UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For
the Quarter ended
OR
For the transition period from __________ to__________
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State of organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
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. | ||
| OTCQB |
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. ☒
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). ☒
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 ☐ |
| 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 ☒
There are shares of common stock outstanding as of July 30, 2021.
TABLE OF CONTENTS
| 2 |
PART I–FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS
| AMERAMEX INTERNATIONAL, INC. |
| UNAUDITED BALANCE SHEETS |
JUNE 30, 2021 | DECEMBER 31, 2020 | ||||||||
| ASSETS | |||||||||
| Current Assets: | |||||||||
| Cash | $ | $ | |||||||
| Accounts Receivable, Net | |||||||||
| Inventory, Net | |||||||||
| Other Current Assets | |||||||||
| Total Current Assets | |||||||||
| Property and Equipment, Net | |||||||||
| Rental Equipment, Net | |||||||||
| Deferred Tax Assets, Net | |||||||||
| Other Assets | |||||||||
| Total Other Assets | |||||||||
| TOTAL ASSETS | $ | $ | |||||||
| LIABILITIES & STOCKHOLDERS' EQUITY | |||||||||
| Current Liabilities: | |||||||||
| Accounts Payable | $ | $ | |||||||
| Accrued Expenses | |||||||||
| Joint Venture Liability | |||||||||
| Lines of Credit | |||||||||
| Notes Payable, Current Portion | |||||||||
| Convertible Notes | |||||||||
| Total Current Liabilities | |||||||||
| Long-Term Liabilities | |||||||||
| Deferred Tax Liabilities, Net | |||||||||
| Notes Payable - Related Party | |||||||||
| Notes Payable, Net of Current Portion | |||||||||
| Total Long-Term Liabilities | |||||||||
| TOTAL LIABILITIES | |||||||||
| Commitments and Contingencies (Note 11) | |||||||||
| STOCKHOLDERS' EQUITY: | |||||||||
| Shareholders' Equity | |||||||||
| Preferred Stock, $ par value, shares authorized, shares issued and outstanding | |||||||||
| Common Stock, $ par value, shares authorized shares issued and outstanding at June 30, 2021 and at December 31, 2020 | |||||||||
| Additional Paid-In Capital | |||||||||
| Accumulated Deficit | ( | ) | ( | ) | |||||
| Total Stockholders' Equity | |||||||||
| TOTAL LIABILITIES & STOCKHOLDERS' EQUITY | $ | $ | |||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 3 |
| AMERAMEX INTERNATIONAL, INC. |
| UNAUDITED STATEMENTS OF OPERATIONS |
| THREE
MONTHS ENDED JUNE 30, | SIX
MONTHS ENDED | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| REVENUES | ||||||||||||||||
| Sales of Equipment and Other Revenues | $ | $ | $ | $ | ||||||||||||
| Rentals and Leases | ||||||||||||||||
| Total Sales | ||||||||||||||||
| COST OF SALES | ||||||||||||||||
| Sales of Equipment and Other Revenues | ||||||||||||||||
| Rentals and Leases | ||||||||||||||||
| Total Cost of Sales | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling Expense | ||||||||||||||||
| Legal Settlement | ||||||||||||||||
| General and Administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Profit (loss) From Operations | ( | ) | ( | ) | ||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest Expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from Early Extinguishment of Debt | ( | ) | ( | ) | ||||||||||||
| Other Income (Expense) | ( | ) | ||||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME BEFORE PROVISION for INCOME TAXES | ( | ) | ( | ) | ||||||||||||
| PROVISION (BENEFIT) for INCOME TAXES | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted Average Shares Outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Earnings (loss) per Share | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 4 |
| AMERAMEX INTERNATIONAL, INC. | ||||||||||||||||||||||||
| UNAUDITED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 | ||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||
| Additional | Stockholders' | |||||||||||||||||||||||
| Common Stock | Paid-in | Treasury | Accumulated | Equity/ | ||||||||||||||||||||
| Balance | Shares | Amount | Capital | Stock | Deficit | (Deficit) | ||||||||||||||||||
| December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||
| March 31, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Net Loss | — | ( | ) | ( | ) | |||||||||||||||||||
| June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net Income | — | |||||||||||||||||||||||
| March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock for Services | ||||||||||||||||||||||||
