AmeraMex International, Inc.

Marty Tullio - IR Lee Hamre - President & CEO Tracie Hannick - CFO

Michael Classie - Colorado Financial Mike Travlos - Private Investor Drew Cobb - Private Investor Matt Davis - Private Investor

Yes, good morning and to some of you good afternoon. Before we begin today's call, I'd like to share with you that the statements made in this conference call that relate to the company's future financial results, company's markets, our growth plans or performance are forward-looking and involve certain risk and uncertainties associated with demands for products and services and development of markets for the company's products and services.

Actual results, events and performance may differ materially. Conference call participants are cautioned not to place undue reliance on these forward-looking statements, which speak only as the date of this conference call.

AmeraMex undertakes no obligation to release publicly the results or revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Now I would like to turn the call over to AmeraMex CEO, Lee Hamre.

Good morning, Lee.

Good morning, Marty and for everybody on the call, thanks for joining us this morning for our second quarter conference call. With me today are all my Board members, Mike Maloney; our Chief Operating Officer, Tracie, CFO; Marty Tullio, who you've been listening to, and myself Lee Hamre.

Before we provide an update and answer shareholder questions, I would like Tracie to provide an overview of net financial statement for the six-month period. These financials were disseminated earlier this month and they along with our quarterly disclosure were uploaded to the OTC market.

So Tracie, would you take it from there?

Sure. Good morning, everyone.

When we spoke in March, I shared with you that our financials for 2014 and 2015 would begin the review cycle and then we'll move on to the audit. We're well into the audit and notwithstanding any unforeseen delays expect to have the audit completed by the end of September.

Before I discuss the numbers for the six-month period, please remember all numbers today discussed are approximate. As announced earlier this month, revenue for the six-month period ending June 30, 2016, was $5.8 million, compared to revenue of $2.2 million reported for 2015.

This is a 164% increase in revenue. Gross profit as a percentage of sales for the period was 62% compared to 59% for the six-month period in 2015.

Net income for the six-month period was $1.4 million, an increase of over 500% when compared to net income of $221,456 for 2015. We've been asked by one of our shareholders about the increase in general expenses over the comparable period and what's driving that.

So our actual operating expense have remained steady or dropped due to budgeting and spending control. The expenses that have risen are due to the hiring of new employees in sales, service, and transportation, our hauling division.

Interest expense will decrease due to the reduction of Lee Hamre's note, and we've changed our line of credit with a lower interest rate. The cost of the audit has increased our accounting and service fees and trucking costs are down in all areas.

However, our outside hauling expenses are much higher. This increase is due in part to increased sales.

We had several units to haul to meet delivery deadlines and currently we don’t have enough trucks and drivers to haul all of that on our own. Our balance sheet for the six-month period is stronger with total assets up just over $1 million due in part to an increase in rental equipment.

We currently have a rental pool of approximately $4 million. Our total liabilities were reduced by $0.75 million due in part to accounts payable being reduced from $1 million to $379,000.

Shareholder equity for the period more than doubled to the comparable six-month period in 2015, which leads into the last item I have before turning the call back over to Lee. Several shareholders have asked about the increase in shares issued and outstanding.

In our year-end conference call, which is available on our website, stock was issued to some of our Board members in partial payment of long-term debt and a reduction of other debts, which strengthens our balance sheet and to employees for their yearly bonus. We corrected the balance sheet also to reflect stock ownership as part of the clean-up and review for the audit.

There was some information that that equity section that had not been on there prior. I would like to turn the call back to Lee now.

Okay. Thank you.

Before beginning projects and pipeline updates, I'd like to say that we're pleased to report our tenth consecutive profitable quarter, and as I mentioned in our last conference call, we recently celebrated our fifth consecutive year with profitability. Not many growing entrepreneurial companies can make that statement, especially during the recession.

Our financed revenue projections and while we do not provide them, our goals are to continue to grow our revenue and remain profitable in order to generate a more balanced cash flow, our goal is to increase our pool of rental equipment from $4 million to $8 million or $10 million over the next 12 to 20 months or so. We've recently received a five-year rental agreement from the U.S.

