Rules Governing Low-price Stocks That May Affect Our Stockholders' Ability to Resell Shares of Our Common Stock

We are a “penny stock” company, as our stock price is less than $5.00 per share. If we are able to obtain an exchange listing for our stock, we cannot make an assurance that we will be able to maintain a stock price greater than $5.00 per share and if the share price were to fall below such threshold, that we would not be subject to the penny stock rules.

The penny stock rules require broker-dealers, prior to a transaction in a penny stock not otherwise exempt from the rules, to make a special suitability determination for the purchaser to receive the purchaser’s written consent to the transaction prior to sale, to deliver standardized risk disclosure documents prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.

Holders of our Common Stock

We have approximately 258257 record holders of our common stockCommon 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,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:

Employees Stock Compensation Plan

We do not have a Stock Option Plan as of the date of this filing.

Recent Sales of Unregistered Securities.Securities

During the year ended December 31, 2016, we issued 14,125,000 shares of common stock to officers, directors, and employees for services rendered valued at $108,763. In addition, during the year ended December 31, 2016, we issued 75,000,000 shares of common stock to an officer and director for the settlement of $80,000 in related party debt and accounts payable.

On March 10, 2016, an aggregate of 25,000,000 shares of common stock were issued to McCloud Communications for investor relations services valued at $97,500 for 2015; 50,000,000 shares of common stock were issued to Lee Hamre for a $185,000 partial repayment of a $700,000 loan to us; and 500,000 shares of common stock were issued to Michael Maloney for services valued in the amount of $1,850.

On February 12, 2016, an aggregate of 12,000,000 shares of common stock were given to three board members as compensation for their services during 2015. Michael Maloney, Lee Hamre, and Marty McCloud were each awarded 4,000,000 shares of common stock. The value of the services rendered for each director was calculated to be $15,000.

During 2019, and 2018, 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.

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.

The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in thisAnnual Report.

Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward 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 theour future operating performance of our company 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 May 29, 1990. 

Selected Financial Data:November 2, 2006.

StatementSelected Financial Data

Statements of Income for the Years Ended December 31, 20192020 and 2018.2019. 

Results of Operations

for the Fiscal Year Ended December 31, 2019 (audited)2020 as compared to the Fiscal Year Ended December 31, 2018 (audited)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, as compareda 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 $9,797,854$10,509,656 for the year ended December 31, 2018,2020 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 29% increase.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 attributeddue almost entirely to a very large orderlegal settlement liability of new equipment for one of our long standing customers as well as a general economic improvement for business as the economy continues to rebound from the economic downturn.$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 20192020 were $10,296,901$9,665,607 and made up 81%79% of our Total Revenues and in 20182019 made up $7,027,948,$10,296,901, or 71.7%81%, of Total Revenues. The remaining portion of Total Revenues, Rentals and Leases, were $2,358,337,$2,631,172, or 19%21%, in 20192020 and in 2018,2019, Rentals and Leases made up 28.3%19% of Total Revenues and totaled $2,769,906.$2,358,337.

From 2018 to 2019,

Gross profit on Sales of Equipment and Other Revenues increased $3,268,953,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 47%,6% while during the same period Rentals and Leases decreased $411,569,increased $255,176, or 15%11%. In 2019, one of our2020, we entered into four new long term rental contracts endedwith a long standing customer which causedaccounts for the decreaseincrease year over year in Rentals and Leases. InRental Revenue. At the same time, Equipment Sales were down compared to 2019 we delivered a large order of new equipmentdue to one of our long time customers which accounted for the spike in Sales of Equipment. Global Pandemic.

We had costs of revenue of $10,294,562 for the year ended December 31, 2019 as compared to costs of $6,686,504 for the year ended December 31, 2018. Our costs increased by $3,608,058, or 55%, while our revenues increased by 29%. This is as a result of the higher cost of new and used equipment as well as the increased hauling costs.

We experienced an increase in operating expenses from $1,426,975$1,828,073 in 20192020 as compared to $1,159,913$1,426,975 in 2018.2019. This increase of approximately 23%28% in operating expenses is a result of the expanded marketing program that was started in 2019 as well as an increase in travel by both our salesGlobal Pandemic and service teams.a one-time legal settlement liability.

From 20182019 to 2019,2020, our Interest Expense decreasedincreased from $828,585$747,855 to $747,855.$1,047,330. This decreaseincrease is due in part to a March 28, 2019 payoff of allthe increased debt incurred to purchase more equipment and the varying interest rates tied to a line of credit for borrowing and refinancing up to $6.5 million with an interest rate of 10% per annum, due monthly. This line of credit expires March 22, 2022. Upon funding of the line of credit, proceeds were used to repay one of our outstanding lines of credit in addition to other notes payable (see Note 7). Based upon the refinance of these notes, we anticipate interest expense in 2020 will be lower than interest expense in 2019. As part of this payoff, there was a one-time Early Extinguishment of Debt that amounted to $482,908.

