EDGAR 10-K Filing

Company CIK: 1776048
Filing Year: 2021
Filename: 1776048_10-K_2021_0001099910-21-000051.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS.
Recent Developments Related to the COVID-19 Outbreak
All of the disclosures set forth in Item 1 below should be read in the context of the recent COVID-19 related developments discussed immediately below. All of the disclosures recited in “Recent Developments Related to the COVID-19 Outbreak” are as of the date of this filing.
The occurrence of the COVID-19 pandemic has and may continue to negatively affect our operations depending on the severity and longevity of the pandemic.
The COVID-19 pandemic is currently impacting countries, communities, supply chains, and businesses as well as the global financial markets. The COVID-19 pandemic has resulted in in social distancing, travel bans, and quarantine measures, which have limited access to our facilities, customers, management, support staff, and professional advisors. These factors, in turn, have impacted and may continue to impact our operations, financial condition, and demand for our goods and services as well as our overall ability to react timely to mitigate the impact of this event. Also, the COVID-19 pandemic has hampered and may continue to hamper our efforts to comply with our filing obligations with the SEC. Depending on the severity and longevity of the COVID-19 pandemic, our business, customers, and shareholders may continue to experience a significant negative impact.
We received the following financial assistance from the Small Business Administration (SBA):
(1) $228,442 under the SBA Paycheck Protection Program 442 to cover payroll and utility expenses. We received 100% forgiveness of this loan;
(2) $150,000 under the COVID-19 Economic Injury Disaster Loan. On April 7, 2021 we received email notification of an increase in this loan from $150,000 to $500,000. That same day, we submitted our request for the increase;
(3) $254,147 under the SBA Paycheck Protection Program - Round 2 442 to cover payroll and utility expenses. We believe we are following the government guidelines and tracking costs to ensure 100% forgiveness of the loan; and
(4) We are working with the SBA on a secondary loan which pays either $10,000,000 or 45% of 2019 gross earned revenue, whichever is lower. We meet the qualifications and based on their requirements are eligible for $5,694,857. We cannot submit our application until after April 19th and will have more updates in our Quarterly Report on Form 10-Q for the quarter ending March 31, 2021.
We mandated a work-from-home policy for our sales, administrative, and accounting employees. Shop employees are servicing contracts with our essential customers and are often traveling to do so. They are practicing social distancing and we are only allowing one customer in the facility at a time. We have worked out payment schedules with our customers in need of assistance and, in turn, have accepted all assistance offered by our vendors.
General
The following is a summary of some of the information contained in this document. Unless the context requires otherwise, references in this document to “our Company,” “us,” “we,” “our,” “AmeraMex,” or the “Company” are to AmeraMex International, Inc.
Organization
We were originally incorporated as Hamre Equipment Company, Inc. in California on November 17, 1989. We merged into AmeraMex International, Inc., a Nevada corporation, on November 2, 2006.
Objectives
Continue to develop and expand the availability of our products to the heavy equipment industry;
Expand online, direct, wholesale, and government sales (both domestic and international); and
Expand our construction equipment division.
Description of Business and Principal Products or Services
We sell, lease, and rent heavy equipment to companies within five industries:
1. Construction (light and infrastructure);
2. Shipping logistics;
3. Mining;
4. Commercial farming; and
5. Forestry.
With customers in the United States, Canada, Latin America, Asia, and Africa, we have over 30 years of experience in heavy equipment sales and service and inventories of top-of-the-line equipment from manufacturers such as Taylor Machine Works Inc., ASV and Terex Heavy Equipment.
Our parts warehouse contains a sizeable heavy equipment parts inventory, ensuring that we have the necessary parts on hand to maintain and repair all lines of represented equipment. Our in-house and field technicians solve service needs to get equipment back on the job as quickly as possible.
Our service facility is equipped with overhead cranes, a paint shop, and a welding-fabricating shop. The facility includes modern, specialized tools and state-of-the-art diagnostic equipment. Our service staff has access to manufacturers’ technical specifications to speed repairs.
Distribution Network
We sell, lease, and rent heavy equipment to a wide variety of industries, including construction, mining, infrastructure, logging, logistics, transportation, and commercial farming. We are authorized dealers for manufacturers such as Taylor Machine Works, Terex Heavy Equipment, Barko Hydraulics, Genie, and Menzi Muck.
We acquire used equipment for resale through trade-ins from our customers, returned customer leases, and selective purchases. We also sell parts and provide repair and maintenance services directly to customers at our Northern California location.
Hamre Heavy Haul, one of our divisions, operates a fleet of heavy haul equipment which includes a fleet of Kenworth trucks and Cozad heavy haulers to transport heavy equipment for our purchase and lease customers as well as others throughout the United States.
Our end-user base is diverse and fragmented, including, among others, light and heavy manufacturers, trucking and automotive companies, rental companies, building materials and paper suppliers, lumber, metal products, warehouses, retailers, food distributors, container handling companies, and domestic and foreign government agencies.
We obtain new customers in several different ways:
• Current customer referrals;
• Website;
• Billboard advertisements;
• Company location where our inventory yard is highly visible from the freeway;
• Monitoring government websites, bidding on jobs and winning contracts; and
• Authorized equipment maker referrals.
Governmental Regulation
We are subject to numerous federal, state, and local rules and regulations, including regulations promulgated by the Environmental Protection Agency (EPA) and similar state agencies with respect to storing, shipping, disposing, discharging, and manufacturing hazardous materials and hazardous and non-hazardous waste. These activities are associated with the repair and maintenance of our equipment and customers’ equipment. Compliance with these rules and regulations has not had any material effect on our operations, nor do we expect it to in the future. Further, we have not made, and do not anticipate making, any material capital expenditures in compliance with environmental regulations. However, there can be no assurance that these expectations will prove to be accurate, particularly if regulations change, unforeseen incidents occur or unknown past contamination or non-compliance is discovered, among other similar events.
Jumpstart Our Business Startups Act
We qualify as an “emerging growth company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we did not have more than $1,070,000,000 in annual gross revenue and did not have such amount as of December 31, 2020, our last fiscal year.
We may lose our status as an emerging growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $1,070,000,000 or (ii) we issue more than $1,070,000,000 in non-convertible debt in a three-year period. We will lose our status as an emerging growth company if at any time we are deemed to be a large accelerated filer. We will lose our status as an emerging growth company on the last day of our fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement.
As an emerging growth company, we may take advantage of specified reduced reporting and other burdens that are otherwise applicable to generally reporting companies. These provisions include:
● a requirement to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in a public offering registration statement;
● an exemption to provide less than five years of selected financial data in a public offering registration statement;
● an exemption from the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act in the assessment of the emerging growth company’s internal control over financial reporting;
● an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; and
● an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit partner rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;
History
We have grown from a used forklift dealer in Northern California to the owner and operator of a multi-million dollar fleet of heavy equipment for sale, lease, or rent to companies in the United States, Canada, Latin America, Asia, and Africa.
We have three business units:
1. Hamre Equipment;
2. Hamre Heavy Haul; and
3. Hamre Parts & Service.
These units are authorized dealers for well-known equipment manufacturers and carry a large inventory of heavy equipment and Hamre Parts & Service includes a complete maintenance organization with a large parts inventory and service department.
We supply heavy equipment to many different industries. Currently, the majority of our revenue is from the sales of new and refurbished container handlers to portside logistics companies. In addition to this line of work, we have an extensive equipment inventory for infrastructure development. Growing demand for infrastructure development typically calls for equipment to be rented, rather than purchased, allowing us to maximize the use of our inventory.
The Hamre Heavy Haul business unit includes a customized fleet of heavy haul equipment and was initially formed to transfer heavy equipment for us, however, in recent years, we have expanded this unit to market our heavy haul services to third-party companies throughout the United States.
Strategy
We have a clearly defined strategy to find opportunities that expand our reach within the United States and internationally. We now have customers in over 12 countries. As we continue to sell new equipment to U.S. customers, we purchase older equipment from well-respected brands that may not meet EPA Tier III requirements in the U.S., and refurbish the equipment to like-new condition. The equipment is sold AS IS with NO warranty agreement. The equipment is then marketed internationally. Our target markets for sales of new and refurbished equipment are:
• Canada
• Indonesia
• Pakistan
• Germany
• Singapore
• Vietnam
• China
• Russia
• India
• The Middle East
• West Africa
• Central America
• Mexico
Opportunities
We believe the demand for leased or rented equipment is growing. Companies within the construction and logistics industries hesitate to purchase equipment that may become idle if related markets weaken. Additionally, the cost of many types of heavy-duty equipment and container handlers has increased substantially because of new federal emission control standards. Due to these and other concerns, many companies forgo purchasing and instead rent or lease needed equipment.
Internationally, our ongoing expansion, specifically within Western Africa, allows us to take advantage of the improving global infrastructure construction market and the increased import and export of natural resources. We have already established marketing opportunities within the governments of several West African countries.
The current trade issues with China have no bearing on our business or current plans. However, trade issues between the United States and China are constantly evolving and the future could bring about potential negative impacts on our business, including increased costs and higher prices.
Market
Our market is highly competitive and constantly changing. Commercial success is frequently dependent upon capital availability, the effectiveness and sufficiency of which are very difficult to accurately predict. It is one of the principal economic risks of companies in our industry.
According to the “Heavy Construction Equipment Market Will Reach $90.4 Billion by 2025,” published by Grand View Research in January 2019/2020 (the “Construction Equipment Report”): The global heavy construction equipment market size is expected to reach $90.4 billion by 2025 at a CAGR of 5.4%. Increased investment of infrastructure will be a major factor in driving market growth.
Competition
There is a large number of companies and individuals engaged in the provision of construction equipment; accordingly, there is a high degree of competition in our industry. Many of the companies and individuals with whom we compete have substantially greater technical, personnel, and financial resources than us. In view of our limited financial resources, we will continue to be at a significant competitive disadvantage compared to our competitors.
