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EX-31 - MINT LEASING INCex31.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q
(Mark One)

[X]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended March 31, 2011

[   ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from ____________ to ____________

Commission File Number 000-52051
 
 
THE MINT LEASING, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Nevada
 (State or Other Jurisdiction of Incorporation or Organization)
87-0579824
(IRS Employer Identification
No.)
   
323 N. Loop West, Houston, Texas
(Address of Principal Executive Offices)
77008
(Zip Code)
 
(713) 665-2000
(Registrant’s Telephone Number, Including Area Code)

                 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þ Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes   o No

                 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
   
Large Accelerated  Filer     o        
Accelerated Filer            o
Non-Accelerated Filer        o          
Smaller reporting companyþ
(Do not check if a smaller reporting company)

      Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes   þ No
 
     As of May 20, 2011, there were  82,224,504 shares of the registrant’s common stock, $0.001 par value per share outstanding.
 
 
 

 
FORWARD-LOOKING STATEMENTS
 
Portions of this Form 10-Q, including disclosure under “Management’s Discussion and Analysis or Plan of Operation,” contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as may, will, should, expect, anticipate, estimate, believe, intend, contemplate or project. Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include among others;

·
our ability to raise capital,
·
our ability to obtain and retain customers,
·
our ability to provide our products and services at competitive rates,
·
our ability to execute our business strategy in a very competitive environment,
·
our degree of financial leverage,
·
risks associated with our acquiring and integrating companies into our own,
·
risks related to market acceptance and demand for our services,
·
the impact of competitive services, and
·
other risks referenced from time to time in our SEC filings.
 
With respect to any forward-looking statement that includes a statement of its underlying assumptions or basis, we caution that, while we believe such assumptions or basis to be reasonable and have formed them in good faith, assumed facts or basis almost always vary from actual results, and the differences between assumed facts or basis and actual results can be material depending on the circumstances. When, in any forward-looking statement, we or our management express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by applicable law, including the securities laws of the United States and/or if the existing disclosure fundamentally or materially changes, we do not undertake any obligation to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect unanticipated events that may occur.
 
 
 
 

 
PART I
FINANCIAL INFORMATION

Item1.  Financial Statements.
 
THE MINT LEASING, INC.
CONSOLIDATED BALANCE SHEETS
 
   
March 31, 2011
   
December 31, 2010
 
   
(unaudited)
       
ASSETS
           
             
Cash and cash equivalents
 
$
424,356
   
$
253,748
 
Investment in sales-type leases, net of allowance of  $150,000 and $905,895 respectively
   
29,868,919
     
30,626,592
 
Vehicle inventory
   
274,425
     
466,350
 
Property and equipment, net
   
51,636
     
62,096
 
Deferred income tax asset
   
2,016,969 
     
1,913,110
 
          TOTAL ASSETS
 
$
32,636,305
   
$
33,321,896
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
LIABILITIES
               
Accounts payable and accrued liabilities
 
$
942,753
   
$
963,363
 
Credit facilities
   
24,963,453
     
25,394,897
 
Notes payable to shareholders
   
863,800
     
913,800
 
                 
                 
         TOTAL LIABILITIES
   
26,770,006
     
27,272,060
 
                 
STOCKHOLDERS' EQUITY
               
Preferred stock; Series B,  2,000,000 shares authorized at $0.001 par value, 2,000,000 shares outstanding at March 31, 2011 and December 31, 2010
   
2,000
     
  2,000
 
Common stock, 480,000,000 shares authorized at $0.001 par value, 82,224,504 shares issued and outstanding at March 31, 2011 and December 31, 2010
   
82,225
     
  82,225
 
Additional paid in capital
   
9,366,359
     
9,357,016
 
Retained earnings
   
(3,584,285
)
   
(3,391,405
)
          Total Stockholders' Equity
   
5,866,299
     
6,049,836
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
32,636,305
   
$
33,321,896
 

“See accompanying notes to the unaudited consolidated financial statements.”

 
F-1

 
THE MINT LEASING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
             
REVENUES
           
   Sales-type leases, net
 
$
2,219,172
   
$
1,228,719
 
   Amortization of unearned income related to sales-type leases
   
594,119
     
998,578
 
                 
           Total Revenues
   
2,813,291
     
2,227,297
 
                 
COST OF REVENUES
   
2,296,376
     
2,262,374
 
                 
GROSS PROFIT
   
516,915
     
(35,077
 )
                 
GENERAL AND ADMINISTRATIVE EXPENSE
   
415,584
     
664,913
 
                 
INCOME (LOSS) FROM OPERATIONS
   
101,331
     
(699,990
 )
                 
OTHER INCOME (EXPENSE)
               
Interest expense
   
(398,071
)
   
(470,666
         Total Other Income (Expense)
   
(398,071
)
   
(470,666
                 
LOSS BEFORE TAX
   
(296,740
   
(1,170,656
                 
Provision for (benefit from ) Income Tax
   
(103,860
   
(411,239
                 
NET LOSS
 
$
(192,880
)
 
$
(759,417
)
 
Weighted average shares outstanding- Basic and fully diluted
   
82,224,504
     
82,224,504
 
Basic and Fully Diluted Earnings per Share:
 
$
(0.00
)
 
$
(0.00
 
“See accompanying notes to the unaudited consolidated financial statements.”
 
 
F-2

 
THE MINT LEASING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
  
   
Three Months Ended March 31,
 
   
2011
   
2010
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income (loss)
  $ (192,880 )   $ (759,417
Adjustments to reconcile net  (loss) to net cash  provided by operating activities:
               
Depreciation
    10,461       10,461  
Bad debt expense
    110,198       102,505  
Imputed interest on related party notes
    9,343       9,456  
                 
Change in operating assets and liabilities:
               
  Net investment in sales-type leases
    647,475       2,663,458  
  Inventory
    191,925       25,556  
  Other assets
    -       33,000  
  Accounts payable and accrued expenses
    (20,610     (1,022,013
  Deferred income taxes
    (103,860 )     (411,239 )
                 
Net Cash provided by operating activities
    652,052       651,767  
                 
                  CASH FLOWS FROM FINANCING ACTIVITIES:
               
                    Borrowings from Notes Payable
    42,000       820,681  
Payments on Notes Payable
    (473,444 )     (2,222,300 )
                    Payment on loans from related parties
    (50,000     283,500  
                    Net Cash (used) by financing activities
    (481,444 )     (1,118,119 )
                I INCREASE (DECREASE) IN CASH and CASH EQUIVALENTS
    170,608       (466,352 )
                 
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD
    253,748       1,231,594  
CASH AND CASH EQUIVALENTS, AT END OF PERIOD
  $ 426,345     $ 765,242  
 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
           
   
2010
   
2010
 
CASH PAID FOR:
           
             
Interest
  $ 398,071     $ 428,338  
Income taxes
  $ -     $ -  
 
“See accompanying notes to the unaudited consolidated financial statements.”
 
 
F-3

 
THE MINT LEASING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(UNAUDITED)

NOTE 1 – ORGANIZATION and NATURE OF BUSINESS ACTIVITY

A. Organization

The Mint Leasing, Inc. (“Mint” or the “Company") was incorporated on May 19, 1999, in the State of Texas and commenced operations on that date.

Effective July 18, 2008, The Mint Leasing, Inc., a Texas corporation (“Mint Texas”), a privately held company, completed the Plan and Agreement of Merger between itself and The Mint Leasing, Inc. (formerly Legacy Communications Corporation) (“Mint Nevada”), and the two shareholders of Mint Texas, pursuant to which Mint Nevada acquired all of the issued and outstanding shares of capital stock of Mint Texas.   In connection with the acquisition of Mint Texas described herein, Mint Nevada issued 70,650,000 shares of common stock and 2,000,000 shares of Series B Convertible Preferred stock to the selling stockholders.   Consummation of the merger did not require a vote of the Mint Nevada shareholders.  As a result of the acquisition, the shareholders of Mint Texas own a majority of the voting stock of Mint Nevada and Mint Texas is a wholly-owned subsidiary of Mint Nevada.  No prior material relationship existed between the selling shareholders and Mint Nevada, any of its affiliates, or any of its directors or officers, or any associate of any of its officers or directors.

Upon completion of the July 18, 2008 transaction with Mint Nevada, Mint Texas ceased to be treated as an "S" Corporation for Income Tax purposes   In accordance with accounting guidance issued by the staff of the Securities and Exchange Commission (the “SEC”), the Company had included in its financial statements all of its undistributed earnings on that date as additional paid in capital. This is to assume constructive distribution to owners followed by a contribution to the capital of the Company.