We had net loss of $(90,294) for the year ended December 31, 2019 as compared to net income of $885,595 for the year ended December 31, 2018. We had a decrease of 110% in our net income due in part to two main factors: an Early Extinguishment of Debt that amounted to $482,908 and a Joint Venture Liability that was initially recorded as revenue but ultimately adjusted in the fourth quarter amounting to $459,500.

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 20192020 and Fiscal 20182019:

Our Net IncomeLoss from 20182019 to 2019 decreased2020 increased by$975,889 $492,396 from $885,595 in 2018 to $(90,294) in 2019.2019 to $(582,690) in 2020. As of December 31, 2018,2019, our Net Cash provided byused in Operating Activities was $1,420,165.$1,525,908. This number increaseddecreased to $2,491,724$256,068 as of December 31, 2019.2020. Comparing December 31, 20182019 to December 31, 2019,2020, our Accounts Receivable decreasedincreased from $182,641$42,095 to $42,095, our$178,661. Our Inventory was increased by $381,787$2,142,641 as of December 31, 20182019 and as of December 31, 2019,2020, Inventory had increased by $2,142,641.$1,031,615. Accounts Payable as of December 31, 20182019 was $937,588,$777,227, but by December 31, 2019,2020, our Accounts Payable was reduced by $777,227.$88,394.

As of December 31, 2018,2019, our Payments for Property and Equipment was $473,757$419,293 and as of December 31, 20192020 was $419,293.$141,998. Payments for Rental Equipment as of the end of 20182019 was $1,936,628$375,912 and as of the end of 20192020 was $375,912.$611,830. Proceeds from Sale of Equipment was consistent and as of the end of 2018, proceeds were $131,165 and as of the end of 2019 proceedsand 2020 were $0. Overall, Net Cash Used in Investing Activities as of the end of 20182019 was $2,279,220$795,205 and $795,205$753,828 by the end of 2019.2020.

We received Proceeds from Notes Payable as of December 31, 20182019 of $2,843,059$960,505 and as of December 31, 2019,2020, the amount was $960,505, a decrease$4,594,871, an increase of $1,882,554,$3,634,366, which is a decreasean increase of 66%378%. Payments on Notes Payable increaseddecreased as of the end of 20192020 to $4,144,680$2,191,602 from $2,577,325$5,110,496 at the end of 2018.2019. This is an increasea decrease of $1,567,355,$2,918,894, or 63%.57.0 %. There was a Joint Venture Liability in 20192020 for $459,500,$20,000, this is a 100% increase over $095% decrease from $459,500 for 2018.2019. In addition, the Net Borrowings under Lines of Credit as of the end of 20192020 was $5,947,205($971,861) compared to $286,456$5,947,205 at the end of 2018, an increase2019, a decrease of $5,660,749,$6,919,066, which is 1976%116%. Overall Net Cash Provided by Financing Activities went from $503,182 as of the end of 2018 to $3,203,681$2,237,865 as of the end of 2019 due to $1,303,273 as of the increase in Net Borrowings under Linesend of Credit, an increase in the amount of Payments on Notes Payable and a Joint Venture Liability. 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. On March 28, 2019, we entered into a line of credit with a finance company that provides for borrowing and refinancing up to $6,500,000. We believe that our expected cash flows from operations and our commitments for theabove referenced credit facility will be sufficient to operate 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, 2019,2020, we had a working capital surplus of $3.8 million.$(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:

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 20192020 and 2018,2019, 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.

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.

AMERAMEX INTERNATIONAL, INC.
INDEX 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”"Company") as of December 31, 20192020 and 2018,2019, and the related statements of operations, stockholders’stockholders' equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial"financial statements”statements").In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20192020 and 2018,2019, 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’sCompany's management. Our responsibility is to express an opinion on the Company’sCompany's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”("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. 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. 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 control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’sCompany's internal control over financial reporting. reporting. Accordingly, we express no such opinion.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. 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 ouropinion.opinion.

/s/dbbmckennon

We have served as the Company’sCompany's auditor since 2016.2017.

Newport Beach, California

June 5, 2020April 15, 2021

 The accompanying notes are an integral part of these financial statements 

AMERAMEX INTERNATIONAL, INC.

