Form 10-K AMERITYRE CORP For: Jun 30

September 17, 2021 9:33 AM EDT

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.
amerityre20210630_10k.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

Form 10-K

 


 

(Mark One)

 

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

For the fiscal year ended June 30, 2021

OR

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   000-50053

 

amerityre20210630_10kimg001.jpg

 

AMERITYRE CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of

incorporation or organization)

87-0535207

(I.R.S. Employer

Identification No.)

1501 Industrial Road

Boulder City, Nevada 89005

(702) 293-1930

(Address of principal executive office and telephone number)

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

N/A

N/A

 

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock

 

 

 

 

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐  NO ☒

 

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. YES ☐  NO

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. YES ☒  NO ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). YES ☒   NO ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐     Accelerated filer ☐     Non-accelerated filer ☒     Smaller reporting company      Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO

 

On September 17, 2021 there were 73,047,868 shares of common stock of the Registrant outstanding.

 

As of December 31, 2020, the Registrant's most recent second quarter, there were 43,117,787 shares of common stock of the Registrant held by non-affiliates outstanding with a market value $1,293,534 (based upon the closing price of $0.03 per share of common stock as quoted on the OTCQB).

 

Documents Incorporated by Reference

 

Portions of the Registrant's definitive proxy statement, which will be issued in connection with the 2021 Annual Meeting of Shareholders of Amerityre Corporation, are incorporated by reference into Part III of this Annual Report on Form 10-K.

 

 

 

 

AMERITYRE CORPORATION

2021 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

 

 

Page

PART I

 

ITEM 1.

BUSINESS

5

ITEM 1A.

RISK FACTORS

10

ITEM 1B.

UNRESOLVED STAFF COMMENTS

18

ITEM 2.

PROPERTIES

19

ITEM 3.

LEGAL PROCEEDINGS

19

ITEM 4.

MINE SAFETY DISCLOSURES

19

PART II

 

ITEM 5.

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

20

ITEM 6.

SELECTED FINANCIAL DATA

20

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

20

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

26

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

26

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

27

ITEM 9A.

CONTROLS AND PROCEDURES

27

ITEM 9B.

OTHER INFORMATION

28

PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

ITEM 11.

EXECUTIVE COMPENSATION

 

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

 

PART IV

 

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

30

 

 

 

 

AMERITYRE CORPORATION

2021 ANNUAL REPORT ON FORM 10-K

 

This report contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.

 

All forward-looking statements, including without limitation, management's examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

 

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks set forth in “Part I. Item 1A. Risk Factors” and elsewhere in this report.

 

This report may include information with respect to market share, industry conditions and forecasts that we obtained from internal industry research, publicly available information (including industry publications and surveys), and surveys and market research provided by consultants. The publicly available information and the reports, forecasts and other research provided by consultants generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy and completeness of such information. We have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon therein. Similarly, our internal research and forecasts are based upon our management's understanding of industry conditions, and such information has not been verified by any independent sources.

 

For convenience in this report, the terms “Amerityre,” “Company,” “our,” “us” or “we” may be used to refer to Amerityre Corporation.

 

 

 

 

 

PART I

 

ITEM 1.  BUSINESS

 

Overview

 

Amerityre incorporated as a Nevada corporation on January 30, 1995.

 

Amerityre engages in the development, manufacturing and sale of polyurethane tires. We believe that we have developed unique polyurethane formulations that allow us to make products with superior performance characteristics, such as high abrasion resistance, increased energy efficiency, and higher load-bearing capabilities, when compared to conventional rubber tires and imported flat free polyurethane tires. We also believe that our manufacturing processes are more energy efficient than the traditional rubber tire manufacturing processes, in part because our polyurethane compounds do not require the multiple processing steps, extreme heat, and high pressure that are necessary to cure rubber. Using our polyurethane-based technologies, we produce tires that last longer, are less susceptible to failure and are friendlier to the environment than conventional rubber tires.

 

Products

 

Our polyurethane material technology is based on two main proprietary formulations; closed-cell polyurethane foam, a lightweight material with high load-bearing capabilities for low duty cycle applications, and Elastothane®, a high performance polyurethane elastomer with high load-bearing capabilities for high duty applications.  Closed cell foam tires and components accounted for the majority of fiscal year 2021 tire revenues. Our closed-cell polyurethane products are categorized as flat-free because they have no inner tube, do not require inflation and will not go flat even if punctured. Our tires are virtually maintenance free, non-toxic, provide extended tire life, and offer superior energy efficiency compared to rubber based tires. Our marketing efforts are divided among the following distinct segments:

 

Bicycle Tires

 

Light duty Industrial Vehicles (Golf Cars, Stock Chasers)

 

Lawn and Garden tires

 

Handtruck and small cart tires

 

Agricultural Carts

 

Forklift Tires

 

Mobility Tires

 

Our business model focuses our resources on applications and opportunities where our advantages in product technology and tire performance give us an opportunity to obtain premium pricing. The majority of our sales are to domestic customers as international sales are adversely affected by high freight costs.

 

Closed-Cell Polyurethane Foam Tires

 

We currently manufacture closed-cell polyurethane foam tires for bicycles, golf and baggage carts, hand trucks, lawn and garden equipment, wheelbarrows, personnel carriers, and medical mobility products, as well as custom designed applications.  Our proprietary formulations produce foam tires that enjoy a market reputation of superior quality and performance relative to competitor offerings.

 

Our efforts in custom product development and marketing allow us to build customer relationships and expand sales with original equipment manufacturers and tire distributors. We continue our focus on creating unique product solutions for customers with specific tire performance requirements. The demand for our golf cart, personnel carrier and baggage cart tires continues to increase as the marketplace recognizes the superior performance of our tires in industrial equipment applications. We believe this growth trend will continue going forward provided business conditions adversely affected by COVID-19 over the past year stabilize. Our growth may be delayed due to the emergence of new variants of the virus. See Item 1A – “Risk Factors” for more information. Since the inception of the pandemic in March 2020, Amerityre has operated as an “essential business”. We have seen strong demand for our products that continues to increase, resulting in strong sales revenues in Q4 of FY2021 and for the entire FY2021.  

 

 

Polyurethane Elastomer Industrial Tires

 

We have developed solid polyurethane industrial tires made of Elastothane®, our family of proprietary polyurethane elastomer formulations.  We currently offer over 20 sizes for Class 1, 4 and 5 forklifts, as well as elastomer tires for scissor lifts. Over the past few years, we have not seen significant sales levels for our forklift tires, as the market prefers cheaper solid rubber forklift tires. Our Elasstothane® 500 material, a lighter density formulation than our standard polyurethane elastomer, continues to be well received by the agricultural applications market. This formulation has been used in baggage carts, personnel carriers, stock chasers, and lawn mowers, in applications where enhanced abrasion resistance and increased weight bearing capacity is required. We believe our polyurethane elastomer tires are superior to rubber tires as they are non-marking, more energy efficient, carry greater load weight, are made of non-toxic materials, operate in lower temperature environments and have longer comparative service life.  Our long-term success in this area is dependent upon finding new joint product development initiatives with OEM partners.

 

Amerityre has developed elastomer-based products for the agricultural tire market, such as flat-free pivot tires used in irrigation systems, seeder tires, and hay baler tires. Overall sales in the agricultural market have historically been negatively impacted by low commodity prices, although in recent months there has been significant increases in the price of farm commodity crops.  As with our industrial tires, we continue to pursue joint product development opportunities to increase our agricultural market base.

 

Raw Materials and Supplies

 

The two principal chemical raw materials required to develop our proprietary formulations used in the manufacture of our products are known generically as polyols and isocyanates.  We also purchase various chemical additives that are blended with the polyols and isocyanates.  We maintain multiple sources for chemical raw materials, where possible, to assure adequate supply and competitive pricing. The quality of our raw materials is critical to the superior performance of our proprietary formulations.

 

Over the past fiscal year, the available market supply for raw material chemicals has significantly tightened due to COVID-19 related shutdowns of refineries that produce polypropylene. In January 2021 a series of winter storms in Texas damaged the majority of propylene based chemical manufacturing, leading to all polyol users being put on allocation. This has restricted the amount of product we can produce and we have occasionally lost days of production due to raw material unavailability. These supply chain restrictions will likely continue for the next 2-3 quarters. We continue to look for other supply alternatives to enable us to produce more product.

 

In addition to the chemical raw materials, we purchase steel and plastic wheel components for use in tire assemblies.  We purchase these components from domestic and overseas suppliers.  The imposition of tariffs on Chinese goods as well as the meteoric rise in ocean freight costs over the past year has increased the cost to procure our imported wheel rims. Despite officials in the US government declaring these price increases “transitory” and short term, we believe that high prices will continue for raw materials and freight, and we continue to manage our business accordingly.  

 

Operations/Manufacturing

 

Our closed-cell polyurethane foam and elastomer products are primarily manufactured utilizing multiple–stationed, carousel molding machines.  We produce closed-cell foam products by pouring a proprietary polyurethane formula into a mold.  The molding process occurs by reacting monomeric diphenylmethanediisocyanate (MDI) with polyol and other chemicals.  The reaction causes a cross linking of the chemicals, which cures into a solid foam. The closed-cell polyurethane foam or elastomer product is then removed from the mold and the process is repeated.

 

All of our products are inspected prior to shipment to ensure quality.  Any products considered defective by our quality control personnel are disposed of through traditional refuse disposal services.  All of our tires are manufactured at our Boulder City, Nevada facility. Due to increased demand for our products over the past 3 months we have been running overtime shifts where raw material availability permits.

 

Information Systems

 

We use commercial computer aided design (CAD) and finite element analysis (FEA) software tools in the engineering and design of our products.  This software allows us to integrate our proprietary manufacturing and production data with our design technology, enabling us to leverage our previous manufacturing and test results to predict the performance characteristics of new product designs and product improvements.  For general business purposes, we use commercially available software for financial, distribution, manufacturing, customer relationships and payroll management. Our computer system is protected by commercially available security and antivirus software.