| Net Income | — | |||||||||||||||||||||||
| June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 5 |
| AMERAMEX INTERNATIONAL, INC. |
| UNAUDITED STATEMENTS OF CASH FLOW |
| SIX MONTHS ENDED JUNE 30, | ||||||||
| 2021 | 2020 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net Income (Loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile Net Loss to | ||||||||
| Net Cash provided (used) by Operations Activities: | ||||||||
| Depreciation and Amortization | ||||||||
| Provision (Benefit) for Deferred Income Taxes | ( | ) | ||||||
| Marketing Services Paid in Stock | ||||||||
| Loss on Early Extinguishment of Debt | ||||||||
| Amortization and Accretion of Interest | ||||||||
| Change in Assets and Liabilities: | ||||||||
| Accounts Receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Other Current Assets | ( | ) | ( | ) | ||||
| Accounts Payable | ||||||||
| Accrued Expenses | ||||||||
| NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES | ( | ) | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Payments for Property & Equipment | ( | ) | ( | ) | ||||
| Proceeds (Payments) for Rental Equipment | ( | ) | ||||||
| NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES | ( | ) | ||||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from Notes Payable | ||||||||
| Payments on Notes Payable | ( | ) | ( | ) | ||||
| Payment on Note Payable - Related Party | ( | ) | ( | ) | ||||
| Joint Venture Liability | ( | ) | ( | ) | ||||
| Net Borrowing Under Lines of Credit | ( | ) | ( | ) | ||||
| NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES | ( | ) | ||||||
| NET INCREASE IN CASH & CASH EQUIVALENTS | ||||||||
| Cash and Cash Equivalents, BEGINNING OF PERIOD | ||||||||
| Cash and Cash Equivalents, END OF PERIOD | $ | $ | ||||||
| CASH PAID FOR: | ||||||||
| Interest | $ | |||||||
| Income Taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING | ||||||||
| AND FINANCING ACTIVITIES: | ||||||||
| Transfer of Inventory to Rental Equipment | $ | $ | ||||||
| Equipment Financed under Capital Leases | $ | $ | ||||||
| Transfer of Rental Equipment to Inventory | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements.
| 6 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
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
June 30, 2021, the Company had working capital of approximately $
Moving forward, the Company expects to generate sufficient cash flows from operations to meet its obligations, and expects to continue to obtain financing for equipment purchases in the normal course of business. The Company believes that its expected cash flows from operations, together with its current or a future new credit facility, will be sufficient to operate in the normal course of business for the next 12 months.
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 the worst of which was felt in 2020.
With the reopening of the State of California, the Company has experienced a resurgence in sales and rentals of both new and used equipment. The nationwide shortages in truck drivers and the increase in fuel prices has led to higher costs to transport equipment and delays in deliveries to customers. Our customers have been very understanding during this difficult period and we have not lost any deals because of these difficulties.
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 ultimate impact of COVID-19 on its financial condition, results of operations or cash flows.
| 7 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
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. 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 and six-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, 2020 and notes thereto that are included in the Company’s Annual Report on Form 10-K.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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 allowances, convertible notes policy and estimated useful life of property and equipment.
Convertible Preferred Stock, and Embedded Derivatives
Convertible
Preferred Stock is accounted for under the guidelines established by Accounting Standards Codification (“ASC”) 470-20, Debt
with Conversion and Other Options. ASC 470-20 governs the calculation of an embedded beneficial conversion, a derivative instrument,
which is treated as an additional discount to the instruments where derivative accounting does not apply. This applies during the period
for which embedded conversion features are either fixed, contingently convertible, or cash or net settlement is in control of the Company.