B.  Description of Business

Mint is a company in the business of leasing automobiles and fleet vehicles throughout the United States. Most of its customers are located in Texas and six other states in the Southeast. Lease transactions are solicited and administered by the Company’s sales force and staff. Mint’s customers are comprised of brand-name automobile dealers that seek to provide leasing options to their customers and individuals, many of whom would otherwise not have the opportunity to acquire a new or late-model-year vehicle. 

C. Basis of Presentation.

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

For further information, refer to the audited consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010, filed on April 15, 2011.
  
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
A.  Basis of Accounting

The Company’s financial statements are prepared using the accrual basis of accounting.   The Company has a December 31st fiscal year-end. References herein to “we” or “our” refer to The Mint Leasing, Inc., unless the context specifically states otherwise.

 
F-4

 
B.  Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that 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 periods. Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for doubtful accounts and the estimated unguaranteed residual values on the lease receivable contracts purchased.

Although Mint attempts to mitigate credit risk through the use of a variety of commercial credit reporting agencies when processing customer applications, failure of the customers to make scheduled payments under their automobile lease contracts could have a material near-term impact on the allowance for doubtful accounts.

Realization of unguaranteed residual values depends on many factors, several of which are not within the Company's control, including general market conditions at the time of the original lease contract's expiration, whether there has been unusual wear and tear on, or use of, the vehicle, the cost of comparable new vehicles and the extent, if any, to which the vehicle has become technologically or economically obsolete during the lease contract term. These factors, among others, could have a material near-term impact on the estimated unguaranteed residual values.
 
C.  Revenue recognition
 
The Company’s customers typically finance vehicles over periods ranging from three to nine years.  These financing agreements are classified as either operating or sales type leases as prescribed by the Financial Accounting Standards Board (FASB).  Revenues representing the capitalized costs of the vehicles are recognized as income upon inception of the leases. The portion of revenues representing the difference between the gross investment in the lease (the sum of the minimum lease payments and the guaranteed residual value) and the sum of the present value of the two components is recorded as unearned income and amortized over the lease term.
 
For the three months ended March 31, 2011 and 2010, amortization of unearned income totaled $594,119 and $998,578, respectively.
 
Taxes assessed by governmental authorities that are directly imposed on revenue-producing transactions between the Company and its customers (which may include, but are not limited to, sales, use, value added and some excise taxes) are excluded from revenues.

Lessees are responsible for all taxes, insurance and maintenance costs.

D.  Cost of Revenues
 
Cost of Revenues comprises the vehicle acquisition costs for the vehicles to be leased to the Company’s customers, the costs associated with servicing the leasing portfolio and the excess of  the Company’s recorded basis in leases when the related cars are reacquired (through early termination, repossessions and trade-in’s).  Cars that are reacquired are typically either re-leased or sold at auction, with the related proceeds recorded in revenue.  Total cost of sales was $2,296,376 and $2,262,374 for the three months ending March 31, 2011 and 2010, respectively.

 
F-5

 
E.  Cash and Cash Equivalents
 
Investments in highly liquid securities with original maturities of 90 days or less are included in cash and cash equivalents.
 
At March 31, 2011, all of the Company’s deposits with financial institutions were within FDIC insurance coverage limits.
 
F.  Allowance for Loan Losses
 
Provisions for losses on investments in sales-type leases are charged to operations in amounts sufficient to maintain the allowance for losses at a level considered adequate to cover probable credit losses inherent in our receivables related to sales-type leases.  The Company establishes the allowance for losses based on the determination of the amount of probable credit losses inherent in the financed receivables as of the reporting date.  The Company reviews charge-off experience factors, delinquency reports, historical collection rates, estimates of the value of the underlying collateral, economic trends, and other information in order to make the necessary judgments as to probable credit losses.  Assumptions regarding probable credit losses are reviewed periodically and may be impacted by actual performance of financed receivables and changes in any of the factors discussed above.  The allowance for loan losses was $150,000 at March 31, 2011 and $905,895 at December 31, 2010.
 
G. Charge-off Policy

The Company charges off accounts when the automobile is repossessed or voluntarily returned by the customer and legally available for disposition. The charge-off amount generally represents the difference between the net outstanding investment in the sales-type lease and the fair market value of the vehicle returned to inventory. The charge-off amount is included in cost of revenues on the accompanying statement of operations. Accounts in repossession that have been charged off have been removed from finance receivables and the related repossessed automobiles are included in Vehicle Inventory on the consolidated balance sheet pending sale.

H.  Vehicle Inventory

Vehicle Inventory includes repossessed automobiles, as well as vehicles turned in at the conclusion of the lease.  Inventory of vehicles is stated at the lower of cost determined using the specific identification method, and market, determined by net proceeds from sale or the NADA book value.
 
I.  Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation and amortization on property and equipment are determined using the straight-line method over the three to seven-year estimated useful lives of the assets.  Leasehold improvements are depreciated using a life that corresponds to the lower of the remaining lease term or the expected life of the improvements.
 
Cost and accumulated depreciation of assets as of March 31, 2011 and December 31, 2010 are as follows:
 
   
March 31,
2011
   
December 31, 2010
 
Leasehold Improvements
 
$
5,980
   
$
5,980
 
Furniture and Fixtures
   
97,981
     
97,981
 
Computer and Office Equipment
   
179,572
     
179,572
 
   Total
   
283,533
     
283,533
 
Less: Accumulated Depreciation
   
(231,897
)
   
(221,437
)
Net Property and Equipment
 
$
51,636
   
$
62,096
 

 
F-6

 
Expenditures for additions, major renewal and betterments are capitalized, and expenditures for maintenance and repairs are charged against income as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income.
 
Depreciation expense charged to operations was $10,461 and $10,461 for the three months ended March 31, 2011 and 2010, respectively.

J. Advertising
 
Advertising costs are charged to operations when incurred. Advertising costs for the three months ended March 31, 2011 and 2010 totaled $987 and $205, respectively.

K.  Income Taxes
 
The Company accounts for income taxes in accordance with guidance provided by the FASB, whereby, deferred tax assets and liabilities are recognized for the expected future tax consequences, utilizing currently enacted tax rates of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Deferred tax assets are recognized, net of any valuation allowance, for the estimated future tax effects of deductible temporary differences and tax operating loss and credit carry forwards.

For interim financial reporting, the Company records the tax provision (benefit) based on its estimate of the effective tax rate for the year.  The Company has projected its annual estimated effective income tax rate to be 34% for 2011.  Accordingly, the Company has recorded a deferred tax benefit of $103,860 for the three month period ended March 31, 2011, on loss before taxes of $296,740.  At March 31, 2011, the Company had a deferred tax asset of $2,016,969 primarily related to the tax effect of net operating loss carry forwards to be used in the future.

We adopted the FASB’s provisions regarding the treatment of income taxes on January 1, 2008. As of March 31, 2011, we had no liabilities included on the consolidated balance sheets associated with uncertain tax position. Due to uncertainty regarding the timing of future cash flows associated with income tax liabilities, a reasonable estimate of the period of cash settlement is not determinable.
 
L. Earnings per Common and Common Equivalent Share  
 
The computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during the year. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus common stock equivalents which would arise from their exercise using the treasury stock method and the average market price per share during the year.  At March 31, 2011 and 2010, there was no difference between basic and diluted loss per share as the effect of these potential common shares were anti-dilutive due to the net loss during the three month periods ended March 2011 and 2010.

M. Effect of New Accounting Pronouncements
 
In April 2009, the FASB issued additional guidance for determining fair value of a financial asset.  This provision clarified the application of earlier guidance related to determining fair value of financial assets by providing additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. These provisions also include guidance on identifying circumstances that indicate a transaction is not orderly. This guidance is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. This guidance does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, these provisions require comparative disclosures only for periods ending after initial adoption. Revisions resulting from a change in valuation technique or its application shall be accounted for as a change in accounting estimate in accordance with FASB provisions. In the period of adoption, a reporting entity shall disclose a change, if any, in valuation technique and related inputs resulting from the application of this provision, and quantify the total effect of the change in valuation technique and related inputs, if practicable, by major category. This pronouncement did not have a material impact on our results of operations or financial position.
 
