOME TAXES			(174,255	)			(389,246	)
BENEFIT FOR INCOME TAXES			(46,176	)			(106,628	)
NET LOSS		$	(128,079	)		$	(282,618	)
Weighted Average Shares Outstanding:
Basic			753,415,879				753,415,879
Diluted			753,415,879				753,415,879
Earnings (loss) per Share:
Basic		$	(0.00	)		$	0.00
Diluted		$	(0.00	)		$	0.00

 

 

The accompanying notes are an integral part of these unaudited financial statements.

 

 

AMERAMEX INTERNATIONAL, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

 

		Common Stock								Additional Paid-in				Treasury				Accumulated				Total Stockholders’
		Shares				Amount				Capital				Stock				Deficit				Equity
Balance at December 31, 2018			753,415,879			$	753,416			$	20,785,924			$	(4,837	)		$	(19,294,449	)		$	2,240,054
Net Loss			—				—				—				—				(282,618	)			(282,618	)
Balance at March 31, 2019			753,415,879				753,416				20,785,924				(4,837	)			(19,577,067	)			1,957,436
Balance at December 31, 2019			753,415,879				753,416				20,781,087				—				(19,384,743	)			2,149,760
Net Loss			—				—				—				—				(128,079	)			(128,079	)
Balance at March 31, 2020			753,415,879			$	753,416			$	20,781,087			$	—			$	(19,512,822	)		$	2,021,681

 

The accompanying notes are an integral part of these unaudited financial statements.

 

 

 

 

 

AMERAMEX INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS – UNAUDITED

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

 

		MARCH 31, 2020				MARCH 31, 2019
CASH FROM OPERATING ACTIVITIES
Net Loss		$	(128,079	)		$	(282,618	)
Adjustments to reconcile Net Loss to Net Cash Used In Operations Activities:
Depreciation			337,673				271,829
Benefit from Deferred Income Taxes			(46,176	)			(85,271	)
Loss on Early Extinguishment of Debt			—				482,908
Changes in Operating Assets and Liabilities:
Accounts Receivable			110,486				(84,279	)
Inventory			(1,943,023	)			(2,007,042	)
Other Current Assets			25,417				53,387
Accounts Payable			107,097				1,256,369
Accrued Expenses			(25,232	)			(25,030	)
NET CASH USED IN OPERATING ACTIVITIES			(1,561,837	)			(419,747	)
INVESTING ACTIVITIES
Payments for Property and Equipment			(20,416	)			46,201
Payments for Rental Equipment			(18,589	)			(97,028	)
NET CASH USED IN INVESTING ACTIVITIES			(39,005	)			(50,827	)
FINANCING ACTIVITIES
Proceeds from Notes Payable			2,900,600				126,000
Payments on Notes Payable			(129,950	)			(5,730,795	)
Payments on Note Payable - Related  Party			(4,568	)			(4,659	)
Joint Venture Liability			(17,500	)			—
Net Borrowings Under Lines of Credit			(1,075,247	)			5,940,262
NET CASH PROVIDED BY FINANCING ACTIVITIES			1,673,335				330,808
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		$	72,493			$	(139,766	)
Cash and Cash Equivalents, beginning of period		$	114,504			$	197,752
Cash and Cash Equivalents, end of period		$	186,997			$	57,986
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid For Interest		$	259,808			$	263,175
Cash Paid For Income Taxes		$	46,176			$	—
NON CASH INVESTING AND FINANCING ACTIVITIES:
Equipment Financed under Capital Leases		$	3,286,771			$	—

 

The accompanying notes are an integral part of these unaudited financial statements.

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

March 31, 2020

 

Note 1 - Organization and Basis of Presentation

 

Organization and Line of Business

 

AmeraMex International, Inc., (the “Company”) was incorporated on May 29, 1990 under the laws of the state of Nevada. The Company sells, leases and rents new and refurbished heavy equipment primarily in the U.S. The Company operates under the name of Hamre Equipment.