Army for rail maintenance equipment. The rental agreement will generate a revenue of approximately $1,770,000 or $29,000 a month for 60 months.

We normally are having in the past had rail maintenance equipment in our rental fleet, but it was a lucrative deal, and it was a customer we have a lot of equipment on rent with already, so we decided to bid for the contract and we’ve rewarded it. The equipment is expected to ship from the two manufacturers by the end of second week of September.

We delivered to the customer on site working by October 1. What they are, the machines once called a tamper, which goes along the rails and packs and tamps in all the rock that stabilizes the rails, the other one is a ballast regulator that spreads the rock count for the tamper to come in and compact [ph] it.

So they are rail mounted, specialized machines that we'll be delivering up to the army base. An update on African opportunities, in Nigeria, we've pretty much decided that our truck project we worked on for such a long time is just not going to get awarded to anyone.

The financial position of the country of Nigeria has got worsened considerably. Nobody wants to take on the risk, even the Chinese banks are backing away.

So, it's just not something we're going to spend a lot of time on. We need to put our time into profitable investments.

There are two other projects under review, but we’ve made a management decision really not to discuss new potential projects until we're awarded the project and have signed financing agreements from all parties, so that a sovereign guarantee can be provided. Our core business in Africa, we’re working on several requests or proposals in the Congo, in Nigeria.

We are working on other things in Nigeria that are private company projects and not government, but we’re not going to really discuss details on those projects until we're 95% sure that its coming our way, the chances of the projects will become ours within 90 days of when we start talking about it. Mali, in the country of Mali, we sold last year as we discussed in conference call the equipment was for heavy machines that went on to a construction site there.

The same buyer discussed a second order for another $1 million where they used construction equipment. We’re recently told this order should materialize may be end of the fourth quarter, but more than likely the beginning of the first quarter of 2017.

They are really happy with the equipment they bought from us and they are desiring to do more business because it’s easy for them to deal with some way they know who is going to do their job. To become more competitive in Africa and to open the door to opportunities more easily finance, we’ve been working with a tactical vehicle manufacture that will give a AmeraMex the right to market specific types of vehicles to the West African countries.

This is important to AmeraMex as it expands not only our product line, but potential customer base. We have verbal approval from their legal department but do not as of today have a signed agreement.

We expect the signed agreement in the very near future, but really have no way to predict when we'll have it. For our core business ramp up currently, our pipeline of core business contains potentially U.S.

business, U.S. Government proposals, International proposals for Africa and Central America.

We have potential customers coming in from Guatemala and from Vietnam over the next couple weeks. The Vietnamese are a company they’re flying in on Friday to look at either 10 machines possibly that we have all of them in inventory and I expect them to arrive Friday morning just before lunch.

We're also working closely again with a large company in Guatemala and Puerto Quetzal on the West Coast. They've bought about eight container handling machines from us in the past and they’re talking about needing four to six more now and the owner of the company who has never been to our facility in Chico wants to fly in and meet with me and look at the machines himself this time.

So that’s a good sign if he is going to fly in and to meet with me, he is coming to buy machines. We’re also excited with the prospect of finishing our SEC audits.

A fully audited and reporting AmeraMex will benefit all shareholders including our employees. We’re using our money wisely and after we are reporting, we will be more active in the market of AmeraMex through the financer community.

We were recently asked what gives AmeraMex its competitive edge. The Management Team believes our edge is based on the following competitive advantages; loyal, knowledgeable employees with very little turnover, 30-plus years of industry experience, actually that’s kind of low on personally at my 40th year on October 25 this fall and a number of our other employees that are well over 10 and 15 years.

So our facilities and people to provide a full line of customer service, equipment refurbishing, large parts inventory and the ability to ship our own equipment gives us a huge advantage. Great references, we have customers all over the world, excess to a significant amount of used equipment from a variety of manufactures that address the needs of multiple markets or farming, mining, logistics and many other industries.