 
F-7

 
In April 2009, the FASB Staff issued guidance on interim disclosures about fair value of financial instruments.  This provision amends earlier guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly-traded companies as well as in annual financial statements and disclosures in summarized financial information at interim reporting periods. This provision does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this guidance requires comparative disclosures only for periods ending after initial adoption. This pronouncement did not have a material impact on our results of operations or financial position.

We adopted the provisions issued by the FASB on January 1, 2008 related to fair value measurements. This provision defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurement.  This guidance applies under other accounting pronouncements that require or permit fair value measurements and accordingly, does not require any new fair value measurements. The guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the provisions established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

·
Level 1. Observable inputs such as quoted prices in active markets;
   
·
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
 
·
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
The following table presents assets that are measured and recognized at fair value on a non-recurring basis at March 31, 2011:

                     
Total
 
                     
Gains
 
Description
 
Level 1
   
Level 2
   
Level 3
   
(Losses)
 
Cash and cash equivalents
  $       $ 424,356     $ -     $ -  
Investment in sales-type leases – net
    -       -       29,868,919       -  
Credit facilities
    -       24,963,453       -       -  
Notes payable to shareholders
    -       863,800       -       -  

The following table presents assets that are measured and recognized at fair value on a non-recurring basis at December 31, 2010:

                     
Total
 
                     
Gains
 
Description
 
Level 1
   
Level 2
   
Level 3
   
(Losses)
 
Cash and cash equivalents
  $       $ 253,748     $ -     $ -  
Investment in sales-type leases – net
    -       -       30,626,592       -  
Credit facilities
    -       25,394,897       -       -  
Notes payable to shareholders
    -       913,800       -       -  

 
F-8

 
The FASB’s guidance became effective for us on January 1, 2008 and establishes a fair value option that permits entities to choose to measure eligible financial instruments and certain other items at fair value at specified election dates. A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at each subsequent reporting date. For the quarter ended March 31, 2011, there were no applicable items on which the fair value option was elected. This FASB provision may impact our consolidated financial statements in the future..

In January 2010, the FASB issued FASB ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements,” which is now codified under FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” This ASU will require additional disclosures regarding transfers in and out of Levels 1 and 2 of the fair value hierarchy, as well as a reconciliation of activity in Level 3 on a gross basis (rather than as one net number). The ASU also provides clarification on disclosures about the level of disaggregation for each class of assets and liabilities and on disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. FASB ASU No. 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures requiring a reconciliation of activity in Level 3. Those disclosures will be effective for interim and annual periods beginning after December 15, 2010. The adoption of the portion of this ASU effective after December 15, 2009, as well as the portion of the ASU effective after December 15, 2010, did not have an impact on our consolidated financial position, results of operations or cash flows.

In April 2010, the FASB issued FASB ASU No. 2010-17, “Milestone Method of Revenue Recognition,” which is now codified under FASB ASC Topic 605, “Revenue Recognition.” This ASU provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. Consideration which is contingent upon achievement of a milestone in its entirety can be recognized as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. A milestone should be considered substantive in its entirety, and an individual milestone may not be bifurcated. An arrangement may include more than one milestone, and each milestone should be evaluated individually to determine if it is substantive. FASB ASU No. 2010-17 was effective on a prospective basis for milestones achieved in fiscal years (and interim periods within those years) beginning on or after June 15, 2010, with early adoption permitted. If an entity elects early adoption, and the period of adoption is not the beginning of its fiscal year, the entity should apply this ASU retrospectively from the beginning of the year of adoption. This ASU did not have any effect on the timing of revenue recognition and our consolidated results of operations or cash flows.

In December 2010, the FASB issued FASB ASU No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts,” which is now codified under FASB ASC Topic 350, “Intangibles — Goodwill and Other.” This ASU provides amendments to Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not goodwill impairment exists. When determining whether it is more likely than not impairment exists, an entity should consider whether there are any adverse qualitative factors, such as a significant deterioration in market conditions, indicating impairment may exist. FASB ASU No. 2010-28 is effective for fiscal years (and interim periods within those years) beginning after December 15, 2010. Early adoption is not permitted. Upon adoption of the amendments, an entity with reporting units having carrying amounts which are zero or negative is required to assess whether it is more likely than not the reporting units’ goodwill is impaired. If the entity determines impairment exists, the entity must perform Step 2 of the goodwill impairment test for that reporting unit or units. Step 2 involves allocating the fair value of the reporting unit to each asset and liability, with the excess being implied goodwill. An impairment loss results if the amount of recorded goodwill exceeds the implied goodwill. Any resulting goodwill impairment should be recorded as a cumulative-effect adjustment to beginning retained earnings in the period of adoption. This ASU did not have any material impact to our financial statements.
 
 
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NOTE 3 - NET INVESTMENT IN SALES-TYPE LEASES
 
The Company’s leasing operations consist principally of leasing vehicles under sales-type leases expiring in various years to 2014. Following is a summary of the components of the Company’s net investment in sales-type leases at March 31, 2011 and December 31, 2010:

   
As of March 31, 2011
   
As of December 31, 2010
 
             
Total Minimum Lease Payments to be Received
  $ 24,933,031     $ 27,091,548  
Residual Values
    12,426,077       12,142,447  
Lease Carrying Value
    37,359,108       39,233,995  
Less: Allowance for Uncollectible Amounts
    (150,000 )     (905,895 )
Less: Unearned Income
    (7,340,189 )     (7,701,508 )
Net Investment in Sales-Type Leases
  $ 29,868,919     $ 30,626,592  
 
NOTE 4 –CREDIT FACILITIES

Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one annually; which the Company did not meet at December 31, 2010. At December 31, 2009, the availability under the $10,000,000 Revolver was limited to $2,500,000.. The Revolver matured on December 31, 2009 and was renewed for an additional 60 days at which time an additional $820,681 was advanced to the Company. On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principal and interest of $37,817, with the remaining balance due at maturity. Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012. At March 31, 2011, the outstanding balance on the Revolver was $2,191,368.  Additionally, at March 31, 2011, we were not in compliance with certain of the covenants required by the Revolver, which failure was waived by Moody Bank pursuant to the Third Renewal, described below.

On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011, and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").

The Modification and March 2011 Modification also modified and amended our required borrowing base and minimum net worth requirements under the Renewal, which factor into whether we are in compliance with the terms and conditions of and/or in default of the terms of the Renewal.

 
F-10

 
The outstanding amount of the Renewal at the time of the parties’ entry into the Modification was $23,704,253, and the Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $110,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning December 10, 2010 and continuing until February 10, 2011 (we had previously been making monthly installment payments of $110,000 beginning in July 2010), with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on March 10, 2011 (previously the full amount of the Renewal as modified by the first Modification Agreement, was due and payable on November 10, 2010).

The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all proceeds from the sale of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.

At March 31, 2011, the outstanding balance on the Note Payable was $22,630,085. Under the terms of the renewals of the Note Payable, the Company has been and will continue to be unable to borrow any new funds under the credit facilities during 2011.

Our credit facility with Sterling Bank requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: our statements, representations and warranties made in the credit facility and related documents are correct and accurate; if Jerry Parish, our Chief Executive Officer and sole Director fails to own at least 50% of the ownership of the Company; the death of either of the guarantors of the credit facility, Jerry Parish or Victor Garcia; the termination of the employment of Mr. Parish; or the transfer of any ownership interest of Mint Texas without the approval of Sterling Bank.  At March 31, 2011 and December 31, 2010, the Company was not in compliance with all debt covenants under the credit facility with Sterling Bank; however such failure to remain in compliance was waived by Sterling Bank pursuant to the Modifications described above.

On June 5, 2010, the Company entered into an unsecured $100,000 promissory note (“Promissory Note”) with a third party to finance the purchase of vehicles for lease, which accrued interest at the rate of 15% per annum, payable monthly, was secured by the personal guaranty of Jerry Parish, was due on December 5, 2010, and was repaid during the year ended December 31, 2010.

On March 1,2011, the Company entered into a Promissory Note with a third party in the amount of $100,000, which accrues interest at the rate of 12% per annum payable monthly, and was due on March 1, 2012. The Promissory Note was secured by the personal guaranty of Jerry Parish. This note was paid off on March 26, 2011, with the proceeds of a new Promissory Note as described below.

On March 26, 2011, the Company Paid off the $100,000 Promissory Note and entered into a new Promissory Note with the same third party in the amount of $142,000, with a maturity date of March 26, 2012.  The Promissory Note accrues interest at the rate of 12% per annum payable monthly. The Promissory Note is secured by the personal guaranty of Jerry Parish. The outstanding balance at March 31, 2011 was $142,000.