According to the Construction Equipment Report, global vendors such as Caterpillar, Komatsu Ltd., and AB Volvo are some of the leading market players in the heavy equipment industry. These vendors dominate the market in terms of technology, experience, and quality.
A rise in prominence of Chinese vendors in the industry has been observed in the last few years. Manufacturers in China have capitalized on government-funded infrastructure projects and are continuously evolving and in some circumstances, acquiring European vendors.
Some other key players in the market for heavy duty construction equipment are Hitachi Construction Machinery Co. Ltd., Liebherr, Deere & Company, Doosan Bobcat, XCMG Group, SANY Group, and Zoomlion Heavy Industry Science & Technology Co. Ltd.
Amount Spent on Research and Development
None.
Employees
As of the date hereof, we have 16 full time employees. In addition to our employees, we utilize various consultants and contractors for other services on an as-needed basis.
FINRA Corporate Action/Information Statement on Form 14C
On December 21, 2020, we effected a one for fifty (1:50) reverse stock split (the “Reverse Stock Split”). To effect the Reverse Stock Split, we filed a Certificate of Amendment to our Restated Certificate of Incorporation with the Nevada Secretary of State. The Reverse Stock Split was approved by our Board of Directors on September 9, 2020 and by our stockholders on September 11, 2020, by a written consent in lieu of a special meeting of stockholders.
As a result of the Reverse Stock Split, every 50 shares of issued and outstanding Common Stock were automatically combined into one issued and outstanding share of Common Stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split and any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share. Following the Reverse Stock Split, the number of shares of Common Stock outstanding was reduced from 753,415,879 shares to 15,068,317 shares. There was no change to the number of authorized shares.
Unless otherwise indicated, all share and per share amounts included in this Annual Report reflect the effects of the Reverse Stock Split.
Additional Information
We file annual, quarterly, and other reports, proxy statements and other information with the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding us and other issuers that file electronically with the SEC.
Our corporate website address is www.ammx.net. We make available free of charge, through the Investor Relations section of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information which appears on our corporate website is not part of this Annual Report.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
We lease a building and real property in Chico, California from a trust whose trustee is Lee Hamre, our President for monthly lease payments of $12,000. We are currently leasing the building and real property through a lease that renews annually. The total rent for 2020 was $139,600, and the total rent for 2019 was $117,600.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
We anticipate that we will from time to time become subject to claims and legal proceedings arising in the ordinary course of business. It is not feasible to predict the outcome of any such proceedings and we cannot give any assurance that their ultimate disposition will not have a materially adverse effect on our business, financial condition, cash flows or results of operations. As of the date of this Annual Report, we have no legal proceedings pending.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our stock is traded on the OTCQB Venture Market (“OTCQB”) operated by the OTC Markets Group, Inc. Our trading symbol is AMMX. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell their securities in our Company.
The following table sets forth the range of high and low bid quotations for our Common Stock for each of the periods indicated as reported by the OTCQB within the two most recent fiscal years. These quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.
Fiscal Year Ended December 31, 2020
Quarter Ended High $ Low $
December 31, 2020 0.48 0.38
September 30, 2020 0.54 0.43
June 30, 2020 0.49 0.49
March 31, 2020 0.55 0.52
Fiscal Year Ended December 31, 2019
Quarter Ended High $ Low $
December 31, 2019 0.70 0.43
September 30, 2019 0.98 0.69
June 30, 2019 0.98 0.73
March 31, 2019 1.07 0.64
Holders of our Common Stock
We have approximately 257 record holders of our Common Stock as of the date of this Annual Report according to the records of our transfer agent. The number of our stockholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.
Our transfer agent is Pacific Stock Transfer Company, 6725 Via Austi Parkway, #300, Las Vegas, Nevada, 89119. Their telephone number is (702) 361-3033.
Dividends
We have not declared a dividend on our Common Stock, and we do not anticipate the payment of dividends in the near future as we intend to reinvest our profits to grow our business.
There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
• we would not be able to pay our debts as they become due in the usual course of business; or
• our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
Employees Stock Compensation Plan
We do not have a Stock Option Plan as of the date of this filing.
Recent Sales of Unregistered Securities
During 2019, we did not issue any shares of common or preferred stock.
On July 20, 2020, we entered into a Securities Purchase Agreement with Geneva Roth Remark Holdings, Inc., a New York corporation (“Geneva”) to issue a convertible promissory note in the amount of $60,000, convertible into shares of our Common Stock. The note matures on July 20, 2021, bears an interest rate of 10% per annum, with a 22% default interest rate, and may be converted at 65% of the lowest closing bid price in the ten days preceding a conversion. On January 15, 2021, this note was paid in full prior to any conversion of stock.
On September 16, 2020, we issued a second convertible promissory note to Geneva in the amount of $60,000, convertible into shares of our Common Stock. The note matures on September 16, 2021, bears an interest rate of 10% per annum, with a 22% default interest rate, and may be converted at 65% of the lowest closing bid price of the Common Stock in the twenty days preceding a conversion. On March 19, 2021, this note was paid in full prior to any stock conversion.
On January 21, 2021, we entered into a securities purchase agreement with Geneva whereby Geneva purchased 103,500 shares of our Series A Preferred Stock for a purchase price of $103,500. After payment of transaction-related expenses, net proceeds to us were $100,000. The proceeds were used for working capital. The Series A Preferred Stock earns dividends at a rate of 10% per annum, and dividends at a default rate of 22%. The shares of Series A Preferred Stock have a stated value of $1.00 per share and are convertible at 70% of the lowest closing bid price of the Common Stock in the ten days preceding a conversion.
On March 23, 2021, we entered into a securities purchase agreement with Geneva whereby Geneva purchased 78,000 shares of our Series A Preferred Stock for a purchase price of $78,000. After payment of transaction-related expenses, net proceeds to us were $75,000. The proceeds were used for working capital. The Series A Preferred Stock earns dividends at a rate of 10% per annum, and dividends at a default rate of 22%. The shares of Series A Preferred Stock have a stated value of $1.00 per share and are convertible at 70% of the lowest closing bid price of the Common Stock in the ten days preceding a conversion.
All issuances were exempt from the registration requirements of Section 5 of the Securities Act of 1933 as they did not involve a public offering under Section 4(a)(2) and were issued as restricted securities as defined in Rule 144 of the Act.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Annual Report.
Forward Looking Statements
Certain statements contained in this Annual Report, including statements regarding the anticipated development and expansion of our business, our intent, belief, or current expectations, primarily with respect to our future operating performance and the products and services we expect to offer and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements. Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also forward-looking statements which involve risks, uncertainties, and assumptions. Because forward-looking statements are inherently subject to risks and uncertainties, our actual results may differ materially from the results discussed in the forward-looking statements. The following discussion and analysis of financial condition and results of our operations is based upon, and should be read in conjunction with, the audited financial statements and related notes elsewhere in this Annual Report.
Overview
We sell, lease, and rent heavy equipment to companies within four industries: construction (light and infrastructure), shipping logistics, mining, forestry, and commercial farming. With customers in the United States, Canada,
Latin America, Asia, and Africa, we have over 30 years of experience in heavy equipment sales and service and inventories of top-of-the-line equipment from manufacturers such as Taylor Machine Works Inc., ASV, and Terex Heavy Equipment.
We were originally incorporated as Hamre Equipment Company, Inc. in California on November 17, 1989. We merged into AmeraMex International, Inc., a Nevada corporation, on November 2, 2006.
Selected Financial Data
Statements of Income for the Years Ended December 31, 2020 and 2019.
REVENUES
Sales of Equipment and Other Revenues $ 9,665,607 $ 10,296,901
Rentals and Leases 2,613,513 2,358,337
Total Revenues 12,279,120 12,655,238
COST OF REVENUES
Sales of Equipment and Other Revenues 9,566,702 9,343,196
Rentals and Leases 942,954 951,336
Total Cost of Revenues 10,509,656 10,294,562
GROSS PROFIT 1,769,464 2,360,676
OPERATING EXPENSES
Sales and Marketing 454,806 448,415
Legal Settlement 428,700 -
General and Administrative 944,567 978,560
Total Operating Expenses 1,828,073 1,426,975
PROFIT (LOSS) FROM OPERATIONS (58,609 ) 933,701
OTHER INCOME (EXPENSE)
Interest Expense (1,047,330 ) (747,855 )
Loss from Early Extinguishment of Debt (90,925) (482,908 )
Forgiveness of Debt, and Other Expenses, Net 222,517 131,423
Total Other Income (Expense) (915,738) (1,099,340 )
LOSS BEFORE BENEFIT FOR INCOME TAXES (974,347) (165,639 )
BENEFIT FOR INCOME TAXES (391,657) (75,345 )
NET LOSS $ (582,690) $ (90,294 )
Results of Operations for the Fiscal Year Ended December 31, 2020 as compared to the Fiscal Year Ended December 31, 2019
We had revenues of $12,279,120 for the year ended December 31, 2020 as compared to revenue of $12,655,238 for the year ended December 31, 2019, a 3% decrease. This decrease is attributed to the reduction in sales while the State of California was shut down during the 2020 Pandemic.
We had costs of revenue of $10,509,656 for the year ended December 31, 2020 as compared to costs of $10,294,562 for the year ended December 31, 2019. Our costs increased by $215,094, or 2%. This is as a result of the added costs associated with working while the State of California was shut down.
We experienced an increase in operating expenses of $1,828,073 in 2020 as compared to $1,426,975 in 2019. This increase of approximately 28% in operating expenses is due almost entirely to a legal settlement liability of $428,700.
We had net loss of $582,690 for the year ended December 31, 2020 as compared to net loss of $90,294 for the year ended December 31, 2019. We had a decrease of $492,396 in our net income due to the following: higher travel and expense costs and reduced sales while enduring the COVID-19 Pandemic and a one-time legal settlement liability.