The proceeds allocated to the equity instruments may reduce the carrying value of the convertible debt, and such discount is amortized
to interest expense over the term of the debt. The Company generally has the option to pay the convertible notes at a premium ranging
from
Many
of the conversion features embedded in the Company’s notes become exercisable upon the event of default or upon the passage of
time in the event the Company does not repay the notes, at a premium, at 180 days from issuance of the note. If the conversion price
is adjusted based on a discount to the market price of the Company’s common stock, the number of shares upon conversion is potentially
unlimited. In the event we cannot control the net share settlement and cash settlement, we record the embedded conversion feature as
a derivate instrument, at fair value. The excess of fair value of the embedded conversion feature, together with the original issue discounts,
warrants, and issue costs over the face value of the debt, is recorded as an immediate charge in the accompanying statements of operations
and cash flows. Each reporting period, the Company will compute the estimated fair value of derivatives and record changes to operations.
| 8 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
ASC 470-50, Extinguishments, require entities to record an extinguishment when the terms of the original note are significantly modified, defined as a greater than 10% change in expected cash flows. As a result of modifications made to one of the Company’s convertible notes during the reporting period, we recorded a loss as reported in the accompanying statements of operations and cash flows.
Line of Credit Issuance Costs
The
Company capitalizes and amortizes direct issue costs incurred in connection with its line of credit arrangement. On or about March 30,
2019 (see Note 6), the Company incurred $
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all leases with terms greater than 12 months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2020 for smaller reporting companies, and interim periods within those years, with early adoption permitted. The Company adopted this new standard on January 1, 2021. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” that allows entities to apply the provisions of the new standard at the effective date, as opposed to the earliest period presented under the modified retrospective transition approach and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities that the Company reports relative to such amounts prior to adoption.
Note 3 – Inventory
Inventory as of June 30, 2021 and December 31, 2020 consisted of the following:
June 30, 2021 |
December 31, 2020 | |||||||
| Parts and supplies | $ | $ | ||||||
| Heavy equipment | ||||||||
| Total | $ | $ | ||||||
All of the inventory is used as collateral for the lines of credit and notes payable (see Notes 6 and 8).
| 9 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
Note 4 – Property and Equipment
Property and equipment includes assets held for internal use; as of June 30, 2021 and December 31, 2020, such property and equipment consisted of the following:
June 30, 2021 |
December 31, 2020 | |||||||
| Furniture and fixtures | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Vehicles and Equipment | ||||||||
| Total, at cost | ||||||||
| Less - Accumulated depreciation | ( |
) | ( |
) | ||||
| Total, Net | $ | $ | ||||||
Depreciation
expense for the three and six months ended June 30, 2021 and 2020 was $
All of the property and equipment is used as collateral for the lines of credit and notes payable (see Notes 6 and 8).
Note 5 – Rental Equipment
Rental equipment as of June 30, 2021 and December 31, 2020 consisted of the following:
June 30, 2021 |
December 31, 2020 | |||||||
| Rental equipment | $ | $ | ||||||
| Less - Accumulated depreciation | ( |
) | ( |
) | ||||
| Total, Net | $ | $ | ||||||
Depreciation
expense for the three and six months ended June 30, 2021 and 2020 was $
All of the rental equipment is used as collateral for the lines of credit and notes payable (see Notes 6 and 8).
Note 6 – Lines of Credit
On
May 22, 2020, the limit on our equipment flooring plan line of credit with a finance company which previously provided for borrowing up to $
| 10 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
On
March 29, 2019, the Company entered into a line of credit with a finance company that provides for borrowing and refinancing up to $
Note 7 – Related-Party Transactions
Related-Party Note Payable
The
Company has a note payable to the Company’s President. The note is interest bearing at
Lease
The
Company leases a building and real property in Chico, California from a trust whose trustee is the Company’s President, Lee Hamre.
The Company was leasing the building and real property at the same rate on a month-to-month lease until
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 Directors. The customers are now renting the machines on a rent-to-own basis
with the Company and the Company is purchasing the machines from the brokerage. The Company has two notes payable tied to these
transactions that, at June 30, 2021 and December 31, 2020, have a combined total due of $
The
Company also has another note payable that was brokered through the same Director’s company.