We believe that the Company has adequate cash flow being generated from its investment in sales-type leases and inventories to meet its financial obligations to the banks in an orderly manner, provided we are able to continue to renew the current credit facilities when they come due and the outstanding balances are amortized over a four to five year period.  The Company has historically been able to negotiate such renewals with its lenders.  However, there is no assurance that the Company will be able to negotiate such renewals in the future on terms that will be acceptable to the Company. In the future, if we are not able to negotiate renewals and/or expansion of our current credit facilities we may be required to seek additional capital by selling debt or equity securities. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that such financing will be available to the Company in amounts or on terms acceptable to us, or at all.
 
 
F-11

 
NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS
 
FASB guidance regarding fair value measurements requires disclosure of fair value information about financial instruments, whether recognized or not in our consolidated balance sheet. Fair values are based on estimates using present value or other valuation techniques in cases where quoted market prices are not available. Those techniques are significantly affected by the assumptions used, including the discount rate and the estimated timing and amount of future cash flows. Therefore, the estimates of fair value may differ substantially from amounts that ultimately may be realized or paid at settlement or maturity of the financial instruments and those differences may be material. The FASB provision excludes certain financial instruments and all non-financial instruments from the Company’s disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

Estimated fair values, carrying values and various methods and assumptions used in valuing our financial instruments as of March 31, 2011 and December 31, 2010 are set forth below:
 
     
March 31, 2011
     
Carrying
Value
 
Estimated
Fair Value
Financial assets:
         
Cash and cash equivalents
(a)
 
$
424,356
 
$
424,356
Investment in sales-type leases – net
(b)
   
29,868,919
   
29,868,919
               
Financial liabilities:
             
Credit facilities
(c)
   
24,963,453
   
24,963,453
Notes payable to shareholders
(d)
   
863,800
   
863,800
 
     
December 31, 2010
     
Carrying Value
 
Estimated Fair Value
Financial assets:
         
Cash and cash equivalents
(a)
 
$
  253,748
 
$
253,748
Investment in sales-type leases – net
(b)
   
 
30,626,592
   
 
30,626,592
               
Financial liabilities:
             
Credit facilities
(c)
 
$
25,394,897
 
$
25,394,897
Notes payable to shareholders
(d)
   
     913,800
   
     913,800
               

(a)
The carrying value of cash and cash equivalents is considered to be a reasonable estimate of fair value since these investments bear interest at market rates and have maturities of less than 90 days.
 
(b)
The fair value of finance receivables is estimated by discounting future cash flows expected to be collected using current rates at which similar loans would be made to borrowers with similar credit ratings and the same remaining maturities.

(c)
Credit facilities have variable rates of interest and maturities of one year or less. Therefore, carrying value is considered to be a reasonable estimate of fair value.

(d)
The fair value of Shareholder notes payable are estimated based on rates currently available for debt with similar terms and remaining maturities.

 
F-12

 
NOTE 6 -RELATED PARTY TRANSACTIONS

Under an informal arrangement, consulting fees totaling $-0- and $52,500 were paid to a shareholder for services rendered during the three months ended March 31, 2011 and 2010, respectively. The Company leased office space from a partnership, which is owned by the Company’s two majority shareholders, pursuant to a lease which expired on August 31, 2008, at the rate of $10,000 per month. The lease was subsequently renewed to July 31, 2011, which included an adjacent property at the rate of $20,000 per month. In conjunction with the Company's cost reduction efforts the monthly rental payment was reduced to $15,000 per month during 2010 and continuing for the term of the lease. We believe these rental rates are consistent with rental rates for similar properties in the Houston, Texas real estate market.  Rent expense under the lease amounted to $45,000 and $60,000 for the three months ended March 31, 2011 and 2010, respectively. 

The Company has notes payable to Jerry Parish, Victor Garcia, and a partnership which is owned by the Company’s two majority shareholders (Mr. Parish and Mr. Garcia) through its wholly-owned subsidiary, Mint Texas. The amounts outstanding as of March 31, 2011 and March 31, 2010 were $863,800 and $913,800, respectively.  These notes payable are non-interest bearing and due upon demand.  The Company imputed interest on these notes payable at a rate of 8.75% per year.  Interest expense of $9,343, and $9,456 was recorded as contributed capital for the three months ended March 31, 2011 and 2010, respectively.

NOTE 7 – COMMITMENTS AND CONTINGENCIES
 
Concentrations of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk are primarily cash equivalents, and finance receivables. Our cash equivalents are placed through various major financial institutions.  Finance receivables represent contracts with consumers residing throughout the United States, with lessees located in Texas, Arkansas, Mississippi, Alabama, Georgia, Tennessee and Florida. No state other than Texas accounted for more than 10% of managed finance receivables.

Legal Proceedings

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by consumers and/or shareholders. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. We believe that we have taken prudent steps to address and mitigate the litigation risks associated with our business activities. In the opinion of management, the ultimate aggregate liability, if any, arising out of any such pending or threatened litigation will not be material to our consolidated financial position or our results of operations and cash flows.

NOTE 8 - ONGOING RELATIONSHIPS WITH FINANCIAL INSTITUTIONS

Management has had a long relationship with the financial institutions that are currently providing its credit facilities.  The Company has a history of successfully working with its lenders in negotiating previous modifications and extensions, and believes that it will continue to be able to do so in the future. Such extensions or modifications are critical to the Company’s ability to meet its financial obligations and execute its business plan.  Accordingly, the financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities should the Company not be able to continue to modify or extend its credit facilities.  See Note 4 for further details.

NOTE 9 – SUBSEQUENT EVENTS

No subsequent event occurred after the date of these financial statements and prior to their issuance, which would require its disclosure in these financial statements.
 
 
F-13

 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

This Management’s Discussion and Analysis contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of forward-looking terminology such as, “may”, “believe”, “expect”, “intend”, “anticipate”, “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct.  Important factors with respect to any such forward-looking statements include, but are not limited to, the risk factors described in the Company’s Annual Report on Form 10-K and in this report.  The following discussion of the results of operations and financial condition should be read in conjunction with the Financial Statements and related Notes thereto included herein and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010.

Corporate History

The Mint Leasing, Inc. (the “Company,” “Mint,” "Mint Leasing", “we,” “Mint Nevada,” and “us”) was incorporated in Nevada on September 23, 1997 as Legacy Communications Corporation.
 
Effective July 18, 2008, The Mint Leasing, Inc., a Texas corporation, which was incorporated on May 19, 1999, and commenced operations on that date (“Mint Texas”), a privately-held company, completed the Plan and Agreement of Merger between itself and the Company (for the purposes of this paragraph, “Mint Nevada”), and the two shareholders of Mint Texas, pursuant to which Mint Nevada acquired all of the issued and outstanding shares of capital stock of Mint Texas.   In connection with the acquisition of Mint Texas, Mint Nevada issued 70,650,000 shares of common stock, and 2,000,000 shares of Series B Convertible Preferred stock to the selling stockholders and owners of Mint Texas.   Additionally, the Company granted stock options to purchase 2,000,000 shares of common stock to Mr. Parish.  The exercise price of the options is $3.00 per share, and the options expire in 2018.  One-third of the options vest to Mr. Parish on the first, second and third anniversary of the grant date (July 28, 2008).  Consummation of the merger did not require a vote of the Mint Nevada shareholders.  As a result of the acquisition, the shareholders of Mint Texas own a majority of the voting stock of Mint Nevada as described below, Mint Texas is a wholly-owned subsidiary of Mint Nevada, and the Company (Mint Nevada) changed its name to The Mint Leasing, Inc. No prior material relationship existed between the selling shareholders and Mint Nevada, any of its affiliates, or any of its directors or officers, or any associate of any of its officers or directors.  Effective on July 18, 2008, our former operations as a developer and purchaser of radio stations ceased and since that date our operations have solely been the operations of Mint Texas, our wholly-owned subsidiary.

Unless otherwise stated, or the context suggests otherwise, the description of the Company’s business operations below includes the operations of Mint Texas, the Company’s wholly-owned subsidiary.
 
The board of directors approved a one-for-twenty reverse stock split (the “Reverse Stock Split”) with respect to shares of common stock outstanding as of July 16, 2008. Unless otherwise stated, all share amounts listed herein retroactively reflect the Reverse Stock Split.
 
