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)
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| (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. |
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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 ☐ |
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Smaller
reporting company
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Emerging
growth company
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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 November 18, 2022.
TABLE OF CONTENTS
2
PART I–FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS
AMERAMEX INTERNATIONAL, INC.
UNAUDITED BALANCE SHEETS
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SEPTEMBER 30,
2022 |
DECEMBER 31,
2021 |
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| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ |
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$ |
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| Accounts Receivable, Net |
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| Inventory, Net |
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| Other Current Assets |
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| Total Current Assets |
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| Property and Equipment, Net |
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| Rental Equipment, Net |
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| Lease Right of Use Asset |
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| Other Assets |
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| Total Other Assets |
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| TOTAL ASSETS | $ |
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$ |
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| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ |
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$ |
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| Accrued Expenses |
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| Customer Deposits |
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| Joint Venture Liability |
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| Lines of Credit |
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| Notes Payable, Current Portion |
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| Lease Liability |
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| Total Current Liabilities |
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| Long-Term Liabilities | ||||||||
| Deferred Tax Liabilities, Net |
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| Notes Payable, Net of Current Portion |
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| Lease Liability, Net of Current Portion |
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| Total Long-Term Liabilities |
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| TOTAL LIABILITIES |
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| 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 and shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively. |
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| Additional Paid-In Capital |
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| Accumulated Deficit |
(
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) |
(
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| Total Stockholders’ Equity |
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| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ |
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$ |
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The accompanying notes are an integral part of these unaudited financial statements.
3
AMERAMEX INTERNATIONAL, INC.
UNAUDITED STATEMENTS OF OPERATIONS
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| REVENUES | ||||||||||||||||
| Sales of Equipment and Other Revenues | $ |
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$ |
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$ |
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$ |
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| Rentals and Leases |
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| Total Sales |
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| COST OF SALES | ||||||||||||||||
| Sales of Equipment and Other Revenues |
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| Rentals and Leases |
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| Total Cost of Sales |
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| GROSS PROFIT |
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| OPERATING EXPENSES | ||||||||||||||||
| Selling Expense |
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| General and Administrative |
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| Total Operating Expenses |
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| Profit from Operations |
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| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest Expense, net |
(
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) |
(
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(
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(
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| Loss from Early Extinguishment of Debt |
(
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(
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(
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(
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| Gain on Sale of Asset |
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| Other Income (Expense) |
(
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| Total Other Income (Expense) |
(
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(
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(
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(
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| INCOME BEFORE PROVISION for INCOME TAXES |
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| PROVISION for INCOME TAXES |
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| NET INCOME | $ |
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$ |
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$ |
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$ |
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| Weighted Average Shares Outstanding: | ||||||||||||||||
| Basic |
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| Diluted |
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| Earnings (loss) per Share | ||||||||||||||||
| Basic | $ |
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$ |
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$ |
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$ |
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| Diluted | $ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited financial statements.
4
AMERAMEX INTERNATIONAL, INC.
UNAUDITED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders’Equity/ | |||||||||||||||||
| Balance | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||
| December 31, 2020 |
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$ |
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$ |
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$ |
(
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) | $ |
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| Stock for Services |
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$ |
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$ |
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| Net Income | - |
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| September 30, 2021 |
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$ |
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$ |
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$ |
(
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) | $ |
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| December 31, 2021 |
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$ |
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$ |
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$ |
(
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) | $ |
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| Stock for Services |
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$ |
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$ |
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| Net Income | - |
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| September 30, 2022 |
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$ |
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$ |
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$ |
(
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) | $ |
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The accompanying notes are an integral part of these unaudited financial statements.
5
AMERAMEX INTERNATIONAL, INC.