Sales of Equipment and Other Revenues in 2020 were $9,665,607 and made up 79% of our Total Revenues and in 2019 made up $10,296,901, or 81%, of Total Revenues. The remaining portion of Total Revenues, Rentals and Leases, were $2,631,172, or 21%, in 2020 and in 2019, Rentals and Leases made up 19% of Total Revenues and totaled $2,358,337.
Gross profit on Sales of Equipment and Other Revenues in 2020 decreased from $953,705 in 2019 to $98,905 in 2020. During the first six months of 2020, we had significantly lower labor and hauling revenue due to the Pandemic. While business improved during the last six months of 2020, we couldn’t make up the deficit of the first six months. We anticipate business continuing to improve in 2021 as Pandemic-related restrictions are eased and lifted, provided that the effects of COVID-19 continue to decline during the year.
From 2019 to 2020, Sales of Equipment and Other Revenues decreased $631,294, or 6% while during the same period Rentals and Leases increased $255,176, or 11%. In 2020, we entered into four new long term rental contracts with a long standing customer which accounts for the increase year over year in Rental Revenue. At the same time, Equipment Sales were down compared to 2019 due to the Global Pandemic.
We experienced an increase in operating expenses from $1,828,073 in 2020 as compared to $1,426,975 in 2019. This increase of approximately 28% in operating expenses is a result of the Global Pandemic and a one-time legal settlement liability.
From 2019 to 2020, our Interest Expense increased from $747,855 to $1,047,330. This increase is due in part to the increased debt incurred to purchase more equipment and the varying interest rates tied to that financing.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Liquidity and Capital Resources
Selected Financial Data:
Summary of Cash Flows Fiscal 2020 and Fiscal 2019:
(audited)
(audited)
Net cash used in operating activities $ (256,068 ) $ (1,525,908 )
Net cash provided by (used in) investing activities $ (753,828 ) $ (795,205 )
Net cash provided by financing activities $ 1,303,273 $ 2,237,865
Net increase (decrease) in cash and cash equivalents $ 293,377 $ (83,248 )
Cash and cash equivalents, beginning of years $ 114,504 $ 197,752
Cash and cash equivalents, end of year $ 407,881 $ 114,504
Our Net Loss from 2019 to 2020 increased by $492,396 from $(90,294) in 2019 to $(582,690) in 2020. As of December 31, 2019, our Net Cash used in Operating Activities was $1,525,908. This number decreased to $256,068 as of December 31, 2020. Comparing December 31, 2019 to December 31, 2020, our Accounts Receivable increased from $42,095 to $178,661. Our Inventory was increased by $2,142,641 as of December 31, 2019 and as of December 31, 2020, Inventory had increased by $1,031,615. Accounts Payable as of December 31, 2019 was $777,227, but by December 31, 2020, our Accounts Payable was reduced by $88,394.
As of December 31, 2019, our Payments for Property and Equipment was $419,293 and as of December 31, 2020 was $141,998. Payments for Rental Equipment as of the end of 2019 was $375,912 and as of the end of 2020 was $611,830. Proceeds from Sale of Equipment as of the end of 2019 and 2020 were $0. Overall, Net Cash Used in Investing Activities as of the end of 2019 was $795,205 and $753,828 by the end of 2020.
We received Proceeds from Notes Payable as of December 31, 2019 of $960,505 and as of December 31, 2020, the amount was $4,594,871, an increase of $3,634,366, which is an increase of 378%. Payments on Notes Payable decreased as of the end of 2020 to $2,191,602 from $5,110,496 at the end of 2019. This is a decrease of $2,918,894, or 57.0 %. There was a Joint Venture Liability in 2020 for $20,000, this is a 95% decrease from $459,500 for 2019. In addition, the Net Borrowings under Lines of Credit as of the end of 2020 was ($971,861) compared to $5,947,205 at the end of 2019, a decrease of $6,919,066, which is 116%. Overall Net Cash Provided by Financing Activities went from $2,237,865 as of the end of 2019 to $1,303,273 as of the end of 2020.
We expect to generate sufficient cash flows from operations to meet our obligations, and to continue to obtain financing for equipment purchases in the normal course of business.
Management may sell and lease equipment and obtain additional debt financing to acquire equipment and provide cash flow for operations.
As of December 31, 2020, we had a working capital of $(854,426). This is due to the Company being in technical default of our covenant with the business line of credit, with an EBITDA, less capital expenditures, to debt service coverage ratio of 1:1. The Company was overdrawn on its 75% of orderly liquidation value by $285,000 which is currently due. Due to the technical default, the Company has reported this credit facility as a current liability in the accompanying balance sheet at December 31, 2020. We have several opportunities we are negotiating to refinance this debt either through an SBA loan, a line of credit through a different agency or renewal of this facility. We will have the new financing in place prior to the expiration of this facility.
Critical Accounting Policies
All companies are required to include a discussion of critical accounting policies and estimates used in the preparation of their financial statements. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our inventory consists of used equipment held for sale and includes parts and attachments. Our inventory is valued at the lower of the inventory’s cost (specific identification or first in, first out basis) or the current market price of the inventory, less costs to sell. Our expenditures for transporting equipment to our facility and refurbishment costs, including parts and labor, are added to the value of the inventory and these costs are capitalized. Our management compares the cost of inventory with its market value and allowances are made to write down inventory to market value if market value is lower.
Expenditures for maintenance and repairs for property and equipment and rental equipment are expensed as incurred. Any additional renewals and improvements to property and equipment and rental equipment, and which extend its useful life, are capitalized. When these assets are retired or otherwise disposed of, the related costs for the assets and the accumulated depreciation are removed from the respective accounts. Any gain or loss is included in our operations. We depreciate these assets using the straight-line method for substantially all assets with estimated lives as follows:
Furniture and Fixtures 5-7 years
Leasehold Improvements Estimated life of the asset as building is owned by Lee Hamre and leased on a month-to-month basis
Vehicles 3-5 years
Equipment 5-7 years
Rental equipment 5-7 years
For the impairment or disposal of our long-lived assets (assets expected to be kept for at least one year) used in operations, when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the type of asset are less than the asset’s carrying amounts, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Any loss on long-lived assets which are disposed are determined in a similar manner, however, the fair values are reduced for the cost of disposal. In 2020 and 2019, we do not believe we had any impairment of our long-lived assets.
Revenue Recognition
Our primary source of generating revenue is through the sale and rental of heavy equipment. In accordance with accounting rules, we recognize revenue when the customer obtains control of the promised equipment and reflect what we are paid in exchange for the equipment. To determine our revenue recognition depending upon
whether the equipment is sold or leased, we perform the following five steps: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) calculate the transfer price; (iv) allocate the transaction price to the performance obligation in the contract; and (v) recognize revenue when (or as) the customer satisfies a performance obligation. In the event any revenue does not meet these recognition criteria, such revenue will be deferred.
Equipment Sales - We recognize revenue from the sale of equipment upon delivery of the equipment to the customer and passing the risk of loss to the customer, and when we have no other significant obligations with regard to the equipment and collectability of the revenue from the customer is reasonably assured.
Equipment Rentals - Our rental revenues are made up of short-term agreements with monthly or annual terms. We recognize rental revenues in the month rental payments are due based upon the accrual method of accounting. Our equipment lease agreements contain varying terms, but typically range from one to five years for commercial entities. In addition to commercial entities, we also have lease agreements with various governments that have terms of 12 to 24 months and contain options to renew annually through five years. When lease terms are completed, and depending on the specific lease agreement, our customers may have the option to return the equipment, to renew the lease term, purchase the equipment at fair market value, or continue to rent the equipment on a month-to-month basis. Our agreements do not contain provisions for contingent rentals, which would allow rentals to cease or continue based upon certain defined events. Rental revenues for equipment leases are recognized upon receipt. Our initial direct costs for rental equipment are capitalized and amortized over the expected term of the applicable lease. To date, initial direct costs for operating leases have not been significant.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AMERAMEX INTERNATIONAL, INC.
Page
Report of Independent Registered Public Accounting Firm
Financial Statements:
Balance Sheets as of December 31, 2020 and 2019
Statements of Operations for the years ended December 31, 2020 and 2019
Statements of Stockholders' Equity for the years ended December 31, 2020 and 2019
Statements of Cash Flows for the years ended December 31, 2020 and 2019
Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Stockholders and Board of Directors of AmeraMex International, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of AmeraMex International, Inc. (the "Company") as of December 31, 2020 and 2019, and the related statements of operations, stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ dbbmckennon
We have served as the Company's auditor since 2017.