 

Note 2 – Summary of Significant Accounting Policies

 

Liquidity Considerations

 

At March 31, 2020, the Company had working capital of approximately $4.6 million. On May 1, 2020, the Company received a Paycheck Protection Program Loan in the amount of $228,442 to cover payroll and utility expenses during the Pandemic. The Company is following the government guidelines and tracking costs to insure 100% forgiveness of the loan. On April 21, 2020, the Company was approved and received a $10,000 advance on an SBA Loan for $2 million. We have not received the final breakdown on terms, but typically the loan is at 3.75% interest for a 30 year term with the first six (6) months of payments deferred. Funding on this loan is anticipated within the next two months. Finally, we received an increase in one of our equipment lines of credit from $500,000 to $1,050,000. Moving forward, we expect to generate sufficient cash flows from operations to meet our obligations, and we expect to continue to obtain financing for equipment purchases in the normal course of business. We believe that our expected cash flows from operations, together with our current credit facility, will be sufficient to operate in the normal course of business for next 12 months from the issuance date of these financial statements.

 

Risks and Uncertainties

 

In March 2020, the World Health Organization declared a novel strain of coronavirus (“COVID-19”) a pandemic, as a result of which the Company is subject to additional risks and uncertainties. In response to the pandemic, governments and organizations have taken preventative or protective actions, such as temporary closures of non-essential businesses and “shelter-at-home” guidelines for individuals. As a result, the global economy has been negatively affected, and the Company’s business has been negatively affected in a number of ways. The Company has had several large transactions that have been put on hold until the State of California is reopened. In addition, the Company has all sales, administrative and account employees working from home. Shop employees are practicing social distancing and we only allow one customer in the facility at a time. Most directly, a number of states and local governments have taken steps that have prohibited or curtailed the sale of equipment or curtailed construction activities during the pandemic. In some jurisdictions, shelter-at-home orders, or other orders related to the pandemic, impede equipment sales. The severity of the impact of COVID-19 on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, all of which are uncertain and cannot be predicted. The Company’s future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms. Given the dynamic nature of this situation, the Company cannot predict with absolute certainty, the impact of COVID-19 on its financial condition, results of operations or cash flows.

 

Basis of Presentation

 

The unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, within the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

March 31, 2020

 

The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the results for the interim periods presented and of the financial condition as of the date of the interim balance sheet. The financial data and the other information disclosed in these notes to the interim financial statements related to the three-month periods are unaudited. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2019 and notes thereto that are included in the Company’s Report on Form 10-K.

Use of Estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and judgment involved. Significant estimates in these unaudited interim financial statements include the allowance for doubtful accounts, inventory reserve, valuation allowance for deferred taxes, and estimated useful life of property and equipment.

 

Line of Credit Issuance Costs

 

We capitalize and amortize direct issue costs incurred in connection with our line of credit arrangement. On or about March 30, 2019 (see Note 6), we incurred $245,000 in costs comprised of originations fees totaling approximately $180,000 and appraisal costs of approximately $65,000. These costs are amortized on a straight-line basis over the term of the debt. Included in Other Assets in the accompanying balance sheet at March 31, 2020 are unamortized loan fees of $157,223. During the three months ended March 31, 2020 and 2019, the Company amortized $20,417 and $2,726 in loan fees, respectively.

 

Note 3 – Inventory

 

Inventory as of March 31, 2020 and December 31, 2019 consisted of the following:

 

		March 31, 2020				December 31, 2019
Parts and supplies		$	257,816			$	250,720
Heavy equipment			6,517,490				4,581,563
Total		$	6,775,306			$	4,832,283

 

 

All the inventory is used as collateral for the line of credit and notes payable (see Notes 6 and 7).

 

Note 4 – Property and Equipment

 

Property and equipment includes assets held for internal use; as of March 31, 2020 and December 31, 2019, such consisted of the following:

		March 31, 2020				December 31, 2019
Furniture and fixtures		$	100,596			$	100,596
Leasehold improvements			467,188				467,188
Vehicles and Equipment			1,483,701				1,483,701
Total, at cost			2,051,485				2,051,485
Less - Accumulated depreciation			(940,642	)			(871,691	)
Total, Net		$	1,110,843			$	1,179,794

 

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

March 31, 2020

 

Depreciation expense for the three months ended March 31, 2020 and 2019 was $68,950 and $35,643, respectively.