UNAUDITED STATEMENTS OF CASH FLOW
| NINE MONTHS ENDED SEPTEMBER 30, | ||||||||
| 2022 | 2021 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net Income |
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| Adjustments to reconcile Net Income to Net Cash provided (used) by Operating Activities: | ||||||||
| Depreciation and Amortization |
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| Provision for Deferred Income Taxes |
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| Marketing Services Paid in Stock |
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| Loss on Early Extinguishment of Debt |
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| Amortization of Right of Use Asset |
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| Gain/Loss on Disposal |
(
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| Amortization and Accretion of Interest |
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| Change in Assets and Liabilities: | ||||||||
| Accounts Receivable |
(
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(
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| Inventory |
(
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) |
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| ROU Asset |
(
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| Other Current Assets |
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(
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| Accounts Payable |
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| Customer Deposits |
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| Accrued Expenses |
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| Lease Liability |
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| NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES |
(
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| INVESTING ACTIVITIES: | ||||||||
| Payments for Property & Equipment |
(
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(
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| Payments for Rental Equipment |
(
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(
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| Proceeds from Sale of Equipment |
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| NET CASH (USED) BY INVESTING ACTIVITIES |
(
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(
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| FINANCING ACTIVITIES: | ||||||||
| Proceeds from Notes Payable |
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| Payments on Notes Payable |
(
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(
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| Payment on Note Payable - Related Party |
(
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| Joint Venture Liability |
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(
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| Net Borrowing (Repayments) Under Lines of Credit |
(
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(
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| NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES |
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(
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| NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS |
(
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| Cash and Cash Equivalents, BEGINNING OF PERIOD |
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| Cash and Cash Equivalents, END OF PERIOD |
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| CASH PAID FOR: | ||||||||
| Interest |
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| Income Taxes |
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| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Transfer of Inventory to Rental Equipment |
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| Equipment Financed under Capital Leases |
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| Transfer of Rental Equipment to Inventory |
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The accompanying notes are an integral part of these unaudited financial statements.
6
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
September 30, 2022
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
September 30, 2022, 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 any new credit facility it obtains, 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 in a number of ways, the worst of which was felt in 2020. The Company had several large transactions that were put on hold until the State of California completely reopened. In addition, the Company had all sales, administrative and account employees working from home. Shop employees were practicing social distancing and only one customer was allowed in the facility at a time. Most directly, a number of states and local governments had taken steps that 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, had impeded and continue to impede equipment sales. 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.
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.
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.
7
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
September 30, 2022
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 nine-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, 2021 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 and estimated useful life of property and equipment.
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, 2021 for smaller reporting companies, and interim periods within those years, with early adoption permitted. The Company adopted this new standard on January 1, 2022. 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.
On January 1, 2022, the Company adopted Accounting Standards Update No. 2016-02, Lease (topic 842)(ASU 2016-02) which establishes ASC 842 and supersedes the lease accounting guidance under ASC 840. The standard generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet
8
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
September 30, 2022
and provide enhanced disclosers on the amount, timing and uncertainty of cash flows arising from lease arrangements. The Company adopted ASC 842 using the modified retrospective approach. The Company elected the package of practical expedients available for existing contracts, which allowed the Company to carry forward our historical assessments of lease identification, lease classification and initial direct costs. The Company also elected a policy to not apply the recognition requirements of ASC 842 for short-term leases with a term of 12 months or less.
As of January 1, 2022, the effective date, the Company identified one operating lease arrangement relating to the Company’s headquarter facility. The adoption of ASC 842 resulted in a recognition of an ROU asset and lease liability on the Company’s balance sheet relating to the leases as of January 1, 2022. The adoption of the standard did not have a material effect on the Company’s statements of operations and statements of cash flows.
Note 3 – Inventory
Inventory as of September 30, 2022 and December 31, 2021 consisted of the following:
|
September 30,
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December 31,
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| Parts and supplies | $ |
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$ |
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| Heavy equipment |
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| Total | $ |
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$ |
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All of the inventory is used as collateral for the lines of credit and notes payable (see Notes 6 and 8).
