UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K


(Mark One)





[X]
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2010





[  ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from_________ to __________





Commission file number: 000-52051











THE MINT LEASING, INC.


(Exact name of small business issuer as specified in its charter)





NEVADA
87-0579824(State or other jurisdiction of

incorporation or organization)
(IRS Employer Identification

No.)





323 N. Loop West, Houston, Texas, 77008


(Address of principal executive offices)





(713) 665-2000


(Registrant's telephone number)





Securities registered under Section 12(b) of the Exchange Act:





NONE





Securities registered under Section 12(g) of the Exchange Act:





Common Stock, $.001 par value per share


(Title of Class)








Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [  ]  No [X]





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes [  ] No [X]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No  [  ]





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





Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]





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





Large accelerated filer  [ ]
Accelerated filer[ ]Non-accelerated filer   [ ]
Smaller reporting company  [X]


(Do not check if a smaller reporting company)





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X].





The issuer's revenues for the most recent fiscal year ended December 31, 2010 were $11,872,424.





The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing value of the Registrant's common stock on June 30, 2010, was approximately $266,475.





As of April 8, 2011, the issuer had 82,224,504 shares of common stock, $0.001 par value per share outstanding.





Documents Incorporated by Reference: NONE





Transitional Small Business Disclosure Format: Yes [   ] No [X]








THE MINT LEASING, INC.


FORM 10-K


YEAR ENDED DECEMBER 31, 2010


INDEX





Part I





PageItem 1. Business
4Item 1A. Risk Factors
9Item 2. Properties
13Item 3. Legal Proceedings
13Item 4. (Removed and Reserved)
13





Part II





Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
14Item 6. Selected Financial Data
15Item 7. Management's Discussion and Analysis or Plan of Operation
16Item 8. Financial Statements and Supplementary Data
F-1Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
22Item 9A. Controls and Procedures
22Item 9B. Other Information
23





Part III





Item 10. Directors, Executive Officers and Corporate Governance
24Item 11. Executive Compensation
27Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
29Item 13. Certain Relationships and Related Transactions
30Item 14. Principal Accountant Fees and Services
30





Part IV





Item 15. Exhibits, Financial Statement Schedules
31








PART I




ITEM 1. BUSINESS


FORWARD-LOOKING STATEMENTS





Portions of this Form 10-K, including disclosure under “Management’s Discussion and Analysis or Plan of Operation,” contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as may, will, should, expect, anticipate, estimate, believe, intend, contemplate or project. Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, among others,





·
our ability to raise capital,·
our ability to provide our products and services at competitive rates,·
our ability to execute our business strategy in a very competitive environment,·
our degree of financial  leverage,·
risks associated with our acquiring and integrating companies into our own,·
risks related to market acceptance and demand for our services,·
the impact of competitive services, and·
other risks referenced from time to time in our SEC filings.





With respect to any forward-looking statement that includes a statement of its underlying assumptions, we caution that, while we believe such assumptions to be reasonable and have formed them in good faith, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results can be material depending on the circumstances. When, in any forward-looking statement, we or our management express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by applicable law, including the securities laws of the United States and/or if the existing disclosure fundamentally or materially changes, we do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.





INDUSTRY DATA





In this Form 10-K, we may rely on and refer to information regarding the automobile industry from market research reports, analyst reports and other publicly available information.  Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified any of it.





Corporate History





The Mint Leasing, Inc. (the “Company,” “Mint,” "Mint Leasing", “we,” “Mint Nevada,” and “us”) was incorporated in Nevada on September 23, 1997 as Legacy Communications Corporation.





Effective July 18, 2008, The Mint Leasing, Inc., a Texas corporation, which was incorporated on May 19, 1999, and commenced operations on that date (“Mint Texas”), a privately-held company, completed the Plan and Agreement of Merger between itself and the Company (for the purposes of this paragraph, “Mint Nevada”), and the two shareholders of Mint Texas, pursuant to which Mint Nevada acquired all of the issued and outstanding shares of capital stock of Mint Texas.   In connection with the acquisition of Mint Texas, Mint Nevada issued 70,650,000 shares of common stock, and 2,000,000 shares of Series B Convertible Preferred stock to the selling stockholders and owners of Mint Texas.   Additionally, the Company granted stock options to purchase 2,000,000 shares of common stock to Mr. Parish.  The exercise price of the options is $3.00 per share, and the options expire in 2018.  One-third of the options vest to Mr. Parish on the first, second and third anniversary of the grant date (July 28, 2008).  Consummation of the merger did not require a vote of the Mint Nevada shareholders.  As a result of the acquisition, the shareholders of Mint Texas own a majority of the voting stock of Mint Nevada as described below, Mint Texas is a wholly-owned subsidiary of Mint Nevada, and the Company (Mint Nevada) changed its name to The Mint Leasing, Inc. No prior material relationship existed between the selling shareholders and Mint Nevada, any of its affiliates, or any of its directors or officers, or any associate of any of its officers or directors.  Effective on July 18, 2008, our former operations as a developer and purchaser of radio stations ceased and since that date our operations have solely been the operations of Mint Texas, our wholly-owned subsidiary.





-4-


Unless otherwise stated, or the context suggests otherwise, the description of the Company’s business operations below includes the operations of Mint Texas, the Company’s wholly-owned subsidiary.





The board of directors approved a one-for-twenty reverse stock split (the “Reverse Stock Split”) with respect to shares of common stock outstanding as of July 16, 2008. Unless otherwise stated, all share amounts listed herein retroactively reflect the Reverse Stock Split.





As set forth in the Company’s Information Statement on Schedule 14C dated June 26, 2008, the Company adopted the Second Amended and Restated Articles of Incorporation and Amended Bylaws as of July 18, 2008.  The Company further amended the Second Amended and Restated Articles of Incorporation on July 18, 2008 to change the Company’s name from Legacy Communications Corporation to The Mint Leasing, Inc., effective as of July 21, 2008.





Effective in July 2008, the Company designated Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, as described in greater detail below.
 
 On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011, and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").





The Modification and March 2011 Modification also modified and amended our required borrowing base and minimum net worth requirements under the Renewal, which factor into whether we are in compliance with the terms and conditions of and/or in default of the terms of the Renewal.





The outstanding amount of the Renewal at the time of the parties’ entry into the Modification was $23,704,253, and the Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $110,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning December 10, 2010 and continuing until February 10, 2011 (we had previously been making monthly installment payments of $110,000 beginning in July 2010), with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on March 10, 2011 (previously the full amount of the Renewal as modified by the first Modification Agreement, was due and payable on November 10, 2010).





The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all proceeds from the sale of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.





The Modification and March 2011 Modification did not otherwise amend or modify the terms of the Renewal, which evidences a Secured Note Payable (the "Note Payable"), which includes an annual interest rate of prime rate plus 2%, subject to a floor of 6%.  The repayment of the credit facility is secured by a security interest over substantially all of our assets and leases, and the personal guaranty of our Chief Executive Officer and sole Director, Jerry Parish.





The credit facility also requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness in addition to those requirements added to the credit facility in connection with the Modification and March 2011 Modification as provided above, including covenants requiring that our statements, representations and warranties made in the credit facility and related documents are correct and accurate; and that Jerry Parish, our Chief Executive Officer and sole Director cannot fail to own less than 50% of the ownership of the Company.





-5-


At December 31, 2010, the outstanding balance on the Note Payable was $23,015,463. Under the terms of the renewals of the Note Payable, the Company has been and will continue to be unable to borrow any new funds under the credit facilities during 2011, 2010 and 2009.





Our credit facility with Sterling Bank requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: our statements, representations and warranties made in the credit facility and related documents are correct and accurate; if Jerry Parish, our Chief Executive Officer and sole Director fails to own at least 50% of the ownership of the Company; the death of either of the guarantors of the credit facility, Jerry Parish or Victor Garcia; the termination of the employment of Mr. Parish; or the transfer of any ownership interest of Mint Texas without the approval of Sterling Bank.  At December 31, 2010, the Company was not in compliance with all debt covenants under the credit facility with Sterling Bank; however such failure to remain in compliance was waived by Sterling Bank pursuant to the March 2011 Modification, described above.





Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one at December 31, 2009, which the Company was not in compliance with. The outstanding balance at December 31, 2009 was $1,679,319 and subsequent to December 31, 2009, Moody advanced an additional $820,681; increasing the outstanding balance to $2,500,000.  On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. At December 31, 2010, the outstanding balance on the Revolver was $2,279,434.  Additionally, at December 31, 2010, we were not in compliance with certain of the covenants required by the Revolver, which failure was waived by Moody Bank pursuant to the Third Renewal, described below.  Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012.





Description of Business





Mint Leasing is a company in the business of leasing automobiles and fleet vehicles throughout the United States. Mint Leasing has partnerships with more than 500 dealerships within 17 states. However, most of its customers are located in Texas and six other states in the Southeast, with the majority of the leases originated in 2009 and 2010 with customers in the state of Texas.  The credit analysts at Mint Leasing review every deal individually, refusing to depend on a target “beacon score” to determine authorization for each deal and instead relying on a common-sense approach for deal approval.





Lease transactions are solicited and administered by the Company’s sales force and staff. Mint’s customers are directed to the Company by brand-name automobile dealers that seek to provide leasing options to their customers, many of whom would otherwise not have the opportunity to acquire a new or late-model-year vehicle.  The Company’s sales are principally accomplished through the Company’s sales force, which includes seven full-time employees.  The Company’s primary marketing and sales strategy is to market to automobile dealers that have established a history of directing customers to the Company.





Industry Segment





With the average cost of new cars rising annually, it is becoming increasingly vital for consumers to understand the alternative financing options at their disposal. This is one of the core missions of Mint Leasing – to educate the average consumer about financing alternatives. It is imperative that consumers understand that by choosing to lease the vehicle, rather than purchase, they may reduce their risk and save money. Mint Leasing believes it provides consumers with the best of both worlds – the ability to drive their dream car, without having to spend more than they can afford. With car and housing prices at all time highs over the past decade; the auto leasing industry has increased in popularity.





Mint Leasing maintains two significant, distinct client sectors – (1) The Franchise Dealer and (2) The Individual Consumer.





-6-


The Franchise Dealer





The Chief Executive Officer and sole Director of Mint Leasing, Jerry Parish, has been a part of the automobile industry for most of his adult life. It is through his knowledge, reputation and expertise that Mint Leasing has forged hundreds of partnerships with dealers across the United States.





Mint Leasing maintains these relationships with dealerships based on the Company’s innovative lease structure. By partnering with Mint Leasing, dealers are provided the opportunity to attract consumers who would otherwise fail to meet their financing standards. We believe that this availability permits franchise dealers to increase their client base, move inventory, and reduce the risk of default, resulting in an increase in profit. In addition to these benefits, Mint Leasing provides a unique payment structure which we believe actually increases the dealer’s profit in the sale.  Upon verification of a consumer’s credit and execution of the lease, Mint Leasing will purchase the vehicle the consumer desires to lease directly from the dealer. The newly purchased vehicle, which is owned by Mint Leasing, is leased by Mint Leasing directly to the consumer as described in greater detail below.





We believe these benefits provide Franchise Dealers with an ideal partnership with Mint Leasing.





The Individual Consumer





While the Company’s primary customer is the Franchise Dealer, Mint Leasing’s financial relationship is with the consumer/lessee of the vehicle. The benefits of offering leasing alternatives are clear for the dealer – leasing provides yet another option for consumers looking to purchase (or lease) a new vehicle. The benefits to the consumer are less clear.





We believe that the choice to lease always provides one automatic benefit to the consumer – the lack of initial cash expenditure. With leasing there is normally a small amount of cash necessary to “close the deal”. At Mint Leasing, the necessity of a “down payment” is determined by the customer’s credit score. As with most terms, a Mint Leasing lease can be structured to meet the individual consumer’s needs. Also, the tax benefits of an auto lease may exceed those of a loan. With an auto loan, the buyer is typically required to pay the sales tax up front in a lump sum. However, with an auto lease the lessee is permitted to amortize the sales tax over the course of the lease, thereby reducing the up front costs.





Additionally, the availability of financing is critical to the sales of both used and new cars. Americans overwhelmingly choose to, or need to, finance the purchase of automobiles to cover the majority, if not all, of the sales price.





Role of Traditional Lending at a Dealership





Typically, auto financing is arranged through the dealer at the time of the car purchase. Most car dealers provide financing through a wide variety of banks, manufacturer finance subsidiaries and independent finance companies who lend to prime customers. The dealer is typically compensated by the financier through a fee based on the difference between the amount provided by the institution and the loan negotiated with the customer. In the case of high-risk and sub-prime sources, the dealer may, in fact, have to pay a discount in order to place the loan.





Expansion Opportunity – The Fleet Customer





In 2010, Mint Leasing began to actively seek out a new market segment – leasing to commercial customers who maintain small fleets of vehicles, particularly rental car franchise owners and large repair shop operations that rent cars to customers having work done at their shops.  We believe that there are several advantages to leasing to these customers, including that:


o
They are generally better credit risks than the individual consumer because the leased vehicles will be used to generate income to service the lease payments;


o
Lease payments are guaranteed by both the company and the owner individually;


o
Payments are set up via automatic debits; and


o
They lease several vehicles of similar make and model at one time, allowing Mint Leasing to negotiate better pricing from dealers.





While these customers may also be in a position to demand better terms, thus lowering the gross margin for Mint Leasing, we believe that the risk of default is minimal and the opportunity for cost savings significant.  Over the course of 2010, this market segment grew to over 21% of the total receivables for Mint Leasing.  The Company expects to continue to expand this segment over the coming year, while still maintaining its consumer business segment.





-7-


The Advantages of Mint Leasing





Mint Leasing offers a different approach to auto financing. Mint Leasing doesn’t rely on Finance Managers and salesmen to verify customers’ applications. Mint Leasing relies on their trained, experienced credit analysts to verify every transaction. Mint Leasing has entered into financial relationships with over 500 dealerships as a premier source for outside financing. Because the agreements with the dealerships have been pre-negotiated, Mint Leasing is able to quickly and efficiently respond to the dealerships and the individual customer’s immediate needs.