 

 

Sales, Marketing and Distribution

 

Amerityre utilizes independent manufacturer representatives with tire industry experience to promote and sell our products. These representatives sell all of our products in a designated sales territory. These independent sales professionals complement our in-house sales department in Boulder City. The majority of our sales is direct to OEMs or sold to tire distributors who in turn sell to individual end users. We sell to individual consumers through our website, although the website is designed primarily as an education tool for current and potential customers. The majority of our product promotion is through direct mail, electronic mail, and attendance at select trade shows. All product shipments originate directly from our manufacturing facility in Boulder City, Nevada.

 

Internationally, we have several distribution partners located in Canada, Australia, and Europe. We continue to seek additional international sales and marketing partners to expand the worldwide sales and distribution of our products.

 

Customers

 

Amerityre has a diversified customer base, providing tires and assemblies to OEMs, distributors, equipment dealers, and individuals. Our largest OEM customer accounted for approximately 28% of our sales for the year ended June 30, 2021, compared to fiscal year 2020 where this same customer accounted for approximately 27% of our sales. We expect sales with this customer to continue to increase as their business is forecast to continue to grow in fiscal year 2022. Our customers include OEMs of lawn and garden products and outdoor power equipment, regional tire distributors, retail cooperatives, agricultural tire distributors, and retailers of lawn and garden products, bicycle tires and hand truck tires. With the added exposure provided by our upgraded website, along with the ability to make purchases online, we expect market awareness among consumers to continue to increase.

 

Competition

 

There are companies that produce not-for-highway-use or light-duty tires from polyurethane foam such as Greentyre, who manufactures in the UK; Carefree Tire, who manufactures in China; Marastar (a division of Carlstar), who manufactures in China, and Custom Engineered Wheels and Krypton Industries, who manufacture in India.  We believe our closed-cell polyurethane foam tires are superior to the polyurethane foam tires offered by these competitors. Our closed cell technology gives our products higher load bearing characteristics than competitor tire products that have open-cell polyurethane foam, while producing a ride quality comparable to a properly inflated pneumatic tire. We believe we are the largest USA-based manufacturer of polyurethane flat free tires.

 

In addition to manufacturers of polyurethane foam tires, we compete directly with companies that manufacture and market traditional not-for-highway-use, low-duty pneumatic, semi-pneumatic, and solid tires made from rubber.  The not-for-highway use tire industry historically has been highly competitive, and most of these competitors have financial resources that substantially exceed ours. In addition, many of our competitors are very large companies, such as Kenda, Taiwan; Maxxis International, Taiwan; Cheng Shin, China; and Carlstar, USA.  These competitors have established brand name recognition, distribution networks for their products, and have some consumer loyalty to their products, although price is a major factor in the buying decision by their customers.

 

Despite the presence of larger competitors, we believe that the performance of our superior proprietary formulations give us some competitive advantages in certain market segments. We produce the only flat free polyurethane foam tires in the bicycle tire, golf cart tire, and personnel carrier tire market segments. The performance advantage of our formulation is evident in these market segments, where load bearing capability and ride quality is important. Consequently, we have focused our attention and sales and marketing resources on these product segments.

 

In the agricultural tire market, the market leaders are Titan International and Carlisle, global manufacturers of agriculture pneumatic tire and wheel assemblies.  The economic landscape in the agricultural sector appears to be improving as commodity crop prices have significantly increased over the past 6 months. While we have yet to see significant increased spending in the agricultural sector, we are optimistic that spending will increase in fiscal year 2022 if commodity pricing remains elevated. We continue to believe that the growth we have seen in the lawn and garden markets will continue in fiscal year 2022.

 

Intellectual Property Rights

 

We seek to obtain patent protection for, or to maintain as trade secrets, those inventions that we consider important to the development of our business.  We rely on a combination of patent, trademark, copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and branding.  We control access to our proprietary technology and enter into confidentiality agreements with our employees and other third parties.  We own twelve issued U.S. patents.  We use various trademarks in association with marketing our products, including the names Amerityre®, Elastothane®, Arcus®, Atmospheric®, Logo®, and Kik®.

 

 

Trade Secrets

 

Our polyurethane formulation technology is based on two key proprietary formulation types; a closed-cell polyurethane foam, which is a lightweight material with high load-bearing capabilities for low duty cycle applications, and a polyurethane elastomer, which is a high performing material with high load-bearing capabilities for high duty applications, like forklift tires and other industrial tires. Our technology has been maintained as a trade secret by combination of limited and controlled access to our facility along with a use of non-disclosure agreements with persons that have been afforded access.  To the best of our knowledge and belief, we have maintained our technology and formulations as trade secrets to provide for the protection of our polyurethane material technology under U.S. trade secret laws. 

 

Patents

 

Set forth in the schedule below are the issued patents that we have received.

 

Description of Patent

 

U.S. Patent

App/Serial No.

 

Issued Date or

Date Filed

 

Brief Description/Purpose

Improved Method and Apparatus for Making Tires and the Like

 

6,165,397

 

12/26/2000

 

Applies to pouring the material at the inside diameter (where the tire starts) during the manufacturing process.

Run-Flat Tire with Elastomeric Inner Support

 

6,679,306

 

1/20/2004

 

Applies to a polyurethane insert within a tire to create a “run-flat” system.

Method and Apparatus for Vacuum Forming a Wheel from a Urethane Material

 

7,377,596

 

5/27/2008

 

Applies to the method we employ to coat a light gauge steel or aluminum wheel by evacuating air from the mold while moving material through the mold utilizing a vacuum process to eliminate pockets of air within the matrix of the material. The resulting product becomes a “Composite” wheel.

Elastomeric Tire with Arch Shaped Shoulders

 

6,971,426

 

12/06/2005

 

Applies the design of the Arcus® run-flat tire (the first polyurethane elastomer tire to run with or without air).

Method for Manufacturing a Tire with Belts, Plies and Beads Using a Pre-cured Elastomer and Cold Rolling Method

 

6,974,519

 

12/13/2005

 

Applies to how we put the plies, beads and belts on a mandrel or bladder to be placed inside a mold for manufacturing a tire.

Improved Vacuum Forming Apparatus for Vacuum Forming a Tire, Wheel or Other Item from an Elastomeric Material

 

7,527,489

 

5/5/2009

 

Applies to an improvement in the vacuum forming equipment used to manufacture a tire and other items.

Method for Vacuum Forming an Elastomeric Tire

 

8,114,330

 

2/14/2012

 

Applies to polyurethane tires and methods we employ to evacuate air from mold while moving material through the mold.

Run Flat Tire Insert System

 

7,398,809

 

7/15/2008

 

Applies to how to utilize an insert on a wheel within a corresponding pneumatic tire.

Method and Apparatus for Vacuum Forming an Elastomeric Tire

 

7,399,172

 

7/15/2008

 

Applies to polyurethane tires and the method we employ to evacuate air from the mold while moving material through the mold utilizing a vacuum process to eliminate air pockets within the matrix of the material.

System for Retreading a Transport Tire with Polyurethane Tread

 

8,206,141

 

6/26/2012

 

Applies to apparatus we used to retread transport tires with polyurethane tread.

Method for Retreading a Heavy Duty Tire with a Polyurethane Tread

 

8,603,377

 

12/10/2013

 

Applies to the method we employ for applying a polyurethane tread to a rubber tire casing.

Pivot Wheel Segment

 

D710,913

 

8/12/2014

 

Applies to irrigation wheels used in special soil conditions.

 

 

Trademarks

 

Set forth in the schedule below are the United States trademarks that have been registered.

 

Trademarks

 

Registration/Serial #

 

Issued

Amerityre®

 

2,401,989

 

8/14/2001

Elastothane®

 

3,139,489

 

9/5/2006

Elastothane®

 

3,497,302

 

9/2/2008

Arcus®

 

2,908,077

 

4/24/2004

Atmospheric®

 

3,089,313

 

5/9/2006

Logo®

 

4,404,548

 

9/17/2013

Kik®

 

3,608,633

 

4/21/2009

 

We also own certain trademark applications and/or trademark registrations relating to the Arcus® trademark in several foreign jurisdictions.

 

Employees

 

As of September 15, 2021, we had 17 full-time employees and 1 part time employee, including 4 salaried and 14 hourly employees.  We hire temporary labor as required to meet peak manufacturing needs.  We believe that we will continue to be able to hire a sufficient quantity of qualified laborers in the local area to meet our business needs.  Our manufacturing process does not require special skills, other than training in our production techniques and specific equipment.  Our employees are not represented by a labor union or a collective bargaining agreement.  We consider our relations with our employees to be good.

 

Research and Development

 

We consider research and development (R&D) activities to be an important part in our growth strategy.  Our current research and development activities are focused on new product development in partnership with potential OEM partners with a specific product needs and improving our current formulation processing to make our manufacturing processes more cost efficient.  We utilize R&D resources on a contract basis when required to investigate new, potentially lower cost polyurethane foam formulations, to design custom sized tires for specific customer requirements, and to increase the Company’s competitive position in specific market segments.  Due to the Company’s limited resources, tire projects are limited to those where an exceptional return on investment is expected. Other, less profitable, projects have been put on hold and will be revisited at a later date when sufficient resources are available.  Research and development expenses of an external testing nature were $9,791 and $16,821, for fiscal year 2021 and 2020, respectively.  In fiscal year 2020 we completed an evaluation of Amerityre bike tires in e-bike applications. All research and development expenses of the Company, including both internal and external expenses, were $102,265 and $117,525, for fiscal years 2021 and 2020, respectively.