We also are new equipment dealers for several well known heavy equipment manufacturers and carry a large inventory of parts to back up these machines. We are entrepreneurial.

A good example is our latest lease agreement with the Army. We do not inventory railroad maintenance equipments, but our customer needs it and we got it for him.

Logo representation inside several of the West African countries we have people living in Nigeria that work with us. We have guy in Nigeria.

We have a guy in Angola and the Congo all that we're working with represent us locally and find a lot of the deals that we're bidding on. With that said, we would like to begin the question-and-answer session of today's call.

Operator, would you like to begin the Q&A.

Good morning, everyone. Congratulations Lee on a stellar quarter again, nice profitability.

Are you guys able to go into a little bit more details of the up-lifting? How long it takes?

Do you guys plan on doing a reverse right away, the cost it's going to be on the company to be an audited company going forward?

I would have to have Marty or Tracie respond to that.

Okay.

So we -- this is Tracie. We expect after the end of the audit that it will take approximately three to four months to get all of the legal work and the SEC work done to make us fully reporting.

Okay. Is that an automatic listing to our different exchange?

Do you have -- is there going to be change in some …

We have to apply for all of that. We don’t have that information yet.

Okay. Okay.

The company does not need to do a reverse just to get an up-lifting to a different exchange correct?

Yes, we do not. We could stay on the OTC market as a QB company and we would not have to do a reverse split.

We will not reverse the stock unless it's for a good -- very good reason and we have no immediate -- there is no immediate reversal in the future of the company. It would have to be for an awfully good reason.

Okay. Perfect, thank you.

Hi, question is looking at your six month operating income, $1.97 million, I do the math, and it looks like it's about 34% of revenue. So the question is how sustainable is that because 34% is a very healthy percentage.

So can you sustain it going forward?

Well, I guess I can respond to that. That percentage is a little higher than you see with a lot of companies, but it's due to the fact that we're dealing all over the world and it takes a lot more money to go see the customers in hotels, mails, and travel expenses, and we have to be careful that we spend the money properly and not travel where unnecessary.

I wouldn't expect it will be much lower than that over the long-haul. Hopefully we can get it down.

It's still much more effective to meet with customers face to face and more people that don’t do that, give us a larger advantage because we are doing that. So that's the best I can respond and maybe Marty could add something to that.

A lot of it depends on our product mix as to our margins, and when we sell newer products, we have a lower margin. Our used equipment gets us significantly higher margin.

So the company has actually reversed so much. If you look at us maybe eight years ago, we were selling more new equipment, and now the company has really made -- has an opportunity and made a decision, strategic decision to sell new equipment, but really getting there particularly internationally with used equipment.

So that really helps significantly our margins.

Okay.

Was your question answered Mike?

Yes. It was.

Just a follow-on on that when we got your -- talking about competitive advantage, you are doing things that other companies can't. How the margin [ph] user that brings in competition or is it just competition doesn’t want to bother going to Africa and all other places?

We can answer that.

Yeah, that's very true. The places where I am going and making friends and developing relationships are places that the majority of our competition don't want to go and are not willing to go, and because of that it gives us an advantage and relationships with people in those areas.

They're doing things for us because of our relationship that make it even more competitive for us to deal there. The governments determine cost of importation and duties for bringing equipment in, we have been negotiating some special deals in Nigeria, especially to reduce our duties to our customers where our competition will not have that reduction, and it gives us an additional advantage for everything we are shipping in there.

Okay. That's all for me.

Thanks.

Hi. How are you doing?

I came in late for the call, so I didn’t hear if or where things were at as far as getting off the penny stocks and into under the big boards or where things were at as far as I could …

We are expecting the audit to close about the end of September, and it will be three to four months after that, that we will have all that work done and the applications in.

Great. So we are looking at potentially the beginning of next year?

Potentially, yes.

Great. All right.

Thank you.

Hi. Yes, so I was just curious about your thoughts on the current stock price.