As a partner with the dealership, the finance manager/sales consultant at the dealership can enter the application information into the sales office computer while sitting beside the customer. The application is then instantly transmitted to Mint Leasing for approval. Approvals are displayed instantly, allowing the franchise dealer to quickly close the transaction.





Rather than rely on a weighted average credit score of the end customer, Mint Leasing chooses to apply a common sense approach to financing. While the customer’s credit score is taken into account, there is no minimum, or “beacon score” to determine approval. However, Mint Leasing does recognize the inherent risk in lending to non-prime or sub-prime borrowers.





Mint Leasing offers quality, affordable leasing to at-risk borrowers to provide customers with the freedom associated with a vehicle. Because of this mission, the Company employs a “reasonableness” test to determine the fitness of the transaction. Mint Leasing relies on the decades of experience within its staff to determine the character of the lease application. This standard ensures that every transaction is approved or disapproved by a person, and not a computer.





Independence





Mint Leasing maintains a relationship with every major automobile manufacturer. Because of this, Mint Leasing is able to retain an autonomous, independent relationship with its dealers and work directly with the finance department to provide fair leasing options.





Repossession Rate





The Mint Leasing repossession rate for 2010 and 2009 has been approximately 15% and 16% of total units out on lease, respectively, because of downturns in the economy in 2009 and early 2010 as the repossession rate spiked to approximately 20% during those time periods, but normally runs 12-15% of total units.





Marketing and Advertising:





The Company markets its leasing products through its partnerships with dealerships and representatives in such dealerships.  The Company also advertises its vehicles on Autotrader.com, ebay.com and on the radio. The Company’s advertising costs for the year ended December 31, 2010 totaled $10,586 and advertising costs for the year ended December 31, 2009 totaled $33,353.





Competition:





The automobile leasing industry is highly competitive. The Company currently competes with several larger competitors such as Americredit Corp. and Americas Car Mart. Although we believe that our services compare favorably to our competitors, the Company can make no assurance that it will be able to effectively compete with these other companies or that competitive pressures, including possible downward pressure on the prices we charge for our products and services, will not arise. In the event that the Company cannot effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures could have a material adverse effect on the Company’s business, results of operations and financial condition.





Dependence on One or a Few Major Customers:





Mint Leasing does not depend on a few major customers for its revenues.  As stated above, it has partnerships with over 500 dealerships and has over approximately 1,700 current leasing customers.





Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts





The Company maintains a website at www.mintleasing.com, which contains information the Company does not desire to be incorporated by reference into this report.  The Company also maintains a lessor license and a dealer license.





-8-


Number of Total Employees and Number of Full-Time Employees





The Company currently employs 17 full-time employees, of which 4 employees are in the Company’s sales department.





ITEM 1A. RISK FACTORS





Our securities are highly speculative and should only be purchased by persons who can afford to lose their entire investment in our Company. If any of the following risks actually occur, our business and financial results could be negatively affected to a significant extent. The Company's business is subject to many risk factors, including the following:





We Will Need To Obtain Additional Financing To Continue To Execute On Our Business Plan.





On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011 and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").





The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all proceeds from the sale of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.





The Note Payable also requires the Company to meet financial covenants related to tangible net worth and leverage. The Note Payable also requires the Company to meet negative covenants, including maximum allowable operating expenses associated with the servicing of the lease contracts securing the Note Payable.  At December 31, 2010, the outstanding balance on the Note Payable was $23,015,463. The Company has been and will continue to be unable to borrow any new funds under the credit facilities with Sterling Bank moving forward.





Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one at December 31, 2009, which the Company was not in compliance with. The Revolver matured on December 31, 2009 and was renewed for an additional 60 days. The outstanding balance at December 31, 2009 was $1,679,319 and subsequent to December 31, 2009, Moody advanced an additional $820,681; increasing the outstanding balance to $2,500,000.  On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. At December 31, 2010, the outstanding balance on the Revolver was $2,279,434.  Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012.





The availability of our credit facility and similar financing sources depends, in part, on factors outside of our control, including the availability of bank liquidity in general. The current disruptions in the capital markets have caused banks and other credit providers to restrict availability of new credit facilities and require more collateral and higher pricing upon renewal of existing credit facilities, if such facilities are renewed at all. Accordingly, as our existing credit facility matures, we may be required to provide more collateral in the form of finance receivables or cash to support borrowing levels which will affect our financial position, liquidity, and results of operations. In addition, higher pricing would increase our cost of funds and adversely affect our profitability.





-9-


The Company may not have sufficient funds on hand in September 2011 when the Sterling Bank credit facility matures to retire the debt. Accordingly, we will need to further extend the credit facility and/or seek alternative financing to repay such credit facility.  Additionally, in the future, we may need additional credit to support our operations, which credit may not be available from our current banking institutions.  We do not currently have any additional commitments of additional capital from third parties or from our officers, directors or majority shareholders. We can provide no assurance that additional financing will be available on favorable terms, if at all. If we choose to raise additional capital through the sale of debt or equity securities, such sales may cause substantial dilution to our existing shareholders.  If we are not able to raise the capital necessary to repay the line of credit, we may be forced to abandon or curtail our business plan, which may cause any investment in the Company to become worthless.





Our Credit Facility Requires Us To Observe Certain Covenants, And Our Failure To Satisfy Such Covenants Could Render Us Insolvent.





Our credit facilities require the Company to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: we make timely payments of principal and interest under the credit facilities; maintain certain financial ratios; Jerry Parish, our Chief Executive Officer and sole Director maintains at least 50% of the ownership of the Company, and that Jerry Parish continues to serve as the Chief Executive Officer of the Company.





Subject to notice and cure period requirements where they are provided for, any unwaived and uncured breach of the covenants applicable to our credit facilities could result in acceleration of the amounts owed and the cross-default and acceleration of indebtedness owing to other lenders, which default may cause the value of our securities to decline in value or become worthless.





We Rely Heavily On Jerry Parish, Our Chief Executive Officer and sole Director, And If He Were To Leave, We Could Face Substantial Costs In Securing A Similarly Qualified Officer and Director.





Our success depends in large part upon the personal efforts and abilities of Jerry Parish, our Chief Executive Officer and sole Director. Our ability to operate and implement our business plan and operations is heavily dependent on the continued service of Mr. Parish and our ability to attract and retain other qualified senior level employees.





We face continued competitionfor our employees, and may face competition for the services of Mr. Parish in the future. We currently have $1,000,000 of key man insurance on Mr. Parish.  We also have a three-year employment agreement with Mr. Parish which expires on July 10, 2011.  Mr. Parish is our driving force and is responsible for maintaining our relationships and operations. We cannot be certain that we will be able to retain Mr. Parish and/or attract and retain qualified employees in the future. The loss of Mr. Parish, and/or our inability to attract and retain qualified employees on an as-needed basis could have a material adverse effect on our business and operations.





Our Success In Executing On Our Business Plan Is Dependent Upon The Company’s Ability To Attract And Retain Qualified Personnel.





Our success depends heavily on the continued services of our executive management and employees.  Our employees are the nexus of our operational experience and customer relationships.  Our ability to manage business risk and satisfy the expectations of our customers, stockholders and other stakeholders is dependent upon the collective experience of our employees and executive management.  The loss or interruption of services provided by one or more of our executive management team could adversely affect our results of operations.  Additionally, the Company’s ability to successfully expand the business in the future will be directly impacted by its ability to hire and retain highly qualified personnel.





-10-


The Company Has Established Preferred Stock Which Can Be Designated By The Company’s Board Of Directors Without Shareholder Approval And Has Established Series A and Series B Preferred Stock, Which Gives The Holders Majority Voting Power Over The Company.





The Company has 20,000,000 shares of preferred stock authorized and 185,000 shares of Series A Convertible Preferred Stock and 2,000,000 shares of Series B Convertible Preferred Stock designated.  As of the filing date of this report, the Company has no Series A Convertible Preferred Stock shares issued and outstanding and 2,000,000 Series B Convertible Preferred Stock shares issued and outstanding, which shares are held by the Company’s Chief Executive Officer and sole Director, Jerry Parish.  The Company’s Series A Convertible Preferred Stock allows the holder to vote 200 votes each on shareholder matters and Series B Convertible Preferred Stock shares allow the holder to vote a number of voting shares equal to the total number of voting shares of the Company’s issued and outstanding stock as of any record date for any shareholder vote plus one additional share.  As a result, due to Mr. Parish’s ownership of the Series B Convertible Preferred Stock shares, he has majority control over the Company.  Mr. Parish also holds voting rights to approximately 48.1% of the Company’s outstanding common stock.





Additional shares of preferred stock of the Company may be issued from time to time in one or more series, each of which shall have distinctive designation or title as shall be determined by the Board of Directors of the Company (“Board of Directors”) prior to the issuance of any shares thereof. The preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the Board of Directors. Because the Board of Directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of the Company’s shareholders, shareholders of the Company will have no control over what designations and preferences the Company’s preferred stock will have. As a result of this, the Company’s shareholders may have less control over the designations and preferences of the preferred stock and as a result the operations of the Company.





Jerry Parish, Our Chief Executive Officer And sole Director, Can Exercise Voting Control Over Corporate Decisions.





Jerry Parish beneficially holds voting control over (a) 2,000,000 Series B Convertible Preferred Stock shares, which provide him the ability to vote the total number of outstanding shares of voting stock of the Company plus one vote, and (b) approximately 48.1% of the Company’s outstanding common stock; which in aggregate provides him voting control over approximately 74% of our total voting securities.  As a result, Mr. Parish will exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Parish may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other shareholders.





Our Quarterly and Annual Results Could Fluctuate Significantly.





The Company’s quarterly and annual operating results could fluctuate significantly due to a number of factors. These factors include:





·
access to additional capital in the form of debt or equity;


·
the number and range of values of the transactions that might be completed each quarter;·
fluctuations in the values of and number of our leases;


·
the timing of the recognition of gains and losses on such leases;·
the degree to which we encounter competition in our markets, and


·
other general economic conditions.





As a result of these factors, quarterly and annual results are not necessarily indicative of the Company’s performance in future quarters and future years.





A Prolonged Economic Slowdown Or A Lengthy Or Severe Recession Could Harm Our Operations, Particularly If It Results In A Higher Number Of Customer Defaults.





The risks associated with our business are more acute during periods of economic slowdown or recession, such as the one we are currently in, because these periods may be accompanied by loss of jobs as well as an increased rate of delinquencies and defaults on our outstanding leases. These periods may also be accompanied by decreased consumer demand for automobiles and declining values of automobiles, which weakens our collateral coverage with our financing source. Significant increases in the inventory of used automobiles during periods of economic recession may also depress the prices at which repossessed or resale automobiles may be sold or delay the timing of these sales. Additionally, higher gasoline prices, unstable real estate values, reset of adjustable rate mortgages to higher interest rates, increasing unemployment levels, general availability of consumer credit or other factors that impact consumer confidence or disposable income, could increase loss frequency and decrease consumer demand for automobiles as well as weaken collateral values on certain types of automobiles. If the current economic slowdown continues to worsen, our business could experience significant losses and we could be forced to curtail or abandon our business operations.





-11-


There Are Risks That We Will Not Be Able To Implement Our Business Strategy.





Our financial position, liquidity, and results of operations depend on our management’s ability to execute our business strategy. Key factors involved in the execution of the business strategy include achieving the desired leasing volume, the use of effective credit risk management techniques and strategies, implementation of effective lease servicing and collection practices, and access to significant funding and liquidity sources. Our failure or inability to execute any element of our business strategy could materially adversely affect our financial position, liquidity, and results of operations.





A substantial part of the Company’s Target Consumer Base Includes Customers Which Are Inherently at High Risk for Defaults and Delinquencies.





A substantial number of our leases involve at-risk customers, which do not meet traditional dealerships’ qualifications for leases.  While we take steps to reduce the risks associated with such customers, including post-verification of the information in their lease applications and requiring down-payments ranging up to thirty percent of the MSRP of the vehicles we lease, no assurance can be given that our methods for reducing risk will be effective in the future. In the event that we underestimate the default risk or under-price or under-secure leases we provide, our financial position, liquidity, and results of operations would be adversely affected, possibly to a material degree.  The Company believes that the expansion into the fleet leasing segment discussed above will help to reduce this risk over time.





The Company May Experience Write-Offs for Losses and Defaults, Which Could Adversely Affect Its Financial Condition And Operating Results.





It is common for the Company to recognize losses resulting from the inability of certain customers to pay lease costs and the insufficient realizable value of the collateral securing such leases. Additional losses will occur in the future and may occur at a rate greater than the Company has experienced to date.   If these losses were to occur in significant amounts, our financial position, liquidity, and results of operations would be adversely affected, possibly to a material degree.





We Incur Significant Costs As A Result Of Operating As A Fully Reporting Company In Connection With Section 404 Of The Sarbanes Oxley Act, And Our Management Is Required To Devote Substantial Time To Compliance Initiatives.





We anticipate incurring significant legal, accounting and other expenses in connection with our status as a fully reporting public company. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently implemented by the SEC have imposed various new requirements on public companies, including requiring changes in corporate governance practices. As such, our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure of controls and procedures. Our testing, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we identify deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.





There Is Currently Only A Limited Market For Our Common Stock, And The Market For Our Common Stock May Continue To Be Illiquid, Sporadic And Volatile.





There is currently only a limited market for our common stock, and as such, we anticipate that such market will be illiquid, sporadic and subject to wide fluctuations in response to several factors moving forward, including, but not limited to:





(1)
actual or anticipated variations in our results of operations;(2)
our ability or inability to generate new revenues;(3)
the number of shares in our public float;





-12-


(4)
increased competition; and(6)
conditions and trends in the market for automobiles and vehicle leasing.





Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. Additionally, at present, we have a limited number of shares in our public float, and as a result, there could be extreme fluctuations in the price of our common stock. Further, due to the limited volume of our shares which trade and our limited public float, we believe that our stock prices (bid, ask and closing prices) are entirely arbitrary, are not related to the actual value of the Company, and do not reflect the actual value of our common stock. Shareholders and potential investors in our common stock should exercise caution before making an investment in the Company, and should not rely on the publicly quoted or traded stock prices in determining our common stock value, but should instead determine the value of our common stock based on the information contained in the Company's public reports, industry information, and those business valuation methods commonly used to value private companies.





Investors May Face Significant Restrictions On The Resale Of Our Common Stock Due To Federal Regulations Of Penny Stocks.





Our common stock will be subject to the requirements of Rule 15(g)9, promulgated under the Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.





Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.





In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired.





ITEM 2. PROPERTIES





The Company leases approximately 6,000 square feet of office space from a limited liability corporation that is owned by the Company’s Chief Executive Officer and a significant shareholder, at the rate of $20,000 per month.  Beginning in September 2010, the Company and the lessor agreed to reduce the monthly rent to $15,000 per month for the balance of the lease term. The lease expires on July 31, 2011, subject to the Company's right to five additional one year extensions.  Any extensions under the lease shall be at a monthly rental cost mutually agreeable by the parties.  The payment of the rental costs due under the lease is secured by a lien on all of the Company's goods and personal property located within the leased premises.





ITEM 3. LEGAL PROCEEDINGS





As a consumer leasing company, we may be subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of applicants. Some litigation against us could take the form of class action complaints by consumers. Through our partnership with various automobile dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages.





From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.





ITEM 4. (REMOVED AND RESERVED)





-13-





PART II





ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





Market Information and Holders





The common stock of The Mint Leasing, Inc. commenced trading on the OTC Bulletin Board under the symbol “LGCC” on August 14, 2006.  Effective July 21, 2008, we changed our name and the trading symbol became “MLES”. On February 23, 2011, we were automatically delisted from the OTC Bulletin Board due to the fact that no market maker quoted our common stock on the OTC Bulletin Board for a period of four or more days.  Our common stock currently trades on the OTCQB market under the symbol "MLES". We may take steps to re-quote our common stock on the OTC Bulletin Board in the future. The following table sets forth the high and low trading prices of one (1) share of our common stock for each fiscal quarter over the past two fiscal years. The quotations provided are for the over the counter market, which reflect interdealer prices without retail mark-up, mark-down or commissions, and may not represent actual transactions.  The values listed below retroactively reflect our 1:20 reverse stock split which was effective as of July 18, 2008.





QUARTER ENDED

HIGH


LOWDecember 31, 2010

$
0.09


$
0.05September 30, 2010

$
0.10


$
0.05June 30, 2010

$
0.19


$
0.03March 31, 2010

$
0.50


$
0.10December 31, 2009

$
0.30


$
0.11September 30, 2009

$
0.89


$
0.03June 30, 2009

$
0.90


$
0.03March 31, 2009

$
1.05


$
0.03





As of April 8, 2011, we had 82,224,504 shares of common stock issued and outstanding held by approximately 59 shareholders of record, no shares of Series A Convertible Preferred Stock issued and outstanding and 2,000,000 shares of Series B Convertible Preferred Stock issued and outstanding.





Dividends





We have never declared or paid any cash dividends on our common stock, and we do not anticipate paying any dividends in the foreseeable future.  We intend to devote any earnings to fund the operations and the development of our business.





Common Stock





Holders of shares of common stock are entitled to one vote per share on each matter submitted to a vote of shareholders. In the event of liquidation, holders of common stock are entitled to share pro rata in the distribution of assets remaining after payment of liabilities, if any. Holders of common stock have no cumulative voting rights, and, accordingly, the holders of a majority of the outstanding shares have the ability to elect all of the directors. Holders of common stock have no preemptive or other rights to subscribe for shares. Holders of common stock are entitled to such dividends as may be declared by the Board out of funds legally available therefore. The outstanding shares of common stock are validly issued, fully paid and non-assessable.





Series A Convertible Preferred Stock





The Company’s Series A Convertible Preferred Stock shares (the “Series A Stock”) allow the holder to vote a number of voting shares equal to two hundred shares for each share of Series A Stock held by such Series A Stock shareholder.  The Series A Stock has a liquidation preference over the shares of common stock issued and outstanding equal to the stated value of such shares, $1.00 per share multiplied by 12.5%.  The Series A Stock is convertible at the option of the holder into 200 shares of common stock for each share of Series A Stock issued and outstanding, provided that no conversion shall be allowed if the holder of such Series A Stock would own more than 4.99% of the Company’s common stock upon conversion.





No amendment to the Company’s Series A Stock shall be made while such Series A Stock is issued and outstanding to amend, alter or repeal the Articles of Incorporation or Bylaws of the Company to adversely effect the rights of the Series A Stock holders; authorize or issue any additional shares of preferred stock; or effect any reclassification of the Series A Stock unless a majority of the outstanding Series A Stock vote to approve such modification or amendment.





-14-


Series B Convertible Preferred Stock





The Company’s Series B Convertible Preferred Stock shares (the “Series B Stock”) allow the holder to vote a number of voting shares equal to the total number of voting shares of the Company issued and outstanding as of any record date for any shareholder vote plus one additional share.  The Series B Stock has a liquidation preference over the shares of common stock issued and outstanding.  The Series B Stock is convertible at the option of the holder with 61 days notice to the Company into 10 shares of common stock for each share of Series B Stock issued and outstanding, which conversion rate may be increased by the Company’s Board of Directors from time to time as provided in the Series B Stock designation.





No amendment to the Company’s Series B Stock shall be made while such Series B Stock is issued and outstanding to amend, alter or repeal the Articles of Incorporation or Bylaws of the Company to adversely effect the rights of the Series B Stock holders; authorize or issue any additional shares of preferred stock; or effect any reclassification of the Series B Stock unless a majority of the outstanding Series B Stock vote to approve such modification or amendment.





EQUITY COMPENSATION PLAN INFORMATION





On June 26, 2008, the Board of Directors adopted, and on July 18, 2008, the stockholders approved, the 2008 Directors, Officers, Employees and Consultants Stock Option, Stock Warrant and Stock Award Plan (the “Plan”).  Under the Plan, the Board of Directors (or a committee thereof) may grant options, warrants or restricted or unrestricted shares of the Company’s common stock or preferred stock to its Directors, officers, employees or consultants.





The following table provides information as of December 31, 2010 regarding compensation plans (including individual compensation arrangements) under which equity securities are authorized for issuance:





Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options,

warrants and rights

Number of securities available for future issuance under equity compensation plans (excluding those in first column)Equity compensation plans approved by the security holders

2,100,000(1)

$2.91

22,900,000Equity compensation plans not approved by the security holders

-

-

-Total

2,100,000(1)

$2.91

22,900,000





(1) Includes options to purchase 2,000,000 common shares of stock granted to Jerry Parish, the Company’s President and sole Director in July 2008 (a total of 1,333,334 of which have vested to date), in connection with his employment agreement with Mint Texas which was assumed by Mint Nevada on the closing date of the merger. The exercise price of the options is $3.00 per share and the options expire ten years after the grant date. One third of the options may be exercised respectively on the first, second and third anniversary of the grant date. The Company recorded the transaction as part of its recapitalization.  Also includes options to purchase 100,000 shares of common stock, which the Company granted to William Sklar, its then Chief Financial Officer in December 2008, for services rendered, which warrants expire on December 31, 2011.





UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





None.





ITEM 6. SELECTED FINANCIAL DATA





Not required.





-15-


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





Critical Accounting Policies





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect amounts reported in the accompanying consolidated financial statements and related footnotes.  These estimates and assumptions are evaluated on an on-going basis based on historical developments, market conditions, industry trends and other information the Company believes to be reasonable under the circumstances.  There can be no assurance that actual results will conform to the Company’s estimates and assumptions, and that reported results of operations will not be materially adversely affected by the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time.  The following policies are those the Company believes to be the most sensitive to estimates and judgments.





Principles of Consolidation





The consolidated financial statements of the Company include the accounts of The Mint Leasing, Inc., its wholly-owned Texas subsidiary, and all of its subsidiaries.  Inter-company accounts and transactions are eliminated in consolidation.





Use of Estimates


The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that 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 periods. Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for doubtful accounts and the estimated unguaranteed residual values on the lease receivable contracts.





Although Mint attempts to mitigate credit risk through the use of a variety of commercial credit reporting agencies when processing customer applications, failure of the customers to make scheduled payments under their automobile lease contracts could have a material impact on the allowance for doubtful accounts.





Realization of unguaranteed residual values depends on many factors, several of which are not within the Company's control, including general market conditions at the time of the original lease contract's expiration, whether there has been unusual wear and tear on, or use of, the vehicle, the cost of comparable new vehicles and the extent, if any, to which the vehicle has become technologically or economically obsolete during the lease contract term. These factors, among others, could have a material impact on the estimated unguaranteed residual values.





Revenue Recognition for Sales-type Leases





The Company’s customers typically finance vehicles over periods ranging from three to five years.  These financing agreements are classified as operating leases or sales-type leases as prescribed by the Financial Accounting Standards Board (the “FASB”) guidance for accounting for leases.  Revenues representing the capitalized costs of the vehicles are recognized as income upon inception of the leases. The portion of revenues representing the difference between the gross investment in the lease (the sum of the minimum lease payments and the guaranteed residual value) and the sum of the present value of the two components is recorded as unearned income and amortized over the lease term.





Cost of Revenues





Cost of Revenues comprises the vehicle acquisition costs for the vehicles to be leased to the Company’s customers, the costs associated with servicing the leasing portfolio and the direct costs of non-performing leases. Portfolio servicing costs include direct wages, bank service fees and premises costs.





Cash and Cash Equivalents





Investments in highly liquid securities with original maturities of 90 days or less are included in cash and cash equivalents.





Concentrations of Credit Risk





Financial instruments which potentially subject us to concentrations of credit risk are primarily cash equivalents and finance receivables. Our cash equivalents are placed through various major financial institutions.  Finance receivables represent contracts with consumers residing throughout the United States, with borrowers located in Texas, Arkansas, Mississippi, Alabama, Georgia, Tennessee and Florida. No other state accounted for more than 10% of managed finance receivables.  No single customer accounts for more than 10% of either revenues or outstanding receivables.





-16-


Allowance for Loan Losses





Provisions for losses on investments in sales-type leases are charged to operations in amounts sufficient to maintain the allowance for losses at a level considered adequate to cover probable credit losses inherent in our receivables related to sales-type leases.  The Company establishes the allowance for losses based on the determination of the amount of probable credit losses inherent in the financed receivables as of the reporting date.  The Company reviews charge-off experience factors, delinquency reports, historical collection rates, estimates of the value of the underlying collateral, economic trends, and other information in order to make the necessary judgments as to probable credit losses.  Assumptions regarding probable credit losses are reviewed periodically and may be impacted by actual performance of financed receivables and changes in any of the factors discussed above.





Charge-off Policy





The Company charges off accounts when the automobile is repossessed or voluntarily returned by the customer and legally available for disposition. The charge-off amount generally represents the difference between the net outstanding investment in the sales-type lease and the fair market value of the vehicle returned to inventory. The charge-off amount is included in cost of revenues on the accompanying statement of operations. Accounts in repossession that have been charged off have been removed from finance receivables and the related repossessed automobiles are included in Vehicle Inventory on the consolidated balance sheet pending sale.





Vehicle Inventory





Vehicle Inventory includes repossessed automobiles, as well as vehicles turned in at the conclusion of the lease.  Inventory of vehicles is stated at the lower of cost determined using the specific identification method, and market, determined by net proceeds from sale or the NADA book value.





Property and Equipment





Property and equipment are recorded at cost less accumulated depreciation. Depreciation and amortization on property and equipment are determined using the straight-line method over the three to five year estimated useful lives of the assets.





Expenditures for additions, major renewal and betterments are capitalized, and expenditures for maintenance and repairs are charged against income as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income.





Stock-based Compensation





The Company accounts for stock-based compensation using the modified prospective application method in accordance with accounting guidance provided by the Financial Accounting Standards Board (the “FASB”). This method provides for the recognition of the fair value with respect to share-based compensation for shares subscribed for or granted on or after January 1, 2006, and all previously granted but unvested awards as of January 1, 2006. The cost is recognized over the period during which an employee is required to provide service in exchange for the options.





Income Taxes





Prior to July 18, 2008, the Company’s financial statements do not include a provision for Income Taxes because the taxable income of Mint is included in the Income Tax Returns of the stockholders under the Internal Revenue Service "S" Corporation elections.  As an “S” Corporation the Company was eligible to and did so elect to be taxed on a cash basis under the provisions of the Internal Revenue Service.





Upon completion of the July 18, 2008 transaction with Legacy as more fully described in Note 1 to the audited consolidated financial statements, Mint ceased to be treated as an "S" Corporation for Income Tax purposes, resulting in (1) the imposition of income tax at the corporate level instead of the shareholder level and (2) the inability to continue to elect to be taxed on a cash basis.





Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.





-17-


The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.





The Company’s significant accounting policies are more fully described in Note 2 to our consolidated financial statements.





PLAN OF OPERATIONS FOR THE NEXT TWELVE MONTHS





Throughout the remainder of fiscal 2010, we plan to continue investing to support our long-term growth initiatives. We plan to partner with new dealerships, enter new markets and further expand our presence in existing markets.





COMPARISON OF OPERATING RESULTS





RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2010, COMPARED TO THE YEAR ENDED DECEMBER 31, 2009





For the year ended December 31, 2010, total revenues were $10,473,342, compared to $16,996,135 for the year ended December 31, 2009, a decrease in total revenues of $6,522,793 or 38.4% from the prior period.  For the year ended December 31, 2010, revenues from sales-type leases, net, decreased $4,477,428 or 40.6% to $6,548,736 for the year ended December 31, 2010, from $11,026,164 for the year ended December 31, 2009.  Revenues from amortization of unearned income related to sales-type leases decreased $2,045,365 or 34.3% to $3,924,606 for the year ended December 31, 2010, from $5,969,971 for the year ended December 31, 2009.