Newport Beach, California
April 15, 2021
AMERAMEX INTERNATIONAL, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 2020 AND 2019
ASSETS
Current Assets:
Cash $ 407,881 $ 114,504
Accounts Receivable, Net 768,371 589,710
Inventory 5,873,569 4,832,283
Other Current Assets 198,531 206,945
Total Current Assets 7,248,352 5,743,442
Property and Equipment, Net 1,035,840 1,179,794
Rental Equipment, Net 3,624,376 4,036,612
Deferred Tax Assets, Net 158,124 -
Other Assets 453,410 489,562
Total Noncurrent Assets 5,271,750 5,705,968
TOTAL ASSETS $ 12,520,102 $ 11,449,410
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 620,200 $ 531,806
Accrued Expenses 231,329 79,787
Joint Venture Liability 439,500 459,500
Lines of Credit 5,749,801 408,033
Notes Payable, Current Portion 911,265 386,528
Convertible Note 150,683 -
Total Current Liabilities 8,102,778 1,865,654
Long-Term Liabilities
Deferred Tax Liability, Net - 226,339
Notes Payable - Related Party 226,659 334,794
Notes Payable, Net of Current Portion 2,597,935 559,235
Line of Credit - 6,313,628
Total Noncurrent Liabilities 2,824,594 7,433,996
TOTAL LIABILITIES 10,927,372 9,299,650
Commitments and Contingencies (Note 11)
STOCKHOLDERS' EQUITY:
Stockholders' Equity
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, no
shares issued and outstanding - -
Common Stock, $0.001 par value, 1,000,000,000 shares authorized
14,808,737 shares issued and outstanding at December 31, 2020 and 2019 14,549 15,068
Additional Paid-In Capital 21,545,614 21,519,435
Treasury Stock - -
Accumulated Deficit (19,967,433 ) (19,384,743 )
Total Stockholders' Equity 1,592,730 2,149,760
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 12,520,102 $ 11,449,410
The accompanying notes are an integral part of these financial statements
AMERAMEX INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
REVENUES
Sales of Equipment and Other Revenues $ 9,665,607 $ 10,296,901
Rentals and Leases 2,613,513 2,358,337
Total Revenues 12,279,120 12,655,238
COST OF SALES
Sales of Equipment and Other Revenues 9,566,702 9,343,196
Rentals and Leases 942,954 951,366
Total Cost of Revenues 10,509,656 10,294,562
GROSS PROFIT 1,769,464 2,360,676
OPERATING EXPENSES
Selling Expense 454,806 448,415
Legal Settlement 428,700 -
General and Administrative 944,567 978,560
Total Operating Expenses 1,828,073 1,426,975
Profit (loss) From Operations (58,609 ) 933,701
OTHER INCOME (EXPENSE)
Interest Expense (1,047,330 ) (747,855 )
Loss from Early Extinguishment of Debt (90,925 ) (482,908 )
Forgiveness of Debt and Other, Net 222,517 131,423
Total Other Income (Expense) (915,738 ) (1,099,340 )
LOSS BEFORE BENEFIT for INCOME TAXES (974,347 ) (165,639 )
BENEFIT for INCOME TAXES (391,657 ) (75,345 )
NET LOSS $ (582,690 ) $ (90,294 )
Weighted Average Shares Outstanding:
Basic 14,808,737 14,808,737
Diluted 14,808,737 14,808,737
Earnings (loss) per Share
Basic $ (0.04 ) $ (0.01 )
Diluted $ (0.04 ) $ (0.01 )
The accompanying notes are an integral part of these financial statements
AMERAMEX INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
Additional
Total
Common Stock Paid-in Treasury Accumulated Stockholders
Balance Shares Amount Capital Stock Deficit Equity
December 31, 2018 15,068,318 $ 15,068 $ 21,524,272 $ (4,837 ) $ (19,294,449 ) $ 2,240,054
Retirement of Treasury Stock - - (4,837 ) 4,837 - -
Net Loss - - - - (90,294 ) (90,294 )
December 31, 2019 15,068,318 15,068 21,519,435 - (19,384,743 ) 2,149,760
Stock for Services 40,000 25,620 - - 25,660
Purchase and Retire Stock (559,163 ) (559 ) - - -
Net Loss - - - - (582,690 ) (582,690 )
December 31, 2020 14,549,155 $ 14,549 $ 21,545,614 $ - $ (19,967,433 ) $ 1,592,730
The accompanying notes are an integral part of these financial statements
AMERAMEX INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (582,690 ) $ (90,294 )
Adjustments to reconcile Net Income (Loss) to
Net Cash Used In Operating Activities:
Stock for Services 25,660 -
Depreciation and Amortization 1,310,018 1,246,777
Benefit for Deferred Income Taxes (384,467 ) (75,345 )
Forgiveness of debt (218,442 ) -
Loss on Legal Settlement 428,700 -
Loss on Early Extinguishment of Debt 90,925 482,908
Changes in Operating Assets and Liabilities:
Accounts Receivable (178,661 ) 42,095
Inventory (1,031,615 ) (2,142,641 )
Other Current Assets 44,568 (173,677 )
Accounts Payable 88,394 (777,227 )
Accrued Expenses 151,542 (38,504 )
NET CASH USED IN OPERATING ACTIVITIES (256,068 ) (1,525,908 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Property & Equipment (141,998 ) (419,293 )
Payments for Rental Equipment (611,830 ) (375,912 )
NET CASH USED IN INVESTING ACTIVITIES (753,828 ) (795,205 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable 4,594,871 960,505
Payments on Notes Payable (2,191,602 ) (5,110,496 )
Payment on Note Payable - Related Party (108,135 ) (18,849 )
Joint Venture Liability (20,000 ) 459,500
Net Borrowings Under Line of Credit (971,861 ) 5,947,205
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,303,273 2,237,865
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 293,377 (83,248 )
CASH, BEGINNING OF YEAR 114,504 197,752
CASH, END OF YEAR $ 407,881 $ 114,504
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash Paid for Interest $ 907,534 $ 747,855
Cash Paid for Income Taxes $ 800 $ 800
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING
AND FINANCING ACTIVITIES:
Transfer of Inventory to Rental Equipment $ - $ -
Equipment Financed Under Capital Leases $ 225,859 $ -
Transfer of Rental Equipment to Inventory $ 526,417 $ 35,470
The accompanying notes are an integral part of these financial statements
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Note 1 - Organization and Basis of Presentation
Organization and Line of Business
AmeraMex International, Inc., (the “Company”) was incorporated on May 29, 1990 under the laws of the state of Nevada. The Company sells, leases and rents new and refurbished heavy equipment primarily in the U.S. The Company operates under the name of Hamre Equipment.
Note 2 - Summary of Significant Accounting Policies
Going Concern Considerations
At December 31, 2020, the Company had working capital of approximately $(854,426) due to classification of business line of credit as current liability because of technical default. On May 1, 2020, the Company received a Paycheck Protection Program (PPP) Loan in the amount of $228,442 to cover payroll and utility expenses during the Pandemic. The Company received 100% forgiveness of the loan which was approved on November 25, 2020. On April 21, 2020, the Company was approved and received a $10,000 advance on an SBA Economic Injury Disaster Loan (EIDL) for $2 million. As the Pandemic continued and more legislation was signed, the COVID EIDL were capped at $150,000. With this change, our approval was reduced to $150,000 which we received in full on September 10, 2020. The loan is at 3.75% interest for a 30 year term with the first twenty-four (24) months of payments deferred.
On February 9, 2021, the Company received a second Paycheck Protection Program (PPP) Loan in the amount of $254,147. We expect to receive 100% forgiveness as we are tracking usage and following the guidelines set forth by the SBA. On April 6, 2021, we received notice that the SBA had increased the limit on the COVID EIDL from $150,000 to $500,000. We requested the increase and should be funded with in the next six (6) to eight (8) weeks. We are currently working with the SBA on a separate loan with specific terms as follows: 45% of the gross earned revenue from 2019 or $10,000,000 whichever is less. Based on our qualifications, we are eligible to receive $5,694,857 at 2% - 6% interest over a 30 year term. This is a brand new program and we cannot apply until after April 19, 2021. An update will be provided in the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2021.
Moving forward, the Company expects to generate sufficient cash flows from operations to meet our obligations, and we expect to continue to obtain financing for equipment purchases in the normal course of business. We are working on several exciting new financing opportunities and whether we replace the current credit facility or renew said facility, we believe that our expected cash flows from operations, together with our current or new credit facility, will be sufficient to operate in the normal course of business for next 12 months from the issuance date of these financial statements.
Basis of Presentation
The accompanying financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and Generally Accepted Accounting Principles (U.S. GAAP). In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and judgment involved. Significant estimates in these financial statements include the allowance for doubtful accounts, inventory reserve, valuation allowance for deferred taxes, and estimated useful life of property and equipment.
Cash
Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At times, cash deposits may exceed FDIC- insured limits. As of December 31, 2020,
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
the Company’s exceeded the FDIC-insured limit by $157,078 and in 2019 no amounts exceeded the FDIC-insured limit. The Company has not experienced any losses related to a concentration of cash or cash equivalents in an FDIC insured financial institution.
Accounts Receivable
The Company grants credit to customers on smaller orders under credit terms that it believes are customary in the industry and does not require collateral to support customer receivables. The Company generally does not extend credit on heavy machinery sales, with occasional exceptions. The Company provides an allowance for doubtful collections, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. As of December 31, 2020 and 2019, the allowance for doubtful accounts was not significant.
Inventory
Inventory consists of used equipment held for sale, as well as parts and attachments. Inventory is valued at the lower of the inventory’s cost (specific identification or first in, first out basis) or the current market price of the inventory, less costs to sell. Expenditures for inbound transportation and refurbishment costs, including parts and labor which add to the value of the inventory are capitalized. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, less costs to sell, if lower.
Property and Equipment, and Rental Equipment
Property and equipment and rental equipment are stated at cost. Expenditures for maintenance and repairs are expensed as incurred; additions, renewals and improvements, which extend the useful life of the assets, are capitalized. When these assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation is provided using the straight-line method for substantially all assets with estimated lives as follows:
Furniture and fixtures 5-7 years
Leasehold improvements Estimated life of the asset as building is owned by Lee Hamre and leased annually
Vehicles 3-5 years
Equipment 5-7 years
Rental equipment 5-7 years
Other Assets
Other assets at December 31, 2020 and 2019, consist principally of cash surrender value of life insurance policies. Total cash value at December 31, 2020 and 2019 was $341,037 and $290,965, respectively.
Long-Lived Assets
The Company applies the provisions of Accounting Standards Codification (ASC) Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review as of December 31, 2020 and 2019, the Company believes there was no impairment of its long-lived assets.
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and equivalents, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Financial Accounting Standards Board (FASB) ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
• Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
• Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
• Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging.
As of December 31, 2020 and 2019, respectively, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value.
Revenue Recognition
In accordance with ASC 606, the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements that the Company deems are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) calculate transfer price; (iv) allocate the transaction price to the performance obligation in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Any revenues that do not meet these recognition criteria will be deferred.
Equipment Sales
The Company recognizes revenue from equipment sales upon delivery of the equipment to the customer and the risk of loss passes to the customer, and no other significant obligations of the Company exist.
