AmeraMex International, Inc.

Thank you, Christine. Good morning, everyone.

Before we begin today’s call, it is important that everyone understand that statements made in this conference call that relate to future financial results, market size or growth plans are forward-looking and involve certain risks and uncertainties associated with demand for the company’s 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 of the date of this conference call. AmeraMex is not obligated to release publicly any revisions to these forward-looking statements as a result of unanticipated events after today’s conference call.

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

Good morning, Marty. Thanks for joining us everybody this morning for our year end 2018 financial conference call.

With me today are Hope Stone, our CFO; Mike Maloney, our COO and Board Member; and Marty Tullio, our Board Secretary. I would like to begin by saying that our newly approved $6 million line of credit will make a significant difference in our ability to purchase used equipment for refurbishment and resale and equipment for our rental pool.

It will also have a positive effect on our bottom line and as this line of credit carries a lower interest rate than other means we have used to acquire rental pool equipment in the past. We are disappointed that we missed our internal February 28 date to get our 2018 audited financials to our securities attorneys.

We completed our 2-year audit 2016 and 2017, but the numbers became stale before the Form 10 was ready for submission to the SEC. We now have 3 years of audited financials that are being readied by our auditors for submission to our securities and attorneys before or no later – absolutely no later than April 1, 2019.

In a normal situation, we would have already submitted to our attorneys, but preparation of our approved $6 million line of credit required many hours by our accounting and management team. In addition a lot of my hours, I had to take their representative to all the rental equipment we have out in the field and let them see the machines and confirm the serial numbers.

So we have been traveling from Los Angeles to [indiscernible] up into Seattle and all over the West Coast just looking at serial numbers. I would like to turn the call over to our CFO, Hope Stone, so that she can provide an overview of our financial statements for the year ended December 31, 2018.

Thanks, Lee. Good morning, everyone.

Before I begin, I want to remind everyone that financials for the comparable 2017 year may have changed subject to adjustments made during the audit. Revenue, we are pleased to report that revenue for the year ending December 31, 2018 was $10.1 million, an increase of 16% when compared to the year ending December 31, 2017, once again congratulations to our sales and marketing team on a great year.

Gross profit for the year was $5.1 million, an increase of 24% when compared to 2017. Gross profit as a percentage of sales was 50%, up slightly when compared to 48% for 2017.

The company’s gross profit fluctuates based on equipment mix whether it’s leased or sold new or refurbished. Net income for the year was $1.4 million, a 67% increase when compared to net income of $842,000 for 2017.

Total assets for the year ending December 31, 2018 decreased approximately $800,000 due to a reduction of cash and cash equivalents, inventory and accounts receivables. There was also a $2 million reduction to total liabilities for the year.

The reduction was due in part to a decrease in accounts payable and deferred revenue. I would like to turn the call back to Lee.

Thank you.

Thank you, Hope. We have discussed Menzi Muck and ASV to a great length, while we like the power and flexibility of the Menzi Muck Walking Excavators and continue to represent the line, the price of the equipment has been raised at a significantly higher than its competition, which limits our marketing efforts.

We are still replying to request for Menzi Muck equipment, but we have not been successful due to the higher costs. Since September we have sold 5 ASV track loaders to contractors working with the California Utility Company and now have a flooring plan with ASV, we have acquired a sales person to specifically market the ASV track loader.

He is working on several quotes for ASV equipment and we expect additional request for quotes from utility contractors as the rains subside and clean up from fires in Northern California begins. We are located only 20 miles from the Paradise California fire, where over 13,000 homes burned to the ground in November of 2018.

All these properties have to be cleaned up and made ready for reconstruction of new homes. With our spring weather, everyone will be trying to get their permits in place to start the rebuilding process.

Our core business at 2018 was a great year for AmeraMex. Revenue was up substantially as was net income.

We booked sales $13.6 million for 2018, but sales do not convert into revenue until the equipment ships from the manufacturer or from our facilities. At the end of this month, we begin shipping the 2018 order for 23 new Taylor forklifts to our largest sawmill customer.

This will generate revenue of approximately $4.2 million between now and the end of April. So in the next 6 weeks, we will be invoicing $4.2 million, not a bad way to begin the year I think.

We are excited about our approved $6 million line of credit and the demand for rental equipment continues to grow. Over the last 3 years, we have increased our rental fleet from $2 million to approximately $9 million and at the end of the year we had a total value of approximately $10.1 million in rental equipment.

We will become a fully reporting company this year and believe our stock price will increase due to the added market exposure, along with continued growth of sales at net income. An increased stock price will allow us to once again explore a variety of avenues to grow our market reach.

I have been in the business now 42 years, 30 plus years as AmeraMex, Hamre Equipment. I know most of the successful equipment sales and rental companies in the western U.S., but none of them are public companies with an increased stock price, reconstruction and acquisition or merger strategy, which could meet our internal goals for substantial growth.