The $4,477,428 decrease in revenues from sales-type leases, net, was primarily due to the Company’s limited ability to purchase vehicles and issue new leases as a result of the Company’s continued restricted borrowing capacity during the year ended December 31, 2010.  The Company was unable to borrow any funds under the Sterling Bank facility or the Moody Bank facility (described in greater detail below) during 2010. The Company believes that if it had access to additional capital during the year ended December 31, 2010, its revenues would have been similar to the Company’s revenues for the year ended December 31, 2009.





Cost of revenues decreased $7,800,166 or 43.5% to $10,113,672 for the year ended December 31, 2010, compared to $17,913,838 for the year ended December 31, 2009.  Cost of revenues decreased as a result of the lower costs incurred associated with early lease terminations and repossessions of vehicles for the year ended December 31, 2010, compared to the year ended December 31, 2009. The costs associated with early lease terminations and repossessions of vehicles decreased by $8,782,887 or 70.9%, to $3,597,273 for the year ended December 31, 2010, compared to $12,380,160 for the year ended December 31, 2009. This decrease in costs associated with early lease terminations and repossessions of vehicles is the result of the following factors:




·
An improved economy in 2010 versus 2009;


·
An increased focus on collections by management; and


·
The Company's focus on fleet transactions which are undertaken with businesses with higher credit ratings and have a lower rate of default than those of private individuals.





Cost of revenues associated with sales-type leases increased by $982,721 or 17.8% to $6,516,399 for the year ended December 31, 2010, compared to $5,533,678 for the year ended December 31, 2009. This increase in the cost of revenues associated with sales-type leases is a direct result of the increased focus in 2010 on fleet lease transactions which have significantly lower gross margins than do leases with individuals.





Gross profit increased $1,277,373 or 139.2% to a gross profit of $359,670 for the year ended December 31, 2010 compared to a gross loss of $917,703 for the year ended December 31, 2009.  Gross profit increased primarily due to the 70.9% decrease in cost of revenues associated with early lease terminations and repossessions of vehicles.





Gross profit as a percentage of revenues was a positive 3.4% for the year ended December 31, 2010 compared to negative 5.4% for the year ended December 31, 2009.  As stated above, the increases in the gross profit in actual dollars and as a percentage of revenues are primarily attributable to the 70.9% decrease in cost of revenues associated with early lease terminations and repossessions of vehicles. The gross profit margin achieved in 2010 on revenues generated from sales-type leases decreased in 2010 from 2009.   The negative impact on the overall gross margin in 2010 was entirely offset by the 70.9% decrease in expenses related to early termination of leases and repossessions of vehicles.





General and administrative expenses were $2,053,230 and $3,422,173, for the years ended December 31, 2010 and December 31, 2009, respectively, resulting in a decrease of $1,368,943 or 40% from the prior period.  The decrease in general and administrative expense was primarily the result of a continued focus by management to reduce overhead costs throughout 2010.





-18-


Other expense, consisting solely of interest expense, was $1,789,869 and $1,863,899 for the years ended December 31, 2010 and December 31, 2009, respectively.   The main reason for the $74,030 or 4% decrease in interest expense for the year ended December 31, 2010, compared to the year ended December 31, 2009, was due to lower outstanding debt balances for the year ended December 31, 2010, compared to the year ended December 31, 2009.





The Company had a benefit from income tax of $1,176,491 for the year ended December 31, 2010, compared to benefit from income tax of $2,183,947 for the year ended December 31, 2009. The benefit recorded in 2010 is $1,007,456, or 46.1%, lower than the benefit recorded in 2009.  This reduction in the income tax benefit period over period is the result of the Company’s loss before income taxes being $2,720,346 lower in 2010 than in 2009.





The Company had a net loss of $2,306,938 for the year ended December 31, 2010, compared to net loss of $4,019,828 for the year ended December 31, 2009, an improvement in net income of $1,712,890 or  42.6% from the prior period.  The decrease in net loss during 2010 was the cumulative effect of the 70.9% decrease in costs associated with early lease terminations and repossessions of vehicles; a 40% decrease in general and administrative expenses; and a 4% decrease in interest expense. These improvements in the operating results were partially offset by a 40.6% decrease in revenues from sales-type leases; the 34.3% decrease in revenues from the amortization of unearned income; and the 17.8% increase in cost of revenues associated with sales-type leases. The cumulative $2,720,346 positive impact on earnings of the items described above, was offset by the $1,007,456 decrease in the tax benefit for the year ended December 31, 2010, compared to the year ended December 31, 2009.





LIQUIDITY AND CAPITAL RESOURCES





We had total assets of $33,321,896 as of December 31, 2010, which included cash and cash equivalents of $253,748, investment in sales-type leases, net, of $30,626,592, vehicle inventory of $466,350, property and equipment, net, of $62,096, and a deferred tax asset of $1,913,110.





We had total liabilities as of December 31, 2010 of $27,272,060, which included $963,363 of accounts payable and accrued liabilities, $25,394,897 of amounts under our senior credit facilities and $913,800 payable to related parties.





On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company, entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011, and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").





The Modification and March 2011 Modification also modified and amended our required borrowing base and minimum net worth requirements under the Renewal, which factor into whether we are in compliance with the terms and conditions of and/or in default of the terms of the Renewal.





The outstanding amount of the Renewal at the time of the parties’ entry into the Modification was $23,704,253, and the Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $110,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning December 10, 2010 and continuing until February 10, 2011 (we had previously been making monthly installment payments of $110,000 beginning in July 2010), with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on March 10, 2011 (previously the full amount of the Renewal as modified by the first Modification Agreement, was due and payable on November 10, 2010).





The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all proceeds from the sale of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.





-19-


The Modification and March 2011 Modification did not otherwise amend or modify the terms of the Renewal, which evidences a Secured Note Payable (the "Note Payable"), which includes an annual interest rate of prime rate plus 2%, subject to a floor of 6%.  The repayment of the credit facility is secured by a security interest over substantially all of our assets and leases and, the personal guaranty of our Chief Executive Officer and sole Director, Jerry Parish.


The credit facility also requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness in addition to those requirements added to the credit facility in connection with the Modification and March 2011 Modification as provided above, including covenants requiring that our statements, representations and warranties made in the credit facility and related documents are correct and accurate; and that Jerry Parish, our Chief Executive Officer and sole Director cannot fail to own less than 50% of the ownership of the Company.





At December 31, 2010, the outstanding balance on the Note Payable was $23,015,463. Under the renewal terms of the Note Payable, the Company has been and will continue to be unable to borrow any new funds under the credit facilities during 2011, 2010 and 2009.





Our credit facility with Sterling Bank requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: our statements, representations and warranties made in the credit facility and related documents are correct and accurate; if Jerry Parish, our Chief Executive Officer and sole Director fails to own at least 50% of the ownership of the Company; the death of either of the guarantors of the credit facility, Jerry Parish or Victor Garcia; the termination of the employment of Mr. Parish; or the transfer of any ownership interest of Mint Texas without the approval of Sterling Bank.  At December 31, 2010, the Company was not in compliance with all debt covenants under the credit facility with Sterling Bank; however such failure to remain in compliance was waived by Sterling Bank pursuant to the March 2011 Modification, described above.





Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one at December 31, 2009, which the Company was not in compliance with. The outstanding balance at December 31, 2009 was $1,679,319 and subsequent to December 31, 2009, Moody advanced an additional $820,681; increasing the outstanding balance to $2,500,000.  On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. At December 31, 2010, the outstanding balance on the Revolver was $2,279,434. Additionally, at December 31, 2010, we were not in compliance with certain of the covenants required by the Revolver, which failure was waived by Moody Bank pursuant to the Third Renewal, described below.  Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012.





Additionally, Jerry Parish, the Company’s Chief Executive Officer and sole Director, and Victor Garcia, a significant shareholder of the Company and our former Director, jointly and severally agreed to guaranty the repayment of the Moody Loan pursuant to individual Guaranty Agreements entered into in favor of Moody in connection with the Moody Loan. The amount outstanding under the Moody Loan is secured by a security interest in any leases made with such funds and the underlying vehicles.





On June 5, 2010, the Company entered into an unsecured $100,000 note payable (“Note Payable”) with a third party to finance the purchase of vehicles for lease, which accrued interest at the rate of 15% per annum, payable monthly, was due on December 5, 2010, and was repaid during the year ended December 31, 2010.





The Company subsequently entered into another Note Payable with a third party in the amount of $100,000 in October 2010, which accrues interest at the rate of 12% per annum, payable monthly,and is due April 26, 2011. The Note Payables are secured by the personal guaranty of Jerry Parish. The outstanding balance at December 31, 2010 was $100,000.





-20-


The Company had notes and advances payable to Jerry Parish, Victor Garcia and an affiliate of $913,800 and $630,300 as of December 31, 2010 and December 31, 2009, respectively.  These notes and advances payable are non-interest bearing and subordinated to the credit facilities with the banks.  Accordingly, they have been classified as long term. The Company imputed interest on these note payables at a rate of 8.75% per year.  Interest expense of $37,943 and $38,088 was recorded as contributed capital for the years ended December 31, 2010 and 2009, respectively.





We generated $2,808,154 in cash from operating activities for the year ended December 31, 2010, which was mainly due from collections and reductions of net investment in sales-type leases of $5,928,883 and an increase in inventory of $299,340.  Non-cash charges for the period included the change in the allowance for doubtful accounts, depreciation, and imputed interest which were $126,213, $41,844, and $37,943, respectively, which also contributed positively to the cash provided by operating activities. Those items negatively impacting the cash provided by operations for the year ended December 31, 2010, were the net loss of $2,306,938, the deferred tax benefit of $1,176,491, and a decrease in accounts payable and accrued liabilities of $241,640.





We had no cash used in investing activities for the year ended December 31, 2010.





We had $3,785,999 of net cash used in financing activities for the year ended December 31, 2010, which was due to $5,090,180 of payments on notes payable and $215,00 of payments on related party notes, offset by $498,500 of shareholder loans, and $1,020,681 of new financing.





We believe that the Company has adequate cash flow being generated from its investment in sales-type leases and inventories to meet its financial obligations to the banks in an orderly manner, provided we are able to continue to renew the current credit facilities when they come due and the outstanding balances are amortized over a four to five year period.  The Company has historically been able to negotiate such renewals with its lenders.  However, there is no assurance that the Company will be able to negotiate such renewals in the future on terms that will be acceptable to the Company.





Currently we are exploring opportunities to increase the Company’s capital base through the sale of additional common or preferred stock and/or the issuance of debt. The sale in the future of additional equity or convertible debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that such financing will be available to the Company in amounts or on terms acceptable to us, or at all.










-21-


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





THE MINT LEASING, INC.


CONSOLIDATED FINANCIAL STATEMENTS





PAGEREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-2FINANCIAL STATEMENTSConsolidated Balance Sheets as of December 31, 2010 and 2009
F-3Consolidated Statements of Operations for the years ended December 31, 2010 and 2009
F-4Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2010 and 2009
F-5Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
F-6Notes to Consolidated Financial Statements
F-7
























F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the Board of Directors


The Mint Leasing, Inc.


Houston, Texas





We have audited the accompanying consolidated balance sheets of The Mint Leasing, Inc. (the “Company”) as of December 31, 2010 and 2009 and the related statements of operations, stockholders' equity and cash flows for the twelve month periods then ended.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.





We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Mint Leasing, Inc. as of December 31, 2010 and 2009 and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.








/s/ M&K CPAS, PLLC


www.mkacpas.com


Houston, Texas


April 15, 2011











F-2




The Mint Leasing, Inc.Consolidated Balance SheetsDecember 31, 2010 and 2009ASSETS

2010


2009Cash and cash equivalents

$
253,748


$
1,231,594Investment in sales-type leases, net


30,626,592



36,681,689Vehicle inventory


466,350



765,690Property and equipment, net


62,096



103,940Deferred tax asset


1,913,110



736,620Other assets


-



98,400TOTAL ASSETS

$
33,321,896


$
39,617,933LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIESAccounts payable and accrued liabilities

$
963,363


$
1,204,406Credit facilities


25,394,897



29,464,396Notes payable to related parties


913,800



630,300TOTAL LIABILITIES


27,272,060



31,299,102STOCKHOLDERS' EQUITYPreferred stock Series A,  18,000,000 shares authorized at $0.001 par  value, 0 and 0 shares outstanding, respectively


-



-Preferred stock Series B,  2,000,000 shares authorized at $0.001 par value, 2,000,000 and 0 shares outstanding, respectively


2,000



2,000Common stock, 480,000,000 shares authorized at $0.001 par value, 82,224,504 and 82,224,504 shares issued and outstanding, respectively


82,225



82,225Additional paid in capital


9,357,016



9,319,073Retained (deficit)


(3,391,405
)


(1,084,467
)TOTAL STOCKHOLDERS’ EQUITY


6,049,836



8,318,831TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
33,321,896


$
39,617,933





See accompanying notes to the consolidated financial statements





F-3





The Mint Leasing, Inc.Consolidated Statements of Operations

For the Years Ended December 31, 2010 and 20092010


2009REVENUESSales-type leases, net

$
6,548,736


$
11,026,164Amortization of unearned income related to sales-type leases


3,924,606



5,969,971Total Revenues


10,473,342



16,996,135COST OF REVENUESCost of sales-type leases


6,516,399



5,533,678Repossession and cancelled lease expense


3,597,273



12,380,160Total Cost of Revenues


10,113,672



17,913,838GROSS PROFIT (LOSS)


359,670



(917,703)GENERAL AND ADMINISTRATIVE EXPENSE


2,053,230



3,422,173(LOSS) BEFORE OTHER (EXPENSE) FROM CONTINUING OPERATIONS


(1,693,560)



(4,339,876)OTHER (EXPENSE)Interest expense


(1,789,869)



(1,863,899)Total Other (Expense)


(1,789,869)



(1,863,899)(LOSS) BEFORE TAX


(3,483,429)



(6,203,775)Income Tax (Benefit)


(1,176,491)



(2,183,947)NET (LOSS)

$
(2,306,938)


$
(4,019,828)Basic average shares outstanding


82,224,504



81,933,353Basic Earnings Per Share

$
(0.03
)

$
(0.05
)





See accompanying notes to the consolidated financial statements





F-4




The Mint Leasing, Inc.Consolidated Statements of Stockholders’ EquityFor the Years Ended December 31, 2010 and 2009Additional


Retained


TotalPreferred Series A


Preferred Series B


Common Stock


Paid In


Earnings


Stockholders'Description

Number


Dollar


Number


Dollar


Number


Dollar


Capital


(Deficit)


Equity-


$
-



2,000,000


$
2,000



81,929,504


$
81,930


$
9,217,680


$
2,935,361


$
12,236,971Balance, December 31, 2008Imputed interest on related party Notes


-



-



-



-



-



-



38,088



-



38,088Cancelled shares


-



-



-



-



(5,000
)


(5
)


5



-



-Warrants issued


-



-



-



-



-



-



12,600



-



12,600Common stock based compensation


-



-



-



-



300,000



300



50,700



-



51,000Net loss for the year ended December 31, 2009


-



-



-



-



-



-



-



(4,019,828
)


(4,019,828
)Balance, December 31, 2009


-


$
-



2,000,000


$
2,000



82,224,504


$
82,225


$
9,319,073


$
(1,084,467
)

$
8,318,831Imputed interest on related party Notes


-



-



-



-



-



-



37,943



-



37,943Net loss for the year ended December 31, 2010


-



-



-



-



-



-



-



(2,306,938
)


(2,306,938
)-


$
-



2,000,000


$
2,000



82,224,504


$
82,225


$
9,357,016


$
(3,391,405
)

$
(6,049,836
)See accompanying notes to the consolidated financial statements





F-5


The Mint Leasing, Inc.