Obviously I am sure, you guys aren’t happy about it and then I am also curious about stock buyback and it relates with 10 quarters in a row of profit that's fantastic, but if the stock prices continues to go down or [languish], that you're not doing whole lot to investors by the end of the day. For us to see stock, it seems that a small buyback here and there could start to bring some of that stock back in control, so it's manipulated stock price on the OTC even if you up those, backing the difference as far as that goes.

I am curious about you guys thoughts on that and really what's your plan is for the next year or two so as to grow this company?

Well, I am doing everything I can to grow the company sales wise. What our latest target has been and we're concentrating heavily on building the rental fleet any machinery we have in the rental fleet that we own is cash flow.

When the rent comes in, it's cash flow that we need desperately every month to be stabilized and we have increased that monthly cash flow by about five or six times what it was a year ago by adding new machinery to the rental fleet on long-term contracts and most of those are within army. It's been a big help.

It helped us to be able to show a profit every quarter and it's given us more stabilization because it's money we can count on coming in every month. That prior to having the larger rental fleet, we couldn’t count on it.

So that's -- we are doing as much of those we can and building the rental fleet because that gives us a steady flow of cash to keep up with all the overhead. As far as expanding the business to do more sales, looking within the next or as soon as we get the audits done and everything, we should be able to hire another sales person to work on local sales and finding service and parts customers, that’s a good solid addition in the service shop.

We have added a couple mechanics and we’re doing a much stronger business in the shop. We’ve added a couple more service vehicles.

So it just takes time. It takes money and a steady push and that's what we're trying to do.

And I think one of the questions you asked is about addressing stock buyback in the open market, currently there is only about one quarters of shares issued and outstanding are in the float and the company has -- we've booked at what would it take to really do a stock buyback that will make an impact on the market. And if we just decided that it was better, we make a better impact on the market and the stock price and a better decision for our shareholders, if we could increase our sales department and we increased our revenue and we increased our profitability instead of buying stock back in the open market.

There is only -- again a third of it is in the flow to rest of it is some, is held by people likely and other Board members.

All right. Which you mean, in that case that should tell you that small of that is the flow that is small -- smaller percentage and this should you tell you that any impact you make on the float would have a well dramatic impact on the stock price because the rest of float is out there and the more, the people that would seek to drive the price down for whatever reason or to see the price down or see situations where you have more supply than demand, were also working as if the company was also taking some of that stock off of the floor if you will to help believing the stock price…

We would have to take a lot of it off, yes.

No, physiological more than the natural, really as I said...

That is something has not been ruled out. It's just that we've just found places that our investments have made better.

We've made better use of our investments. It's certainly something that's not ruled out and we would like to be able to do that, but I weigh it out against two more sales people it's a difficult -- it's not a difficult decision to make at that point.

I don't know. You have eight to ten quarters of profit in a row, you have a $1 million...

Check the cash flow. Do look at the cash flow statement?

All right.

Okay.

Thank you.

Thank you.

I just had a question or follow-up, Marty you did answer it but to clarify, there is 753 million shares outstanding of which 664 million are restricted. You said at least the public float of 89 million right?

No, no. I just had this out at my fingertips a few moments ago, there is some…

I'm pulling this off the last your 8/11...

There is about 2 million in the float.

200 million.

200 million.

200 million. I'm sorry, it's 200 million in the float yes.

Okay because the press release says there is 753 million outstanding but restricted is 664.

Yes.

So that's 89 million.

Let me check with -- let me just check again with the specific stuff…

The vast majority is held, I'm assuming by Lee correct?

That's correct.

Which is restricted.

Yes.

Okay. Which I got to believe it's not common back into the market anytime soon.

No, and I will clarify this for everyone on the call, I will clarify these numbers from specifics of transfer but there is about 200 million in the float. So I apologize if it's been a typographer error in the press release, but I will check on that.

Okay. All right.

Appreciate. Thank you.

Thanks Michael.

Okay. This is Lee again.

We would like to thank all of you for participating in the call and thank you for your questions and continued support. We look forward to speaking with you when our third quarter results are disseminated and at that point again, thank you very much and good bye.