 

 

ITEM 1A. RISK FACTORS

 

Risks Related to our Business

 

Investing in our common stock involves a high degree of risk. You should carefully consider the following Risk Factors before deciding whether to invest in Amerityre. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition. If any of the events discussed in the Risk Factors below occur, our business, financial condition, results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of the common stock could decline.

 

Our results of operations have been and may in the future be adversely impacted by the COVID-19 pandemic.

 

The COVID-19 pandemic has resulted in significant volatility in the U.S. and global economies and led to a dramatic reduction in economic activity worldwide. Because of COVID-19, federal, state and local governmental authorities have issued and may again issue stay-at-home orders (which vary at the state and local level), proclamations and/or directives aimed at minimizing the spread of COVID-19. Additionally, more restrictive proclamations and/or directives may be issued in the future. To date, Amerityre has continued normal operations as we provide products which support essential businesses and operations. However, there is no guarantee that we will be able to continue regular operations going forward in light of COVID-19 especially if our plant workers sustain infections or reinfections. These government restrictions have also negatively impacted the operations of some of our customers, leading to delay and/or cancellation of orders and uncertain order levels going forward. Due to COVID-19, we have sustained price increases from our suppliers which have reduced our gross profit margins. To date we have successfully implemented our own price increases to offset some of these cost increases. There is also a risk that some customers may not be able to pay for Amerityre products already shipped due to reductions in their revenues and a deterioration of their financial position as a result of COVID-19. To date we have had three employees with confirmed cases of COVID-19 illness. In each case the affected individual was the only infected person and the virus was not spread to others in our workforce.

 

The ultimate impact of the COVID-19 pandemic on the Company’s operations remains unknown at this time and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 pandemic, government restrictions and other effects thereof, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, the Company, or our customers or suppliers may direct, which may result in an extended period of continued business disruption, reduced customer traffic or orders and reduced operations and revenue. Further, we cannot be certain when businesses will begin hiring back unemployed workers and the extent to which workers may elect to remain unemployed, although the federal unemployment benefit ended on September 6, 2021. All of these factors may affect supply chains which can impact our needs and expenditures required to fill customer orders and reduce demand for our products. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and operational results. 

 

The counter-COVID-19 measures taken or which may be taken, including due to potential new outbreaks on a regional or national scale, may negatively impact the Company’s business during some or all of the 2022 fiscal year and potentially beyond. Management expects that all of its business segments, across all of its geographies, have been and could continue to be impacted to some degree, but the significance of the impact of the COVID-19 pandemic on the Company’s business and the duration for which it may have an impact remains undeterminable at this time. There can therefore be no assurance that the pandemic will not have a material adverse impact on the future results of the Company. The extent of the impact will depend on future developments, including actions that have been or may be taken to contain COVID-19.

 

Further, while the economy has reopened and began to recover, new strains of the virus pose the risk of future shutdowns, particularly in areas with low vaccination rates, which could hinder our ability to manufacture and sell our products and materially adversely affect our results of operations.

 

 

Recent market condition changes in the chemical markets have forced us to increase the prices we charge customers for our products, and could have a material adverse effect on demand for our products, results of operations, and our financial condition.

 

We were informed in February 2021 by our suppliers that manufacturing plant problems arising from the severe storms in Texas, combined with already reduced production capacity due to COVID-19 and stronger market demand for chemical feedstocks, created a shortage of available supply for raw materials. Most suppliers declared a “force majeure,” meaning that their non-performance under existing agreements should be excused due to the occurrence of one or more events beyond their control. To date, we have been able to obtain the necessary materials to meet the majority of demand requirements of our customers, albeit at higher raw material prices and in longer than expected delivery timeframes. We expect these higher material prices to continue to pressure gross margins for at least the first half of the fiscal year ending June 30, 2022. We have evaluated and increased our product pricing in April 2021 and most recently August 2021 to offset these raw material cost increases. We continue to work with our suppliers to secure adequate quantities of raw materials to meet the increased demand for our products. While management believes these responses to be necessary to address these issues, there can be no assurance they will be sufficient, nor that they will not cause us to lose customer orders or customers, which would have a material adverse effect on our financial condition and results of operations.

 

If we incur material losses due to a weakening economy or other factors, we may encounter difficulty in raising capital to meet our working capital needs.

 

While we incurred a small net income from operations in four of the past five fiscal years, Amerityre lost money from operations in all periods prior to fiscal year 2017. While we are optimistic that we will be able to continue this positive profitability trend, there is no guarantee that this will be the case, particularly given the economic uncertainty caused by COVID-19.

 

Since inception, we have been able to cover our operating losses from the sale of our securities. If we were to experience losses or negative net cash flow from operations in the future, there is no guarantee that funding sources will be available to cover future operating losses, and funding sources that are available could have a dilutive effect on our current investors. If we are unable to obtain adequate sources of funds to operate our business, we may not be able to continue as a going concern. Based on our financial results of the past two fiscal years we do not anticipate liquidity issues.

 

Our business operations and plans could be adversely affected in the event we need additional financing and are unable to obtain such funding.  The capital markets in general and for microcap companies in particular are subject to a variety of risks including COVID-19, a lack of business diversification and domestic and global economic declines. To the extent that our business strategy requires expanding our operations, such expansion could be costly to implement and may cause us to experience significant losses.  Insufficient funds may prevent us from implementing our business strategy or may require us to delay, scale back or eliminate certain opportunities for the commercialization of our technology and products.  If we cannot generate adequate sales of our products, or increase our revenues through licensing of our technology or other means, we may be forced to cease operations.

 

Because we face competition in all phases of our business, we may not be able to increase or maintain revenue or profitability, which may have an adverse effect our results of operations or stock price.

 

A number of factors may affect future sales of our products even if we are successful in increasing our revenue base.  These factors include whether competitors produce alternative or superior products, whether the cost of our products is competitive in the marketplace, and whether we can establish effective product sales and distribution networks. The tire industry is a highly competitive, global industry. Most of our competitors are larger companies with greater financial resources. Their access to greater resources enables them to adapt more quickly to changes in the markets we have targeted. Our competitors are able to devote greater resources to the development and marketing of new products. Most of the products we have developed have not obtained broad market acceptance and rely on our emerging technologies. To significantly improve our competitive position, we will need to make significant ongoing investments in manufacturing, customer support, marketing, sales, research and development and intellectual property protection. Intense competitive activity in the tire industry has caused and will likely continue to cause pressures on our business, as well as pressure on certain of our customers or suppliers. Further, to the extent negative macroeconomic events, such as COVID-19 pandemic, affect the industry generally, we may have difficulty navigating and adjusting to such circumstances relative to our larger, better-capitalized competitors in the tire industry. For example, by virtue of their larger scale of operations and wider market access, many of our larger competitors have been able to continue offering relatively lower prices for their products in the wake of increases in the costs of supplies and production, whereas we have been forced to increase our prices in response to market developments such as supply shortages caused by factors such as adverse weather conditions, geopolitical friction and COVID-19.  To succeed as a company, we must continue to manufacture quality products and sell adequate quantities of products at prices sufficient to generate profits.  We may not accomplish these objectives, which may have an adverse effect on our results of operations or stock price.

 

 

Further, we trade on the OTCQB which generally is an illiquid market, are subject to the Securities and Exchange Commission (the “SEC”)’s penny stock rules and have no analyst coverage, all of which creates illiquidity and makes raising capital more difficult and expensive.

 

A reduction in the growth rate of the U.S. or global economy could have an adverse impact on our business, operating results and financial position.

 

Until March 2020, the U.S. economy experienced increased growth. However, the national shutdown of the U.S. economy due to COVID-19 put the U.S. and global economies in a tailspin. While the US economy has started to recover, but it is unknown how long it will take for the U.S. or global economy to fully recover. In recent months there have been increases in COVID-19 cases in many areas caused by a combination of the potentially more contagious “Delta” variant of the virus, as well as vaccine hesitancy and low vaccination rates in many areas of the U.S. This development increases the possibility of further shutdowns, production delays, staffing and resource challenges and reductions in spending and demand for our products which could materially harm our financial condition and results of operations. Further, while market conditions in the agricultural commodity markets have improved since the pandemic began, other potential headwinds to economic growth overall are the continuation and/or increase in tariffs, a trade war, renegotiated trade agreements with international trading partners, and Federal Reserve policies that tighten credit or cause other imbalances in the economy. A continuation or worsening of these conditions, including credit and capital markets disruptions, could have an adverse impact on our business, operating results and financial position. We may experience declines in revenues and cash flows as a result of reduced orders, payment delays or other factors caused by the economic problems of our customers and prospective customers. We may experience supply chain delays, disruptions or other problems associated with financial constraints faced by our suppliers and customers or arising from prolonged shutdowns due to government orders or related safety precautions to address COVID-19 concerns. We may incur increased costs or experience difficulty with our ability to borrow in the future or to finance our operating, investing or financing activities. Any of these potential problems could hinder our efforts to increase our sales and might, if severe and extensive enough, cause our sales to decline, jeopardizing our ability to successfully operate.

 

We may experience delays in resolving unexpected technical issues in the development of new technology, resulting in increased development costs and delays of anticipated sales and revenues.

 

As we develop and improve our products, we frequently address chemical, manufacturing and/or equipment-related issues.  Some of these challenges cannot be anticipated because the products we are developing are new. The revision of existing manufacturing processes or procurement of specialized equipment may result in delays, and we may not meet our projected timetable for bringing products to market.  Such delays may interfere with existing manufacturing activities, negatively affect revenues and/or increasing our cost of operations.

 

We have entered new market segments where we have limited resources, and we may be unable to successfully manage planned growth.

 

We have less marketing and product development resources at our disposal compared to our competitors in the tire industry.  To remain profitable, our products must be cost-effective, economical to produce, and have the ability to be distributed on a commercially viable scale.  Furthermore, if our technologies and products do not achieve or maintain market acceptance, we may not be profitable.