Consolidated Statements of Cash Flows


For the Years Ended December 31, 2010 and 2009


2010

2009CASH FLOWS FROM OPERATING ACTIVITIESNet (loss)

$
(2,306,938)


$
(4,019,828)Adjustments to reconcile net (loss) to net cash provided by operating activities:Depreciation


41,844



33,353Amortization of debt costs


99,000Change in allowance for doubtful accounts


126,213



628,661Share based compensation


-



63,600Imputed interest


37,943



38,088Deferred income taxes


(1,176,491)



(2,183,947)Change in operating assets and liabilities:Net investment in sales-type leases


5,928,883



8,322,613Inventory


299,340



89,260Prepaid expenses and other assets


-



(19,130)Accounts payable and accrued expenses


(241,640)



754,526Net Cash provided by Operating Activities


2,808,154



3,707,196CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant and equipment


-



(15,977)Net Cash (used in) Investing Activities


-



(15,977)CASH FLOWS FROM FINANCING ACTIVITIES:Payments on Credit Facilities


(5,090,180)



(5,214,923)Proceeds from Credit Facilities


1,020,681



1,679,319J           Proceeds from Notes to Related Parties


498,500



195,000Payments on Notes from Related Parties


(215,000)



-Net Cash (used in) Financing Activities


(3,785,999)



(3,340,604)INCREASE (DECREASE) IN CASH and CASH EQUIVALENTS


(977,846)



350,615CASH and CASH EQUIVALENTS, AT BEGINNING OF PERIOD


1,231,594



880,979C                CASH and CASH EQUIVALENTS, AT END OF PERIOD

$
253,748


$
1,231,594Supplemental disclosure of cash flow informationCash paid for interest

$
1,751,926


$
1,858,927Cash paid for taxes

$
-


$
-





See accompanying notes to the consolidated financial statements





F-6


NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS ACTIVITY





A. Organization





The Mint Leasing, Inc. (“Mint” or the “Company") was incorporated on May 19, 1999, in the State of Texas and commenced operations on that date.





Effective July 18, 2008, The Mint Leasing, Inc., a Texas corporation (“Mint Texas”), a privately held company, completed the Plan and Agreement of Merger between itself and The Mint Leasing, Inc. (formerly Legacy Communications Corporation) (“Mint Nevada”), and the two shareholders of Mint Texas, pursuant to which Mint Nevada acquired all of the issued and outstanding shares of capital stock of Mint Texas.   In connection with the acquisition of Mint Texas described herein, Mint Nevada issued 70,650,000 shares of common stock and 2,000,000 shares of Series B Convertible Preferred stock to the selling stockholders.   Consummation of the merger did not require a vote of the Mint Nevada shareholders.  As a result of the acquisition, the shareholders of Mint Texas own a majority of the voting stock of Mint Nevada and Mint Texas is a wholly-owned subsidiary of Mint Nevada.  No prior material relationship existed between the selling shareholders and Mint Nevada, any of its affiliates, or any of its directors or officers, or any associate of any of its officers or directors.





Upon completion of the July 18, 2008 transaction with Mint Nevada, Mint Texas ceased to be treated as an "S" Corporation for Income Tax purposes   In accordance with accounting guidance issued by the staff of the Securities and Exchange Commission (the “SEC”), the Company had included in its financial statements all of its undistributed earnings on that date as additional paid in capital. This is to assume constructive distribution to owners followed by a contribution to the capital of the Company.





B.  Description of Business





Mint is a company in the business of leasing automobiles and fleet vehicles throughout the United States. Most of its customers are located in Texas and six other states in the Southeast. Lease transactions are solicited and administered by the Company’s sales force and staff. Mint’s customers are comprised of brand-name automobile dealers that seek to provide leasing options to their customers and individuals, many of whom would otherwise not have the opportunity to acquire a new or late-model-year vehicle.





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





A. Principles of Consolidation





The consolidated financial statements of the Company include the accounts of The Mint Leasing, Inc. and all of its subsidiaries.  Inter-company accounts and transactions are eliminated in consolidation.





B.  Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that 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 periods. Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for doubtful accounts and the estimated unguaranteed residual values on the lease receivable contracts.





Although Mint attempts to mitigate credit risk through the use of a variety of commercial credit reporting agencies when processing customer applications, failure of the customers to make scheduled payments under their automobile lease contracts could have a material impact on the allowance for doubtful accounts.





F-7


Realization of unguaranteed residual values depends on many factors, several of which are not within the Company's control, including general market conditions at the time of the original lease contract's expiration, whether there has been unusual wear and tear on, or use of, the vehicle, the cost of comparable new vehicles and the extent, if any, to which the vehicle has become technologically or economically obsolete during the lease contract term. These factors, among others, could have a material impact on the estimated unguaranteed residual values.





C.  Revenue recognition





The Company’s customers typically finance vehicles over periods ranging from three to nine years.  These financing agreements are classified as operating leases or sales-type leases as prescribed by the Financial Accounting Standards Board (the “FASB”) guidance for accounting for leases.  Revenues representing the capitalized costs of the vehicles are recognized as income upon inception of the leases. The portion of revenues representing the difference between the gross investment in the lease (the sum of the minimum lease payments and the guaranteed residual value) and the sum of the present value of the two components is recorded as unearned income and amortized over the lease term.





For the years ended December 31, 2010 and 2009, amortization of unearned income totaled $3,924,606 and $5,969,971, respectively.





Taxes assessed by governmental authorities that are directly imposed on revenue-producing transactions between the Company and its customers (which may include, but are not limited to, sales, use, value added and some excise taxes) are excluded from revenues.





Lessees are responsible for all taxes, insurance and maintenance costs.





D.  Cost of Revenues





Cost of Revenues comprises the vehicle acquisition costs for the vehicles to be leased to the Company’s customers, the costs associated with servicing the leasing portfolio and the direct costs of non-performing leases. Portfolio servicing costs include direct wages, bank service fees, and premises costs. Cost of revenues include the following:





Description

2010


2009Portfolio servicing costs

$
908,684


$
3,197,935Purchase and delivery of the vehicle to the lessee


5,607,715



2,335,743Non-performing leases


3,597,273



12,380,160Total

$
10,113,672


$
17,913,838





E.  Cash and Cash Equivalents





Investments in highly liquid securities with original maturities of 90 days or less are considered cash equivalents and are included in cash and cash equivalents in the accompanying balance sheets.  At December 31, 2010 and 2009, the Company had cash and cash equivalents of $253,748 and $1,231,594, respectively.





At December 31, 2010 and 2009, the Company had no deposits that exceeded FDIC insurance coverage limits.





F-8


F. Concentrations of Credit Risk





Financial instruments which potentially subject us to concentrations of credit risk are primarily cash equivalents and finance receivables. Our cash equivalents are placed through various major financial institutions.  Finance receivables represent contracts with consumers residing throughout the United States, with borrowers located in Texas, Arkansas, Mississippi, Alabama, Georgia, Tennessee and Florida. No other state accounted for more than 10% of managed finance receivables.





G.  Allowance for Loan Losses





Provisions for losses on investments in sales-type leases are charged to cost of revenues in amounts sufficient to maintain the allowance for losses at a level considered adequate to cover probable credit losses inherent in our receivables related to sales-type leases.  The Company establishes the allowance for losses based on the determination of the amount of probable credit losses inherent in the financed receivables as of the reporting date.  The Company reviews charge-off experience factors, delinquency reports, historical collection rates, estimates of the value of the underlying collateral, economic trends, and other information in order to make the necessary judgments as to probable credit losses.  Assumptions regarding probable credit losses are reviewed periodically and may be impacted by actual performance of financed receivables and changes in any of the factors discussed above.





H.  Charge-off Policy





The Company charges off accounts when the automobile is repossessed or voluntarily returned by the customer and legally available for disposition. The charge-off amount generally represents the difference between the net outstanding investment in the sales-type lease and the fair market value of the vehicle returned to inventory. The charge-off amount is included in cost of revenues on the accompanying statement of operations. Accounts in repossession that have been charged off have been removed from finance receivables and the related repossessed automobiles are included in Vehicle Inventory on the consolidated balance sheet pending sale.





I.  Vehicle Inventory





Vehicle Inventory includes repossessed automobiles, as well as vehicles turned in at the conclusion of the lease.  Inventory of vehicles is stated at the lower of cost determined using the specific identification method, and market, determined by net proceeds from sale or the NADA book value.





J.  Property and Equipment





Property and equipment are recorded at cost less accumulated depreciation. Depreciation and amortization on property and equipment are determined using the straight-line method over the three to five year estimated useful lives of the assets.





Expenditures for additions, major renewal and betterments are capitalized, and expenditures for maintenance and repairs are charged against income as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income.





K. Stock-based Compensation





The Company accounts for stock-based compensation using the modified prospective application method in accordance with accounting guidance issued by the FASB. This method provides for the recognition of the fair value with respect to share-based compensation for shares subscribed for or granted on or after January 1, 2006, and all previously granted but unvested awards as of January 1, 2006. The cost is recognized over the period during which an employee is required to provide service in exchange for the options.





F-9


L. Advertising





Advertising costs are charged to operations when incurred. Advertising costs for the years ended December 31, 2010 and 2009 totaled $10,586 and $33,353, respectively.





M.  Income Taxes





Upon completion of the July 18, 2008 transaction with Legacy as more fully described in Note 1, Mint ceased to be treated as an "S" Corporation for Income Tax purposes, resulting in (1) the imposition of income tax at the corporate level instead of the shareholder level and (2) the inability to continue to elect to be taxed on a cash basis.





Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.





The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.





We adopted the provisions of the FASB’s guidance related to accounting for uncertainty as to income tax positions on January 1, 2008. As of December 31, 2010 and 2009, we had no liabilities included on the consolidated balance sheets associated with uncertain tax positions.





N. Earnings per Common and Common Equivalent Share





The computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus common stock equivalents which would arise from their exercise using the treasury stock method and the average market price per share during the year.  At December 31, 2010 and 2009, we have common stock equivalents as follows:





2010


2009Stock options


2,100,000



2,100,000Convertible Preferred Stock


20,000,000



20,000,000Warrants


300,000



300,000Total


22,400,000



22,400,000





O. Preferred Stock Rights and Privileges





We have a total of 20,000,000 shares of preferred stock (the “Preferred Stock”) authorized.  The rights and privileges of the Preferred Stock are detailed as follows:





Series A Convertible Preferred Stock





As of December 31, 2010, we had 185,000 shares of Series A Convertible Preferred Stock designated and 0 shares issued and outstanding.





The Company’s Series A Convertible Preferred Stock shares (the “Series A Stock”) allow the holder to vote a number of voting shares equal to two hundred shares for each share of Series A Stock held by such Series A Stock shareholder.  The Series A Stock has a liquidation preference over the shares of common stock issued and outstanding equal to the stated value of such shares, $1.00 per share multiplied by 12.5%.  The Series A Stock is convertible at the option of the holder into 200 shares of common stock for each share of Series A Stock issued and outstanding, provided that no conversion shall be allowed if the holder of such Series A Stock would own more than 4.99% of the Company’s common stock upon conversion.





F-10


No amendment to the Company’s Series A Stock shall be made while such Series A Stock is issued and outstanding to amend, alter or repeal the Articles of Incorporation or Bylaws of the Company to adversely effect the rights of the Series A Stock holders; authorize or issue any additional shares of preferred stock; or effect any reclassification of the Series A Stock unless a majority of the outstanding Series A Stock vote to approve such modification or amendment.





Series B Convertible Preferred Stock





As of December 31, 2010, we had 2,000,000 shares of Series B Convertible Preferred Stock designated, authorized, issued and outstanding. The Series B Convertible Preferred Stock is non-redeemable and the dividend is non-cumulative.





Each share of Series B Convertible Preferred Stock shall be convertible into shares of common stock of the Company, par value $0.001 per share.  Each share of Preferred Stock shall be convertible into fully paid and non-assessable shares of Common Stock at the rate of 10 shares of Common Stock for each full share of Preferred Stock.





Each holder of Series B Convertible Preferred Stock has the number of votes equal to the number of votes of all outstanding shares of capital stock plus one additional vote such that the holders of a majority of the outstanding shares of Series B Preferred Stock shall always constitute a majority of the voting rights for the Company.





Upon liquidation, dissolution or winding up of the Company, holders of Series B Convertible Preferred Stock shall have liquidation preference over all of the Company’s Preferred and Common Stock as to asset distribution.