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Equipment Rentals
Rental revenues comprise of short term agreements that can have monthly or annual terms. Rental revenues are recognized in the month they are due on the accrual basis of accounting. Our operating lease agreements have varying terms, typically one to five years with commercial entities. We also have agreements governmental entities that are 12 to 24 months in length, with options to renew annually through year five. Upon lease termination, customers, depending in the individual lease agreements, may have the option to return the equipment, to renew the lease term, purchase the equipment at fair market value, or continue to rent on a month-to-month basis. Our operating leases do not provide for contingent rentals. Revenues related to operating leases are recognized on a straight-line basis over the term of the lease. Negotiated lease early-termination charges are recognized upon receipt. Initial direct costs are capitalized and amortized over the expected term of the leases. To date, initial direct costs for operating leases have not been insignificant.
Shipping and Handling
Costs incurred for shipping and handling of equipment sold to customers are included in costs of goods sold in the statements of income.
Sales Tax
Sales tax collected from customers is initially recorded as a liability and then remitted in a timely manner to the appropriate governmental entity.
Warranty Costs
Generally, the Company sells its equipment with no warranty. In the event the Company determines we should repair equipment, it may do so at its election. In the event it does repair equipment, such costs are expensed as incurred.
Stock-Based Compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, Compensation - Stock Compensation. FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity- based compensation issued to employees and non-employees. There were no stock options outstanding as of December 31, 2020 and 2019 and no shares issued for employee compensation during the years then ended.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Basic and Diluted Earnings Per Share
Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (EPS) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were no potentially dilutive securities outstanding during 2020 and 2019.
Concentrations
For the year ended December 31, 2020, three customers accounted for 10.50%, 10.57% and 11.72% of sales, and in 2019, one customer accounted for 12.74% of sales. The loss of one or more of these customers would have a negative impact on the Company’s financial results.
For the year ended December 31, 2020, two vendors accounted for 28.26% and 24.19% of purchases, and in 2019, one vendor made up 30.49% of purchases. The loss of one or more of these vendors would have a negative impact on the Company’s financial results.
Recent Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than 12 months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In November 2019, the FASB delayed the effective date for Topic 842 to fiscal years beginning after December 15, 2020 for private companies and emerging growth companies, and interim periods within those years, with early adoption permitted. In June 2020, the FASB issued ASU No 2020-05 that further delayed the effective date of Topic 842 to fiscal years beginning after December 15, 2021. We will adopt this new standard on January 1, 2022. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” that allows entities to apply the provisions of the new standard at the effective date, as opposed to the earliest period presented under the modified retrospective transition approach and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities that the Company reports relative to such amounts prior to adoption.
Other recent accounting pronouncements issued by the FASB, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company's present or future financial statements.
Note 3 - Inventory
Inventory as of December 31, 2020 and 2019 consisted of the following:
Parts and supplies $ 292,616 $ 250,720
Heavy equipment 5,580,953 4,581,563
Inventory, net $ 5,873,569 $ 4,832,283
All the inventory is used as collateral for the notes payable and lines of credit (see Notes 6 and 7).
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Note 4 - Property and Equipment
Property and equipment includes assets held for internal use; as of December 31, 2020 and 2019, such consisted of the following:
Furniture and fixtures
$ 107,105 $ 100,596
Leasehold improvements 467,188 467,188
Vehicles and equipment 1,619,191 1,483,701
2,193,484 2,051,485
Less accumulated depreciation (1,157,644 ) (871,691 )
Property and equipment, net $ 1,035,840 $ 1,179,794
Depreciation expense for the years ended December 31, 2020 and 2019 was $285,952 and $228,051, respectively.
All the property and equipment is used as collateral for the line of credit and notes payable (see Notes 6 and 7).
Note 5 - Rental Equipment
Rental equipment as of December 31, 2020 and 2019 consisted of the following:
Rental equipment
$ 6,480,478 6,974,935
Less accumulated depreciation (2,856,102 ) (2,938,341 )
Rental equipment, net $ 3,624,376 $ 4,036,594
Depreciation expense for the years ended December 31, 2020 and 2019 was $942,400 and $951,366, respectively.
All the rental equipment is used as collateral for the lines of credit and notes payable (see Notes 6 and 7).
Note 6 - Lines of Credit
The Company has a line of credit with a finance company that provides for borrowing up to $1,050,000. The line of credit is secured by the equipment purchased and is interest free if paid within 180 days from finance date. After applicable free interest period interest calculates as follows; 30 day LIBOR plus 6.75% - rate after Free Period to Day 365, 30 day LIBOR plus 7.00% - Rate Day 366 to 720, 30 Day LIBOR plus 7.25% - Rate Day 721 to 1095, 30 Day LIBOR plus 12.00% Matured Rate Day 1096 and above. Each piece of equipment has its own calculations based on the date of purchase. At December 31 2020 and 2019, the amounts outstanding under this line of credit agreement were $314,400 with $736,000 available and $408,033 with $91,967 available, respectively. Interest expense for 2020 and 2019 was $3,841 and $8,100, respectively. The agreement has no expiration date provided the Company does not default.
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
The Company has line of credit with a finance company that provides for borrowing and refinancing up to $6.5 million, as amended. The credit facility expires March 22, 2022. Interest is due monthly at a rate of 10%, per annum. Principal only becomes due and payable if the Company reaches the maximum balance under the credit facility, which management does not expect to reach. If the maximum balance is reached, the principal becomes payable at 1.25% of the outstanding principal balance per month. The line of credit is secured by substantially all the Company assets, other than those specifically secured by an existing agreement. At December 31 2020, the amounts outstanding under this line of credit agreement were $5,435,401 with $1,064,596 available for purchases. Interest expense for 2020 and 2019 was $569,208 and $421,557, respectively. At December 31, 2020, the Company was in technical default of our 75% covenant with this facility, with an EBITDA, less capital expenditures, to debt service coverage ratio of 1:1. The Company was overdrawn on its 75% of orderly liquidation value by $285,000 which is currently due. Due to the technical default, the Company has reported this credit facility as a current liability in the accompanying balance sheet at December 31, 2020. The lender has not notified the Company of any event of default. We have several opportunities we are negotiating to refinance this debt either through an SBA Economic Injury Disaster loan, a line of credit through a different agency or renewal of this facility. We will have the new financing in place prior to the expiration of this facility.
Note 7 - Notes Payable
The Company uses credit to finance the purchase of heavy equipment on a short-term and long-term basis and secured by specific pieces of equipment. Notes payable as of December 31, 2020 and 2019, consisted of the following:
Payable to insurance company; interest only, secured by cash surrender value of life insurance policy; no due date $ 158,535 $ 158,535
Note Payable 043 to finance company dated March 20, 2019; interest at 0.0% per annum; monthly payment of $5,000; due 12 months from issuance; unsecured - 15,000
Note Payable ROC 001 to finance company dated June 17, 2019; interest at 2.90% per annum; monthly payment of $4,749.37; due 48 months from issuance; secured by equipment 141,489 189,467
Note Payable 044 to finance company dated September 26, 2019; interest at 10.228% per annum; monthly payment of $4,383.09; due 60 months from issuance; secured by equipment 156,267 197,033
Note Payable ROC 002 to finance company dated September 13, 2019; interest at 2.90% per annum; monthly payment of $3,422.31; due 48 months from issuance; secured by equipment
105,264 142,689
Note Payable 045 to finance company dated September 18, 2019; interest at 10.52% per annum; monthly payment of $2,143; due 35 months from issuance; secured by equipment
39,151 59,566
Note Payable 046 to finance company dated November 1, 2019; interest at 0.0% per annum; monthly payment of $3,000; due 52 months from issuance, final payment of $12,000; secured by equipment 129,000 162,000
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Note Payable 047 to finance company dated November 22, 2019; interest at 0.0% per annum; monthly payment of $933.60; due 24 months from issuance; secured by equipment 12,030 21,473
Note Payable 050 to finance company dated February 19,2020; interest at 8.0% per annum; monthly payment of $16,500 for 6 months then $11,520.44 due 36 months from issuance; secured by equipment 330,995 -
Note Payable 051 to finance company dated February 25, 2020; interest at 10.35% per annum; monthly payment of $28,903.16; due 12 months from issuance; unsecured 48,169 -
Note Payable ROC 003 to finance company dated March 26, 2020; interest at 5% per annum; monthly payment of $6,135.98; due 60 months from issuance; secured by equipment 286,277 -
Note Payable ROC 004 to finance company dated March 26, 2020; interest at 5% per annum; monthly payment of $6,135.98; due 60 months from issuance; secured by equipment 286,277 -
Note Payable ROC 005 to finance company dated March 26, 2020; interest at 5% per annum; monthly payment of $6,135.98; due 60 months from issuance; secured by equipment 286,277 -
Note Payable ROC 006 to finance company dated March 26, 2020; interest at 5% per annum; monthly payment of $6,135.98; due 60 months from issuance; secured by equipment 286,277 -
Note Payable ROC 007 to finance company dated May 1, 2020; interest at 4.95% per annum; monthly payment of $34,26.73; due 60 months from issuance; secured by equipment 181,132 -
Note Payable 052 to finance company dated April 21, 2020; interest at 10.582% per annum; monthly payment of $1,489.66; due 60 months from issuance; secured by equipment 61,918 -
Note Payable 053 to SBA dated September 24, 2020; interest at 3.884% per annum; monthly payment of $731; due 384 months from issuance; unsecured 170,000 -
Note Payable 054 to finance company dated May 22, 2020; interest at 14.378% per annum; monthly payment of $1,037.45; due 36 months from issuance; secured by equipment 26,413 -
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Note Payable 055 to finance company dated June 18, 2020; interest at 4.990% per annum; monthly payment of $1,207.42; due 60 months from issuance; secured by equipment 58,293 -
Note Payable 056 to finance company dated June 24, 2020; interest at 10.625% per annum; monthly payment of $3,377.42; due 60 months from issuance; secured by equipment 144,475 -
Note Payable 058 to finance company dated August 28, 2020; interest at 3.390% per annum; monthly payment of $783.56; due 60 months from issuance; secured by equipment 39,863 -
Note Payable 059 to finance company dated September 16, 2020; interest at 4.850% per annum; monthly payment of $4,778.59; due 36 months from issuance; secured by equipment 147,670 -
Note Payable 060 to finance company dated October 9, 2020; interest at 8.90% per annum; monthly payment of $16,500 for 5 months, then $10,158.19; due 48 months from issuance;
secured by equipment 413,428 -
Total 3,509,200 945,763
Less current portion 911,265 386,528
Long-term portion $ 2,597,935 $ 559,235
From time to time, the Company’s Chief Executive Officer provides a personal guarantee on certain of the equipment loans above.