 

Our success depends on our ability to license, market and distribute, and commercialize our technologies and products effectively.  We have limited manufacturing, marketing and distribution resources. Those resources we do have will therefore be critical to the success of new product offerings, and any unexpected issues therewith could be materially harmful to our business plans.  We may not properly ascertain or assess any and all risks inherent in the industry.  We may not be successful in entering into new licensing or marketing arrangements on favorable terms or at all.  If we are unable to meet the challenges posed by our planned licensing, manufacturing, distribution and sales growth, our business may fail.

 

Our limited resources and working capital levels may hinder our ability to take advantage of business development opportunities in our various market segments, reducing growth and profitability of the Company.

 

Although our available working capital has increased over the past fiscal year, we continue to have limited resource levels relative to our competitors. This has forced us to prioritize choices regarding the pursuit of new market opportunities. Our inability to raise significant additional working capital has resulted in the Company deferring potentially attractive market opportunities. The Company continues to finance new business opportunities using internally generated cash flow. If we are not able to raise additional capital going forward, it is possible that additional opportunities to improve the Company’s market position will be lost.

 

 

We are subject to governmental regulations, including environmental and health and safety regulations.

 

Our business operations are subject to a variety of national, state and local laws and regulations, many of which deal with environmental, health and safety, and employment issues. While we believe we are in material compliance with applicable environmental, worker health and safety and employment requirements, there can be no assurances that we are correct, that we will continue to comply, or that new laws or regulations will not be passed that limit our ability to continue or expand our operations without expending significant additional funding on compliance. Our raw materials and tire manufacturing process are less hazardous than traditional rubber tire manufacturing. However, significant expenditures may be necessary if future compliance standards change or unknown conditions that require remediation are discovered. Further, there is a trend in some neighboring states, like California, Washington, and Oregon, towards passing employee friendly legislation. For example, a California court recently upheld a challenge to a statute classifying “gig economy” workers such as Uber drivers as employees under California employment law, rather than independent contractors. These laws increase compliance costs and the cost of doing business. We cannot predict what legislation Nevada may pass, or what case law may develop interpreting such laws. If we fail to comply with present and future laws and regulations, we could be subject to future liabilities or interruptions in our operations and costs, which could have a material adverse effect on our business.

 

We attempt to protect the critical elements of our proprietary technology as trade secrets.  Because of our reliance on trade secrets, we are unable to prevent third parties from independently developing technologies that are similar or superior to our technology or from successfully reverse engineering or otherwise replicating our technology.

 

In certain cases, where the disclosure of information required to obtain a patent would divulge critical proprietary data, we may choose not to patent elements of our proprietary technology and intellectual property. Instead, we rely on trade secret laws to protect certain elements of our proprietary technology and processes, such as our key polyurethane formulations.  These formulations are critical elements of our proprietary technology.  While we enter into non-disclosure agreements with our employees and certain third parties with which we do business, our trade secrets could nonetheless be compromised by third parties, or intentionally or accidentally by our employees.  It is also possible that others will independently develop technologies that are similar or superior to our technology.  Third parties may also legally reverse engineer our products.  Independent development, reverse engineering, or other legal copying of those elements of our proprietary technology could enable third parties to benefit from our technologies without compensating us.  The protection of proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons, even when proprietary claims are unsubstantiated.  The prosecution of litigation to protect our trade secrets or the defense of such claims is costly and unpredictable given the uncertainty and rapid development of the principles of law pertaining to this area.  Intellectual property litigation has had two trends which can make it prohibitively expensive - (i) the use of litigation funding companies and (ii) the presence of large law firms. The effect is to increase legal and expert litigation fees. These factors also arise with respect to the following patent risk factors. We may also be subject to claims by other parties with regard to the use of technology information and data that may be deemed proprietary to others.  The independent development of technologies that are similar or superior to our technology or the reverse engineering of our products by third parties would have a material adverse effect on our business and results of operations.  In addition, the loss of our ability to use any of our trade secrets or other proprietary technology would have a material adverse effect on our business and results of operations.  Because trade secrets do not ensure exclusivity and pose such issues with respect to enforcement, third parties may decline to partner with us or may pay lesser compensation for use of our technology which is protected only by trade secrets.

 

Our business depends on the protection of our patents and other intellectual property and may suffer if we are unable to adequately protect such intellectual property.

 

Our success and ability to compete are substantially dependent upon our intellectual property.  We rely on patent, trademark and copyright laws, trade secret protection and confidentiality or license agreements with our employees, customers, strategic partners and others to protect our intellectual property rights.  However, the steps we take to protect our intellectual property rights may be inadequate.  There are events that are outside of our control that pose a threat to our intellectual property rights as well as to our products and services.  For example, effective intellectual property protection may not be available in every country in which we license our technology or our products are distributed.  Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. The risk of unauthorized access to our intellectual property and other confidential business information is further exacerbated with the general trend toward remote working in the past six-months, and as a result we may be more susceptible to computer hackers seeking access to our proprietary information. Any impairment of our intellectual property rights could harm our business and our ability to compete.  Also, protecting our intellectual property rights is costly and time consuming.  Any increase in the unauthorized use of our intellectual property could make it more expensive to do business and harm our operating results.  In addition, other parties may independently develop similar or competing technologies designed around any patents that may be issued to us.

 

 

We have been granted a number of U.S. patents relating to certain aspects of our manufacturing technology and processes and use of polyurethane to make tires, and we may seek further patents on future innovations.  Our ability to either manufacture products or license our technology is substantially dependent on the validity and enforcement of these patents and patents pending.  We cannot guarantee that our patents will not be invalidated, circumvented or challenged, that patents will be issued for our patents pending, that the rights granted under the patents will provide us competitive advantages or that our current and future patent applications will be granted.

 

Third parties may invalidate our patents.

 

Third parties may seek to challenge, invalidate, circumvent or render unenforceable any patents or proprietary rights owned by or licensed to us based on, among other things:

 

 

subsequently discovered prior art or engineering designs;

 

 

lack of entitlement to the priority of an earlier, related application; or

 

 

failure to comply with the written description, best mode, enablement or other applicable requirements.

 

United States patent law requires that a patent must disclose the “best mode” of creating and using the invention covered by a patent.  If the inventor of a patent knows of a better way, or “best mode,” to create the invention and fails to disclose it, that failure could result in the loss of patent rights.  Our decision to protect certain elements of our proprietary technologies as trade secrets and to not disclose such technologies in patent applications, may serve as a basis for third parties to challenge and ultimately invalidate certain of our related patents based on a failure to disclose the best mode of creating and using the invention claimed in the applicable patent.  If a third party is successful in challenging the validity of our patents, our inability to enforce our intellectual property rights could seriously harm our business.

 

We may be liable for infringing the intellectual property rights of others.

 

Our products and technologies may be the subject of claims of intellectual property infringement in the future.  Our technologies may not be able to withstand any third-party claims or rights against their use.  Any intellectual property claims, with or without merit, could be time-consuming, expensive to litigate or settle, could divert resources and attention and could require us to obtain a license to use the intellectual property of third parties.  We may be unable to obtain licenses from these third parties on favorable terms, if at all.  Even if a license is available, we may have to pay substantial royalties to obtain it.  If we cannot defend such claims or obtain necessary licenses on reasonable terms, we may be precluded from offering most or all of our products or services and our business and results of operations will be adversely affected.

 

Because our tire products are derived from relatively new technology, our product liability insurance costs will likely increase and we may be exposed to product liability risks that could adversely affect profitability.

 

Even if tests indicate that our tires meet industry performance standards, these products may subject us to significant product liability claims because the technology is relatively new and there is little history of long term use in particular applications.  Moreover, because our products are and will be used in applications where their failure could result in injury, we could also be subject to product liability claims.  Introduction of such new products and increased use of our existing products will most likely increase our product liability premiums and defense of potential claims could increase insurance costs even further, which could substantially increase our expenses.  Any insurance we obtain may not be sufficient to cover the losses incurred through such lawsuits.

 

Significant increases in the price of chemicals, steel and other raw materials used in our products could increase our production costs and decrease our profit margins or make our products less competitive in the marketplace due to price increases.

 

The materials used to produce our products are susceptible to price fluctuations due to supply and demand trends, economic factors, and other unforeseen factors. If we are successful in implementing our business strategy, the quantities of chemical raw materials required by us or by others that utilize our technology may increase significantly. Shortages, if any, may result in chemical price increases. The COVID-19 pandemic has seen us experience increased chemical and supply costs and reduced our gross profit margins. We have experienced increases in the cost of wheel components due to the increased cost of steel and the imposition of tariffs. Existing trade agreements with foreign countries may be subject to change in the future, with tariffs or import duties being levied by the US government increasing the cost of our foreign-based raw materials. Because we are introducing products that will compete, in part, on the basis of price, we may be unable to pass cost increases on to our customers in order to stay competitive. If we are unable to pass on raw material cost increases to our customers, our future results of operations and cash flow will be materially adversely affected. Because of factors such as COVID-19, we may encounter issues with our manufacturing facility or resources supply which may materially and adversely impact our business.

 

 

Our ability to execute our business plan would be harmed if we are unable to retain or attract key personnel.

 

Our technology has been developed by a small team and only a limited number of team members maintain the technical knowledge to produce our products.  Our future success depends, to a significant extent, upon our ability to retain and attract the services of our key personnel.  The loss of the services of our Chief Executive Officer could hinder our ability to effectively manage our business and implement our growth strategies. Finding suitable replacements could be difficult, and competition for experienced personnel is intense.  We do not carry key person insurance on any of our officers.

 

If our data or our users content is hacked, including through privacy and data security breaches, our business could be damaged, and we could be subject to liability. Because the personal information that we, our customers or our vendors collect may be vulnerable to breach, theft or loss, any of these factors could adversely affect our reputation and operations.