P. Effect of New Accounting Pronouncements.





In April 2009, the FASB issued additional guidance for determining fair value of a financial asset.  This provision clarified the application of earlier guidance related to determining fair value of financial assets by providing additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. These provisions also include guidance on identifying circumstances that indicate a transaction is not orderly. This guidance is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. This guidance does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, these provisions require comparative disclosures only for periods ending after initial adoption. Revisions resulting from a change in valuation technique or its application shall be accounted for as a change in accounting estimate in accordance with FASB provisions. In the period of adoption, a reporting entity shall disclose a change, if any, in valuation technique and related inputs resulting from the application of this provision, and quantify the total effect of the change in valuation technique and related inputs, if practicable, by major category. This pronouncement did not have a material impact on our results of operations or financial position.





In April 2009, the FASB Staff issued guidance on interim disclosures about fair value of financial instruments.  This provision amends earlier guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements and disclosures in summarized financial information at interim reporting periods. This provision does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this guidance requires comparative disclosures only for periods ending after initial adoption. This pronouncement did not have a material impact on our results of operations or financial position.





F-11


We adopted the provisions issued by the FASB on January 1, 2008 related to fair value measurements. This provision defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurement.  This guidance applies under other accounting pronouncements that require or permit fair value measurements and accordingly, does not require any new fair value measurements. The guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the provisions established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:





·
Level 1. Observable inputs such as quoted prices in active markets;·
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and





·
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.


The following table presents assets that are measured and recognized at fair value on a non-recurring basis at December 31, 2010:





Total GainsDescription

Level 1

Level 2

Level 3

(Losses)Cash and cash equivalents



$
253,748

$
-

$
-Investment in sales-type leases – net


-


-


30,626,592


-Credit facilities


-


25,394,897


-


-Notes payable to shareholders


-


913,800


-


-


Total GainsDescription

Level 1

Level 2

Level 3

(Losses)Cash and cash equivalents



$
1,231,594

$
-

$
-Investment in sales-type leases – net








36,681,689


-Credit facilities





29,464,396


-


-Notes payable to shareholders





630,300


-


-




The FASB’s guidance became effective for us on January 1, 2008 and establishes a fair value option that permits entities to choose to measure eligible financial instruments and certain other items at fair value at specified election dates. A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at each subsequent reporting date. For the year ended December 31, 2010, there were no applicable items on which the fair value option was elected. This FASB provision may impact our consolidated financial statements in the future.





In October 2009, the FASB issued FASB ASU No. 2009-13, “Multiple-Deliverable Revenue Arrangements,” which is now codified under FASB ASC Topic 605, “Revenue Recognition.” This ASU establishes a selling price hierarchy for determining the selling price of a deliverable; eliminates the residual method of allocation and requires arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method; and requires a vendor determine its best estimate of selling price in a manner consistent with that used to determine the selling price of the deliverable on a standalone basis. The ASU also significantly expands the required disclosures related to a vendor’s multiple-deliverable revenue arrangements. FASB ASU No. 2009-13 was effective on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. This ASU is not expected to have an effect on the timing of revenue recognition and our consolidated results of operations or cash flows.





In October 2009, the FASB issued FASB ASU No. 2009-14, “Certain Revenue Arrangements That Include Software Elements,” which is now codified under FASB ASC Topic 985, “Software.” This ASU changes the accounting model for revenue arrangements which include both tangible products and software elements, providing guidance on how to determine which software, if any, relating to the tangible product would be excluded from the scope of the software revenue guidance. FASB ASU No. 2009-14 was effective on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. This ASU is not expected to have an effect on the timing of revenue recognition and our consolidated results of operations or cash flows.





F-12


In January 2010, the FASB issued FASB ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements,” which is now codified under FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” This ASU will require additional disclosures regarding transfers in and out of Levels 1 and 2 of the fair value hierarchy, as well as a reconciliation of activity in Level 3 on a gross basis (rather than as one net number). The ASU also provides clarification on disclosures about the level of disaggregation for each class of assets and liabilities and on disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. FASB ASU No. 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures requiring a reconciliation of activity in Level 3. Those disclosures will be effective for interim and annual periods beginning after December 15, 2010. The adoption of the portion of this ASU effective after December 15, 2009, as well as the portion of the ASU effective after December 15, 2010, did not have an impact on our consolidated financial position, results of operations or cash flows.





In April 2010, the FASB issued FASB ASU No. 2010-17, “Milestone Method of Revenue Recognition,” which is now codified under FASB ASC Topic 605, “Revenue Recognition.” This ASU provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. Consideration which is contingent upon achievement of a milestone in its entirety can be recognized as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. A milestone should be considered substantive in its entirety, and an individual milestone may not be bifurcated. An arrangement may include more than one milestone, and each milestone should be evaluated individually to determine if it is substantive. FASB ASU No. 2010-17 was effective on a prospective basis for milestones achieved in fiscal years (and interim periods within those years) beginning on or after June 15, 2010, with early adoption permitted. If an entity elects early adoption, and the period of adoption is not the beginning of its fiscal year, the entity should apply this ASU retrospectively from the beginning of the year of adoption. This ASU did not have any effect on the timing of revenue recognition and our consolidated results of operations or cash flows.





In December 2010, the FASB issued FASB ASU No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts,” which is now codified under FASB ASC Topic 350, “Intangibles — Goodwill and Other.” This ASU provides amendments to Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not goodwill impairment exists. When determining whether it is more likely than not impairment exists, an entity should consider whether there are any adverse qualitative factors, such as a significant deterioration in market conditions, indicating impairment may exist. FASB ASU No. 2010-28 is effective for fiscal years (and interim periods within those years) beginning after December 15, 2010. Early adoption is not permitted. Upon adoption of the amendments, an entity with reporting units having carrying amounts which are zero or negative is required to assess whether it is more likely than not the reporting units’ goodwill is impaired. If the entity determines impairment exists, the entity must perform Step 2 of the goodwill impairment test for that reporting unit or units. Step 2 involves allocating the fair value of the reporting unit to each asset and liability, with the excess being implied goodwill. An impairment loss results if the amount of recorded goodwill exceeds the implied goodwill. Any resulting goodwill impairment should be recorded as a cumulative-effect adjustment to beginning retained earnings in the period of adoption. This ASU is not expected to have any material impact to our future financial statements.






F-13


NOTE 3 - NET INVESTMENT IN SALES-TYPE LEASES





The Company’s leasing operations consist principally of leasing vehicles under sales-type leases expiring in various years to 2014. Following is a summary of the components of the Company’s net investment in sales-type leases at December 31, 2010 and 2009:





2010


2009Total Minimum Lease Payments to be Received

$
27,091,548


$
37,112,817Residual Values


12,142,447



11,843,408Lease Carrying Value


39,233,995



48,956,225Less: Allowance for Uncollectible Amounts


(905,895
)


(1,260,484
)Less: Unearned Income


(7,701,508
)


(11,014,052
)Net Investment in Sales-Type Leases

$
30,626,592


$
36,681,689





Note 4 – EQUIPMENT AND LEASEHOLD IMPROVEMENTS





Cost and accumulated depreciation of equipment and leasehold improvements as of December 31, 2010 and 2009 are as follows:





2010


2009Leasehold Improvements

$
5,980


$
5,980Furniture and Fixtures


97,981



97,981Computer and Office Equipment


179,572



179,572283,533



283,533Less: Accumulated Depreciation


(221,437
)


(179,593
)Net Property and Equipment

$
62,096


$
103,940





Depreciation expense charged to operations was $41,844 and $33,353 for the years ended December 31, 2010 and 2009, respectively.





NOTE 5 – CREDIT FACILITIES





Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one at December 31, 2009; which the Company did not meet. At December 31, 2009, the availability under the $10,000,000 Revolver was limited to $2,500,000. The outstanding balance at December 31, 2009 was $1,679,319. The Revolver matured on December 31, 2009 and was renewed for an additional 60 days at which time an additional $820,681 was advanced to the Company. On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. At December 31, 2010, the outstanding balance on the Revolver was $2,279,434.  Additionally, at December 31, 2010, we were not in compliance with certain of the covenants required by the Revolver, which failure was waived by Moody Bank pursuant to the Third Renewal, described below.  Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012.


F-14
 On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011, and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").





The Modification and March 2011 Modification also modified and amended our required borrowing base and minimum net worth requirements under the Renewal, which factor into whether we are in compliance with the terms and conditions of and/or in default of the terms of the Renewal.





The outstanding amount of the Renewal at the time of the parties’ entry into the Modification was $23,704,253, and the Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $110,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning December 10, 2010 and continuing until February 10, 2011 (we had previously been making monthly installment payments of $110,000 beginning in July 2010), with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on March 10, 2011 (previously the full amount of the Renewal as modified by the first Modification Agreement, was due and payable on November 10, 2010).





The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all proceeds from the sale of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.





At December 31, 2010, the outstanding balance on the Note Payable was $23,015,463. Under the terms of the renewals of the Note Payable, the Company has been and will continue to be unable to borrow any new funds under the credit facilities during 2011, 2010 and 2009.





Our credit facility with Sterling Bank requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: our statements, representations and warranties made in the credit facility and related documents are correct and accurate; if Jerry Parish, our Chief Executive Officer and sole Director fails to own at least 50% of the ownership of the Company; the death of either of the guarantors of the credit facility, Jerry Parish or Victor Garcia; the termination of the employment of Mr. Parish; or the transfer of any ownership interest of Mint Texas without the approval of Sterling Bank.  At December 31, 2010 and 2009, the Company was not in compliance with all debt covenants under the credit facility with Sterling Bank; however such failure to remain in compliance was waived by Sterling Bank pursuant to the Modifications described above.





On June 5, 2010, the Company entered into an unsecured $100,000 note payable (“Note Payable”) with a third party to finance the purchase of vehicles for lease, which accrued interest at the rate of 15% per annum, payable monthly, was due on December 5, 2010, and was repaid during the year ended December 31, 2010.





F-15


The Company subsequently entered into another Note Payable with a third party in the amount of $100,000 in October 2010, which accrues interest at the rate of 12% per annum, payable monthly,and is due April 26, 2011 The Note Payables are secured by the personal guaranty of Jerry Parish. The outstanding balance at December 31, 2010 was $100,000.





We believe that the Company has adequate cash flow being generated from its investment in sales-type leases and inventories to meet its financial obligations to the banks in an orderly manner, provided we are able to continue to renew the current credit facilities when they come due and the outstanding balances are amortized over a four to five year period.  The Company has historically been able to negotiate such renewals with its lenders.  However, there is no assurance that the Company will be able to negotiate such renewals in the future on terms that will be acceptable to the Company. In the future, if we are not able to negotiate renewals and/or expansion of our current credit facilities we may be required to seek additional capital by selling debt or equity securities. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that such financing will be available to the Company in amounts or on terms acceptable to us, or at all.





NOTE 6 – FAIR VALUE OF FINANCIAL INSTRUMENTS





FASB guidance regarding fair value measurements requires disclosure of fair value information about financial instruments, whether recognized or not in our consolidated balance sheet. Fair values are based on estimates using present value or other valuation techniques in cases where quoted market prices are not available. Those techniques are significantly affected by the assumptions used, including the discount rate and the estimated timing and amount of future cash flows. Therefore, the estimates of fair value may differ substantially from amounts that ultimately may be realized or paid at settlement or maturity of the financial instruments and those differences may be material. The FASB provision excludes certain financial instruments and all non-financial instruments from the Company’s disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.





Estimated fair values, carrying values and various methods and assumptions used in valuing our financial instruments as of December 31, 2010 are set forth below:





December 31, 2010Carrying Value


Estimated Fair ValueFinancial assets:Cash and cash equivalents
(a)

$
253,748


$
253,748Investment in sales-type leases – net
(b)


30,626,592



30,626,592Financial liabilities:Credit facilities
(c)

$
25,394,897


$
25,394,897Notes payable to shareholders
(d)


913,800



913,800





(a)
The carrying value of cash and cash equivalents is considered to be a reasonable estimate of fair value since these investments bear interest at market rates and have maturities of less than 90 days. This valuation is a type 1 indicator.





(b)
The fair value of finance receivables is estimated by discounting future cash flows expected to be collected using current rates at which similar loans would be made to borrowers with similar credit ratings and the same remaining maturities. This valuation is a type 3 indicator.





(c)
Credit facilities have variable rates of interest and maturities of one year or less. Therefore, carrying value is considered to be a reasonable estimate of fair value. This valuation is a type 1 indicator.





(d)
The fair value of Shareholder notes payable is estimated based on rates currently available for debt with similar terms and remaining maturities. This valuation is a type 1 indicator.





F-16


NOTE 7 -RELATED PARTY TRANSACTIONS





Under an informal arrangement, consulting fees totaling $306,800 and $306,800 were paid to a shareholder for services rendered during the years ended December 31, 2010 and 2009, respectively. The Company leased office space from a partnership, which is owned by the Company’s two majority shareholders, pursuant to a lease which expired on August 31, 2008, at the rate of $10,000 per month. The lease was subsequently renewed to July 31, 2011, which included an adjacent property at the rate of $20,000 per month. In conjunction with the Company's cost reduction efforts the monthly rental payment was reduced to $15,000 per month during 2010. We believe these rental rates are consistent with rental rates for similar properties in the Houston, Texas real estate market.  Rent expense under the lease amounted to $220,000 and $240,000 for the years ended December 31, 2010 and 2009, respectively.





The Company has notes payable to Jerry Parish, Victor Garcia, and a partnership which is owned by the Company’s two majority shareholders (Mr. Parish and Mr. Garcia) through its wholly-owned subsidiary, Mint Texas. The amounts outstanding as of December 31, 2010 and December 31, 2009 were $913,800 and $630,300, respectively.  These notes payable are non-interest bearing and due upon demand.  The Company imputed interest on these notes payable at a rate of 8.75% per year.  Interest expense of $37,943, and $38,088 was recorded as contributed capital for the years ended December 31, 2010 and 2009, respectively.





