Related-Party Transactions

3 Months Ended

Mar. 31, 2022

Note 7 – Related-Party Transactions

Related-Party Note Payable

The Company had a note payable to the Company’s Chief Executive Officer. Funds were received years ago to fund operations. The note was interest bearing at 10% per annum, unsecured and payable upon demand. The balance of the note at March 31, 2022 and December 31, 2021 was $0 as it was paid in full before the end of 2021. During the three months ended March 31, 2021, the note increased by $12,753 pertaining to a refund that was tied to the note and incurred $9,557 in interest expense for that same period.

Lease

The Company leases a building and real property in Chico, California under a lease agreement renewing annually every March from a trust whose trustee is the Company’s Chief Executive Officer. The overall term of the lase is ten (10) years. The lease provided for monthly lease payments of $12,000 per month. Rent expense during the three months ended March 31, 2022 and 2021, was $36,000 and $36,000, respectively.

The operating lease liabilities of $848,131 as of March 31, 2022, represents the discounted (at 8% incremental borrowing rate) value of the future lease payments at March 31, 2022.

At March 31, 2022, the future undiscounted minimum lease payments under the noncancellable leases are as follows:


For the nine-month period ending December 31, 2022	$	108,000
Year ending December 31, 2023		144,000
Year ending December 31, 2024		144,000
Year ending December 31, 2025		144,000
Year ending December 31, 2026		144,000
Thereafter		456,000
Total undiscounted finance lease payments	$	1,140,000
Less: Imputed interest		(291,869	)
Present value of finance lease liabilities		848,131

Transactions with Director

Two separate customers lost financing for purchases of equipment after delivery, so the Company sold the machines to the brokerage company of one of the Company’s Directors. The customers are now renting the machines on a rent-to-own basis and the Company is purchasing the machines from the brokerage. The Company has two notes payable tied to these transactions that, at March 31, 2022 and December 31, 2021, have a combined total due of $94,434 and $109,482 respectively. The brokerage made $42,681 on the transactions. The notes are secured by the equipment.

The Company also has another note payable that was brokered through the same Director’s company. The note is secured with equipment and as of March 31, 2022 and December 31, 2021 had a total due of $180,313 and $195,133, respectively.

Ameramex International Inc 10-Q