Note 8 – Notes Payable
Notes payable as of June 30, 2021 and December 31, 2020 consisted of the following:
| 11 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
June 30, 2021 | December 31, 2020 | |||||||
| Payable to insurance company; secured by cash surrender value of life insurance policy; no due date | $ | $ | ||||||
| Notes
Payable to various finance companies with varying start dates and interest rates; combined monthly payments of $ | ||||||||
| Total | ||||||||
| Less Current Portion | ( | ( | ||||||
| Long Term Portion | $ | $ | ||||||
Interest
expense for all notes payable for the three and six months ended June 30, 2021 and 2020 was $
Note 9 – Convertible Notes
On
January 21, 2021, the Company entered into a securities purchase agreement with Geneva Roth Remark Holdings, Inc. (“Holder”),
whereby Holder purchased shares of Series A Convertible Preferred Stock for a purchase price of $
On
March 23, 2021, the Company entered into a second securities purchase agreement with Holder whereby Holder purchased shares of
Series A Convertible Preferred Stock for a purchase price of $
The
Series A Convertible Preferred Stock earns dividends at a rate of
At any time during the period indicated below, after the date of the issuance of shares of Series A Convertible Preferred Stock (each respectively an “Issuance Date”), the Company will have the right, at the Company’s option, to redeem all of the shares of Series A Convertible Preferred Stock by paying an amount equal to (i) the number of shares of Series A Convertible Preferred Stock multiplied by the then-current Stated Value (including and accrued dividends); (ii) multiplied by the corresponding percentage as indicated in the chart below:
| Prepayment Period | Prepayment Percentage |
| 1.
|
|
| 2. |
|
| 3. |
|
| 4. |
|
| 12 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
After the expiration of 180 days following the Issuance Date, except for the Mandatory Redemption, the Company shall have no right to redeem the Series A Convertible Preferred Stock unless otherwise agreed to with the Holder.
If the Series A Convertible Preferred Stock is not redeemed, at any time on and following the six-month anniversary of the Issuance Date, the Series A Convertible Preferred Stock shall be convertible into shares of Common Stock at the option of the Holder.
In
the event of a conversion of any Series A Convertible Preferred Stock, the Company shall issue to the Holder a number of Common
Stock equal to: (i) the then Stated Value; multiplied by (ii) the number of shares of Series A Convertible Preferred Stock being
converted by the Holder as set forth in the Conversion Notice; divided by (iii) the Conversion Price.
The Holder will be limited to convert no more than % of the issued and outstanding Common Stock at time of conversion at any one time.
An aggregate of shares of Common Stock have been reserved for issuance for possible conversion of the Series A Convertible Preferred Stock.
On the date which is the earlier of (i) 24 months following the Issuance Date and (ii) the occurrence of an event of default, the Company will redeem (the “Mandatory Redemption”) all of the shares of Series A Convertible Preferred Stock of the Holder (which have not been previously redeemed or converted) for cash in an amount equal to the number of shares so redeemed multiplied by the stated value.
The
combined accrued and accreted interest for both notes for the three and six months ended June 30, 2021 was $
On
July 26, 2021, the Company paid $
Note 10 – 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
| 13 |
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
June 30, 2021
Note 11 – Commitments and Contingencies
From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. At the present time, the Company is not involved in any litigation.
Note 12 – Stockholders’ Equity
The Company has authorized shares of $par value preferred stock, of which shares have been designated as Series A Convertible Preferred Stock of which shares are issued and outstanding as of June 30, 2021 and as of December 31, 2020.
On April 28, 2021, the Company paid out fully vested shares of the Company’s Common Stock as final payment per the contract between the Company and M Vest LLC, an SEC registered, FINRA member broker-dealer for services. The shares of Common Stock have and the same rights afforded other holders of the Company’s Common Stock.
Note 13 – Subsequent Events
On July 22, 2021, the Company paid $
On July 26, 2021, the Company paid off the securities
purchase agreement with Geneva Roth Remark Holdings, Inc. in full, together with interest totaling $
| 14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
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 (the “Exchange Act”). 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. Readers should not 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.
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 November 2, 2006.