NOTE 8 – CAPITAL STOCK TRANSACTIONS


In May 2009, 5,000 shares of the Company's common stock were cancelled by an entity associated with a former officer and director of the Company, who resigned as of the effective date of the Reorganization Agreement.





In December 2009, the Company issued 300,000 shares of common stock to two employees.  In accordance with accounting guidance issued by the FASB, the Company recorded $51,000 of compensation expense that is reflected in the 2009 operating results of the Company.





NOTE 9 –OPTIONS AND WARRANTS





On or around July 17, 2009, we entered into a letter agreement (the “Letter Agreement”) to confirm certain terms of our Engagement Agreement with a placement agent. Pursuant to the Letter Agreement, the agent agreed to waive any rights to any consideration pursuant to the Engagement Agreement in connection with funding by certain financial institutions in consideration for the grant by us of warrants to purchase 300,000 shares of our common stock at an exercise price of $0.50 per share, which warrants have a term of 5 years, include a cashless exercise provision and piggy-back registration rights, which warrants were subsequently granted.  The Company recorded $12,600 of consulting expense in the third quarter of 2009 and a similar amount of additional paid-in-capital.  The $12,600 of consulting expense was calculated as the fair market value of the warrants using the Black-Scholes option-pricing model.  The significant variables used in the calculation were; stock price of $0.17/share; $0.50/share exercise price of warrant; volatility of 88%; time to expiration of 1,750 days; and risk free interest rate of 2.31%.





On September 30, 2009, the Company and Mr. Parish and Victor Garcia, a then Director of the Company, entered into a Mutual Release and Termination Agreement with third parties who were the holders of 8,278,872 shares of the Company’s common stock and warrants to purchase an additional 2,100,000 common shares at prices ranging from $0.10 to $2.00 per share.  Messers. Parish and Garcia paid $250,000 in cash and Mr. Parish delivered 125,000 shares of Arrayit Corporation to the third parties for the 8,278,872 shares of the Company’s common stock, of which 4,239,436 shares were issued to Mr. Parish and 4,239,436 shares were issued to Mr. Garcia. The third parties also agreed to cancel the warrants to purchase the 2,100,000 shares of the Company’s common stock.





F-17


A summary of activity under the Employee Stock Plans for the years ended December 31, 2010 and 2009 is presented below:





Options

WeightedAverage

Exercise PriceOutstanding – December 31, 2008
2,100,000

$
2.91Granted
-

$
-Exercised
-

$
-Forfeited or Expired
-

$
-Distributed
-

$
-Outstanding – December 31, 2009
2,100,000

$
2.91Granted
-

$
-Exercised
-

$
-Forfeited or Expired
-

$
-Distributed
-

$
-Outstanding – December 31, 2010
2,100,000

$
2.91Exercisable – December 31, 2010
1,333,334

$
2.91





The following table summarizes information about outstanding warrants at December 31, 2010 and 2009:





Year

Issued

Number Outstanding


Remaining Contractual Life in Years


Weighted Average Exercise Price2009


300,000



4.50


$
0.502010


300,000



3.50


$
0.50





NOTE 10 – COMMITMENTS AND CONTINGENCIES





Leases





The Company leases office space from its President and majority shareholder, a related party, pursuant to a lease which expired on August 31, 2008 at the rate of $10,000 per month. The lease was renewed to July 31, 2011 at the rate of $20,000 per month.  In conjunction with the Company’s cost reduction efforts the monthly rental payment was reduced to $15,000 in September 2010.  Rent expense related to this operating lease totaled $220,000 and $240,000 for the years ended December 31, 2010 and 2009, respectively.





Operating lease commitments for the years ending December 31 are as follows:





2011

$
105,0002012


-2013


-2014

-2015

-Thereafter

-$
105,000





F-18


Legal Proceedings





As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by consumers and/or shareholders. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. We believe that we have taken prudent steps to address and mitigate the litigation risks associated with our business activities. In the opinion of management, the ultimate aggregate liability, if any, arising out of any such pending or threatened litigation will not be material to our consolidated financial position or our results of operations and cash flows.


NOTE 11 – INCOME TAXES
  Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company calculates a provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes.
  The income tax provision (benefit) for the years ended December 31, 2010 and December 31, 2009 consists of the following:
  2010


2009Current income tax expense (benefit)

$
-


$
-Deferred income tax expense (benefit)


(1,176,491
)


(2,183,947
)Total income tax provision

$
(1,176,491
)

$
(2,183,947
)
  Significant components of our deferred tax assets and liabilities at December 31, 2010 and 2009 are as follows:
  2010


2009Deferred tax assets:NOL carry-forwards

$
2,035,876


$
2,358,480Accrued expenses


103,510



294,169Property


1,235



1,235Other


-



7,452Deferred tax liabilities:Accounts Receivable


(227,511
)


(1,924,716
)Net deferred tax (liabilities) assets

$
1,913,110


$
736,620
  The total income tax provision recognized by the Company for the years ended December 31, 2010 and December 31, 2009, reconciled to that computed under the federal statutory corporate rate, is as follows:
  2010


2009Tax provision (benefit) at federal statutory rate

$
(1,294,480
)

$
(2,169,841
)State income taxes — net of federal


22,520



(15,934
)Valuation allowance


-



-Meals and entertainment


1,673



1,828Transaction fees


(50,220)



-Other


144,016



-Income tax provision (benefit)

$
(1,176,491
)

$
(2,183,947
)


F-19


The Company adopted accounting guidance issued by the FASB related to accounting for uncertainty as it relates to income taxes. These provisions became effective January 1, 2008 and provide that a tax benefit from an uncertain tax position may be recognized in the financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s widely understood administrative practices and precedents. Once the recognition threshold is met, the portion of the tax benefit that is recorded represents the largest amount of tax benefit that is greater than 50 percent likely to be realized upon settlement with a taxing authority. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.


NOTE 12 - ONGOING RELATIONSHIPS WITH FINANCIAL INSTITUTIONS





Management has had a long relationship with the financial institutions that are currently providing its credit facilities.  The Company has a history of successfully working with its lenders in negotiating previous modifications and extensions, and believes that it will continue to be able to do so in the future. Such extensions or modifications are critical to the Company’s ability to meet its financial obligations and execute its business plan.  Accordingly, the financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities should the Company not be able to continue to modify or extend its credit facilities.  See Note 5 for further details.





NOTE 13 – SUBSEQUENT EVENTS





On February 28, 2010, the Company executed the Amended Moody Revolver which extended the maturity date of the facility to March 1, 2011, reduces the amount available under the facility to $2,500,000, fixes the interest rate on the facility at 6.5%, and provides for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the  amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%.  The Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012. This transaction is discussed in detail in Note 5 above.





On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011, and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification"). This transaction is discussed in detail in Note 5 above.





On February 3, 2011, Victor Garcia, resigned as a Director of The Mint Leasing, Inc.





No other subsequent event occurred after the date of these financial statements and prior to their issuance, which would require its disclosure in these financial statements.





F-20


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





None.





ITEM 9A. CONTROLS AND PROCEDURES





Management’s Annual Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.





Our internal control over financial reporting includes those policies and procedures that





(i)
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions;(ii)
provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements;(iii)
provide reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and(iv)
provide reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.





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





Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. This assessment is based on the criteria for effective internal control described in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  As of the date of our assessment we concluded our internal controls over financial reporting were ineffective due to discovery of material weaknesses.





A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. As a result of management’s evaluation of our internal control over financial reporting, management identified the following two material weaknesses in our internal control over financial reporting:





·
Inadequate and ineffective controls over the period-end financial reporting close process -The controls were not adequately designed or operating effectively to provide reasonable assurance that the financial statements could be prepared in accordance with GAAP. Specifically, we did not have sufficient personnel with an appropriate level of technical accounting knowledge, experience and training to adequately review manual journal entries recorded, ensure timely preparation and review of period-end account analyses and the timely disposition of any required adjustment, review of our customer contracts to determine revenue recognition in the proper period, and ensure effective communication between operating and financial personnel regarding the occurrence of new transactions; and





·
Adequacy of accounting systems at meeting company needs — The accounting system in place at the time of the assessment lacks the ability to provide high quality financial statements from within the system, and there were no procedures in place or built into the system to ensure that all relevant information is secure, identified, captured, processed, and reported within the accounting system. Failure to have an adequate accounting system with procedures to ensure the information is secure and accurately recorded and reported amounts to a material weakness to the Company’s internal controls over its financial reporting processes.





-22-


In light of the foregoing, management plans to develop the following additional procedures to help address these material weaknesses:





·
We will create and refine a structure in which critical accounting policies and estimates are identified, and together with other complex areas, are subject to multiple reviews by qualified consultants.  We believe these actions will remediate the material weaknesses by focusing additional attention on our internal accounting functions. However, the material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.





·
We will hire a permanent Chief Financial Officer to oversee financial reporting specifically in lease accounting and financial reporting.





·
We will continue to work with the experienced third party accounting firm in the preparation and analysis of our interim and financial reporting to ensure compliance with generally accepted accounting principles and to ensure corporate compliance.





·
We will upgrade our existing accounting information system to one that is tailored for lease accounting to better meet the Company’s needs.





This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.





Changes in Internal Control over Financial Reporting





There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.





ITEM 9B. OTHER INFORMATION





None.












-23-


PART III





ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The following sets forth our sole officer and Director (as used below, references to our Board of Directors, currently refer only to our sole Director, Jerry Parish) as of the date of this filing:





Name
Position
Year of AppointmentJerry Parish
Chief Executive Officer, President, Chief Financial Officer, Secretary

and sole Director
2008





Jerry Parish, Age 68





Jerry Parish, founder of The Mint Leasing, Inc. currently serves as the Chief Executive Officer, Chief Financial Officer, President, Secretary and sole Director of the Company. Mr. Parish is an accomplished businessman, manager and salesman having spent his entire professional career in the automobile industry. Mr. Parish has served as both the Sales Manager and General Manager of several franchise dealerships in Texas, including Austin-Hemphill, Red McComb Automotive, Westway Ford and the Davis Chevrolet Organization. In recognition of Mr. Parish’s dedicated service to Red McComb Automotive, he received a number of awards including Salesman of the Year (in addition to his numerous “Salesman of the Month” awards). Mr. Parish, a native of Houston, Texas began his career with military service in the United States Navy.





Director Qualifications:





Mr. Parish has significant knowledge of the Company’s history, strategies, technologies and culture. Having led the Company as Chief Executive Officer and a director since 1999, Mr. Parish has been the driving force behind the strategies and operational guidance that have generated more than a decade of operating history. His leadership of diverse business units and functions before becoming Chief Executive Officer gives Mr. Parish profound insight into the product development, marketing, finance, and operations aspects affecting the Company.


-------------------------------





Officers hold their positions at the pleasure of the Board of Directors, absent any employment agreement. Our officers and Directors may receive compensation as determined by us from time to time by vote of the Board of Directors. Such compensation might be in the form of stock options. Directors may be reimbursed by the Company for expenses incurred in attending meetings of the Board of Directors. Vacancies in the Board are filled by majority vote of the remaining Directors.





Independence of Directors





We are not required to have independent members of our Board of Directors, and do not anticipate having independent Directors until such time as we are required to do so.





Audit Committee and Financial Expert





The Company is not required to have an audit committee and as such, does not have one.





-24-


CORPORATE GOVERNANCE





The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. On July 18, 2008, the Board of Directors of the Company adopted a Code of Ethics for the Company’s senior officers.  The Board of Directors believes that these individuals must set an exemplary standard of conduct, particularly in the areas of accounting, internal accounting control, auditing and finance.  This code sets forth ethical standards to which the designated officers must adhere and other aspects of accounting, auditing and financial compliance.





In lieu of an Audit Committee, the Company’s Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company's financial statements and other services provided by the Company’s independent public accountants. The Board of Directors reviews the Company's internal accounting controls, practices and policies.





Risk Oversight





Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors’ approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities. The Board of Directors exercises direct oversight of strategic risks to the Company.





Involvement in Certain Legal Proceedings





Our sole Director has not been involved in any of the following events during the past ten years:





1.
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;2.
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses’);3.
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or4.
being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.





Board of Directors Meetings





The Company had three official meetings of the Board of Directors of the Company during the last fiscal year ending December 31, 2010.  Each member of the Company’s Board of Directors is encouraged, but not required to attend meetings





Nominating Committee





The Company does not have a Nominating Committee.  Furthermore, the Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Board of Directors believes that, given the stage of our development, a specific nominating policy would be of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.





-25-


A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President and Director, at the address appearing on the first page of this Report.





Changes in Officers and Directors:





On March 1, 2009, William L. Sklar resigned as Chief Financial Officer of the Company and Jerry Parish was appointed as interim Chief Financial Officer and Chief Accounting Officer.





Effective March 4, 2009, Kelley V. Kirker and Michael Hluchanek resigned as Directors of the Company.





Effective March 18, 2009, the number of Directors of the Company was increased to four (4) and Victor Garcia, Gary W. Dugger and Randy Foust were appointed Directors of the Company.





Effective April 17, 2009, Gary W. Dugger resigned as a Director of the Company.





On October 28, 2009, the Board of Directors of the Company appointed Warren L. Williams as interim Chief Financial Officer of the Company as the Company conducts a search for a permanent Chief Financial Officer.





On October 7, 2010, Warren L. Williams of Woodhill Financial Group, Ltd., resigned as Chief Financial Officer of the Company as he had served the purpose for which he was appointed and left to pursue other duties. Jerry Parish, the Company’s Chief Executive Officer, President, Secretary and sole Director will serve as interim Chief Financial Officer until a suitable replacement Chief Financial Officer can be found.  Woodhill Financial Group, Ltd. and Warren Williams will still be available to the Company for consultation.





On October 7, 2010, Randy Foust resigned as a Director of the Company due to personal reasons.





On February 3, 2011, Victor Garcia, resigned as a Director of The Mint Leasing, Inc.





SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of a class of our equity securities which are registered under the Exchange Act of 1934, as amended, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of such registered securities. Such executive officers, directors and greater than 10% beneficial owners are required by Commission regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons.