The Company entered into a note payable to purchase equipment for a customer who wished to maintain the equipment as a long term rental. After six (6) months of leasing the equipment, the customer decided to purchase the machine. This early extinguishment of debt caused the Company to be charged an additional $90,925 in pre-payment penalties on the note.
Aggregate future annual maturities of notes payable as of December 31, 2020, are as follows:
Years ending December 31:
$ 911,265
1,025,936
787,902
514,494
269,603
$ 3,509,200
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Note 8 - Related-Party Transactions
Related-Party Note Payable
The Company has a note payable to the Company’s Chief Executive Officer. Funds were received years ago to fund operations. The note is interest bearing at 10% per annum, unsecured and payable upon demand. The balance of the note at December 31, 2020 and 2019 was $226,659 and $334,794, respectively. During the years ended December 31, 2020 and 2019, the Company repaid $108,135 and $18,849, respectively, of this note payable. The note incurred $36,936 and $29,137 in interest expense for the years ended December 31, 2020 and 2019 respectively.
Lease
The Company leases a building and real property in Chico, California under a lease agreement renewing annually every March from a trust whose trustee is the Company’s Chief Executive Officer. The lease provides for monthly lease payment of $9,800 per month. Upon renewal in March of 2020, the monthly lease payment was increased to $12,000. Rent expense for the years ended December 31, 2020 and 2019 were $139,600 and $117,600, respectively.
Transactions with Director
Two separate customers lost financing for purchases of equipment after already receiving the machines, so the Company sold the machines to the brokerage company of one of the Company’s Directors. The customers are now renting the machines on a rent to own basis and the Company is purchasing the machines from the brokerage. The Company has two notes payable tied to these transactions that at December 31, 2020 and December 31, 2019, have a combined total due of $168,151 and $221,566 respectively. The brokerage made $42,681 on the transactions. The notes are secured by the equipment.
The Company also has two notes payable that were brokered through the same Director’s company. The notes are secured with equipment and as of December 31, 2020 and 2019 have a combined total due of $744,424 and $0, respectively.
Note 9 - Joint Venture
The Company entered into a Joint Venture with one of its long time collaborators. This arrangement was made in order to purchase 30 machines from a closing terminal in Seattle Washington for $1,089,000. At December 31, 2020, the Company had repaid $20,000 for equipment sold. During the same time period, the Company also remitted $63,878 in joint venture profits. The amount due to the collaborator for the years ended December 31, 2020 and 2019 was $439,500 and $459,500, respectively.
Note 10 - Convertible Notes
On or about July 20, 2020 and again on September 16, 2020, the Company and Geneva Roth Remark Holdings, Inc., a New York corporation (“Buyer”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) by which the Buyer purchased and the Company issued and sold convertible notes of the Company, in the aggregate principal amount of $120,000 (the “Notes”), convertible into shares of common stock of the Company (the “Common Stock”).
A summary of the terms of the Note are as follows:
The principal amount of the Notes is $120,000, with an interest rate of 10% per annum, and a maturity date of July 20, 2021 and September 16, 2021 net of direct loan costs of approximately $6,000 combined.
Any amount of principal or interest which is not paid by the maturity date shall bear interest at the rate of 22% per annum from the due date thereof. The Note holds conversion rights, whereby the Buyer has the right from time to time, and at any time after 180 days from July 20, 2020 and ending on the later of: (i) July 20, 2021 and (ii) the date of payment of the Default Amount (payable only in the event of a default), to convert the outstanding amounts of the Note into fully paid and non-assessable shares of Common Stock, at the Conversion Price (defined below). Principal may be repaid before the Maturity Date at the following premiums:
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Prepayment Period Prepayment Percentage
1. The period beginning on the Issue Date and ending on the date which is 60 days following the Issue Date.
120%
2. The period beginning on the date which is 61 days following the Issue Date and ending on the date which is 90 days following the Issue Date. 125%
3. The period beginning on the date that is 91 days from the Issue Date and ending 150 days following the Issue Date. 130%
4. The period beginning on the date that is 151 days from the Issue Date and ending 180 days following the Issue Date
135%
If not paid at Maturity Date, the Conversion Price shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the ten Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service. 66,000,000 shares have been reserved for possible conversion and principal and interest will increase to 150% in the event of default.
The July 20, 2020 note was paid in full on January 15, 2021. The September 16, 2020 note was paid in full on March 19, 2021. As of December 31, 2020, the accrued and accreted Interest Expense for these convertible notes was $7,233 and $11,317, respectively. Prior to payment, 1,553,063 shares were reserved for the first note and 1,334,569 for the second. All shares were release upon payment of notes.
Note 11 - Commitments and Contingencies
From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. In 2020, there were two pending legal proceedings which were subsequently dismissed as the Company reached a combined confidential settlement agreement. As of December 31, 2020, this settlement was paid in full using $50,000 in cash and a machine sale. There are no pending legal proceedings to which the Company is a party for which management believes the ultimate outcome would not have a material adverse effect on the Company's financial position. There are no pending legal proceedings that are expected to be material to our cash flow and operating results.
See Note 8 for related party operating lease.
Note 12 - Stockholders’ Equity
The Company has authorized 5,000,000 shares of $0.001 par value blank check preferred stock, of which no shares were issued and outstanding as of December 31, 2020 and 2019.
The Company has authorized 1,000,000,000 shares of $0.001 par value common stock, of which 14,808,737 were issued and outstanding as of December 31, 2020 and 2019. During the years ended December 31, 2020 and 2019, the Company issued 40,000 shares of common stock as compensation for services.
On September 14, 2020, the Company entered into an agreement with M Vest LLC., a FINRA registered broker-dealer, contracting their services. In addition to monetary compensation, the Company paid out 40,000 fully vested shares of the Company’s Common Stock. The shares of Common Stock will have unlimited piggyback registration rights and the same rights afforded other holders of the Company’s Common Stock. We recorded compensation expense totaling $25,660 based on the quoted market price of the Company’s Common Stock.
On December 21, 2020, we effected a one for fifty (1:50) reverse stock split (the “Reverse Stock Split”). To effect the Reverse Stock Split, we filed a Certificate of Amendment to our Restated Certificate of Incorporation with the Nevada Secretary of State. The Reverse Stock Split was approved by our Board of Directors on September 9, 2020 and by our stockholders on September 11, 2020, by written consent in lieu of a special meeting of stockholders.
As a result of the Reverse Stock Split, every 50 shares of issued and outstanding Common Stock were automatically combined into one issued and outstanding share of Common Stock, without any change in the par value per share. No fractional shares were issued as a
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
result of the Reverse Stock Split and any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share. Following the Reverse Stock Split, the number of shares of Common Stock outstanding was reduced from 753,415,879 shares to 15,068,317 shares. There was no change to the number of authorized shares.
At the time of the Reverse Stock Split we retired 27,958,150 shares which after the split equates to 559,163 shares at a cost of $7,813.
Unless otherwise indicated, all shares and per share amounts included in this Annual Report reflect the effects of the Reverse Stock Split.
Note 13 - Revenues
During the years ended December 31, 2020 and 2019, revenues and costs related to domestic and foreign sales of equipment are as follows:
Domestic Export Domestic Export
Equipment Sales $ 9,665,607 $ - $ 7,481,094 $ 517,000
Less Cost of Sales (9,566,702 ) - (6,711,262 ) (239,500 )
Gross profit $ 98,905 $ - $ 769,832 $ 277,500
During the years ended December 31, 2020 and 2019, there were no foreign rentals of equipment.
The Company provides equipment for rental on a month-to-month basis and under terms which exceed one year. Future annual estimated rental revenues as of December 31, 2020 are as follows:
Years ending December 31:
$ 3,733,657
3,292,657
2,455,657
$ 9,481,971
Note 14 - Income Taxes
Income tax expense (benefit) reflected in the statements of operations consisted of the following for the years ended December 31, 2020 and 2019:
Current tax expense:
Federal $ - $ -
State
Total current tax expense
Deferred tax expense (benefit):
Federal (313,987 ) (56,618 )
State (78,470 ) (19,527 )
Total deferred tax expense (benefit) (392,457 ) (76,145 )
Total tax expense (benefit) $ (391,657 ) $ (75,345 )
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
A reconciliation of the differences between the effective and statutory income tax rates for years ended December 31, 2020 and 2019 is as follows:
Amount Percent Amount Percent
Federal statutory rates
$ (206,254 ) (21.0 %) $ (34,784 ) (21.0 %)
State income taxes (83,330 ) (8.5 %) (11,595 ) (7.0 %)
Life insurance and meals (44,324 ) (4.5 %) 1,954 1.5 %
True up (57,749 ) (5.9 %) (24,316 ) (15.0 %)
AMT Credit Carryover - 0.0 % (6,604 ) (4.0 %)
Income taxes \ Effective rate $ (391,657 ) 39.9 % $ (75,345 ) 45.5 %
As of December 31, 2020 and 2019, the significant components of the deferred tax assets and liabilities are summarized below:
Deferred tax assets (liabilities)
Net operating loss carryforwards $ 688,220 $ 564,125
Reserves and allowances 89,400 81,966
Tax credits and other 32,110 40,203
Total deferred tax assets 809,730 686,294
Deferred tax liability -
Depreciation (651,606 ) (912,633 )
Total deferred tax liabilities (651,606 ) (912,633 )
Net deferred tax asset (liability) $ 158,124 $ (226,339 )
The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of December 31, 2020 and 2019.