 

Our business is and we expect it will continue to be reliant upon the Internet. Cyber security events have caused significant damage to large well-known companies. If our systems are hacked and our confidential information is misappropriated, we could be subject to liability. Further, if third party vendors experience data or cyber security breaches, sensitive business or customer information could be subject to similar risks.

 

Possession and use of personal information of our customers and vendors subjects us to risks and costs that could harm our business. We also collect and maintain personal information of our employees in the ordinary course of our business. Errors in the storage, use or transmission of personal information could result in a breach of customer or employee privacy. Possession and use of personal information in our operations also subjects us to possible regulatory burdens that could require notification of data breaches, and restrict our use of personal information. We cannot guarantee that there will not be a breach, loss or theft of personal information that we store or our third parties’ store. If we are hacked and there is a breach, theft or loss of personal information could have a material adverse effect on our reputation and results of operations and result in liability under state and federal privacy statutes and legal or administrative actions by state attorneys general, private litigants, and federal regulators and by such other international laws including the European Union’s GDPR and their respective enforcement mechanisms, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

 

We may fail to detect the existence of a breach of user content and be unable to prevent unauthorized access to user and company content. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often not recognized until launched against a target. They may originate from less regulated third world countries where lax local enforcement and poverty create opportunities for hacking. If our security measures are breached, or our personal information or that of our customers, suppliers, employees or independent contractors is otherwise accessed through unauthorized means, or if any such actions are believed to occur, we may be materially harmed.

 

As of the date of this filing we have not experienced a breach of data security.

 

If we fail to comply with laws and regulations relating to privacy, data protection, information security, advertising and consumer protection, government access requests, or, new laws in one or more of these areas are enacted, it could result in proceedings, actions, or penalties against us and could adversely affect our business, financial condition, and results of operations.

 

We rely on a variety of marketing techniques, and we are or may become subject to various laws and regulations that govern such marketing and advertising practices. A variety of federal, state, and international laws and regulations govern the collection, use, retention, sharing, and security of personal data.

 

 

Laws and regulations relating to privacy, data protection, information security, marketing and advertising, and consumer protection are evolving and subject to potentially differing interpretations. These requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other regulations or our current practices. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements, and obligations. We have implemented various features, integrations, and capabilities as well as contractual obligations intended to enable us to comply with applicable privacy and security requirements in our collection, use, and transmittal of data, but these features do not ensure our compliance and may not be effective against all potential privacy concerns. In particular, as a United States company, we may be obliged to disclose data pursuant to government requests under United States law. Compliance with such requests may be inconsistent with local laws in other countries where our customers reside. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject, or other legal obligations relating to privacy or consumer protection, whether federal, state, or international, could adversely affect our reputation, brand, and business, and may result in claims, proceedings, or actions against us by governmental entities, customers, users of our website, third party service providers, or others, or may require us to change our operations and/or cease using certain types of data. Any such claims, proceedings, or actions could hurt our reputation, brand, and business, force us to incur significant expenses in defense of such proceedings or actions, result in adverse publicity, distract our management, increase our costs of doing business, result in a loss of customers or vendors, and result in the imposition of monetary penalties.

 

The legislative and regulatory bodies or self-regulatory organizations in various jurisdictions both inside and outside the United States may expand current laws or regulations, enact new laws or regulations, or issue revised rules or guidance regarding privacy, data protection, consumer protection, information security, and online advertising. For example, in June 2018 the State of California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which took effect on January 1, 2020. The CCPA requires companies that process personal information on California residents to make new disclosures to consumers about such companies’ data collection, use, and sharing practices and inform consumers of their personal information rights such as deletion rights, allows consumers to opt out of certain data sharing with third parties, and provides a new cause of action for data breaches. The State of Nevada has also passed a law, which took effect on October 1, 2019, that amends the state’s online privacy law to allow consumers to submit requests to prevent websites and online service providers (“Operators”) from selling personally identifiable information that Operators collect through a website or online service. More recently, on March 2, 2021, the Governor of Virginia signed into law the Virginia Consumer Data Protection Act (the “VCDPA”). The VCDPA creates consumer rights, similar to the CCPA, but also imposes security and assessment requirements for businesses. In addition, on July 7, 2021, Colorado enacted the Colorado Privacy Act (“CoCPA”), joining the growing list of states adopting comprehensive consumer privacy laws. Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. Each of these privacy, security, and data protection laws and regulations, and any other such changes or new laws or regulations, could impose significant limitations, require changes to our business model or practices, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct. In addition, any such changes could compromise our ability to develop an adequate marketing strategy and pursue our growth strategy effectively, which, in turn, could adversely affect our business, financial condition, and results of operations. Further, the data protection laws of various jurisdictions often differ greatly and the regulatory landscape in general is constantly changing, and we may be unable to effectively adapt and comply particularly with respect to our website and online sales.

 

In addition, federal and state governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes. The U.S. government has enacted, has considered, or is considering legislation or regulations that could significantly restrict the ability of companies and individuals to utilize online behavioral tracking, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools. Additionally, some providers of consumer devices and web browsers have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies or to block other tracking technologies, which could, if widely adopted, result in the use of third-party cookies and other methods of online tracking becoming significantly less effective. The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new customers on cost-effective terms and consequently, materially and adversely affect our business, financial condition, and results of operations.

 

 

Risks Related to our Common Stock

 

Because our common stock is subject to the penny stock rules, brokers cannot generally solicit the purchase of our common stock, which adversely affects its liquidity and market price.

 

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock on the OTCQB is presently less than $5.00 per share and therefore our common stock is considered a penny stock according to SEC rules. Further, we do not expect our stock price to rise above $5.00 in the immediate future. The penny stock designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our common stock and therefore reduce the liquidity of the public market for our shares.

 

Moreover, as a result of apparent regulatory pressure from the SEC and the Financial Industry Regulatory Authority, a growing number of broker-dealers decline to permit investors to purchase and sell or otherwise make it difficult to sell shares of penny stocks. The penny stock designation may continue to have a depressive effect upon our common stock price.

 

If our common stock becomes subject to a chill imposed by the Depository Trust Company (the DTC), your ability to sell your shares may be limited.

 

The DTC acts as a depository or nominee for street name shares that investors deposit with their brokers. DTC in the last several years has increasingly imposed a chill or freeze on the deposit, withdrawal and transfer of common stock of issuers whose common stock trades on the tiers of the OTC Markets like that of the Company. Depending on the type of restriction, a chill or freeze can prevent shareholders from buying or selling shares and prevent companies from raising money. A chill or freeze may remain imposed on a security for a few days or an extended period of time (in at least one instance a number of years). While we have no reason to believe a chill or freeze will be imposed against our common stock in the future, if it were your ability to sell your shares would be limited. In such event, your investment will be adversely affected.

 

Due to factors beyond our control, our stock price may be volatile.

 

Any of the following factors could affect the market price of our common stock:

 

 

Our future financial results;

 

 

Any downturn in the economy in the United States, including currently as a result of COVID-19;

 

 

The effect of tariffs and other political factors which increases our costs and causes economic issues for farmers who cease or reduce purchases of our products;

 

 

Regulatory changes including new laws and rules which adversely affect us;

 

 

Our public disclosure of the terms of any financing which we consummate in the future;

 

 

Our failure to generate increasing material revenues;

 

 

Our failure to remain profitable;

 

 

Any acquisitions we may consummate;

 

 

Announcements by us or our competitors of significant contracts;

 

 

Changes in our management; or

 

 

Changes in market valuations of similar companies.

 

 

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.

 

Because we may issue preferred stock without the approval of our shareholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire us and could depress our stock price.

 

In general, our Board of Directors may issue, without a vote of our shareholders, one or more additional series of preferred stock that have more than one vote per share. Without these restrictions, our Board could issue preferred stock to investors who support us and our management and give effective control of our business to our management. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline in interest of our common stock. This could make it more difficult for shareholders to sell their common stock. This could also cause the market price of our common stock shares to drop significantly, even if our business is performing well.

 

Because we may not be able to attract the attention of major brokerage firms, it could have a material impact upon the price of our common stock.

 

It is not likely that securities analysts of major brokerage firms will provide research coverage for our common stock since these firms cannot recommend the purchase of our common stock under the penny stock rules referenced in an earlier risk factor. The absence of such coverage limits the likelihood that an active market will develop for our common stock. It may also make it more difficult for us to attract new investors at times when we require additional capital.

 

Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock.

 

There has been limited trading in our common stock and there can be no assurance that an active trading market in our common stock will either develop or be maintained. Our common stock may experience significant price and volume fluctuations in the future, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future.

 

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

If our shareholders sell substantial amounts of our outstanding common stock, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, could make it difficult to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. In May 2020, our 2013 Series Preferred Shares automatically converted into 20,000,000 shares of common stock constituting approximately 27% of our outstanding common stock as of the date of this report. These shares are subject to the limitations of Rule 144(i) under the Securities Act of 1933 which, among other things, limit the number of shares which can be sold to 1% of our outstanding stock every three months.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

As of the date of this Report, we did not have any unresolved comments with the staff of the SEC.

 

 

ITEM 2. PROPERTIES

 

In March 2019, we negotiated a five-year extension of the lease on our executive office and manufacturing facility located at 1501 Industrial Road, Boulder City, Nevada.  The property consists of a 49,200 square foot building.  We currently occupy all 49,200 square feet, inclusive of approximately 5,500 square feet of office space, situated on approximately 4.15 acres.  The extended lease commenced on July 1, 2019 for the base monthly rent as follows:

 

 

July 1, 2019 to June 30, 2020: $11,750

 

 

July 1, 2020 to June 30, 2021: $12,150

 

 

July 1, 2021 to June 30, 2022: $12,300

 

 

July 1, 2022 to June 30, 2023: $12,450

 

 

July 1, 2023 to June 30, 2024: $12,600

 

All other terms and conditions of the building lease remain in effect.

