AmeraMex International, Inc.

Marty Tullio - Board Secretary Lee Hamre - CEO Tracie Hannick - CFO

Thank you, Emilie. Good morning, everyone.

Before we begin today's call, it is important that everyone understand that the statements made in this conference call relate to future financial results, markets, growth plans or performance are forward-looking and involve certain risks and uncertainties associated with demand for products and services, and the 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 of any revisions to these forward-looking statements that may be made to reflect events or circumstances after today’s call or to reflect the occurrence of unanticipated events.

I would now like to turn the call over to AmeraMex CEO, Lee Hamre. Good morning, Lee.

Good morning, Marty. Thanks for joining us this morning, everybody, for our second quarter conference call.

With me today are our COO Mike Maloney; Tracie Hannick, our CFO; and course Marty Tullio, our Board Secretary. I would like to thank you, our shareholders, for your ongoing support.

You, our management team, and the employees of AmeraMex along with the Board are extremely disappointed that that Company's Form 10-K is not under SEC review. Management worked closely with our past and present auditing firms and the facts affecting the delay, I'm going to have Tracie explain to your right now.

Tracie

Good morning, everyone. We negotiated in good faith the estimated timeframe and the price of the audit with our initial auditors.

At the end of the audit for 2014 and 2015, which took longer than estimated, the auditors presented an invoice that was double the amount they had originally quoted and refused to provide the audited financials until the additional moneys were paid. With the assistance of our securities attorney, the additional amount was reduced and paid.

Going forward, management along with our attorney decided to switch to a new accounting firm and engaged them to audit the 2016 financials and become our auditors of record. The change in auditors was the right choice that created a contentious relationship between both auditing firms when the information and explanation was requested by the new firm to understand the adjustments in notes relating to 2015.

The lack of timely communication has caused us to miss our projected 2016 audit deadline. Progress is being made by our new auditing firm.

They have been here already three days this week, completing the testing of revenue and expenses. While our team and our auditing firm are moving as quickly as possible, at this point in the process, we’re making no projections as to when the audit will be completed.

But, when the Form 10 is submitted to the SEC, we will make a public announcement of the submission.

I would also like Tracie to provide a recap of our financial statement for the six-month period that ended June 30th.

Thanks, Lee. As announced earlier today, revenue for the six months period ended June 30, 2017, was approximately $2.7 million compared to revenue of $5.8 million reported for the 2016 period.

The first six months of 2016 produced unprecedented revenue with the shipment of a large order to a customer in Africa and some new rental equipment. Historically, we experienced some seasonality to revenue generation with a major portion of our revenue being recorded in the second half of the year.

Secondly, there was a significant increase in rental of equipment versus sales of equipment. The increase in rental income for the quarter was $168,983 first to $78,900 for the comparable quarter.

The increased rental base helps the Company maintain a more predictable cash flow. Gross profit for the six-month period was approximately $1.2 million compared to $3.6 million for the 2016 period.

Gross profit as a percentage of sales for the six months period was 43%, down when compared to 61% for the comparable period. This is due in part to the cost of goods sold associated with the an increase in parts and rental equipment inventory.

Net loss for the six months period ended June 30th was approximately $247,000 compared to net income of approximately $1.4 million. This was due in part to a 100% increase in cost of goods for rental equipment and parts inventory, the addition of employee healthcare and our attorney and accounting fees.

Our balance sheet for the second quarter ended June 30, 2017 indicates an increase in assets of approximately $1 million. This increase is due to increased rental equipment and parts inventory.

Our current liabilities for the quarter decreased approximately $700,000, while the total liability increased approximately $1.7 million for the year, due to this financial of the expanded rental pool. I would like to turn the call back to Lee now.

As we discussed on our last conference call, our strategy is to increase our equipment rental pool from $4 million to hopefully $10 million by the end of 2018. Currently our equipment on rent represents approximately $6 million.

Our rental equipment pays for itself and we can resell at the end of the rental agreement. It is a real win-win for us.

All that increased inventory, rental equipment that we did purchase in the first half net out on rent immediately, we didn’t buy it until we had a rental contract for it. So that would explain larger expenses and inventories.

And now that is all out on rent, the revenue starts coming in, and they are all long-term rental contracts. For an update on African opportunities.