BALANCE SHEETSThe accompanying notes are an integral part of these financial statements

DECEMBER 31, 2019 and 2018The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these financial statements

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019  and 2018

The accompanying notes are an integral part of these financial statements

AMERAMEX INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

The accompanying notes are an integral part of these financial statements.

AMERAMEX INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

The accompanying notes are an integral part of these financial statements.

AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018

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

LiquidityGoing Concern Considerations

At December 31, 2019,2020, the Company had working capital of approximately $3.8 million.$(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 is following the government guidelines and tracking costs to insurereceived 100% forgiveness of the loan.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. We have notAs 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 the final breakdownin full on terms, but typically theSeptember 10, 2020. The loan is at 3.75% interest for a 30 year term with the first six (6)twenty-four (24) months of payments deferred. Funding

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 this loan is anticipated withinthe COVID EIDL from $150,000 to $500,000. We requested the increase and should be funded with in the next twosix (6) to eight (8) weeks. Finally,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 received an increaseare 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 one of our equipment lines of credit from $500,000 to $1,050,000. the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2021.

Moving forward, we expectthe 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.

Risks and Uncertainties

In March 2020, the World Health Organization declared a novel strain of coronavirus (“COVID-19”) a pandemic, as a result of which the Company is subject to additional risks and uncertainties. In response to the pandemic, governments and organizations have taken preventative or protective actions, such as temporary closures of non-essential businesses and “shelter-at-home” guidelines for individuals. As a result, the global economy has been negatively affected, and the Company’s business has been negatively affected in a number of ways. The Company has had several large transactions that have been put on hold until the State of California is reopened. In addition, the Company has all sales, administrative and account employees working from home. Shop employees are practicing social distancing and we only allow one customer in the facility at a time. Most directly, a number of states and local governments have taken steps that have prohibited or curtailed the sale of equipment or curtailed construction activities during the pandemic. In some jurisdictions, shelter-at-home orders, or other orders related to the pandemic, impede equipment sales. The severity of the impact of COVID-19 on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, all of which are uncertain and cannot be predicted. The Company’s future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms. Given the dynamic nature of this situation, the Company cannot predict with absolute certainty, the impact of COVID-19 on its financial condition,results of operations or cash flows.

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).Inthe 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, 20192020,

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2018,2019

the Company’sexceeded 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, 20192020 and 2018,2019, the allowance for doubtful accounts was $28,000 and $87,000, respectively.

AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018not 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:

Other Assets

Other assets at December 31, 20192020 and 2018,2019, 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,andEquipment, 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, 20192020 and 2018,2019, 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, restricted cash, 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 andDisclosures, 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:

AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018

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.Hedging.

As of December 31, 20192020 and 2018,2019, respectively, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value.

Revenue Recognition

The Company generates revenues primarily through the sale and rental of heavy equipment. In May 2014 and in subsequent updates, FASB issued Accounting Standards Update (ASU) No. 2014-09,Revenue from Contracts with Customers, as amended, and referred herein as ASC 606. ASC 606 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASC 606 requires that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. It also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASC 606 was effective for interim and annual periods beginning after December 15, 2017.

Effective January 1, 2018, the Company adopted ASC 606, with no significant impact on our financial statements. 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 existexist.

AMERAMEX INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and collectability is reasonably assured.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.

AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018

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

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 we determinethe Company determines we should repair equipment, weit may do so at ourits election. In the event we do so,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, 20192020 and 20182019 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 20192020 and 2018.2019.

Concentrations

At December 31, 2019, 65% of the accounts receivable was due from three customers and at December 31, 2018, 53% of the accounts receivable was due from three customers.

For the yearsyear ended December 31, 20192020, three customers accounted for 10.50%, 10.57% and 2018,11.72% of sales, and in 2019, one customer accounted for 10% or more12.74% of sales at 12.74% and 11.16% respectively.sales. The loss of one or more of these customers would have a negative impact on the Company’s financial results.

AMERAMEX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBERFor the year ended December 31, 2020, two vendors accounted for 28.26% and 24.19% of purchases, and in 2019, and 2018one 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 Leases (ASC 842). ASC 842 requiredrequires 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 liabilitiesliabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the balance sheet and required expanded disclosures about leasing arrangements. ASU 2016-02 waslease term. In November 2019, the FASB delayed the effective date for Topic 842 to fiscal years beginning after December 15, 20182020 for private companies and emerging growth companies, and interim periods inwithin 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 early adoption permitted. We adopted thisprevious guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard with no impact since our facilities are leased from our chief executive officer on a month-to-month basis, and we have no significant equipment leases accounted forrecognized as operating leases.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.