 

ITEM 3. LEGAL PROCEEDINGS

 

As of the date of this Report, we were not involved in any legal proceedings.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Our common stock is quoted on the OTCQB Venture Market (“OTCQB”) under the symbol AMTY. The closing price of our common stock on the OTCQB on September 14, 2021 was $0.07 per share.  There were approximately 462 holders of record of our common stock.

 

Dividends

 

We have not paid any dividends on our common stock since our inception and do not anticipate paying any dividends in the foreseeable future.  Any future determination to pay dividends will be at the discretion of our Board of Directors and will be dependent upon then-existing conditions, including our financial condition, results of operations, state law constraints, contractual restrictions, capital requirements, business prospects and other factors our Board of Directors deems relevant.

 

Unregistered Sales of Equity Securities

 

We have previously disclosed all sales of securities without registration under the Securities Act of 1933.

 

ITEM 6. SELECTED FINANCIAL DATA

 

We are a “Smaller Reporting Company” as defined under §229.10(f)(1) of Regulation S-K and are not required to provide the information required by this Item.

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This discussion and analysis contain statements of a forward-looking nature relating to future events or our future financial performance or financial condition.  Such statements are only predictions and the actual events or results may differ materially from the results discussed in or implied by the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I. Item 1A. Risk Factors as well as those discussed elsewhere in this report.  The historical results set forth in this discussion and analyses are not necessarily indicative of trends with respect to any actual or projected future financial performance.  This discussion and analysis should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this report.

 

Overview

 

Amerityre engages in the research and development, manufacturing, and sale of solid polyurethane foam tires.  We have developed unique polyurethane formulations that allow us to make products with superior performance characteristics, compared to conventional rubber tires, in the areas of abrasion resistance, energy efficiency and load-bearing capabilities.  Our manufacturing processes are more energy efficient than the traditional rubber tire manufacturing processes, in part because our polyurethane compounds do not require the multiple processing steps, extreme heat, and high pressure necessary to cure rubber. We believe tires produced with our proprietary polyurethane formulations last longer, are less susceptible to failure and are friendlier to the environment when compared to competitor offerings.

 

We focus our business on applications and markets where our advantages in product technology, tire performance, and customer service give us an opportunity to obtain premium pricing. Our product development and marketing efforts are focused on building customer relationships and expanding sales with original equipment manufacturers and tire distributors.  Our competitive advantage is creating unique product solutions for customers who have challenging tire performance requirements that cannot be met by competitor offerings.

 

Closed cell Polyurethane Foam Tires – The sale of polyurethane foam tires to original equipment manufacturers, distributors, and dealers accounts for the majority of our sales revenue. We produce a broad range of tire sizes for the light duty tire market, including bicycle tires, hand truck tires, mobility tires, and lawn/garden tires.

 

 

Despite the negative effects of COVID-19 on the overall US economy, we experienced higher than expected demand for our polyurethane foam tires in the recent quarter. Sales for the fiscal fourth quarter 2021 were 10.6% higher than the sales level in fiscal fourth quarter 2020. We continue to see the same strong sales trends that we saw during the pre-COVID period. Our current customers are increasing sales of their current products and we continue to engage new customers to expand our customer base.

 

Our industrial tire product line, which includes our golf car tires, our 480 x 12 tires, and our 570 x 12 tires, continues to see strong growth. We expect these tires to continue to grow in popularity in the coming quarters.

 

Polyurethane Elastomer Tires Our elastomer formulations are used to manufacture tires requiring higher levels of abrasion resistance and greater load bearing capability. Forklift tires constitute a large part of this market, with other industrial and agricultural applications representing other opportunities. Overall sales volumes of our forklift tires remain small, less than 0.1% of our total sales revenue. Price sensitive consumers continue to favor imported solid rubber press-on forklift tires rather than our products. We have not devoted significant resources towards promoting this product line. We have been working with OEMs to utilize our elastomer formulations for large industrial equipment tires and agricultural applications, and we await the results of trials that are currently ongoing.

 

Light Density Elastomer Tires – The Company continues to see greater interest in its light-density elastomer formulation for use in tire applications where customers need higher abrasion resistance and load bearing capability. Our ElastothaneTM 500 formulation provides better performance in these areas compared to our closed cell foam formulation. Lawn and garden tire applications continue to drive increased sales of this formulation. We expect Agricultural tires sales to increase in the coming quarters as increases in the price of in farm commodity crops such as corn and soybeans should result in more disposable income for farmers. We continue to approach OEMs and large distributors about promoting and utilizing our tires for certain applications, and several are evaluating sample tires. The introduction of our ElastothaneTM 500 formulation has enabled us to offer a better product alternative for abrasive applications.

 

We believe investment in new and improved products is important to the continued growth and success of our overall business, and we will selectively invest in promising opportunities that can be supported within our current financial model. We have several product evaluations programs ongoing which have the potential to develop into significant future business. We expect our current R&D investments to continue to prove to be a prudent investment of our capital resources.

 

A major component of the strategic operating plan we discussed during our annual meeting in December 2020 was the desire to establish partnerships with large OEMs and distributors to increase our distribution capabilities. We continue to have discussions with various entities to establish these relationships, which we believe would be advantageous for both parties. Testing of our tires in several applications are ongoing by these potential partners, and we are hopeful that some of these opportunities will result in new business for Amerityre in the coming quarters.

 

As described above, our product line covers diverse market segments which are unrelated in terms of customer base, product distribution, market demands and competition. Our sales team is comprised of independent manufacturer representatives with inside sales support. The Company’s continued emphasis on proper product pricing continues to drive more profitable sales. Our website educates the marketplace about our products as well as offers an outlet for online sales.

 

Factors Affecting Results of Operations

 

Our operating expenses consisted primarily of the following:

 

 

Cost of sales, which consists primarily of raw materials, components and production costs of our products, including applied labor costs and benefits expenses, maintenance, facilities and other operating costs associated with the production of our products;

 

 

Selling, general and administrative expenses, which consist primarily of salaries, commissions and related benefits paid to our employees and related selling and administrative costs including professional fees;

 

 

Research and development expenses, which consist primarily of direct labor conducting research and development, equipment and materials used in new product development and product improvement using our technologies;

 

 

Consulting expenses, which consist primarily of amounts paid to third-parties for outside services;

 

 

 

Depreciation and amortization expenses which result from the depreciation of our property and equipment, including amortization of our intangible assets; and

 

 

Stock based compensation expense related to stock and stock option awards issued to directors, employees and consultants for services performed for the Company.

 

Critical Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with United States generally accepted accounting principles.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.  On an ongoing basis, we evaluate our estimates, including those related to uncollectible receivables, inventory valuation, deferred compensation and contingencies.  We base our estimates on historical performance and on various other assumptions that we believe to be reasonable under the circumstances.  These estimates allow us to make judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

At present we do not have any critical accounting policies that require critical management judgments and estimates about matters that may be uncertain.  

 

Results of Operations

 

Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our sales and cash flows.  These key performance indicators include:

 

 

Revenues, net of returns and trade discounts, which consists of product sales and services and is an indicator of our overall business growth and the success of our sales and marketing efforts;

 

 

Gross profit, which is an indicator of both competitive pricing pressures and the cost of goods sold of our products and the mix of product and license fees, if any;

 

 

Growth in our customer base, which is an indicator of the success of our sales efforts; and

 

 

Distribution of sales across our products offered.

 

The Company, in light of the impact COVID-19 has had on our business, implemented a price increase on most of its products starting on April 1, 2021. We have seen over the past 7 months significant increases in raw material pricing. The January winter storms in Texas took all polyol manufacturing offline for several weeks as these facilities needed to be repaired and brought back online. Combined with COVID-19 caused reductions in propylene manufacturing capacity, the Company was fortunate to receive enough material to maintain operations, albeit at significantly higher prices and an amount that limited our ability to fulfill orders on a timely basis. It is expected that availability of raw material feedstock supply in the chemical markets will increase in the coming months, but it is not clear that pricing will return to the lower levels of last year, or even stabilize at current elevated levels. Management will continue to monitor the situation and is prepared to make further product pricing adjustments if necessary. In the following paragraphs we address the material factors that affect our business.

 

 

The following summary table presents a comparison of our results of operations for the fiscal years ended June 30, 2021 and 2020 with respect to certain key financial measures.  The comparisons illustrated in the table are discussed in greater detail below. 

 

                   

Percent

 
   

Fiscal Years Ended June 30,

   

Change

 
   

(in 000’s)

         
   

2021

   

2020

   

2021 vs. 2020

 

Net revenues

  $ 4,863     $ 3,941       23.4

%

Cost of revenues

    (3,579

)

    (2,839

)

    26.0

%

Gross profit

    1,284       1,103       16.4

%

Research and development expenses

    (102

)

    (118

)

    (13.6

)%

Sales and marketing expense

    (225

)

    (193

)

    16.6

%

General and administrative expense (1)

    (860

)

    (744

)

    15.6

%

Gain on debt extinguishment

    150       -       100.0

%

Loss on assets, due to write down or disposal

    (26

)

    (17 )     52.9

%

Other income (expense)

    38       12       216.7

%

Net income

    259       43       502.0

%

Preferred stock dividend

    -       (83

)

    (100.0

)%

Net income (loss) attributable to common shareholders

  $ 259     $ (40

)

    747.5

%


(1)  Includes stock-based compensation expense of $88,806 and $44,300 for the fiscal years ended June 30, 2021 and 2020, respectively.

 

Year Ended June 30, 2021 Compared to the Year Ended June 30, 2020

 

Net revenues. Net revenues of $4,863,412 for the year ended June 30, 2021, represents an increase of $922,208 or 23.4%, over net revenues of $3,941,204 during the year ended June 30, 2020.  These results were above our expectations and driven by increased demand for polyurethane foam tires from current customers, despite the negative effects of COVID-19 on the overall business environment. With the expected continued recovery of the economy and our current sales backlog level, we expect sales for the upcoming fiscal year to be strong, however delays in recovery and/or further hardship may be caused by surges in new variants of COVID-19 which could adversely affect these outcomes.