We're continuing to respond to request for proposals from companies and in on the continent of Africa when we are awarded a funded project, we will make a public announcement. As a high percentage of those projects we get involved in bidding, never do come to fruition, so it doesn’t make sense for us to announce them until we have a completed project.

We were recently told that a $1 million plus order for refurbished construction equipment should materialize at the end of the first quarter or beginning of 2017. 10 days ago, we spoke with a customer and the project -- and project signing the order and starting the project hopefully by the end of 2017 now, but that's not a commitment either.

And these are the reasons why announcing projects in Africa that may or may not materialize and usually don’t meet their projection dates, I'd rather just make the announcement when the project is complete and we're awarded the business. We were able to announce our agreement with Oshkosh Defense, LLC, to represent their line of tactical vehicles to the Republic of Nigeria.

We recently spent two days with Oshkosh, both myself and Grant, who went with me. And at the end of our trip, our territory was expanded to include Angola, one of the richest countries in Africa.

Our relationship with Oshkosh is very important as it allows us to become more price -- technologically competitive in Africa and do bid on opportunities more easily financed. The majority of these opportunities for Oshkosh sales will come from governments in Africa, and financing is considerably easier than private business.

Currently, our pipeline for core business contains potential U.S. business, U.S.

government proposals and international proposals for Africa and Central America. We expect to have a record next six months, and I truly believe that.

We are as excited as any other shareholder about becoming a fully reporting company and working diligently with our auditing firm to make it happen as quickly as possible, becoming a reporting company will benefit all of us. And with that said, I'd like to begin our question-and-answer session for today's call.

Operator, would you begin?

So, my question is -- first, I want to start this question by saying there's no political spin to this whatsoever. This question strictly has to do with AmeraMex.

It just seems that no matter who you talk to today, there's always some political spin but this does not have it. Lee, you and Marty and I have talked in the past extensively about the excitement of an infrastructure bill [ph] being sent through Congress and the faith that we had in the Trump administration kept this thing through.

[Ph] Monday or Tuesday, I forget which day now that they have [technical difficulty] when this was produced in the public and the disastrous events [ph] of that day, how do you think this will affect AmeraMex, because we thought that this is a big part of the upcoming years being able to get the funding, the funding was the thing that we basically talked to. There'll be federal funding on various jobs and we're looking at this.

But how it is going to affect, Lee, your plans or your hopes and desires?

Well, funding is absolutely critical. There's no question about that.

And when the funding is available for government projects, that's easy. I have a source of funds now that we do our rental equipment for the U.S.

Army. They have about 14 machines out on a five-year rental contract; it's a very large part of our rental fleet.

And the funding is -- there's no problem whatsoever with the government, with the U.S. Army behind the rental.

So, as opportunities arise, we have the source, we can get the money quickly with the government signature on a rental or sale, either one, we can get the funding we need to locate and prepare machines for delivery or rental, either one. As far as private business goes, for projects put out to be bid, it's the same basic scenario that companies that get the bid, it's easier to get funding for them when they have a contract in hand from the government also.

Okay. Lee, that's not my question.

My question is, we have talked in the past regarding the projections of where AmeraMex might stand with this infrastructure bill. [Ph] So, now, we're looking at a scenario when we don't really know when or if ever there'll be an infrastructure bill [ph].

So, are we going to discount this from any hopes and dreams in the immediate future or what are your plans? I mean, if we consider this to be a major factor going forward or is this a non-starter?

One of the most important factors on what you're talking about has been done, and our current government has put into place tariffs on Canadian lumber. The tariffs have practically doubled business for the sawmills in the United States that produce lumber.

Since that tariff was put into place, I've sold probably about a $1 million worth of equipment to sawmills, all of it's been announced on separate announcements. We have an additional $1 million that I'm working on right now that are all directly related to the tariffs on Canadian lumber because our sawmills here can make a much lesser…

Wait, wait, I'm going to stop here because I'm going to disconnect now, because you're not listening to me and it's not the question that I’m asking. Infrastructure spending has nothing to do with Canadian lumber.

So, I'm going to disconnect myself from this call now. Thanks a lot.

And I wish you the best of luck.

Okay, thank you.

Lee, would you like to end the call now, please?

Okay, I can do that. We would like to thank all of you for participating in the call and for your questions and continued support.

We look forward to speaking with you when third quarter results are disseminated.