 

All the property and equipment is used as collateral for the line of credit and notes payable (see Notes 6 and 7).

 

Note 5 – Rental Equipment

 

Rental equipment as of March 31, 2020 and December 31, 2019 consisted of the following:

 

		March 31, 2020				December 31, 2020
Rental equipment		$	6,993,542			$	6,974,953
Less - Accumulated depreciation			(3,186,647	)			(2,938,341	)
Total, Net		$	3,806,895			$	4,036,612

 

Depreciation expense for the three months ended March 31, 2020 and 2019 was $248,306 and $236,186, respectively.

 

All the rental equipment is used as collateral for the line of credit and notes payable (see Notes 6 and 7).

 

Note 6 – Lines of Credit

 

The Company has a line of credit with a finance company that provides for borrowing up to $500,000. The line of credit is secured by the equipment purchased and is interest free if paid within 180 days from finance date. After applicable free interest period interest calculates as follows; 30 day LIBOR plus 6.75% - rate after Free Period to Day 365, 30 day LIBOR plus 7.00% - Rate Day 366 to 720, 30 Day LIBOR plus 7.25% - Rate Day 721 to 1095, 30 Day LIBOR plus 12.00% Matured Rate Day 1096 and above. Each piece of equipment has it owns calculations based on date of purchase. At March 31, 2020 and December 31, 2019, the amounts outstanding under this line of credit agreement were $345,575 with $154,425 available and $408,033 with $91,967 available, respectively. Interest expense for the three months ended March 31, 2020 and 2019 was $295 and $2,605, respectively. The agreement has no expiration date providing the Company does not default. See Note 13 for increase in facility.

 

On or about March 31, 2019, the Company entered into a line of credit with a finance company that provides for borrowing and refinancing up to $6.5 million, as amended The line of credit is secured by substantially all the Company assets, other than those specifically secured by an existing agreement and bears interest at a rate of 10% annum. The credit facility expires March 22, 2022. Interest is due monthly at a rate of 10%, per annum. Principal only becomes due and payable if the Company reaches the maximum balance under the credit facility, for which management does not expect to reach. If the maximum balance is reached, the principal becomes payable at 1.25% of the outstanding principal balance per month. The line of credit is secured by substantially all the Company assets, other than those specifically secured by an existing agreement. At March 31 2020 and December 31, 2019, the amount outstanding under this line of credit agreement was $5,300,840 with $1,199,160 available for purchases and $6,313,628 with $186,372 available, respectively. Interest expense for the three months ended March 31, 2020 was $158,495.

 

Note 7 – Notes Payable

 

Notes payable as of March 31, 2020 and December 31, 2019 consisted of the following:

 

		March 31, 2020				December 31, 2019
Payable to insurance company; secured by cash surrender value of life insurance policy; no due date		$	158,535			$	132,880

 AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

March 31, 2020

Note Payable to finance company dated March 20, 2019; interest at 0.0% per annum; monthly payments of $5,000; due at 15 months from issuance; unsecured			15,000				15,000
Note Payable to finance company dated June 17, 2019; interest at 2.90% per annum; monthly payments of $4,749; due 48 months from issuance; secured by equipment			176,561				189,467
Note Payable to finance company dated September 26, 2019; interest at 10.228% per annum; monthly payments of $4,383; due 60 months from issuance; secured by equipment			186,841				197,033
Note Payable to finance company dated September 13, 2019; interest at 2.90% per annum; monthly payments of $3,422; due at 48 months from issuance; secured by equipment			133,434				142,689
Note Payable to finance company dated September 18, 2019; interest at 10.52% per annum; monthly payments of $2,143; due at 35 months from issuance; secured by equipment			54,661				59,566
Note Payable to finance company dated November 1, 2019; interest at 0.0% per annum; monthly payments of $3,000; due 52 months from issuance; final payment of $12,000; secured by equipment			153,000				162,000
Note Payable to finance company dated November 22, 2019; interest at 0.0% per annum; monthly payments of $934; due 24 months from issuance; secured by equipment			18,672				21,473
Note Payable to finance company dated February 3, 2020; interest at 9.380% per annum; monthly payments of $9,424; due 50 months from issuance; secured by equipment			435,854				—
Note Payable to finance company dated February 19, 2020; interest at 8.0% per annum; monthly payments of $16,500 for the first 6 months then $11,520 for the remaining 36 months; due 42 months from issuance; secured by equipment			422,910				—
Note Payable to finance company dated February 19, 2020; interest at 8.0% per annum; monthly payments of $16,500 for the first 6 months then $11,520 for the remaining 36 months; due 42 months from issuance; secured by equipment			422,910				—
Note Payable to finance company dated February 13, 2020; interest at 10.35% per annum; monthly payments of $28,903; due 12 months from issuance; unsecured			237,434				—
Note Payable to finance company dated March 20,2020; interest at 5.0% per annum; monthly payments of $6,135.98; due 60 months from issuance; secured by equipment			325,150				—
Note Payable to finance company dated March 20, 2020; interest at 5.0% per annum; monthly payments of $6,135.98; due 60 months from issuance; secured by equipment			325,150				—

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

March 31, 2020

 

Note Payable to finance company dated March 20, 2020; interest at 5.0% per annum; monthly payments of $6,135.98; due 60 months from issuance; secured by equipment			325,150				—
Note Payable to finance company dated March 20, 2020; interest at 5.0% per annum; monthly payments of $6,135.98; due 60 months from issuance; secured by equipment			325,150				—
Other notes payable			—				—
Total			3,716,412				945,763
Less current portion			1,593,002				386,528
Long-term portion		$	2,123,410			$	559,235

 

Note 8 – Related-Party Transactions

 

Related-Party Note Payable

 

The Company has a note payable to the Company’s President. The note is interest bearing at 10% annum, unsecured and payable upon demand. The balance of the note at March 31, 2020 and 2019 was $330,226 and $348,984, respectively. During the three months ended March 31, 2020 and 2019, the Company repaid $11,844 and $4,659, respectively, on this note payable. The note incurred $7,276 and $9,070 in interest expense for the three months ended March 31, 2020 and 2019, respectively.

 

Lease

 

The Company leases a building and real property in Chico, California under a five year lease agreement from a trust whose trustee is the Company’s President. The lease provides for monthly lease payment of $9,800 per month, and expired on December 1, 2017. The Company was leasing the building and real property at the same rate on a month-to-month lease until March 1, 2020 when a one-year lease agreement was signed renewable at anniversary for up to ten years. The new lease provides for monthly lease payment of $12,000. Rent expense during the three months ended March 31, 2020 and 2019, was $31,635 and $29,400, respectively.

 

Transactions with Director

 

Two separate customers lost financing for purchases of equipment after already receiving the machines, so the Company sold the machines to the brokerage company of one of the Company’s new Directors. The customers are now renting the machines on a rent to own basis and the Company is purchasing the machines from the brokerage. We have two notes payable tied to these deals that at March 31, 2020 and December 31, 2019, have a combined total due of $207,661, $221,566 respectively. The brokerage made $42,681 on the deal. The notes are secured by the equipment.

 

Note 9 – Stockholders’ Equity

 

The Company has authorized 5,000,000 shares of $0.001 par value blank check preferred stock, of which no shares were issued and outstanding as of March 31, 2020.

 

The Company has authorized 1,000,000,000 shares of $0.001 par value common stock, of which 753,415,879 were issued and outstanding as of March 31, 2020. 

 

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - UNAUDITED

March 31, 2020

 

During the three months ended March 31, 2020 the Company issued no stock.