As set forth in the Company’s Information Statement on Schedule 14C dated June 26, 2008, the Company adopted the Second Amended and Restated Articles of Incorporation and Amended Bylaws as of July 18, 2008.  The Company further amended the Second Amended and Restated Articles of Incorporation on July 18, 2008 to change the Company’s name from Legacy Communications Corporation to The Mint Leasing, Inc., effective as of July 21, 2008.
 
Effective in July 2008, the Company designated Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, as described in greater detail below.
 
On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011, and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").

 
-3-

 
The Modification and March 2011 Modification also modified and amended our required borrowing base and minimum net worth requirements under the Renewal, which factor into whether we are in compliance with the terms and conditions of and/or in default of the terms of the Renewal.

The outstanding amount of the Renewal at the time of the parties’ entry into the Modification was $23,704,253, and the Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $110,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning December 10, 2010 and continuing until February 10, 2011 (we had previously been making monthly installment payments of $110,000 beginning in July 2010), with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on March 10, 2011 (previously the full amount of the Renewal as modified by the first Modification Agreement, was due and payable on November 10, 2010).

The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all proceeds from the sale of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.

The Modification and March 2011 Modification did not otherwise amend or modify the terms of the Renewal, which evidences a Secured Note Payable (the "Note Payable"), which includes an annual interest rate of prime rate plus 2%, subject to a floor of 6%.  The repayment of the credit facility is secured by a security interest over substantially all of our assets and leases, and the personal guaranty of our Chief Executive Officer and sole Director, Jerry Parish.

The credit facility also requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness in addition to those requirements added to the credit facility in connection with the Modification and March 2011 Modification as provided above, including covenants requiring that our statements, representations and warranties made in the credit facility and related documents are correct and accurate; and that Jerry Parish, our Chief Executive Officer and sole Director cannot fail to own less than 50% of the ownership of the Company.

At March 31, 2011, the outstanding balance on the Note Payable was $22,630,085. Under the terms of the renewals of the Note Payable, the Company has been and will continue to be unable to borrow any new funds under the credit facilities during 2011.
 
Our credit facility with Sterling Bank requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: our statements, representations and warranties made in the credit facility and related documents are correct and accurate; if Jerry Parish, our Chief Executive Officer and sole Director fails to own at least 50% of the ownership of the Company; the death of either of the guarantors of the credit facility, Jerry Parish or Victor Garcia; the termination of the employment of Mr. Parish; or the transfer of any ownership interest of Mint Texas without the approval of Sterling Bank.  At December 31, 2010, the Company was not in compliance with all debt covenants under the credit facility with Sterling Bank; however such failure to remain in compliance was waived by Sterling Bank pursuant to the March 2011 Modification, described above.

 
-4-

 
Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one annually, which the Company was not in compliance with at December 31, 2010. Subsequent to December 31, 2009, Moody advanced an additional $820,681; increasing the outstanding balance to $2,500,000.  On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012. At March 31, 2011, the outstanding balance on the Revolver was $2,191,368.

Description of Business

Mint Leasing is a company in the business of leasing automobiles and fleet vehicles throughout the United States. Mint Leasing has partnerships with more than 500 dealerships within 17 states. However, most of its customers are located in Texas and six other states in the Southeast, with the majority of the leases originated in 2009 and 2010 with customers in the state of Texas.  The credit analysts at Mint Leasing review every deal individually, refusing to depend on a target “beacon score” to determine authorization for each deal and instead relying on a common-sense approach for deal approval.

Lease transactions are solicited and administered by the Company’s sales force and staff. Mint’s customers are directed to the Company by brand-name automobile dealers that seek to provide leasing options to their customers, many of whom would otherwise not have the opportunity to acquire a new or late-model-year vehicle.  The Company’s sales are principally accomplished through the Company’s sales force, which includes seven full-time employees.  The Company’s primary marketing and sales strategy is to market to automobile dealers that have established a history of directing customers to the Company.

PLAN OF OPERATIONS FOR THE NEXT TWELVE MONTHS

Throughout the remainder of fiscal 2011, we plan to continue investigating opportunities to support our long-term growth initiatives. We are exploring opportunities to increase the Company’s capital base through the issuance by the Company of additional common or preferred stock and/or the issuance of convertible debt, which may not be available on favorable terms, if at all  Without access to additional capital in the form of debt or equity the Company’s ability to add new leases to its current portfolio will be limited to the excess cash generated by its current lease portfolio.  While the cash flow from its current lease portfolio is sufficient to service the Company’s debts and expenses (assuming the continued renewal/extension of its outstanding credit facilities), it may not generate sufficient excess cash to allow the Company to enter into enough new leases to generate a profit.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011, COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2010

For the three months ended March 31, 2011, total revenues were $2,813,291, compared to $2,227,297 for the three months ended March 31, 2010, an increase in total revenues of $585,994 or approximately 26% from the prior period.  Revenues from sales-type leases, net increased $990,453 or 81% to $2,219,172 for the three months ended March 31, 2011, from $1,228,719 for the three months ended March 31, 2010.  Revenues from amortization of unearned income related to sales-type leases decreased $404,459 or 41% to $594,119 for the three months ended March 31, 2011, from $998,578 for the three months ended March 31, 2010.

 
-5-

 
The increase in revenues from sales-type leases, net was principally due to an increased availability of internally-generated funds, which enabled the Company to purchase vehicles and issue new leases during the three months ended March 31, 2011 compared to the prior period. The  availability of funds to enter into new sales-type lease is primarily the result of less restrictive terms under the Company’s credit facilities with the Company senior lenders during the three months ended March 31, 2011, as compared to the three months ended March 31, 2010.  The decrease in revenues from amortization of unearned income related to sales-type leases was principally due to lower balances in the net investment in sales-type leases. The decrease in the balance in the net investment in sales-type leases is the result of the Company collecting lease payments on existing leases and expiration or early termination of leases which more than offset the amount of new leases added to the books.

Cost of revenues increased $34,002 or 2% to $2,296,376 for the three months ended March 31, 2011, as compared to $2,262,374 for the three months ended March 31, 2010.  Cost of revenues increased as a result of the higher level of new lease revenue for the three months ended March 31, 2011, compared to the three months ended March 31, 2010.

Gross profit increased $551,992 to a positive $516,915 for the three months ended March 31, 2011 compared to a loss of $35,077 for the three months ended March 31, 2010.  Gross profit increased largely due to the 26% increase in total revenues, which was partially offset by the 2% increase in total cost of revenues.

General and administrative expenses were $415,584 and $664,913, for the three months ended March 31, 2011 and March 31, 2010, respectively, constituting a decrease of $249,329 or 37% from the prior period.  The decrease in general and administrative expenses was mainly associated with a reduction in employees and other expenses as a result of cost controls and improved efficiency at the Company.

Interest expense was $398,071 and $470,666 for the three months ended March 31, 2011 and March 31, 2010, respectively. The $72,595 or 15% decrease in interest expense for the three months ended March 31, 2011, compared to the three months ended March 31, 2010, was due to a decrease in the outstanding balances on our credit facilities for the three months ended March 31, 2011, compared to the three months ended March 31, 2010.  The lower debt balances during the first quarter of 2011 versus the first quarter of 2010 were the result of principal payments made under the terms of the renewals of our debt facilities.

The Company had a benefit from income taxes of $103,860 for the three months ended March 31, 2011, compared to a benefit from income taxes of $411,239 for the three months ended March 31, 2010. The $307,379 decrease in the benefit from income taxes is entirely due to the $873,916 decrease in the loss before taxes in the first quarter of 2011 versus the first quarter of 2010.

The Company had a net loss for the three months ended March 31, 2011 of $192,880 compared to a net loss of $759,417 for the three months ended March 31, 2010.  This improvement of $566,573 or 75% was the result of the increase in revenues generated by new leases and improved expense control. This was partially offset by the impact of bad debt expenses of $110,198 taken in the quarter to build up the allowance for potential future defaults on lease payments.

Earnings before interest, taxes, depreciation and amortization (EBITDA) improved dramatically over the same quarter last year.  EBITDA for the three months ended March 31, 2011 was a positive $113,803 compared to a negative $657,519 for the three months ended march 31, 2010.  The improvement of $771,322 was due to the improvement in income from operations discussed above. EBITDA is not a measure derived in accordance with GAAP and is provided for informational purposes only.  We provide EBITDA to help readers evaluate our operating results, compare our operating performance with that of similar companies that have different capital structures and to help evaluate our ability to meet future debt service, capital expenditure and working capital requirements. Our EBITDA should not be considered in isolation or as a substitute for comparable measures presented in accordance with GAAP.