We are also considering building our sales and marketing team with a couple of high priority industry professionals that have years of experience in both the sales and rental of heavy equipment. Either one or both could double our 2020 sales.

It is very important that we have a succession plan in place for the company and for our shareholders. While I am not retiring anytime soon, it takes a while to get a new President or CEO up to speed if the need were to arise.

Even more important is making sure we have the right person to interface all of our customers both domestic and international. Based on what I have seen in the markets we serve and the level of RFPs we are receiving as request for prices.

2019 should be another good year for the company. We are all excited about our 2019 and 2020 prospects.

With that said, we would like to begin the Q&A session for today’s call. Operator, would you like to begin?

Hey, Lee.

Yes.

Are you still going to keep your stock as the penny stock, I look at the number of transactions and everything. There are very few transactions even over $1,000, over $10,000 so far I don’t see real investors buying your shares.

All I see is people trading stocks or maybe the brokers I think making market and that sort of stuff, what are your plans about keeping this as penny stock?

Well, we are working as hard as we can to keep sales going and grow the company and there is nothing that we can do here at Hamre Equipment or AmeraMex to make the stock go up other than do our job the best we can. I have anticipated for a while with going fully reporting and moving up to the OTC QB market that we should see a considerable increase in the stock value.

I really believe we will. We have had huge problems trying to get the audits all done.

Everybody knows how long that’s been taking. We are now right there and able to say that we should have it done very, very shortly, but your question for me is really nothing we can do.

I mean, it is what it is. We can do – I mean the only way you get this stock price to go up like what you are asking would be like a reverse split and we really don’t want to do that, that’s not in the plan.

So I am not sure how to respond other than that.

What sort of advantage of a reverse split though or something like that?

What’s the advantage?

Yes, disadvantage, we are not – making the taller stock instead of a penny stock?

We have talked about it. And if we are going to move up beyond the OTC QB, I think there is a minimum stock value you have to meet to be able to go up to the next level and Marty, can you explain that better?

Sure. James, what we are looking at is first of all we didn’t want to spend any money on any marketing campaign to do publicly fully reporting company.

At that point once we become fully reporting, their marketing campaigns and road shows and conferences we would like to tend to introduce the stock to additional investors, obviously brokerages and fund managers etcetera do not purchase the stock that is not fully reporting company nor do they generally purchase stock under $1. So our goal is to continue with our sales and marketing goals within internally in the company, but also though externally and market the company and its stock to investors.

So once that is done, and this isn’t something that’s going to happen overnight, but it allows us to go on and become listed on NASDAQ. And we haven’t considered a reverse split and we would only consider if it’s a benefit to our shareholders.

A benefit might be we want to list on NASDAQ and our stock price isn’t quite there yet, but we have the revenue and income from the company to support a higher stock price, then perhaps we will look at doing a reverse, so that we could list on NASDAQ for to increase our exposure. Did that answer your question, James?

Yes. One more question, how did people there survive big fire there, anything your employees have any houses burned down or anything?

Yes, two of our employees lost their homes and my next door neighbor burned to the ground, actually, 11 houses in my neighborhood are gone and there’s about 10 left. So, we lost a little over half the homes in our sub-divisions and 13,000 other homes not burned down, so it was a big mess.

We’ll be recovering for a number of years in Butte County, I’m quite sure, but the worst of it’s over. They’re starting to look at cleaning up the messes on all the lots and getting plans in for reconstruction.

There’ll be a pretty good number I think that won’t rebuild, they’ll just sell the property. But there’s enough of them that will rebuild that it’s going to be a big surge to the construction business around our county.

Thank you.

Yes, hello. Can you hear me?

Yes.

Listen, one of the things as a private investor and I heard this last discussion you had just previous to this call, the number one thing I think the company has to do is file an audited 10-K. I mean, everything that you guys are saying that doesn’t get any real justification or veracity unless that document is out in the public.

It’s the linchpin of everything you’re doing. So, you give us another date of all of April 1, and if that doesn’t happen as when this cycle continues, I mean, we need to get that – we – you guys need to become fully reporting?

Absolutely. That’s our number one goal and we’re doing everything in our power to do that.

So is that, I mean, can you release any kind of information on why it’s so difficult to do, I mean, that’s another thing, I mean, isn’t it just numbers, I mean, it’s numbers, right, I mean, we’ve got calculators, we’ve got intelligent people, I mean, we’re not trying to solve world hunger here, right, is –

Well, yes, you are right. It’s our systems were not really in place to be an audited company and we had to change systems and we had to change to a different – we want to use QuickBooks instead of our old system.

We’ve got inventory. We had – the parts inventory was a nightmare and we finally got through that and got it done and now we do it every quarter.

So, we know what’s going on in the parts inventory. It’s just a really tough deal to do.