The Company has approximately $2,213,253 in federal net operating losses that begin to expire in 2036. As of December 31, 2020, the Company has no net operating losses for state income tax reporting purposes.
We filed amended income tax returns for 2015 and 2016, which are currently under examination by the Internal Revenue Service. 2017-2019 returns are still subject to examination by federal and state agencies.
AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
Note 15 - Subsequent Events
On January 21, 2021, we entered into a securities purchase agreement with Geneva whereby Geneva purchased 103,500 shares of our Series A Preferred Stock for a purchase price of $103,500. After payment of transaction-related expenses, net proceeds to us were $100,000. The proceeds were used for working capital. The Series A Preferred Stock earns dividends at a rate of 10% per annum, and dividends at a default rate of 22%. The shares of Series A Preferred Stock have a stated value of $1.00 per share and are convertible at 70% of the lowest closing bid price of the Common Stock in the ten days preceding a conversion.
On February 9, 2021, the Company received a second Paycheck Protection Program (PPP) Loan in the amount of $254,147. We expect to receive 100% forgiveness as we are tracking usage and following the guidelines set forth by the SBA. On April 6, 2021, we received notice that the SBA had increased the limit on the COVID EIDL from $150,000 to $500,000. We requested the increase and should be funded with in the next six (6) to eight (8) weeks. We are currently working with the SBA on a separate loan with specific terms as follows: 45% of the gross earned revenue from 2019 or $10,000,000 whichever is less. Based on our qualifications, we are eligible to receive $5,694,857 at 2% - 6% interest over a 30 year term. This is a brand new program and we cannot apply until after April 19, 2021. An update will be provided in the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2021.
On March 23, 2021, we entered into a securities purchase agreement with Geneva whereby Geneva purchased 78,000 shares of our Series A Preferred Stock for a purchase price of $78,000. After payment of transaction-related expenses, net proceeds to us were $75,000. The proceeds were used for working capital. The Series A Preferred Stock earns dividends at a rate of 10% per annum, and dividends at a default rate of 22%. The shares of Series A Preferred Stock have a stated value of $1.00 per share and are convertible at 70% of the lowest closing bid price of the Common Stock in the ten days preceding a conversion.
At any time during the period indicated below, after the date of the issuance of shares of Series A Preferred Stock (each respectively an “Issuance Date”), the Company will have the right, at the Company’s option, to redeem all of the shares of Series A Preferred Stock by paying an amount equal to (i) the number of shares of Series A Preferred Stock multiplied by then Stated Value (including and accrued dividends); (ii) multiplied by the corresponding percentage as indicated in the chart below:
Prepayment Period Prepayment Percentage
1. The period beginning on the Issue Date and ending on the date which is 60 days following the Issue Date.
120%
2. The period beginning on the date which is 61 days following the Issue Date and ending on the date which is 90 days following the Issue Date. 125%
3. The period beginning on the date that is 91 days from the Issue Date and ending 150 days following the Issue Date. 130%
4. The period beginning on the date that is 151 days from the Issue Date and ending 180 days following the Issue Date
135%
After the expiration of one hundred eighty (180) days following the Issuance Date, except for the Mandatory Redemption, the Company shall have no right to redeem the Series A Preferred Stock unless otherwise agreed to with the Holder.
If the Series A Preferred Stock is not redeemed, at any time on and following the six-month anniversary of the Issuance Date, the Series A Preferred Stock shall be convertible into shares of Common Stock at the option of the Holder.
In the event of a conversion of any Series A Preferred Stock, the Company shall issue to the Holder a number of Common Stock equal to: (i) the then Stated Value; multiplied by (ii) the number of shares of Series A Preferred Stock being converted by the Holder as set forth in the Conversion Notice; divided by (iii) the Conversion Price. The Conversion Price shall equal a discount of 30% off of the Trading Price. The Trading Price shall be the lowest closing bid price for the Common Stock during the prior ten (10) trading day period (“Trading Price”).
The Holder will be limited to convert no more than 4.99% of the issued and outstanding Common Stock at time of conversion at any one time.
Pertaining to the first purchase agreement, 5,000,000 of common stock were reserved for possible conversion; for the second agreement the amount of shares reserved was 4,896,500.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No events occurred requiring disclosure under Item 304 of Regulation S-K during the fiscal year ending December 30, 2020.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision of our President and Chief Financial Officer performed an evaluation (the “Evaluation”) of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide a reasonable level of assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our President and Chief Financial Officer concluded that, as of December 31, 2020, due to the presence of material weaknesses, our disclosure controls and procedures were ineffective.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal controls over our financial reporting. Internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failure. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
In connection with the preparation of the Annual Report on Form 10-K for the year ended December 31, 2020, our President and Chief Financial Officer evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission’s Internal Control-Integrated Framework. As a result of this assessment, we concluded that we had not implemented effective internal control over financial reporting during the reporting year due, in part, to our continued inability to install and utilize a system wide work order software.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this Annual Report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2021: a new work order software that communicates with our accounting system.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control Over Financial Reporting
An evaluation was performed under the supervision of our management, including our President and Chief Financial Officer, of whether any change in our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the year ended December 31, 2020. Based on that evaluation, our management, including our President and Chief Financial Officer, concluded that there was no change in our internal control over financial reporting that occurred during the year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Executive Officers and Directors
The following table sets forth the names and ages of our current directors and executive officers and includes the principal offices and positions held by each person and the date each person began his or her role. Our executive officers were appointed by our Board of Directors. Our directors serve until the earlier occurrence of the election of his or her successor at the next meeting of stockholders, death, resignation, or removal by our Board of Directors.
Name Age Position Date
Lee Hamre President and Chairman
Marty Tullio Secretary and Director
Hope Stone Chief Financial Officer
J. Jeff Morris Director
Brian Hamre Director
Michael Maloney Director
Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.
Lee Hamre, President and Chairman
Mr. Hamre has been in the heavy equipment business for over 38 years. He worked for Buehrer Inc. in Berkeley, California for 13 years from 1976 to 1989. He then founded Hamre Equipment Co. as its sole owner in 1989. In 2006, he merged Hamre Equipment Co. with AmeraMex International after having rented equipment to AmeraMex International for several years. Mr. Hamre served in the United States Navy Reserves for six years. He earned a B.A. in Business Communications from California State College, Chico.
Michael Maloney, Chief Operations Officer, Treasurer, & Director
Having retired from a 32 year career in law enforcement which culminated with his assignment as the Chief of Police in the City of Chico, California from 2009 through 2012, Mr. Maloney joined our Board of Directors and became our Chief Operating Officer. With significant budget, management, and strategic planning experience, he has provided counsel to us on a variety of management issues and has coordinated the handling of sensitive personnel matters, all while offering a fresh perspective
from outside of the industry. Mr. Maloney is also Director of Public Safety, Education, and Training at Butte College; a Board Member of Catalyst Domestic Violence Services; and a Board Member of the California Partnership to End Domestic Violence. Mr. Maloney has an A.A. in Social Science from Butte College, a B.A. in Management from St. Mary’s College and has completed graduate work in Business Management at the University of Virginia.
Marty Tullio, Secretary and Director
Marty Tullio is a veteran of the investor relations and corporate communications fields. She has managed the financial communications programs for a wide range of public and private companies, providing day-to-day counsel to executive management and coordinating investor relations efforts for a number of diversified clients. Ms. Tullio is proactive in the planning and execution of investor outreach programs, including road shows and investor conferences, and in developing strategic communications plans for client organizations.
Ms. Tullio has more than a decade of in-house agency investor relations management experience, specializing in the targeting and development of institutional investor and research analyst following, support of fundraising activities, corporate and crisis communications, consulting, and the introduction and positioning of companies to the investment community.
Prior to becoming an investor relations professional, Ms. Tullio spent 15 years as a sales and marketing executive in the technology industry, with major corporations such as NCR, GTE Telenet, and a division of McDonnell-Douglas, as well as smaller technology companies such as Time Systems International and Data Point Corporation. She has held several managerial and executive positions, including Vice President of Sales and Marketing, Executive Vice President, and General Manager. Marty earned a Bachelor of Arts degree as well as her investor relations certification from the University of California, Irvine.
Hope Stone, Chief Financial Officer
Hope Stone joined us as Chief Financial Officer in June 2018. Ms. Stone is responsible for our overall financial strategy and direction, as well as human resources. Within finance, she guides our treasury, accounting, tax, and internal and external audit functions.
From March 2016 to March 2018, Ms. Stone was Controller and acting Chief Financial Officer of Digital Path, Inc., a mid-sized telecommunications company servicing Northern California, Northern Nevada, and Southern Oregon from June 2016 to August 2018. From March 2014 to August 2016, Ms. Stone was the Controller and Human Resources Manager at Moana Nursery, a multi-store organization servicing Northern Nevada’s nursery and landscaping industry since 1967. She also worked in the insurance practice at ISU Stetson-Beemer. Throughout her over 20-year career in accounting, auditing and financial planning, Ms. Stone has established a reputation for building world-class teams and for aligning financial and business metrics to support business strategy and high-growth. Ms. Stone has spearheaded multiple SBA loans and equipment and other financing transactions. Ms. Stone holds a BS in Finance from Tennessee Baptist College and an MBA from the University of Devonshire.