 
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LIQUIDITY AND CAPITAL RESOURCES

We had total assets of $32,636,305 as of March 31, 2011, which included cash and cash equivalents of $424,356, investment in sales-type leases, net of $29,868,919, vehicle inventory of $274,425, deferred income taxes asset of $2,016,969, and net property and equipment of $51,636.

We had total liabilities as of March 31, 2011 of $26,770,006, which included $942,753 of accounts payable and accrued liabilities, $24,963,453 of amounts due under our credit facilities with senior lenders (described in greater detail below), and $863,800 of notes payable to related parties.

On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011, and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").

The Modification and March 2011 Modification also modified and amended our required borrowing base and minimum net worth requirements under the Renewal, which factor into whether we are in compliance with the terms and conditions of and/or in default of the terms of the Renewal.

The outstanding amount of the Renewal at the time of the parties’ entry into the Modification was $23,704,253, and the Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $110,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning December 10, 2010 and continuing until February 10, 2011 (we had previously been making monthly installment payments of $110,000 beginning in July 2010), with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on March 10, 2011 (previously the full amount of the Renewal as modified by the first Modification Agreement, was due and payable on November 10, 2010).

The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all proceeds from the sale of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.

The Modification and March 2011 Modification did not otherwise amend or modify the terms of the Renewal, which evidences a Secured Note Payable (the "Note Payable"), which includes an annual interest rate of prime rate plus 2%, subject to a floor of 6%.  The repayment of the credit facility is secured by a security interest over substantially all of our assets and leases, and the personal guaranty of our Chief Executive Officer and sole Director, Jerry Parish.

At March 31, 2011, the outstanding balance on the Note Payable was $22,630,085. Under the terms of the renewals of the Note Payable, the Company has been and will continue to be unable to borrow any new funds under the credit facilities during 2011.
 
Our credit facility with Sterling Bank requires us to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: our statements, representations and warranties made in the credit facility and related documents are correct and accurate; if Jerry Parish, our Chief Executive Officer and sole Director fails to own at least 50% of the ownership of the Company; the death of either of the guarantors of the credit facility, Jerry Parish or Victor Garcia; the termination of the employment of Mr. Parish; or the transfer of any ownership interest of Mint Texas without the approval of Sterling Bank.  At March 31,2011 and December 31, 2010, the Company was not in compliance with all debt covenants under the credit facility with Sterling Bank; however such failure to remain in compliance was waived by Sterling Bank pursuant to the March 2011 Modification, described above.

 
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Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one annually, which the Company was not in compliance with at December 31, 2010.  Subsequent to December 31, 2009, Moody advanced an additional $820,681; increasing the outstanding balance to $2,500,000.  On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012. At March 31, 2011, the outstanding balance on the Revolver was $2,191,368.
 
Additionally, Jerry Parish, the Company’s Chief Executive Officer and Director, and Victor Garcia, our Director, jointly and severally agreed to guaranty the repayment of the Moody Loan pursuant to individual Guaranty Agreements entered into in favor of Moody in connection with the Moody Loan. The amount outstanding under the Moody Loan is secured by a security interest in any leases made with such funds and the underlying vehicles.

On June 5, 2010, the Company entered into an unsecured $100,000 promissory note (“Promissory Note”) with a third party to finance the purchase of vehicles for lease, which accrued interest at the rate of 15% per annum, payable monthly, was secured by the personal guaranty of Jerry Parish, was due on December 5, 2010, and was repaid during the year ended December 31, 2010.

On March 1,2011, the Company entered into a Promissory Note with a third party in the amount of $100,000, which accrues interest at the rate of 12% per annum payable monthly, and was due on March 1, 2012. The Promissory Note was secured by the personal guaranty of Jerry Parish. This note was paid off on March 26, 2011, with the proceeds of a new Promissory Note as described below.

On March 26, 2011, the Company Paid off the $100,000 Promissory Note and entered into a new Promissory Note with the same third party in the amount of $142,000, with a maturity date of March 26, 2012.  The Promissory Note accrues interest at the rate of 12% per annum payable monthly. The Promissory Note is secured by the personal guaranty of Jerry Parish. The outstanding balance at March 31, 2011 was $142,000.
 
The Company has notes and advances payable to Jerry Parish, Victor Garcia and an entity owned by those two individuals of $863,800 and $630,300 as of March 31, 2011 and December 31, 2010, respectively.  These notes and advances payable are non-interest bearing, payable on demand and subordinated to the credit facilities with the banks.  Accordingly, they have been classified as long term. The Company imputed interest on these note payables at a rate of 8.75% per year.  Interest expense of $9,343 and $9,456 was recorded as contributed capital for the three months ended March 31, 2011 and 2010.
 
We generated $652,052 in cash from operating activities for the three months ended March 31, 2011, which was mainly due from collections and reductions of net investment in sales-type leases of $647,475, bad debt expense of $110,198 and a decrease in inventory of $191,925. Non-cash charges for the period included depreciation, and imputed interest that were $10,461, and $9,343, respectively, which also contributed positively to the cash provided by operating activities. Those items negatively impacting the cash provided by operations for the three months ended March 31, 2011, were the net loss of $192,880, the deferred tax benefit of $103,860, and a decrease in accounts payable and accrued liabilities of $20,610.
 
 
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Our cash balance was not affected by investing activities for the three months ended March 31, 2011.
 
We had $481,444 of net cash used in financing activities for the three months ended March 31, 2011, which was due to $473,444 of payments on credit facilities and $50,000 in payments to related parties, offset by $42,000 of net proceeds from borrowings from credit facilities.
 
We believe that the Company has adequate cash flow being generated from its investment in sales-type leases and inventories to meet its financial obligations to the banks in an orderly manner, provided we are able to continue to renew the current credit facilities when they come due and the outstanding balances are amortized over a four to five year period.  The Company has historically been able to negotiate such renewals with its lenders.  However, there is no assurance that the Company will be able to negotiate such renewals in the future on terms that will be acceptable to the Company.

Currently we are exploring opportunities to increase the Company’s capital base through the sale of additional common or preferred stock and/or the issuance of convertible debt. The sale in the future of additional equity or convertible debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that such financing will be available to the Company in amounts or on terms acceptable to us, or at all.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

We are evaluating the impact that recently adopted accounting pronouncements discussed in the notes to the financial statements will have on our financial statements but do not believe their adoption will have a significant impact.
 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this quarterly report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
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PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

As a consumer leasing company, we may be subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of applicants. Some litigation against us could take the form of class action complaints by consumers. Through our partnership with various automobile dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages.

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

ITEM 1A.  RISK FACTORS

Our securities are highly speculative and should only be purchased by persons who can afford to lose their entire investment in our Company. If any of the following risks actually occur, our business and financial results could be negatively affected to a significant extent. The Company's business is subject to many risk factors, including the following:

We Will Need To Obtain Additional Financing To Continue To Execute On Our Business Plan.

On or around January 6, 2009, the Company entered into a renewal of its $33,000,000 revolving credit facility with Sterling Bank of Houston, Texas (“Sterling Bank”) that matured on October 2, 2009.  On or around October 27, 2009, the Company entered into a Modification, Renewal and Extension Agreement and an Amended and Restated Loan Agreement in connection with its $33,000,000 line of credit facility with Sterling Bank of Houston, Texas (“Sterling Bank” and collectively the “Renewal”).  On or around July 30, 2010, we entered into a Modification Agreement with Sterling Bank to modify and amend the Renewal.  On December 14, 2010, and effective November 10, 2010, we entered into an additional Modification Agreement with Sterling Bank to modify and amend the Renewal (the “Modification”).  On April 13, 2011 and effective as of March 10, 2011, the Company entered into an additional Modification Agreement with Sterling Bank (the "March 2011 Modification").

The outstanding amount of the Renewal at the time of the parties' entry into the March 2011 Modification was $22,648,222, and the March 2011 Modification amended the Renewal to reflect such current balance outstanding, and to provide that such outstanding balance would be repaid in monthly installments of $160,000 of principal, plus accrued interest, due on the tenth (10th) of each month beginning April 10, 2011 and continuing until August 10, 2011, with a balloon payment of the remaining amount of the outstanding principal and interest due on such Renewal payable on September 10, 2011.  Additionally, each month, we are required to pay Sterling Bank, in addition to the monthly payments, a prepayment of principal equal to the amount of all of the proceeds from the sales of our vehicles which have not already been paid to Sterling Bank as a result of the monthly payment.