It’s not as easy as just adding up the numbers, but everything is in place now and we’ve got – we’re confident that we can meet this goal.

And I think Richard, this is Marty again. Again, it helps to know that small companies generally do not report or do their accounting and it’s not audited generally, so, to get ready for audit, it has taken an enormous amount of time and money.

In addition to that, not only do you have to report numbers, but you have to have policies put in place and actual people put in place. So, that there is everything flows smoothly and you’re in alignment what – with what the SEC expects and what your auditors expect, because until those things are in place, auditors will not sign off on anything any audited financials, that’s not signed off until you have the buffers, checks and balances and reporting procedures.

And that takes a while, Richard, but it is in place now and we look forward to become fully reporting this year.

Okay, one more – okay, I respect the answers. And I understand that once you put the procedures and the people in place, you have to maintain that level as well, so, from quarter-to-quarter, so I know it’s not easy.

I mean, I appreciate it, but I mean, you noted everything you do is going to have eyes on this April 1 date, I don’t know whether that’s a joke or not, but April 1 is like April Fools’ Day. So, we’ll be looking with data threats, so I appreciate the response and we’ll be waiting, I mean, I have significant amount of money invested.

So –

We appreciate.

So alright, so thank you for the response.

You bet.

Hello?

Hello?

Can you guys hear me?

Now I can, yes.

Can you – can you explain why the 2017 year-end report, you said you made $1.7 million net income and on today’s number it seems that we lost money on 2017. What’s the explanation on that and on the fourth quarter it looks like we lost $100,000, right?

I’m sorry, I have it from hearing. Hello?

Yes. I’m not hearing your real clear, but –

You said that – it looks like we lost $100,000 on the fourth quarter, is that clear?

Hope, can you address –

So –

Hello?

So, Joe, the issue is that when we do these calls, if the audit is not completed, money will move from bucket-to-bucket depending on specific guidelines. And one of the issues I think prior was the adjustment to how we can qualify what is revenue and the determination of when we can consider something that is a sales order when we can translate to revenue.

And so in the – completing of the 2017 audit adjustments were made there. We didn’t technically lose any money, it was just moved from the 2017 bucket to the 2018 bucket, if that makes sense.

Well, it doesn’t make sense at all.

Well, it was the equipment that I closed the deal and got a signed order and purchase order from the customer for machines that weren’t going to be able to deliver for 14 months, that sort of carries over into the next year and then – and we’re having that happen again, now, machines we sold in 2018 that are going to be delivered starting next month. So, it probably got reported in 2017 and then we thought it’s audited.

How could be making such a mistake, I mean, how could you say there’s $1.7 million when you did it?

Well, it’s not really –

People are buying – people are buying the stock because of what they read on the report. And I’m surprised, I’m surprised we lost money on the fourth quarter.

Can you explain why we lost $100,000 [ph] 3:05 on the fourth quarter?

Of which year.

This year.

Of 2018 –

For the nine months you reported in November that we made net income $1.5 million and now on a year-on-year report you say you made $1.4 million, so, we are $100,000 down, that means we lost money on the fourth quarter.

Yes, that is partly due to when the equipment that was ordered is going to ship, it originally was going to ship in December and the factory delayed the shipment in the January and February and then March and now it’s going to start shipping next week.

That doesn’t make any – that’s why we will never be able to have the audited financials, because if the SEC goes back and see all this monkey numbers, they’re going to run away, I would never allow you to become necessary for you to report if I read these numbers, every 3 quarter – every 3 months to be not a number that they’re supposed to be.

Well, we just –

That’s a big mistake, huge mistake.

We don’t have any control over the manufacturer, so –

You have such shareholders – your shareholders are buying stock because of the report. If the reports are close and then a year later you say you lost $870,000 [ph] for 2017 while you said you made $1.7 million, that’s crazy.

Okay. We don’t have any control over the manufacturers.

When that order was placed that we’re talking about, it was placed and estimated deliveries were in December for that equipment and we realized the machines weren’t going to ship till 2019, we had to roll them forward, we had no choice, because we have to be accurate. So, our being accurate, I mean, what you’re saying, I can see what you’re saying, I understand what’s your comment is, but there’s no way we can predict whether the factory is going to make deliveries on time and once it was realized that we’re not going to make the delivery in December, we have no choice, but to roll it into 2019.

We didn’t really lose money, we’ve just moved it to a different quarter because of when – we cannot recognize revenue until the equipment shipped. When we initially had reported that, we have a disclaimer always, these are – these are subject to change due to the audit.

Now when we realized that it was not going to ship on time, it’s required that we move it, because there’s a revenue recognition formula and if it’s not going to ship, we have to move it forward.

Okay, we – this is Lee again. We would like to thank all of you for participating in the call and for your continued support.

We look forward to speaking with you when we report financial results for the end of the second quarter if not before that.