To our knowledge, based solely on a review of the copies of such reports furnished to us Jerry Parish and Victor Garcia are currently subject to Section 16(a) filing requirements.





-26-


ITEM 11. EXECUTIVE COMPENSATION





SUMMARY COMPENSATION TABLE


Name and Principal Position

Year

Salary ($)


Bonus($)

Stock Awards ($)


Options Awards

($)


All Other Compensation


Total ($)Jerry Parish

2010

$
379,995




$
-


$
-


$
-


$
379,995CEO, CFO and President (1)

2009

$
337,096


$
5,000

$
-



-


$
-


$
342,096Warren L. Williams (2) (4)

2010

$
-


$
-

$
-


$
-


$
-


$
-Former Chief Financial Officer

2009

$
-


$
-

$
-


$
-


$
-


$
-Anacelia Olivarez (3)

2010

$
107,206


$
-

$
34,000


$
-


$
-


$
141,205Executive Assistant and Former Chief Financial Officer

2009

$
107,206


$
-

$
34,000


$
-


$
-


$
141,205John Colburn

2010

$
135,000


$
-

$
17,000


$
-


$
-


$
152,000Sales Manager

2009

$
135,000


$
-

$
17,000


$
-


$
-


$
152,000





*
Does not include perquisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation.  No executive officer earned any non-equity incentive plan compensation or nonqualified deferred compensation during the periods reported above.





(1) Mr. Parish has served as the Company’s Chief Executive Officer and President since July 18, 2008.


(2) Mr. Williams served as the Company’s Chief Financial Officer from October 28, 2009 until October 7, 2010.


(3) Ms. Olivarez served as the Company’s Chief Financial Officer from July 18, 2008 to on or around November 18, 2008.


(4) Mr. Williams did not receive any direct compensation for his services as the Company’s Chief Financial Officer during 2010 and 2009.  However, Woodhill Financial Group, Ltd received payments of $239,675 and $191,175 for services provided to the Company during 2010 and 2009, which included payments for Mr. Williams’ services.





Our compensation and benefits programs are administered by our Board of Directors and are intended to retain and motivate individuals with the necessary experience to accomplish our overall business objectives within the limits of our available resources.  Consequently, the guiding principles of our compensation programs are:





·
simplicity, clarity, and fairness to both the employee and the Company;·
preservation of Company resources, including available cash; and·
opportunity to receive fair compensation if the Company is successful.





Each element of our compensation program contributes to these overall goals in a different way.





·
Base Salary and Benefits are designed to provide a minimum threshold to attract and retain employees identified as necessary for our success.·
Cash Bonuses and equity awards are designed to provide supplemental compensation when the Company achieves financial or operational goals within the limits of our available resources.





-27-


All compensation payable to the Chief Executive Officer and the other named executive officers is reviewed annually by the Board of Directors and changes or awards are approved by the Board of Directors.





Board Compensation





None of the Company's Directors other than Mr. Parish (whose compensation is included in the table above, and who did not receive any consideration separate from the compensation provided to him as an officer of the Company, as provided above, for serving as a Director of the Company) during the year ended December 31, 2010, received any compensation during 2010.




The following table sets forth certain information concerning unexercised stock options for each named executive officer.





OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END





OPTION AWARDS

STOCK AWARDSName

Number of

securities

underlying

unexercised

options (#)

Exercisable


Number of

securities

underlying

unexercised

options (#)

Unexercis-

able (1)


Equity

Incentive

Plan

Awards:

Number of

Securities

underlying

unexercised

unearned

options (#)


Option

exercise

price ($)

Option

expiration

date

Number

of

shares

or units

of stock

that

have

not

vested

(#)


Market

value of

shares or

units of

stock that

have not

vested

($)


Equity

incentive

plan

awards:

number

of

unearned

shares,

units or

other

rights

that have

not

vested

(#)


Equity

incentive

plan

awards:

Market

or payout

value of

unearned

shares,

units or

other

rights

that have

not

vested

($)Jerry Parish


1,333,334



666,666



-



3.00

7/18/2011


-



-



-



-





(1) In July 2008, the Company granted stock options to purchase 2,000,000 shares of common stock to Mr. Parish, in connection with the assumption of his employment agreement with Mint Texas. The exercise price of the options is $3.00 and the options expire ten years after the grant date. One third of the options may be exercised respectively on the first, second and third anniversary of the grant date (July 18, 2008).





Employment Agreement:





On July 18, 2008, the Company assumed a three year employment agreement between Mint Texas and Mr. Parish, originally effective as of July 10, 2008.  The employment agreement provides for a salary $675,000 per annum and a bonus payable quarterly equal to 2% of the Company’s “modified EBITDA” (as defined in the employment agreement), as well as a discretionary bonus payable at the option of the Company’s Board of Directors.  Upon the termination of the employment agreement for cause by the Company (as defined therein) or by Mr. Parish, without cause, Mr. Parish will receive only the benefits and compensation he has earned as of the termination date of the agreement.  Upon termination of the agreement by Mr. Parish for good cause (as defined therein) disability, or death, Mr. Parish is due his compensation for the remainder of the current calendar month, and for 12 months thereafter (or such shorter period as the agreement is in effect) and his pro rated bonus. During 2010 and 2009, Mr. Parish received cash compensation of $379,995 and $342,096, respectively. Mr. Parish has agreed to forgo any additional cash compensation he would be entitled to under his employment agreement for 2010 and 2009.





-28-


Mr. Parish also receives five weeks of vacation per year pursuant to the employment agreement, of which up to four weeks of vacation time shall roll over to the following year if not used.  Mr. Parish may also exchange up to one week’s vacation time per year in exchange for an additional one week’s salary from the Company.





In July 2008, the Company granted stock options to purchase 2,000,000 shares of common stock to Mr. Parish, in connection with the assumption of his employment agreement with Mint Texas. The exercise price of the options is $3.00 and the options expire ten years after the grant date. One third of the options may be exercised respectively on the first, second and third anniversary of the grant date (July 18, 2008).


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
 The following table sets forth certain information, as of April 8, 2011 with respect to the holdings of (1) each person who is the beneficial owner of more than five percent of our common stock, (2) each of our directors, (3) each named executive officer, and (4) all of our directors and executive officers as a group.





Beneficial ownership of the common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes any shares of common stock over which a person exercises sole or shared voting or investment powers, or of which a person has a right to acquire ownership at any time within 60 days of April 8, 2011.  Except as otherwise indicated, and subject to applicable community property laws, the persons named in this table have sole voting and investment power with respect to all shares of common stock held by them.


Common Stock Shares Beneficially Owned

Series A Convertible Preferred Stock Shares Beneficially Owned


Series B Convertible Preferred Stock Shares Beneficially Owned
Total Voting Shares

Total Voting Percentage (3)Jerry Parish - CEO, CFO, President, Secretary and sole Director


41,772,770
(1)

0



2,000,000(2)

123,997,275
(1)(2)

74.8
%323 N. Loop West, Houston, Texas, 77008Victor Garcia


39,564,436


0



0

39,564,436


24.1
%222 Detering

Houston, Texas 77007All of the Officers and Directors as a Group

(1 persons)


41,772,770


0



2,000,000(2)

123,997,275


74.8
%


(1) Includes stock options to purchase 1,333,334 shares of common stock. The exercise price of the options is $3.00 per share, and the options expire ten years after the grant date. Mr. Parish was granted 2,000,000 stock options in July 2008, of which, one third of such options may be exercised respectively on the first, second and third anniversary of the grant date (July 10, 2008).  A total of 1,333,334 of the stock options have vested to date.
 
 (2) The Company’s Series B Convertible Preferred Stock shares allow the holder to vote a number of voting shares equal to the total number of voting shares of the Company issued and outstanding as of any record date for any shareholder vote plus one additional share. The Series B Convertible Preferred Stock shares are convertible at the option of the holder with 61 days notice to the Company into 10 shares of common stock for each share of preferred stock issued and outstanding, which conversion rate may be increased by the Company’s Board of Directors from time to time as provided in the preferred stock designations.
 
 (3) Based on 164,449,009 voting shares issued and outstanding, which amount includes the 82,224,504 shares of common stock issued and outstanding and 2,000,000 shares of the Company’s Series B Convertible Preferred Stock issued and outstanding, which shares vote in aggregate the total number of voting shares of the Company plus one vote.





-29-


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





Under an informal arrangement, consulting fees totaling $306,800 were paid to Mr. Garcia, a former Director of the Company, for services rendered during the year ended December 31, 2009 and have been expensed in the accompanying financial statements.





In May 2010, Jerry Parish, our Chairman and Chief Executive Officer purchased 875,000 shares of our common stock in a private transaction for aggregate consideration of $80,000.





The Company leased office space from a partnership, which is owned by the Company’s two majority shareholders, pursuant to a lease which expired on August 31, 2008, at the rate of $10,000 per month. The lease was subsequently renewed to July 31, 2011, which included an adjacent property to be built, at the rate of $20,000 per month. In conjunction with the Company’s cost reduction efforts the monthly rental payment was reduced in September 2010 to $15,000 per month. Rent expense under the lease amounted to $220,000 and $240,000 for the years ended December 31, 2010 and 2009, respectively, and has been expensed in the accompanying financial statements.





The Company has notes payable to Jerry Parish, Victor Garcia, and a partnership which is owned by the Company’s two majority shareholders (Mr. Parish and Mr. Garcia) through its wholly-owned subsidiary, Mint Texas. The amounts outstanding as of December 31, 2010 and December 31, 2009 were $913,800 and $630,300, respectively.  These notes payable are non-interest bearing and due upon demand.  The Company imputed interest on these notes payable at a rate of 8.75% per year.  Interest expense of $37,943 and $38,088 was recorded as contributed capital for the years ended December 31, 2010 and 2009, respectively.





Review, Approval and Ratification of Related Party Transactions





We have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officers, Directors and significant stockholders to date.  However, all of the transactions described above were approved and ratified by our officers or Directors.  In connection with the approval of the transactions described above, our officers and/or Directors, took into account several factors, including their fiduciary duty to the Company; the relationships of the related parties described above to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; whether comparable products or services were available; and the terms the Company could receive from an unrelated third party.





We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof.   On a moving forward basis, our sole Director will continue to approve any related party transaction based on the criteria set forth above.





ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





Audit Fees





The aggregate fees billed for each of the fiscal years ended December 31, 2010 and 2009 for professional services rendered by the principal accountant for the audit of the Company's annual financial statements and the review of the Company's quarterly financial statements were $71,500 and $66,000, respectively.





Audit Related Fees





None.





Tax Fees





None.





All Other Fees





None.





-30-


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a) Exhibits





Exhibit No.
Description of Exhibit3.1(2)
Amended and Restated Articles of Incorporation3.2(2)
Amended and Restated Bylaws3.3(3)
Amendment to the Bylaws of the Company4.1(1)
Incentive Stock Option for 2,000,000 shares4.2(1)
Consulting Agreement dated June 1, 20074.3(1)
Consulting Agreement dated June 1, 20074.4(1)
Common Stock purchase warrant for 1,050,000 shares4.5(1)
Common Stock purchase warrant for 1,050,000 shares4.6(1)
Note Conversion Agreement dated July 18, 20084.7(1)
Designation of Series B Convertible Preferred Stock4.8(2)
2008 Directors, Officers, Employees and Consultants Stock Option, Stock Warrant and Stock Award Plan10.1(1)
Agreement and Plan of Reorganization among Legacy Communications Corporation, The Mint Leasing, Inc., a Texas corporation, and the shareholders of the Mint Leasing, Inc., dated July 18, 2008 (without Exhibits).10.2(1)
Stock Purchase Agreement between Legacy Communications Corporation and Three Irons, Inc. dated July 18, 2008.10.3(1)
Employment Agreement between The Mint Leasing, Inc. and Jerry Parish dated July 10, 2008 assumed by The Mint Leasing, Inc. (f/k/a Legacy Communications Corporation)10.4(1)
Form of Indemnification Agreements between The Mint Leasing, Inc. (f/k/a Legacy Communications Corporation) and each of Jerry Parish, Michael Hluchanek, and Kelley V. Kirker10.5(4)
Voting Trust Agreement between Jerry Parish and Victor Garcia10.6(5)
Modification, Renewal and Extension Agreement with Sterling Bank10.7*
Modification Agreement with Sterling Bank10.8*
Third Renewal, Extension and Modification Agreement with Moody Bank14.1(1)
Code of Ethics dated July 18, 200816.1(6)
Letter from HJ & Associates, LLC21.1(7)
Subsidiaries31.1*
Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
Certificate of the Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1*
Certificate of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2*
Certificate of the Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





* Filed herein.





(1) Filed as exhibits to the Company’s Form 8-K/A filed with the Commission on July 28, 2008, and incorporated herein by reference.





(2) Filed as exhibits to the Company’s Definitive Schedule 14C filing, filed with the Commission on June 26, 2008, and incorporated herein by reference.





(3) Filed as an exhibit to the Company’s Form 8-K, filed with the Commission on July 9, 2008, and incorporated herein by reference.





(4) Filed as an exhibit to Mr. Parish’s Schedule 13d filing, filed with the Commission on July 24, 2008, and incorporated herein by reference.





(5) Filed as an exhibit to the Company’s Form 10-K, filed with the Commission on April 15, 2009, and incorporated herein by reference.





(6) Filed as an exhibit to the Company’s Form 8-K, filed with the Commission on May 11, 2009, and incorporated herein by reference.





(7) Filed as an exhibit to the Company's Form 10-K, filed with the Commission on March 26, 2010, and incorporated herein by reference.




-31-


SIGNATURES





In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





THE MINT LEASING, INC.DATED:  April 15, 2011
By: /s/ Jerry ParishJerry ParishChief Executive Officer,

Secretary, President(Principal Executive Officer), and

Chief Financial Officer (Principal Accounting Officer)





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.





NAME
TITLE
DATE/s/ Jerry Parish
Chief Executive Officer
April 15, 2011Jerry Parish
President, Secretary,Chief Financial Officer(Principal Accounting Officer) and Sole Director






-32-