The Note Payable also requires the Company to meet financial covenants related to tangible net worth and leverage. The Note Payable also requires the Company to meet negative covenants, including maximum allowable operating expenses associated with the servicing of the lease contracts securing the Note Payable.  At March 31, 2011, the outstanding balance on the Note Payable was $22,630,085. The Company has been and will continue to be unable to borrow any new funds under the credit facilities with Sterling Bank moving forward.

Effective August 3, 2009, the Company entered into a secured $10,000,000 revolving credit agreement (the “Revolver”) with Moody National Bank (“Moody” and “Moody Bank”) to finance the purchase of vehicles for lease. The interest rate on the Revolver is the prime rate plus 1% with a floor of 6%. The Revolver is secured by purchased vehicles, the related receivables associated with leased vehicles, and the personal guaranties of Jerry Parish and Victor Garcia (the Company’s majority shareholders).  The credit agreement also requires the Company to meet a debt to tangible net worth ratio of 2.5 to one at December 31, 2009, which the Company was not in compliance with. The Revolver matured on December 31, 2009 and was renewed for an additional 60 days. The outstanding balance at December 31, 2009 was $1,679,319 and subsequent to December 31, 2009, Moody advanced an additional $820,681; increasing the outstanding balance to $2,500,000.  On February 28, 2010, the Company executed a second renewal, extension and modification of the Revolver (the “Amended Moody Revolver”).  The Amended Moody Revolver extended the maturity date of the facility to March 1, 2011, reduced the amount available under the facility to $2,500,000, fixed the interest rate on the facility at 6.5%, and provided for 11 monthly payments of principle and interest of $37,817, with the remaining balance due at maturity. Effective February 28, 2011, the Company executed a Third Renewal, Extension and Modification of the Revolver (the "Third Renewal").  Under the terms of the Third Renewal, the maturity date of the Revolver was extended to March 1, 2012, the amount available remains at $2,500,000, the interest rate was increased and fixed at 6.75%, and the Third Renewal provides for 11 monthly payments of principal and interest of $45,060, with the remaining balance due at maturity on March 1, 2012. At March 31, 2011, the outstanding balance on the Revolver was $2,191,368.

 
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The availability of our credit facility and similar financing sources depends, in part, on factors outside of our control, including the availability of bank liquidity in general. The current disruptions in the capital markets have caused banks and other credit providers to restrict availability of new credit facilities and require more collateral and higher pricing upon renewal of existing credit facilities, if such facilities are renewed at all. Accordingly, as our existing credit facility matures, we may be required to provide more collateral in the form of finance receivables or cash to support borrowing levels which will affect our financial position, liquidity, and results of operations. In addition, higher pricing would increase our cost of funds and adversely affect our profitability.

The Company may not have sufficient funds on hand in September 2011 when the Sterling Bank credit facility matures to retire the debt. Accordingly, we will need to further extend the credit facility and/or seek alternative financing to repay such credit facility.  Additionally, in the future, we may need additional credit to support our operations, which credit may not be available from our current banking institutions.  We do not currently have any additional commitments of additional capital from third parties or from our officers, directors or majority shareholders. We can provide no assurance that additional financing will be available on favorable terms, if at all. If we choose to raise additional capital through the sale of debt or equity securities, such sales may cause substantial dilution to our existing shareholders.  If we are not able to raise the capital necessary to repay the line of credit, we may be forced to abandon or curtail our business plan, which may cause any investment in the Company to become worthless.

Our Credit Facility Requires Us To Observe Certain Covenants, And Our Failure To Satisfy Such Covenants Could Render Us Insolvent.
 
Our credit facilities require the Company to comply with certain affirmative and negative covenants customary for restricted indebtedness, including covenants requiring that: we make timely payments of principal and interest under the credit facilities; maintain certain financial ratios; Jerry Parish, our Chief Executive Officer and sole Director maintains at least 50% of the ownership of the Company, and that Jerry Parish continues to serve as the Chief Executive Officer of the Company.

Subject to notice and cure period requirements where they are provided for, any unwaived and uncured breach of the covenants applicable to our credit facilities could result in acceleration of the amounts owed and the cross-default and acceleration of indebtedness owing to other lenders, which default may cause the value of our securities to decline in value or become worthless.

We Rely Heavily On Jerry Parish, Our Chief Executive Officer and sole Director, And If He Were To Leave, We Could Face Substantial Costs In Securing A Similarly Qualified Officer and Director.
 
Our success depends in large part upon the personal efforts and abilities of Jerry Parish, our Chief Executive Officer and sole Director. Our ability to operate and implement our business plan and operations is heavily dependent on the continued service of Mr. Parish and our ability to attract and retain other qualified senior level employees.

 
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We face continued competition for our employees, and may face competition for the services of Mr. Parish in the future. We currently have $1,000,000 of key man insurance on Mr. Parish.  We also have a three-year employment agreement with Mr. Parish which expires on July 10, 2011.  Mr. Parish is our driving force and is responsible for maintaining our relationships and operations. We cannot be certain that we will be able to retain Mr. Parish and/or attract and retain qualified employees in the future. The loss of Mr. Parish, and/or our inability to attract and retain qualified employees on an as-needed basis could have a material adverse effect on our business and operations.

Our Success In Executing On Our Business Plan Is Dependent Upon The Company’s Ability To Attract And Retain Qualified Personnel.
 
Our success depends heavily on the continued services of our executive management and employees.  Our employees are the nexus of our operational experience and customer relationships.  Our ability to manage business risk and satisfy the expectations of our customers, stockholders and other stakeholders is dependent upon the collective experience of our employees and executive management.  The loss or interruption of services provided by one or more of our executive management team could adversely affect our results of operations.  Additionally, the Company’s ability to successfully expand the business in the future will be directly impacted by its ability to hire and retain highly qualified personnel.

The Company Has Established Preferred Stock Which Can Be Designated By The Company’s Board Of Directors Without Shareholder Approval And Has Established Series A and Series B Preferred Stock, Which Gives The Holders Majority Voting Power Over The Company.

The Company has 20,000,000 shares of preferred stock authorized and 185,000 shares of Series A Convertible Preferred Stock and 2,000,000 shares of Series B Convertible Preferred Stock designated.  As of the filing date of this report, the Company has no Series A Convertible Preferred Stock shares issued and outstanding and 2,000,000 Series B Convertible Preferred Stock shares issued and outstanding, which shares are held by the Company’s Chief Executive Officer and sole Director, Jerry Parish.  The Company’s Series A Convertible Preferred Stock allows the holder to vote 200 votes each on shareholder matters and Series B Convertible Preferred Stock shares allow the holder to vote a number of voting shares equal to the total number of voting shares of the Company’s issued and outstanding stock as of any record date for any shareholder vote plus one additional share.  As a result, due to Mr. Parish’s ownership of the Series B Convertible Preferred Stock shares, he has majority control over the Company.  Mr. Parish also holds voting rights to approximately 48.1% of the Company’s outstanding common stock.

Additional shares of preferred stock of the Company may be issued from time to time in one or more series, each of which shall have distinctive designation or title as shall be determined by the Board of Directors of the Company (“Board of Directors”) prior to the issuance of any shares thereof. The preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the Board of Directors. Because the Board of Directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of the Company’s shareholders, shareholders of the Company will have no control over what designations and preferences the Company’s preferred stock will have. As a result of this, the Company’s shareholders may have less control over the designations and preferences of the preferred stock and as a result the operations of the Company.

Jerry Parish, Our Chief Executive Officer and sole Director, Can Exercise Voting Control Over Corporate Decisions.

Jerry Parish beneficially holds voting control over (a) 2,000,000 Series B Convertible Preferred Stock shares, which provide him the ability to vote the total number of outstanding shares of voting stock of the Company plus one vote, and (b) approximately 48.1% of the Company’s outstanding common stock; which in aggregate provides him voting control over approximately 74% of our total voting securities.  As a result, Mr. Parish will exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Parish may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other shareholders.

 
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Our Quarterly and Annual Results Could Fluctuate Significantly.