 

Note 10 – Revenues

 

During the three months ended March 31, 2020 and 2019, revenues and costs related to domestic and foreign sales of equipment are as follows:

 

		March 31, 2020								March 31, 2019
		Domestic				Export				Domestic				Export
Equipment Sales and Other Revenues		$	912,315			$	—			$	1,253,053			$	517,000
Less - Cost of Sales of equipment and Other Revenues			(745,952	)			—				(1,162,238	)			(403,298	)
Gross Profit		$	166,363			$	—			$	90,815			$	113,702

 

During the three months ended March 31, 2020 and 2019, there were no foreign rentals of equipment.

 

Note 11 – Joint Venture

 

In 2019, the Company entered into a Joint Venture with one of its long-time collaborators whereby costs and profits are shared equally. This arrangement was made in order to purchase 30 machines from a closing terminal in Seattle, WA for $1,089,000. At March 31, 2020 and December 31, 2019, the Company had repaid $17,500 and $85,000, respectively (for equipment sold). During the same time periods, the Company also remitted $61,651 and $35,000 in joint venture profits. The amount due to the collaborator as of March 31, 2020 and December 31, 2019 was $442,000 and $459,500, respectively.

 

Note 12 – Commitments and Contingencies

 

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are two pending legal proceedings to which the Company is a party for which management believes the ultimate outcome would not have a material adverse effect on the Company’s financial position. Please see Note 13 for more details.

 

See Note 8 for related party operating lease.

 

Note 13 – Subsequent Events

 

On April 21, 2020, the Company received a $10,000 advance on an SBA loan of $2 million dollars. We have not received the final terms, but we have been instructed that typically these notes are 30 year terms, interest at 3.75% per annum, with six (6) months of deferred payments. We currently do not have a monthly payment amount but are expecting funding within July 2020.

 

On May 1, 2020, the Company received a Paycheck Protection Program Loan in the amount of $228,442 to cover payroll and utility expenses during the Pandemic. The Company is following the government guidelines and tracking costs to insure 100% forgiveness of the loan.

 

On May 6, 2020, the Company was named in a suit filed in the State of Virginia by a manufacturer asking the court to hold the Company liable for the amount of our customer’s deposit the manufacturer erroneously wired to a bank in China after receiving fraudulent bank wiring instructions from a cloned email account. The deposit amount was $1,057,400. On May 13, 2020, the Company was named in a second suit filed in the State of Virginia by the customer demanding return of their deposit. Management is working on a settlement agreement. Management does not believe there will be a financial impact once agreement is reached.

 

On May 22, 2020, the limit on the line of credit with a finance company that provides for borrowing up to $500,000 was increased to $1,050,000 with all other terms remaining the same as stated in Note 6.

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

EXPLANATORY NOTE

 

Reliance on Relief Order.

 

On May 6, 2020, we filed a current report on Form 8-K in compliance with and in reliance upon the Securities and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Granting Exemptions From Specified Provisions of the Exchange Act and Certain Rules Thereunder dated March 4, 2020 (Release No. 34-88318) as modified and superseded by a new SEC order issued on March 25, 2020 (Release No. 34-88465) (collectively, the “Order”) to delay the filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the “Report”) due to circumstances related to the coronavirus disease 2019 (“COVID-19”). We are filing this 10-Q on or about June 29, 2020 within the time period prescribed by the Order. 

 

FORWARD LOOKING STATEMENTS

 

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

Recent Developments Related to the COVID-19 Outbreak

 

All of the disclosures set forth in Item 1 below should be read in the context of the recent COVID-19 related developments discussed immediately below.  All of the disclosures recited in “Recent Developments Related to the COVID-19 Outbreak” are as of the date of this filing.

 

The occurrence of the COVID-19 pandemic may negatively affect our operations depending on the severity and longevity of the pandemic.

 

The COVID-19 pandemic is currently impacting countries, communities, supply chains and markets as well as the global financial markets. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission. Depending on the severity and longevity of the COVID-19 pandemic, our business, customers, and shareholders may experience a significant negative impact. 

 

COVID-19 Update

 

AmeraMex has been approved by the Small Business Administration (SBA) for the following financial assistance:

 

●

The Company has received $228,442 under the SBA Paycheck Protection Program 442 to cover payroll and utility expenses during the Pandemic. The Company is following the government guidelines and tracking costs to insure 100% forgiveness of the loan.