Recent Developments Related to the COVID-19 Outbreak
The COVID-19 pandemic is currently impacting countries, communities, supply chains and markets as well as the global financial markets. The pandemic has resulted in social distancing, travel bans and quarantine, and this has limited and may continue to 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 SEC. Depending on the severity and longevity of the COVID-19 pandemic, our business, customers, and shareholders may experience a significant negative impact. (See Financial Statements, Note 2 – Summary of Significant Accounting Policies – Risks and Uncertainties.)
| 15 |
In connection with the COVID-19 pandemic, we have been approved by the Small Business Administration (SBA) for the following financial assistance:
•
|
We received $228,442 under the SBA Paycheck Protection Program 442 to cover payroll and utility expenses during the Pandemic. We received 100% forgiveness of this loan. | |
| • | We also received $254,147 under the extended SBA Paycheck Protection Program (2) to cover payroll and utility expenses during the Pandemic. We believe we are following the government guidelines and tracking costs to ensure 100% forgiveness of the loan. |
With the vaccination of multiple employees and as the State of California reduces restrictions, our sales, administrative, and accounting employees have returned to our main office. We are continuing our extended cleaning efforts and restrictions on the number of customers allowed inside the facility at a time. Shop employees are servicing contracts with our essential customers and are often traveling to do so. All employees are practicing social distancing
Results of Operations
| June 30, 2021 | June 30, 2020 | |||||||
| REVENUES | (unaudited) | (unaudited) | ||||||
| Sales of Equipment and Other Revenues | $ | 8,902,726 | $ | 1,937,679 | ||||
| Rentals and Leases | 1,426,921 | 1,283,475 | ||||||
| Total Revenues | 10,329,647 | 3,221,154 | ||||||
| COST OF REVENUES | ||||||||
| Sales of Equipment and Other Revenues | 7,753,266 | 1,849,257 | ||||||
| Rentals and Leases | 434,246 | 497,398 | ||||||
| Total Cost of Revenues | 8,187,512 | 2,346,655 | ||||||
| GROSS PROFIT | 2,142,135 | 874,499 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling Expense | 423,921 | 148,000 | ||||||
| Legal Settlement | — | 428,700 | ||||||
| General and Administrative | 474,230 | 548,385 | ||||||
| Total Operating Expenses | 898,151 | 1,125,085 | ||||||
| INCOME (LOSS) FROM OPERATIONS | 1,243,984 | (250,586 | ) | |||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest Expense, net | (535,032 | ) | (520,797 | ) | ||||
| Loss from Early Extinguishment of Debt | (90,178 | ) | — | |||||
| Other Income | 10,842 | (1,302 | ) | |||||
| Total Other Expense | (614,368 | ) | (522,099 | ) | ||||
| INCOME (LOSS) BEFORE BENEFIT FOR INCOME TAXES | 629,616 | (772,685 | ) | |||||
| PROVISION (BENEFIT) FOR INCOME TAXES | 185,737 | (204,766 | ) | |||||
| NET INCOME (LOSS) | $ | 443,879 | $ | (567,919 | ) | |||
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Revenue
Six Months Ended June 30, 2021. Revenue for the six months ending June 30, 2021 was $10,329,647 compared to $3,221,154 for the same time during 2020, a 221% increase. Sales of Equipment and Other Revenues for the six months ending June 30, 2021 was $8,902,726 and made up 86% of our Total Revenues. For the six months ending June 30, 2020, Sales of Equipment and Other Revenues made up $1,937,679, or 60% of Total Revenues. The remaining portion of Total Revenues, Rentals and Leases, for the respective periods were $1,426,921, or 14%, in 2021 and in 2020, Rentals and Leases made up 40% of Total Revenues and totaled $1,283,475. Sales of Equipment and Other Revenues was up 359% year over year due to the continued momentum we experienced as the State of California reduces restrictions tied to the COVID-19 pandemic which shut down our state and halted all major sales from March 2020 through June 2020. Rentals and Leases increased by 11% due to two new long term rental contracts one started in April 2020, the other in October 2020, only one of which was included in the June 30, 2020 results.