 

Cost of revenues.  Cost of revenues for the year ended June 30, 2021 was $3,579,227 or 73.6% of revenues compared to $2,838,667 or 72.0% of revenues for the year ended June 30, 2020. We experienced higher raw material costs, particularly chemical feedstocks, during the recent quarter which pressured gross profit margins. Our chemical suppliers have informed us that there will likely be continued price increases in the coming months for our raw materials due to t increased demand in the market and limited available supply. The new US Administration has signaled that the current tariff situation with China will remain unchanged. We expect these headwinds to continue to pressure our Gross Margins for the first half of fiscal year 2022 at a minimum We are looking at ways to mitigate these adverse factors, including price increases on the products sold to our customers. However, continuing increases in raw material costs may result in reduced product sales if we are forced to turn away sales because we cannot sell product at a price that is profitable.

 

Gross Profit.  Gross profit for the year ended June 30, 2021 of $1,284,185 represents a 16.4% increase over gross profit of $1,102,537 for the year ended June 30, 2020. The fiscal year 2021 gross profit reflects a 26.4% gross margin for product sales compared to a gross margin on product sales of 28.0% for fiscal 2020.

 

Research and Development expenses.  Research and development expense of $102,265 for the year ended June 30, 2021 represents a 13.6% decrease over the same expense of $117,525 for the year ended June 30, 2020. The difference between periods is attributed to reduced investment in tire evaluation programs due to COVID-19 restrictions in fiscal year 2021. We continue to invest in product formulation and new product development where appropriate to support our business plan.

 

Sales and Marketing expenses.  Sales and marketing expense of $224,686 for the year ended June 30, 2021 represents a 16.6% increase over expenses of $192,951 for the year ended June 30, 2020. The difference between periods relates to higher sales commission expense due to higher overall sales and the product mix sold, when compared to the same period in 2020,as well as no tradeshow expenses in fiscal year 2021 due to COVID 19 closures.

 

 

General and Administrative expenses. General and administrative expenses of $860,693 for the year ended June 30, 2021 represents a 15.6% increase over the same expense of $744,525 for the year ended June 30, 2020.  The increase was caused by higher executive compensation, higher outside consulting expenses, an increase in insurance costs and warranty expenses, offset by lower legal fees and depreciation expense. We continue to control costs and find more efficient ways to conduct our business activities.

 

Other Income (Expense).  Other income was $161,795 for the year ended June 30, 2021, with the primary driver of this variance being the forgiveness of our loan from the Small Business Administration Paycheck Protection Program plus various small grants available from Federal and State agencies during the fiscal year, offset by loss on the full impairment of equipment available for sale. Other expense of $5,003 in the year ended June 30, 2020 includes charges for impairment of equipment available for sale and the write down of obsolete inventory.

 

Net Income. The net income for the year ended June 30, 2021 of $258,336 represents a 516.7% increase from the $42,533 net income for the year ended June 30, 2020.  A significant portion of the net income was the non-cash forgiveness of our Small Business Administration loan.

 

Liquidity and Capital Resources

 

Cash Flows

 

The following table sets forth our cash flows for the fiscal years ended June 30, 2021 and 2020.

 

   

Years ended June 30,

 
   

(in 000’s)

 
   

2021

   

2020

 

Net cash (used in)/provided by operating activities

  $ (136

)

  $ 42  

Net cash used in investing activities

    (14

)

    (56

)

Net cash (used in)/provided by financing activities

    (1

)

    124  

Net (decrease)/increase in cash during period

  $ (151

)

  $ 110  

 

The Company has evaluated its current cash position relative to its cash requirements in the future and has determined its cash levels are sufficient to cover its cash needs. The Company enjoys a strong level of cash on hand as well as an unused credit line facility. These cash resources have been critical during the past year as working capital needs have increased due to the extended time required to receive imported materials (which are paid for when they are ready to ship from the manufacturer, not after they are received for use by the Company) as well as Management’s decision to increase chemical stock levels when extra material became available for purchase. The Company is also planning on upgrading some production equipment by the end of the first quarter of fiscal year 2022, which are anticipated to be paid using our cash reserves.

 

Our principal sources of liquidity consist of cash on hand and payments received from our customers. In February 2020, the Company secured a $50,000 line of credit with a local community bank. As of June 30, 2021, this credit line had not been used.

 

Historically, the current management team has been reluctant to pursue financing at terms that subject the Company to the high costs of debt, or raise money through the sale of equity at prices we believe do not reflect the true value of the Company. 

 

Cash Position, Outstanding Indebtedness and Future Capital Requirements

 

At September 15, 2021, our total cash balance was $509,318, none of which is restricted; accounts receivables were $263,920; and inventory, net of reserves for slow moving or obsolete inventory, and other current assets was $1,269,993. Our total indebtedness, specifically which management reviews for cash management, was $848,866 and includes $374,239 in accounts payable and accrued expenses, $2,000 in current portion of long-term debt, $61,326 in long-term debt and $411,300 in total operating lease liability.

 

 

We continue to take actions to improve our liquidity and access to capital resources. Management continues to maintain that an equity financing in the current market environment would be too dilutive and not in the best interests of our shareholders. We have been successful in securing a line of credit with our bank. These new sources of liquidity have been key tools to enable the Company to overcome negative effects of the coronavirus on our business.

 

In assessing our liquidity, management reviews and analyzes our current cash, accounts receivable, accounts payable, capital expenditure commitments, cash requirements and other obligations.  In connection with the preparation of our financial statements for the year ended June 30, 2021, we have analyzed our cash needs for the next twelve months. We have concluded that our available cash and accounts receivables are sufficient to meet our current minimum working capital, capital expenditure and other cash requirements for this period.  Although we have seen a significant increase in business activity in recent quarters, there can be no assurance that a resurgence of the COVID-19 virus will not cause another significant decrease in demand from our customers. While many government restrictions have been relaxed and the economy has continued to open in more jurisdictions, the emergence of new and transmittable variants of COVID-19 appears to have led to a possible resurgence of the virus, particularly in populations with low vaccination rates and has resulted in new restrictions in certain geographies and among certain businesses. The long-term financial impact on our business cannot be reasonably estimated at this time. As a result, the effects of COVID-19 may not be fully reflected in our financial results until future periods. Refer to “Item 1A — Risk Factors” for a description of the material risks that the Company currently faces in connection with COVID-19. If there is a new shutdown of the economy, reduction in demand for our products or other adverse effect on our business, we may lack sufficient working capital to meet our needs for the next 12 months.

 

The Company has, on occasion, instituted initiatives to incentivize sales of slower-moving inventory through promotional pricing. These programs will continue to be selectively utilized in the upcoming quarters to monetize inventory, promote individual product lines, and improve our cash flow.

 

As of September 15, 2021, the Company has approximately 24,607,000 shares authorized and available for issuance. Although we are reluctant to raise money through stock sales at what we believe are dilutive share prices, these authorized but unissued and unreserved shares of our common stock can be utilized, if necessary, to raise new funds.

 

Off-Balance Sheet Arrangements

 

We do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts.

 

Cautionary Note Regarding Forward Looking Statements

 

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding economic conditions in general and in the agricultural market, in particular, the impact of the COVID-19 pandemic and the continued reopening of the economy and anticipated increase in product sales resulting therefrom, increases to the prices we charge for our products in response to increased costs we incur to obtain the materials needed to manufacture them, expected increases in agricultural spending and any resultant positive effect on our business, prospective partnerships and business relationships with large OEMs including some with whom we are currently in discussions, the possibility and expected effect of delays from future shutdowns in connection with COVID-19, operational actions taken by us to reduce expenditures as the economy continues to recover, price increases and expected sales levels for the fiscal year ending June 30, 2021, our ability to pursue future financings, increased demand for our products and resulting sales and profits, the expansion of our customer base, continued strength of our current polyurethane foam tire market segment, the prudence of our research and development investments, the sufficiency of our cash on hand and credit line facility, and liquidity. All statements other than statements of historical facts contained in this report, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

 

 

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in this report. In addition, there is a risk that the economic repercussions from COVID-19 may be more severe than we currently expect, particularly with the new strains emerging and the uncertainty if existing vaccinations will be effective against the new strains, and vaccine hesitancy and slowing vaccination rates which has led and may continue to lead to new outbreaks in certain geographic areas. Additionally, there is a risk that our price increases may result in lower revenues and further decreased gross profit margins. New risk factors emerge from time-to-time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements described in this report, whether as a result of new information, future events, changed circumstances or any other reason after the date this report is filed. 

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a “Smaller Reporting Company” as defined under §229.10(f)(1) of Regulation S-K and are not required to provide the information required by this Item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Our financial statements required by this item are included on the pages immediately following the Index to Financial Statements appearing on page F-1.

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Managements Report On Internal Control Over Financial Reporting

 

The Company’s management is responsible for the preparation and integrity of our published financial statements. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, accordingly, include amounts based on judgments and estimates made by our management. The Company’s management also prepared the other information included in the annual report and is responsible for its accuracy and consistency with the financial statements.

 

The Company’s management is responsible for establishing and maintaining a system of internal control over financial reporting, which is intended to provide reasonable assurance to our management and the Board of Directors regarding the reliability of our financial statements. The system includes but is not limited to:

 

 

a documented organizational structure and division of responsibility;

 

 

established policies and procedures, including a code of conduct to foster a strong ethical climate which is communicated throughout the Company;

 

 

regular reviews of our financial statements by qualified individuals; and

 

 

the careful selection, training and development of our people.

 

There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Also, the effectiveness of an internal control system may change over time. We have implemented a system of internal control that was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.