●

The Company has been approved for up to $2 million by the SBA for a Disaster Assistance Loan and has received a $10,000 advance on the loan. The amount of the loan and the loan terms are not yet finalized.

 

AmeraMex is mandating a work-from-home policy for its sales, administrative, and accounting employees. Shop employees are busy servicing contracts with our essential customers and are often traveling to do so. They are practicing social distancing and we are only allowing one customer in the facility at a time. Our Company has worked out payment schedules with our customers in need of assistance and, in turn, has accepted all assistance offered by our vendors.

 

 

Overview of the Business

We sell, lease, and rent heavy equipment to companies within four industries: construction (light and infrastructure), shipping logistics, mining, and commercial farming. With customers in the United States, Canada, Latin America, Asia and Africa, we have over 30 years of experience in heavy equipment sales and service and inventories of top-of-the-line equipment from manufacturers such as Taylor Machine Works Inc. and Terex Heavy Equipment. We were originally incorporated as Hamre Equipment Company, Inc. in California on November 17, 1989. We merged into AmeraMex International, Inc., a Nevada corporation, on May 29, 1990.

 

		March 31, 2020				March 31, 2019
REVENUES		(unaudited)				(unaudited)
Sales of Equipment and Other Revenues		$	912,315			$	1,770,053
Rentals and Leases			526,154				673,839
Total Revenues			1,438,469				2,443,892
COST OF REVENUES
Sales of Equipment and Other Revenues			745,952				1,565,536
Rentals and Leases			248,306				236,186
Total Cost of Revenues			994,258				1,801,722
GROSS PROFIT			444,211				642,170
OPERATING EXPENSES
Selling Expense			88,833				81,233
General and Administrative			268,523				204,617
Total Operating Expenses			357,356				285,850
INCOME FROM OPERATIONS			86,855				356,320
OTHER INCOME (EXPENSE)
Interest Expense			(259,808	)			(263,175	)
Loss from Early Extinguishment of Debt			—				(482,908	)
Other Income			(1,302	)			517
Total Other Income (Expense)			(261,110	)			(745,566	)
LOSS BEFORE BENEFIT FOR INCOME TAXES			(174,255	)			(389,246	)
BENEFIT FOR INCOME TAXES			(46,176	)			(106,628	)
NET LOSS		$	(128,079	)		$	(282,618	)

 

 

We had revenue of $1,438,469 for the quarter ending March 31, 2020 as compared to revenue of $2,443,892 for the quarter ending March 31, 2019, a 41% decrease. Sales of Equipment and Other Revenues for the quarter ending March 31, 2020 were $912,315 and made up 63% of our Total Revenues. For the quarter ending March 31, 2019, Sales of Equipment and Other Revenues made up $1,770,053, or 72.4%, of Total Revenues. The remaining portion of Total Revenues, Rentals and Leases, for the respective periods were $526,154, or 37%, in 2020 and in 2019, Rentals and Leases made up 27.6% of Total Revenues and totaled $673,839. Sales of Equipment and Other Revenues saw a larger number for the quarter ending March 31, 2019 because we had a sale of equipment to a Mexico company totaling $500,000, none of which was included in March 31, 2020. Rentals and Leases decreased due to two long term rental contracts ending which had combined revenues in March 31, 2019 of $161,900, none of which were included in March 31, 2020.

 

We had costs of revenue of $994,258 for the quarter ending March 31, 2020 as compared to costs of $1,801,722 for the quarter ending March 31, 2019. Our costs decreased by $807,464, or 45%, while our revenues decreased by 41%. We experienced an increase in gross profit as a percentage of Sales of Equipment and Other Revenues from 88.5% during the three months ended March 31, 2019 to 88% as we sold more used equipment than new.

 

We experienced an increase in operating expenses with $357,356 in the quarter ending March 31, 2020 as compared to $285,850 in the quarter ending March 31, 2019. This is an increase of approximately 25%.