Three Months Ended June 30, 2021. Revenue for the three months ending June 30, 2021 was $6,299,951 compared to $1,782,685 for the same time during 2020, a 253% increase. Sales of Equipment and Other Revenues for the three months ending June 30, 2021 was $5,656,744 and made up 90% of our Total Revenue. For the three months ending June 30, 2020, Sales of Equipment and Other Revenues made up $1,025,364, or 58% of Total Revenue. The remaining portion of Total Revenues, Rental and Leases, for the respective periods were $643,207, or 10% in 2021 and in 2020, rentals and Leases made up 42% of Total Revenues and totaled $757,321. Sales of Equipment and Other Revenues was up 452% year over year due to the sale of 4 large pieces of equipment to a long-time customer in the 2nd quarter of 2021 as well as the reduction in restrictions tied to the COVID-19 pandemic. Rentals and Leases decreased 15% due to the conversion of 4 long-term rentals to sales in the 2nd quarter of 2021.
Cost of Revenue
Six Months Ended June 30, 2021. Costs of revenue for the six months ending June 30, 2021 were $8,187,512 compared to the same time in 2020 of $2,346,655, an increase of 249% as our revenue increased. We had an increase in gross profit as a percentage of Sales of Equipment and Other Revenues from 55% during the six months ending June 30, 2020 to 76% for the six months ended June 30, 2021. The increase is do to the mix of new and used machines sold each year. In 2021 we sold significantly more machines and the majority of the machines sold were used where as during the same time in 2020, we sold mostly new machines. The margins are much higher on used equipment.
Three Months Ended June 30, 2021. Costs of revenues for the three months ending June 30, 2021 were $5,329,524 compared to the same time in 2020 of $1,352,397, an increase of 294% as our revenue increased.
Operating Expenses
Six Months Ended June 30, 2021. Operating expenses decreased by $226,934 during the six months ending June 30, 2021 compared to the six months ending June 30, 2021. This decrease was due to a one time legal settlement of $428,700 that hit the second quarter of 2020. Removing the settlement cost, there was an increase of $201,766 year over year from $696,385 in 2020 to $898,151 in 2021.
Three Months Ended June 30, 2021. Operating expensed decreased by $253,070 during the three months ending June 30, 2021 compared to the three months ending June 30, 2020. This decrease was due to a one time legal settlement of $428,700. Removing the settlement cost, there was an increase of $175,630 year over year from $339,029 in 2020 to $514,659 in 2021.
Interest Expense
Six Months Ended June 30, 2021. The six months ending June 30, 2021 compared to the six months ending June 30, 2020 shows a slight increase in interest expense from $520,797 to $535,032.
Three Months Ended June 30, 2021. The three months ending June 30, 2021 compared to the three months ending June 30, 2020 shows a slight increase in interest expense from $260,989 to $267,975.
Operating Results
We had a net profit of $443,879 for the six months ending June 30, 2021 as compared to net loss of $567,919 for the six months ending June 30, 2020. The increase is due to a return to more normal operating activity as our state and country slowly reopen.
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Liquidity and Capital Resources
Moving forward, we expect to generate sufficient cash flows from operations to meet our obligations, and expect to continue to obtain financing for equipment purchases in the normal course of business. The Company believes 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 the next 12 months.
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 Estimates
Critical accounting estimates are those estimates made in accordance with U.S. GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company. The nature of our business generally does not call for the preparation or use of estimates. Due to that fact, we do not believe that we have any such critical accounting estimates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are 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 of the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (the “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 June 30, 2021, our disclosure controls and procedures were effective.
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.
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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 as 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 our assets;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our 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 June 30, 2021. 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 June 30, 2021.
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 June 30, 2021. 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 June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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 have no legal proceedings pending.
ITEM 1A. RISK FACTORS
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
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SIGNATURES
In accordance with the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AMERAMEX INTERNATIONAL, INC. | |||||
| Date: August 10, 2021 | By: /s/ Lee Hamre | ||||
Lee Hamre President |
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| Date: August 10, 2021 | By: /s/ Hope Stone | ||||
Hope Stone Chief Financial Officer |
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