Note 4 – Property and Equipment
Property and equipment includes assets held for internal use; as of September 30, 2022 and December 31, 2021, such property and equipment consisted of the following:
|
September 30,
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December 31,
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| Furniture and fixtures | $ |
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$ |
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| Leasehold improvements |
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| Vehicles and Equipment |
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| Total, at cost |
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| Less - Accumulated depreciation |
(
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) |
(
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) | ||||
| Total, Net | $ |
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$ |
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Depreciation
expense for the three and nine months ended September 30, 2022 and 2021 was $
All 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 September 30, 2022 and December 31, 2021 consisted of the following:
|
September 30,
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December 31,
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| Rental equipment | $ |
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$ |
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| Less - Accumulated depreciation |
(
|
) |
(
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) | ||||
| Total, Net | $ |
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$ |
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Depreciation
expense for the three and nine months ended September 30, 2022 and 2021 was $
All the rental equipment 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
September 30, 2022
Note 6 – Lines of Credit
On
April 12, 2022 the limit on our equipment flooring plan line of credit with a finance company which previously provided for
borrowing up to $
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 $
On
January 28, 2022, the Company entered into a line of credit (flooring plan) with a finance company that provides for borrowing up to
$
Note 7 – Related-Party Transactions
Related-Party Note Payable
The
Company had a note payable to the Company’s Chief Executive Officer, which was fully repaid in 2021. The note was interest bearing
at
Lease
The
Company leases a building and real property in Chico, California under a lease agreement renewing annually every March from a trust whose
trustee is the Company’s Chief Executive Officer. The overall term of the lease is ten (10) years. The lease provided for monthly
lease payments of $
The
operating lease liabilities of $
10
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
September 30, 2022
At September 30, 2022, the future undiscounted minimum lease payments under the noncancellable leases are as follows:
| For the three-month period ending December 31, 2022 | $ |
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| Year ending December 31, 2023 |
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| Year ending December 31, 2024 |
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| Year ending December 31, 2025 |
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| Year ending December 31, 2026 |
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| Thereafter |
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| Total undiscounted finance lease payments | $ |
|
||
| Less: Imputed interest |
(
|
) | ||
| Present value of finance lease liabilities |
|
Transactions with Director
Two
separate customers lost financing for purchases of equipment after delivery, 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 and the Company is purchasing
the machines from the brokerage. The Company has two notes payable tied to these transactions that, at September 30, 2022 and December
31, 2021, have a combined total due of $
Note 8 – Notes Payable
Notes
payable as of September 30, 2022 and December 31, 2021 consisted of the following:
|
September 30,
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December 31,
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| Payable to insurance company; secured by cash surrender value of life insurance policy; no due date | $ |
|
$ |
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| Notes Payable to various finance companies with varying start dates and interest rates; Interest rates on September 30, 2022 and December 31, 2021, were a 7% weighted average. As of September 30, 2022 notes maturing from December 25, 2022 to September 24, 2050 have combined monthly payments of $98,977; secured by equipment and stock. |
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| Total |
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| Less Current Portion |
(
|
) |
(
|
) | ||||
| Long Term Portion | $ |
|
$ |
|
||||
Interest
expense for all notes payable for the three and nine months ended September 30, 2022 and 2021 was $
Note 9 – 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, Washington for $
11
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
September 30, 2022
Note 10 – 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.
[ See Note 7 for operating lease with related party. ]
Note 11 – 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 zero shares are issued and outstanding as of September 30, 2022 and December 31, 2021.
The Company has authorized shares of $ par value common stock, of which were issued and outstanding as of September 30, 2022 and were issued and outstanding as of December 31, 2021.
The Company issued fully vested shares of the Company’s Common Stoc k as payment for marketing services.
12
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.
Recent Developments Related to the COVID-19 Outbreak
All of the disclosures set forth in this Item 2 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. 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.)
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.
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Results of Operations
| Three Months Ended | Nine Months Ended | |||||||||||||||
|
September 30,
2022 |
September 30,
2021 |
September 30,
2022 |
September 30,
2021 |
|||||||||||||
| REVENUES | ||||||||||||||||
| Sales of Equipment and Other Revenues | $ | 7,303,783 | $ | 7,591,527 | $ | 13,904,722 | $ | 16,494,253 | ||||||||
| Rentals and Leases | 180,957 | 588,746 | 910,172 | 2,015,667 | ||||||||||||
| Total Revenues | 7,484,740 | 8,180,273 | 14,814,894 | 18,509,920 | ||||||||||||