J. Jeffery Morris, Director
J. Jeffery Morris is the president of Global Finance Group located in Newport Beach, California. Mr. Morris has been in the commercial leasing/finance industry since 1974. Prior to joining Global Finance Group, Morris started Crocker Capital, a lease invoice financing company, in 1992. Mr. Morris has merged portions of the Crocker operations into Global Vantage Ltd. In 1980, Morris began Perry Morris Corporation and by 1990, the company had an annual leasing invoice position of over $100 million. The company was twice named in INC Magazine’s list of the 500 fastest growing, privately held companies in the U.S. Mr. Morris graduated from USC in 1972 as a finance major. He has been on the boards of many civic and charitable organizations such as: Southern California Chapter of YPO, Children’s Hospital of Orange County, USC Associates, and the Orange County YMCA. He also headed a public fundraising campaign for a Children’s Hospital that raised over $12 million.
Brian Hamre, Director
Brian Hamre is the Regional Sales Manager (Northern California and Northern Nevada) of Ritchie Brothers Auctioneers, which specializes in the acquisition and auction of heavy equipment. Mr. Hamre has over 32 years of sales and marketing management experience in the heavy equipment industry. Prior to joining Ritchie Brothers in 2008, Mr. Hamre worked with us for 22 years. While with us, he held a variety of positions and was responsible for successfully expanding our sales and marketing reach within the Western United States. Brian Hamre is an alumnus of California State University, Chico.
Conflicts of Interest - General
There can be no assurance that management will resolve all of our conflicts of interest.
Our directors and officers are, or may become, in their individual capacities, officers, directors, controlling shareholder and/or partners of other entities engaged in a variety of businesses. Thus, there exist potential conflicts of interest including, among other things, time, efforts, and corporate opportunity, involved in participation with such other entities. Consequently, there are potential inherent conflicts of interest in their acting as our officers and directors. Insofar as the officers and directors are engaged in other business activities, management anticipates it will devote only up to approximately 40 hours per week to the our affairs.
Conflicts of Interest - Corporate Opportunities
Presently, there is no requirement included in our Articles of Incorporation, Bylaws, or minutes which provides that our officers and directors must disclose business opportunities which come to their attention. Our officers and directors do, however, have a fiduciary duty of loyalty to us to disclose any business opportunities brought to their attention, in their capacity as an officer and/or director or otherwise. Excluded from this duty would be opportunities which the person learns
about through his or her involvement as an officer and/or director of another company. We have no intention of merging with or acquiring an affiliate, associated person, or business opportunity from any affiliate or any client of any such person.
Our Board of Directors has adopted a policy that we will not seek a fund of, any entity in which any officer or director serves as an officer or director or in which they or their family members own or hold a controlling ownership interest. Although the Board of Directors could elect to change this policy, the Board of Directors has no present intention to do so.
Annual Meeting
Our annual meeting of stockholders is scheduled to take place on November 5 of each year. This will be an annual meeting of stockholders and will include the election of directors. The annual meeting will be held at our principal office or at such other place as permitted by the laws of the State of Nevada and on such date as may be fixed from time to time by resolution of our Board of Directors.
Involvement in Certain Legal Proceedings
During the past five years, none of our officers or directors has been a party to or executive officer of an entity that has filed any bankruptcy petitions. During the past five years, none of our officers or directors have been convicted or been a named subject of any pending criminal proceedings. During the past five years, none of our officers or directors has been held to have violated any State or Federal Securities laws or any Federal commodities law or otherwise have been subject to any order, judgment or decree not subsequently reversed, suspended, or vacated permanently enjoining such officer or director from the activities enumerated in Regulation S-K Item 4.01(f)(3).
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires that our officers, directors, and persons who own more than 10% of our Common Stock file reports of ownership and changes in ownership with the SEC. Based solely on our review of the SEC’s EDGAR database, copies of such forms received by us, or written representations from certain reporting persons, we believe that during the fiscal year ended December 31, 2019, the following delinquencies have occurred:
Name and Affiliation No. of Late Reports No. of Transactions Not Filed on a Timely Basis Known Failures to File
Jeff Morris, Director None
Brian Hamre, Director None
Code of Ethics
We have a code of Ethics that is signed off by each employee as part of their initial hiring package. Our code of ethics is posted on our website and can be found at https://ammx.net/investor-relations/corporate-governance/#GovSection|3. We are also vetted and certified through TRACE International Organization an Anti-Bribery Compliance Solution. This certification is posted on our website.
Nominating Procedures to the Board of Directors
There have been no changes to the procedures by which our security holders may recommend nominees to our Board of Directors.
Audit Committee and Audit Committee Financial Expert
Our separately-designated audit committee consists of J. Jeff Morris, Marty Tullio, and Hope Stone; with J. Jeff Morris acting as the audit committee financial expert.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
Executive and Director Compensation
All decisions regarding compensation for our executive officers and executive compensation programs are reviewed, discussed, and approved by our Board of Directors. All compensation decisions are determined following a detailed review and assessment of external competitive data, the individual’s contributions to our success, any significant changes in role or responsibility, and internal equity of pay relationships.
The following table sets forth the compensation paid to our officers from the years ended December 31, 2020 and 2019.
Name and Principal Position Year Salary ($) Stock Awards Price per Share Stock Awards ($) Total
($)
Lee Hamre, President & Chairman
150,000
150,000
N/A
N/A
150,000
150,000
Hope Stone, Chief Financial Officer
120,000
120,000
N/A
N/A
120,000
120,000
There was no Bonus, Option Award, or Other Compensation paid during the years listed in the table above.
Employment Contracts and Termination of Employment and Change-in-Control Arrangements
There are no employment contracts, compensatory plans, or arrangements, including payments to be received from us, with respect to any of our directors or executive officers which would in any way result in payments to any such person because of his or her resignation, retirement, or other termination of employment with us. These agreements do not provide for payments to be made as a result of any change in control of us, or a change in the person's responsibilities following such a change in control.
Equity Compensation Plan Information
We currently do not have a Stock Option Plan.
Independent Contractor Agreements
As of the date of this Annual Report, we do not have any Independent Contractor Agreements in place; however, we may adopt such agreements in the future.
Other Compensation
As of the date of this Annual Report, we do not have any annuity, pension, stock options, profit sharing retirement, or other similar benefit plans; however, we may adopt such plans in the future. As of the date of this Annual Report, there are no personal benefits available to our officers and directors.
Grants of Plan Based Awards
There were no grants of plan based awards made in the fiscal year ended December 31, 2020.
Outstanding Equity Awards at Fiscal Year-End
We do not currently have any arrangements or contracts pursuant to which our officers and directors are compensated for any services, including any additional amounts payable for committee participation or special assignments.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership of our outstanding Common Stock by:
• Each person who is known by us to be the beneficial owner of 5% or more of our Common Stock;
• Our executive officers, and each director as identified in the “Management - Executive Compensation” section; and
• All of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock and options, warrants and convertible securities that are currently exercisable or convertible within 60 days of the date of this document into shares of our Common Stock are deemed to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible securities for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
The information below is based on the number of shares of our Common Stock that we believe were beneficially owned by each person or entity as of the date of this registration statement.
Name and Address(1) of
Beneficial Owner Number of Shares of
Common Stock
Percent
of Class
Lee Hamre, President & Chairman 6,183,657 42.2%
Marty Tullio, Secretary & Director 916,667 6.3%
Hope Stone, Chief Financial Officer -
Michael Maloney, Director 260,000 1.8%
J. Jeff Morris, Director 2,000 *
Brian Hamre, Director 60,000 *
All officers and directors
as a group (five persons)
7,422,324 50.7%
Warren Murphy
Troon Court
Windsor, CA 95492
1,358,100 9.3%
*Less than 1%.
(1) The address of all officers and directors is our corporate address at 3930 Esplanade, Chico, California 95973.
Rule 13d-3 under the Exchange Act governs the determination of beneficial ownership of securities. That rule provides that a beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or investment power with respect to such security. Rule 13d-3 also provides that a beneficial owner of a security includes any person who has the right to acquire beneficial ownership of such security within 60 days, including through the exercise of any option, warrant or conversion of a security. Any securities not outstanding which are subject to such options, warrants or conversion privileges are deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class owned by such person. Those securities are not deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person. Included in this table are only those derivative securities with exercise prices that we believe have a reasonable likelihood of being “in the money” within the next 60 days.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Related Party Transactions
Except as described below, there were no transactions with any executive officers, directors, 5% stockholders and their families and affiliates since January 1, 2017.
We lease our facility from the Lee Hamre Trust. (See Item 2. Properties.)
We have a note payable to our President, Lee Hamre, for funds loaned for our operations. The note is interest bearing at 10% per annum, unsecured, and payable upon demand. The balance of the note at December 31, 2020 and 2019 was $226,659 and $334,794, respectively. During the years ended December 31, 2020 and 2019, we repaid $158,675 and $18,849, respectively, on the note. The note incurred $36,936 in interest in 2020 and $29,137 of interest in 2019. See Exhibit 3.6.
Director Independence
We are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” None of our directors (see Item 10 above) are independent as defined under the Nasdaq Marketplace Rules.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the annual audit of our financial statements and review of financial statements included in our quarterly reports and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
For the Fiscal Year Ended
Audit Fees $ 132,657 $ 156,672
Audit Related Fees $ 5,213 $ 5,260
Tax Fees $ 7,100 $ 0
All Other Fees $ 24,657 $ 15,439
Total $ 169,626 $ 177,371
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Our Audit Committee pre-approves all audit and permissible non-audit services. These services may include audit services, audit-related services, tax services, and other services. Our Audit Committee approves these services on a case-by-case basis.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
1. Financial Statements.
Our consolidated financial statements are included in Part II, Item 8 of this report:
Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity	
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
2. Financial statement schedules.
All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.
3. Exhibits.
A list of the exhibits filed or furnished with this report on Form 10-K (or incorporated by reference to exhibits previously filed or furnished by us) is provided in the Exhibit Index beginning on page 52 of this Annual Report. Those exhibits incorporated by reference herein are indicated as such by the information supplied in the parenthetical thereafter. Otherwise, the exhibits are filed herewith.