The Company’s quarterly and annual operating results could fluctuate significantly due to a number of factors. These factors include:
 
·  
access to additional capital in the form of debt or equity;
·  
the number and range of values of the transactions that might be completed each quarter;
·  
fluctuations in the values of and number of our leases;
·  
the timing of the recognition of gains and losses on such leases;
·  
the degree to which we encounter competition in our markets, and
·  
other general economic conditions.
 
As a result of these factors, quarterly and annual results are not necessarily indicative of the Company’s performance in future quarters and future years.
 
A Prolonged Economic Slowdown Or A Lengthy Or Severe Recession Could Harm Our Operations, Particularly If It Results In A Higher Number Of Customer Defaults.
 
The risks associated with our business are more acute during periods of economic slowdown or recession, such as the one we are currently in, because these periods may be accompanied by loss of jobs as well as an increased rate of delinquencies and defaults on our outstanding leases. These periods may also be accompanied by decreased consumer demand for automobiles and declining values of automobiles, which weakens our collateral coverage with our financing source. Significant increases in the inventory of used automobiles during periods of economic recession may also depress the prices at which repossessed or resale automobiles may be sold or delay the timing of these sales. Additionally, higher gasoline prices, unstable real estate values, reset of adjustable rate mortgages to higher interest rates, increasing unemployment levels, general availability of consumer credit or other factors that impact consumer confidence or disposable income, could increase loss frequency and decrease consumer demand for automobiles as well as weaken collateral values on certain types of automobiles. If the current economic slowdown continues to worsen, our business could experience significant losses and we could be forced to curtail or abandon our business operations.
 
There Are Risks That We Will Not Be Able To Implement Our Business Strategy.
 
Our financial position, liquidity, and results of operations depend on our management’s ability to execute our business strategy. Key factors involved in the execution of the business strategy include achieving the desired leasing volume, the use of effective credit risk management techniques and strategies, implementation of effective lease servicing and collection practices, and access to significant funding and liquidity sources. Our failure or inability to execute any element of our business strategy could materially adversely affect our financial position, liquidity, and results of operations.

A substantial part of the Company’s Target Consumer Base Includes Customers Which Are Inherently at High Risk for Defaults and Delinquencies.
 
A substantial number of our leases involve at-risk customers, which do not meet traditional dealerships’ qualifications for leases.  While we take steps to reduce the risks associated with such customers, including post-verification of the information in their lease applications and requiring down-payments ranging up to thirty percent of the manufacturer’s suggested retail price (MSRP) of the vehicles we lease, no assurance can be given that our methods for reducing risk will be effective in the future. In the event that we underestimate the default risk or under-price or under-secure leases we provide, our financial position, liquidity, and results of operations would be adversely affected, possibly to a material degree.  The Company believes that the expansion into the fleet leasing segment discussed above will help to reduce this risk over time.

 
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The Company May Experience Write-Offs for Losses and Defaults, Which Could Adversely Affect Its Financial Condition And Operating Results.
 
It is common for the Company to recognize losses resulting from the inability of certain customers to pay lease costs and the insufficient realizable value of the collateral securing such leases. Additional losses will occur in the future and may occur at a rate greater than the Company has experienced to date.   If these losses were to occur in significant amounts, our financial position, liquidity, and results of operations would be adversely affected, possibly to a material degree.
 
We Incur Significant Costs As A Result Of Operating As A Fully Reporting Company In Connection With Section 404 Of The Sarbanes Oxley Act, And Our Management Is Required To Devote Substantial Time To Compliance Initiatives.

We anticipate incurring significant legal, accounting and other expenses in connection with our status as a fully reporting public company. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and new rules subsequently implemented by the SEC have imposed various new requirements on public companies, including requiring changes in corporate governance practices. As such, our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure of controls and procedures. Our testing has revealed deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if as a result of the identification of deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

There Is Currently Only A Limited Market For Our Common Stock, And The Market For Our Common Stock May Continue To Be Illiquid, Sporadic And Volatile.

There is currently only a limited market for our common stock, and as such, we anticipate that such market will be illiquid, sporadic and subject to wide fluctuations in response to several factors moving forward, including, but not limited to:

(1)
actual or anticipated variations in our results of operations;
   
(2)
our ability or inability to generate new revenues;
   
(3)
the number of shares in our public float;

(4)
increased competition; and
   
(5)
conditions and trends in the market for automobiles and vehicle leasing.

Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock. Additionally, at present, we have a limited number of shares in our public float, and as a result, there could be extreme fluctuations in the price of our common stock. Further, due to the limited volume of our shares which trade and our limited public float, we believe that our stock prices (bid, ask and closing prices) are entirely arbitrary, are not related to the actual value of the Company, and do not reflect the actual value of our common stock. Shareholders and potential investors in our common stock should exercise caution before making an investment in the Company, and should not rely on the publicly quoted or traded stock prices in determining our common stock value, but should instead determine the value of our common stock based on the information contained in the Company's public reports, industry information, and those business valuation methods commonly used to value private companies.

 
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Investors May Face Significant Restrictions On The Resale Of Our Common Stock Due To Federal Regulations Of Penny Stocks.

Our common stock will be subject to the requirements of Rule 15(g)9, promulgated under the Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.

Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.
  
In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
None.
 
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
 
None.
  
ITEM 4 - (REMOVED AND RESERVED)
   
ITEM 5 – OTHER INFORMATION

None.
 
ITEM 6 - EXHIBITS

Exhibit No.
Description of Exhibit
3.1(2)
Amended and Restated Articles of Incorporation
3.2(2)
Amended and Restated Bylaws
3.3(3)
Amendment to the Bylaws of the Company
4.1(1)
Incentive Stock Option for 2,000,000 shares
4.2(1)
Consulting Agreement dated June 1, 2007
4.3(1)
Consulting Agreement dated June 1, 2007
4.4(1)
Common Stock purchase warrant for 1,050,000 shares
4.5(1)
Common Stock purchase warrant for 1,050,000 shares
4.6(1)
Note Conversion Agreement dated July 18, 2008
4.7(1)
Designation of Series B Convertible Preferred Stock
4.8(2)
2008 Directors, Officers, Employees and Consultants Stock Option, Stock Warrant and Stock Award Plan
10.1(1)
Agreement and Plan of Reorganization among Legacy Communications Corporation, The Mint Leasing, Inc., a Texas corporation, and the shareholders of the Mint Leasing, Inc., dated July 18, 2008 (without Exhibits).
10.2(1)
Stock Purchase Agreement between Legacy Communications Corporation and Three Irons, Inc. dated July 18, 2008.
10.3(1)
Employment Agreement between The Mint Leasing, Inc. and Jerry Parish dated July 10, 2008 assumed by The Mint Leasing, Inc. (f/k/a Legacy Communications Corporation)
 
 
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10.4(1)
Form of Indemnification Agreements between The Mint Leasing, Inc. (f/k/a Legacy Communications Corporation) and each of Jerry Parish, Michael Hluchanek, and Kelley V. Kirker
10.5(4)
Voting Trust Agreement between Jerry Parish and Victor Garcia
10.6(5)
Modification, Renewal and Extension Agreement with Sterling Bank
10.7(6)
Modification Agreement with Sterling Bank
10.8(6)
Third Renewal, Extension and Modification Agreement with Moody Bank
14.1(1)
Code of Ethics dated July 18, 2008
21.1(5)
Subsidiaries
31.1*
Certificate of the Chief Executive Officer and Principal Accounting Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certificate of the Chief Executive Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
* Filed herein.

(1) Filed as exhibits to the Company’s Form 8-K/A filed with the Commission on July 28, 2008, and incorporated herein by reference.

(2) Filed as exhibits to the Company’s Definitive Schedule 14C filing, filed with the Commission on June 26, 2008, and incorporated herein by reference.

(3) Filed as an exhibit to the Company’s Form 8-K, filed with the Commission on July 9, 2008, and incorporated herein by reference.

(4) Filed as an exhibit to Mr. Parish’s Schedule 13d filing, filed with the Commission on July 24, 2008, and incorporated herein by reference.

(5) Filed as an exhibit to the Company’s Form 10-K, filed with the Commission on April 15, 2009, and incorporated herein by reference.

(6) Filed as an exhibit to the Company’s Form 10-K, filed with the Commission on April 15, 2011, and incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
THE MINT LEASING, INC.
   
 
DATED:  May 20, 2011
 
 
By: /s/ Jerry Parish
 
Jerry Parish
 
Chief Executive Officer and Chief Financial Officer,
 
Secretary and President
 
(Principal Executive Officer and Principal Accounting Officer)
   
 
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