| COST OF REVENUES | ||||||||||||||||
| Sales of Equipment and Other Revenues | 4,845,129 | 7,169,018 | 10,197,658 | 14,922,284 | ||||||||||||
| Rentals and Leases | 108,081 | 195,994 | 415,805 | 630,240 | ||||||||||||
| Total Cost of Revenues | 4,953,210 | 7,365,012 | 10,613,463 | 15,552,524 | ||||||||||||
| GROSS PROFIT | 2,531,530 | 815,261 | 4,201,431 | 2,957,396 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling Expense | 441,216 | 203,100 | 994,721 | 627,021 | ||||||||||||
| General and Administrative | 385,505 | 269,029 | 989,114 | 743,259 | ||||||||||||
| Total Operating Expenses | 827,721 | 472,129 | 1,983,835 | 1,370,280 | ||||||||||||
| INCOME FROM OPERATIONS | 1,703,809 | 343,132 | 2,217,596 | 1,587,116 | ||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest Expense, net | (275,793 | ) | (208,967 | ) | (549,924 | ) | (743,999 | ) | ||||||||
| Loss from Early Extinguishment of Debt | (18,021 | ) | (20,373 | ) | (33,366 | ) | (110,551 | ) | ||||||||
| Gain on Sale of Assets |
215,625 |
- |
215,625 |
- | ||||||||||||
| Other Income | (174,292 | ) | 3,500 | 175,842 | 14,342 | |||||||||||
| Total Other Income (Expense) | (252,481 | ) | (225,840 | ) | (191,823 | ) | (840,208 | ) | ||||||||
|
PROFIT BEFORE PROVISION FOR INCOME TAXES |
1,451,328 | 117,292 | 2,025,773 | 746,908 | ||||||||||||
| PROVISION FOR INCOME TAXES | 522,478 | 34,601 | 598,264 | 220,338 | ||||||||||||
| NET PROFIT | $ | 928,850 | $ | 82,691 | $ | 1,427,509 | $ | 526,570 | ||||||||
Revenue
Revenue for the nine months ended September 30, 2022 was $14,814,894 compared to $18,509,920 for the same time during 2021, a 20% decrease. Sales of Equipment and Other Revenues for the nine months ended September 30, 2022 was $14,814,894 and made up 94% of our Total Revenues. For the nine months ended September 30, 2021, Sales of Equipment and Other Revenues made up $16,494,253, or 89% of Total Revenues. The remaining portion of Total Revenues, Rentals and Leases, for the respective periods were $910,172, or 6%, in 2022 and $2,015,667 or 11% in 2021. The 16% decrease in Sales of Equipment and Other Revenues year over year is due to continuing delays the company experienced shipping machines to customers. While the delays were not as significant as they were in the second quarter they are still primarily due to back-ordered parts, interstate trucking delays and lack of availability of third-party shippers. Rentals and Leases revenue decreased by 55% year over year as the long-standing government rental contract came to an end. The rental contract has been renewed with new equipment purchases to meet the needs of the contract. The rentals will start to be delivered in the 4 th quarter of 2022 and we will see the Rentals and Leases revenue reflecting that income in the first quarter of 2023.
Revenue for the three months ended September 30, 2022 was $7,484,740 compared to $8,180,273 for the same time during 2021, this is a 9% decrease. Had all of the equipment shipped as planned, as noted above, the Sales of Equipment and Other Revenues would have been $8,289,783, $698,256 more than the same time in 2021. Rentals and Leases were down 69% for the same period year over year.
Cost of Revenue
Costs of Revenue for the nine months ending September 30, 2022 were $10,613,463 compared to $15,552,524, a decrease of 32%. Costs of Revenue for the three months ending September 30, 2022 were $4,953,210 compared to $7,365,012, a 33% decrease. The price of used equipment has been increasing since the beginning of 2021 and was noticeably higher during the first and second quarter of 2022; however, these decreases are directly tied to the continuing sells of equipment purchased years ago at much lower prices.
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Operating Expenses
Operating expenses increased by $613,555 during the nine months ending September 30, 2022 compared to the nine months ending September 30, 2021. The operating expenses increase by $355,592 during the third quarter of 2022 compared to the same time in 2021. The 45% increase for the first nine months of 2022 is due to the Company paying higher wages to stay competitive in a highly volatile job market and the higher costs spent on marketing our equipment.
Interest Expense
The nine months ending September 30, 2022 compared to the nine months ending September 30, 2021 shows a reduction in interest expense from $743,999 to $549,924. This 26% reduction is due to the Company’s continuing efforts to pay off debt.
Operating Results
The Company had a net profit of $1,427,509 for the nine months ending September 30, 2022 as compared to net profit of $526,570 for the nine months ending September 30,2021. The 171% increase in profit is tied to the liquidation of old inventory purchased at significantly lower prices than the current trend. This created a much higher profit margin than the same quarter last year when the Company sold a higher percentage of new equipment. The third quarter of 2022 reflects the continuing trend of easy financing terms for customers to purchase equipment offset by higher input costs and rising operational costs.
Liquidity
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 available credit facilities, 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 Policies
The SEC 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 SEC 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 that fact, we do not believe that we 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, we are not required to provide information required by this Item.
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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 Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2022, 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.
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 September 30, 2022. 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.
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As a result of this assessment, we have determined that our internal control over financial reporting was effective as of March 31, 2022.
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 September 30, 2022. 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 September 30, 2022 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, 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: November 18, 2022 | By: /s/ Lee Hamre | ||
|
Lee Hamre Chief Executive Officer |
|||
| Date: November 18, 2022 | By: /s/ Hope Stone | ||
|
Hope Stone Chief Financial Officer |
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