 

From first quarter 2019 to first quarter 2020, our Interest Expense decreased from $263,175 to $259,808. This decrease is due to the lower interest rates in debt used to finance our equipment.

 

We had a net loss of $128,079 for the quarter ending March 31, 2020 as compared to net loss of $282,618 for the first quarter ending March 31, 2019. In connection with the global pandemic, multiple equipment sales were put on hold until things return to normal. This delay resulted in a net loss for the 2020 first quarter. Please see Note 2 for more details.

 

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

 

Seasonality

Our operating results are not affected by seasonality.

 

Inflation

Our business and operating results are not affected in any material way by inflation.

 

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The nature of our business generally does not call for the preparation or use of estimates. Due to the fact that the Company does not have any operating business, we do not believe that we do not have any such critical accounting policies.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES 

Evaluation of Disclosure Controls and Procedures

 

Our management, under the supervision of our President and Chief Financial Officer performed an evaluation (the “Evaluation”) of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide a reasonable level of assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our President and Chief Financial Officer concluded that, as of March 31, 2020, due to the presence of material weaknesses described below, our disclosure controls and procedures were ineffective.

 

There can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within our Company and our consolidated subsidiaries to disclose material information otherwise required to be set forth in our periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.

 

Management’s Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal controls over financial reporting for our Company. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

 

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

 

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failure. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

We assessed the effectiveness of our internal control over financial reporting as of March 31, 2020. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission’s Internal Control-Integrated Framework. As a result of this assessment, we have determined that our internal control over financial reporting was effective as of March 31, 2020 with no material weakness in our internal control over financial reporting continuing to exist at March 31, 2020, because we have an independent audit committee of our board of directors which was established mid-2019 comprised of two independent directors and Chief Financial Officer.

 

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

 

Changes in Internal Control Over Financial Reporting

 

An evaluation was performed under the supervision of our management, including our President and Chief Financial Officer, of whether any change in our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended March 31, 2020. Based on that evaluation, our management, including our President and Chief Financial Officer, concluded that there were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On May 5, 2020, Liebherr-America, Inc. d/b/a Liebherr USA, Co. (“Liebherr”) filed a Complaint in United States District Court for the Eastern District of Virginia (Newport News Division) against Ameramex International, Inc. and Ceres Terminals Incorporated (collectively the “Defendants”) seeking a declaratory judgment against the Defendants for alleged negligence that resulted in a fraudulent wire transfer. On May 12, 2020, Ceres Terminals Incorporated filed a Complaint in United States District Court for the Eastern District of Virginia (Newport News Division) against Hamre Equipment Company a/k/a Ameramex International, Inc. (Defendant) seeking a judgement against the Defendant for breach of contract.

 

Management is working on a settlement agreement. Management does not believe there will be a financial impact once agreement is reached.

 

We anticipate that we will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and we cannot assure that their ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows or results of operations. As of the filing of this Report, we were party to two legal proceedings that have since been resolved.

 

ITEM 1A. RISK FACTORS

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

 

During 2017, 2018, and 2019 we did not issue any shares of common or preferred stock.

All issuances were exempt from the registration requirements of Section 5 of the Securities Act of 1933 as they did not involve a public offering under Section 4(a)(2) and were issued as restricted securities as defined in Rule 144 of the Act.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibit No.				Description
	31.1			Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2			Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32			Certification of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101. INS			XBRL Instance Document
	101. SCH			XBRL Taxonomy Extension Schema Document
	101. CAL			XBRL Taxonomy Extension Calculation Linkbase Document
	101. DEF			XBRL Taxonomy Extension definition Linkbase Document
	101. LAB			XBRL Taxonomy Extension Label Linkbase Document
	101. PRE			XBRL Taxonomy Extension Presentation Linkbase Document

 

SIGNATURES

 

In accordance with 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 dates indicated.

 

	AMERAMEX INTERNATIONAL, INC.
Date: June 23, 2020	By	/s/ Lee Hamre
		Lee Hamre
		President
Date: June 23, 2020	By	/s/ Hope Stone
		Hope Stone
		Chief Financial Officer