 

The Company’s management has assessed our internal control system in relation to criteria for effective internal control over financial reporting described in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on its assessment, the Company’s principal executive and principal financial officers have concluded that, as of June 30, 2021, the Company’s system of internal controls over financial reporting was effective in providing reasonable assurance based on those criteria.  The Company used the 2013 version of the COSO framework.

 

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management's report in this annual report.

 

Disclosure Controls and Procedures

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive and Financial Officers, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

 

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, carried out an evaluation, required by Rule 13a-15 or 15d-15 of the Exchange Act of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based on their evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None. 

 

 

PART III

 

The information called for by Part III of Form 10-K (Item 10—Directors, Executive Officers and Corporate Governance of the Registrant, Item 11—Executive Compensation, Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Item 13—Certain Relationships and Related Transactions, and Director Independence, and Item 14—Principal Accounting Fees and Services) is incorporated by reference from our Proxy Statement related to our 2021 Annual Meeting of Shareholders, which will be filed with the SEC not later than October 28, 2020 (120 days after the end of the fiscal year covered by this Annual Report on Form 10-K).

 

 

 

 

 

 

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

(a)           Documents filed with this report.

 

1.               Financial Statements:

See Index to Financial Statements on page F-1

 

2.               Financial Statement Schedules:

Financial statement schedules are omitted because they are not required or are not applicable or the required information is shown in the financial statements or notes thereto.

 

3.               Exhibits:

The exhibits to this report are listed on the Exhibit Index below.

 

(b)           Description of exhibits

 

       

Incorporated by Reference

 

Filed or

Furnished

Exhibit #

 

Exhibit Description

 

Form

 

Date

 

Number

 

Herewith

3.1

 

Articles of Incorporation of the Company

 

8-A12G

 

10/28/02

 

3.01

   

3.2

 

Certificate of Amendment to the Articles of Incorporation of the Company

 

8-A12G

 

10/28/02

 

3.01

   

3.3

 

Certificate of Amendment to the Articles of Incorporation

 

10-Q

 

2/14/13

 

3(i)

   

3.4

 

Certificate of Amendment to the Articles of Incorporation

 

8-K

 

6/1/20

 

3.1

   

3.5

 

Bylaws of the Company

 

8-K

 

9/25/13

 

3.02

   

4.1

 

Description of securities registered under Section 12 of the Exchange Act of 1934

             

Filed

10.1

 

2020 Equity Incentive Plan

             

Filed

10.2

 

Employment Agreement between the Company and Michael Sullivan

 

8-K

 

1/7/21

 

10.1

   

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

             

Filed

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

             

Filed

32.1

 

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

             

Filed

32.2

 

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

             

Filed

101 INS

 

Inline XBRL Instance Document

               

101 SCH

 

Inline XBRL Taxonomy Extension Schema Document

             

Filed

101 CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

             

Filed

101 DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

             

Filed

101 LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

             

Filed

101 PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

             

Filed

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated:  September 17, 2021

 

AMERITYRE CORPORATION

     

By:

     

/s/ Michael F. Sullivan

 

/s/ Lynda R. Keeton-Cardno

 

Michael F. Sullivan

Chief Executive Officer

(Principal Executive Officer)

 

Lynda R. Keeton-Cardno

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 17th day of September 2021.

 

/s/ Michael F. Sullivan

 

/s/ David Clark

 

Michael F. Sullivan

Chairman of the Board

 

David Clark

Director

 
       

/s/ David Hollister

 

/s/ George Stoddard

 

David Hollister

Director

 

George Stoddard

Director

 

 

/s/ Terry Gilland

     

Terry Gilland

Director

     

 

 

 

AMERITYRE CORPORATION

 

INDEX TO FINANCIAL STATEMENTS

 

Audited Financial Statements

 
   

Report of Independent Registered Public Accounting Firm

F-2

   

Balance Sheets as of June 30, 2021 and 2020

F-3

   

Statements of Operations for the years ended June 30, 2021 and 2020

F-4

   

Statements of Stockholders' Equity for the years ended June 30, 2021 and 2020

F-5

   

Statements of Cash Flows for the years ended June 30, 2021 and 2020

F-6

   

Notes to Financial Statements

F-7

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and
Stockholders of Amerityre Corporation

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Amerityre Corporation (the Company) as of June 30, 2021 and 2020, and the related statements of operation, stockholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Critical Audit Matters

 

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

 

 

/s/ Haynie & Company         

 

Haynie & Company

Salt Lake City, Utah

September 17, 2021

   

We have served as the Company’s auditor since 2016.

 

 

 

AMERITYRE CORPORATION

Balance Sheets

 

   

June 30, 2021

   

June 30, 2020

 

ASSETS

               
                 

CURRENT ASSETS

               

Cash

  $ 516,192     $ 666,756  

Accounts receivable

    728,315       292,642  

Current inventory – net

    659,333       493,892  

Prepaid and other current assets

    94,483       86,467  

Total Current Assets

    1,998,323       1,539,757  
                 

RIGHT TO USE LEASE ASSETS, OPERATING, NET

    544,070       692,007  
                 

PROPERTY AND EQUIPMENT

               

Molds and models

    583,611       583,611  

Equipment

    2,910,018       3,037,474  

Furniture and fixtures

    73,423       73,423  

Software

    233,528       247,610  

Less – accumulated depreciation

    (3,690,515

)

    (3,816,004

)

Total Property and Equipment - net

    110,065       126,114  
                 

OTHER ASSETS

               

Patents and trademarks – net

    75,977       92,905  

Non-current inventory

    163,289       300,778  

Deposits

    11,000       11,000  

Total Other Assets

    250,266       404,683  

TOTAL ASSETS

  $ 2,902,724     $ 2,762,561  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               
                 

CURRENT LIABILITIES

               

Accounts payable and accrued expenses

  $ 767,193     $ 691,962  

Current portion of long-term debt

    2,000       59,440  

Current portion of lease liability

    147,600       145,800  

Deferred revenue

    25,892       12,192  

Total Current Liabilities

    942,685       909,394  
                 

Long-term debt, net of current portion

    61,326       153,996  

Long-term lease liability, net of current portion

    300,600       448,200  

TOTAL LIABILITIES

    1,304,611       1,511,590  
                 

COMMITMENTS AND CONTINGENCIES  

   
 
     
 
 
                 

STOCKHOLDERS’ EQUITY

               

Common stock: 100,000,000 shares authorized of $0.001 par value, 73,047,868 and 70,172,868 shares issued and outstanding, respectively

    73,048       70,173  

Additional paid-in capital

    62,805,404       62,719,473  

Accumulated deficit

    (61,280,339

)

    (61,538,675

)

Total Stockholders’ Equity

    1,598,113       1,250,971  

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 

  $ 2,902,724     $ 2,762,561  

 

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

 

 

AMERITYRE CORPORATION

Statements of Operations

 

   

For the Years Ended June 30,

 
   

2021

   

2020

 
                 

NET SALES

  $ 4,863,412     $ 3,941,204  
                 

COST OF REVENUES

    3,579,227       2,838,667  
                 

GROSS PROFIT

    1,284,185       1,102,537  
                 

EXPENSES

               

Research and development

    102,265       117,525  

Sales and marketing

    224,686       192,951  

General and administrative

    860,693       744,525  
                 

Total Expenses

    1,187,644       1,055,001  
                 

INCOME FROM OPERATIONS

    96,541       47,536  
                 

OTHER (EXPENSE)/ INCOME

               

Interest expense

    -       (1,223

)

Interest income

    1,710       931  

Gain on debt extinguishment

    149,570       -  

Loss on asset disposal/impairment

    (26,183

)

    (17,226 )

Other income

    36,698       12,515  
                 

Total Other Income (Expense)

    161,795       (5,003 )
                 

NET INCOME

    258,336       42,533  
                 

Preferred Stock Dividend

    -       (83,300

)

                 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

  $ 258,336     $ (40,767

)

                 

BASIC AND DILUTED INCOME (LOSS) PER SHARE

  $ 0.00     $ (0.00

)

                 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING

    70,918,758       51,123,318  

 

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

 

 

AMERITYRE CORPORATION

Statements of Stockholders Equity

 

   

Preferred Stock

   

Common Stock

   

Additional

Paid in

   

Stock

   

Accumulated

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Payable

   

Deficit

 

Balance, June 30, 2019

    2,000,000       2,000       47,727,867     $ 47,728     $ 62,695,035     $ 583     $ (61,497,908

)

Preferred stock dividends

    -       -       -       -       -       -       (83,300

)

Preferred stock conversion to common stock

    (2,000,000

)

    (2,000

)

    20,000,000       20,000       (18,000

)

    -       -  

Stock based compensation expense for employee and Board of Director service

    -       -       2,445,001       2,445       42,438       (583

)

    -  

Net income for the year ended June 30, 2020

    -       -       -       -       -       -       42,533  

Balance, June 30, 2020

    -       -       70,172,868     $ 70,173     $ 62,719,473     $ -     $ (61,538,675

)

Stock based compensation expense for employee and Board of Director service

    -       -       2,875,000       2,875       85,931       -       -  

Net income for the year ended June 30, 2021

    -       -       -       -       -       -       258,336  

Balance, June 30, 2021

    -     $ -       73,047,868     $ 73,048     $ 62,805,404     $ -     $ (61,280,339

)

 

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

 

 

 

AMERITYRE CORPORATION

Statements of Cash Flows

 

   

For the Years Ended June 30,

 
   

2021

   

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net income

  $ 258,336     $ 42,533  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization expense

    210,696       238,838  

Stock based compensation, employee and Board of Directors

    88,806       44,300  

Gain on debt extinguishment

    (149,570

)

    -  

Loss on assets, due to impairment

    26,183       17,226  

Changes in operating assets and liabilities:

               

Accounts receivable

    (435,674

)

    (14,952

)

Prepaid and other current assets

    (39,220

)

    (3,870

)

Inventory and change in inventory reserve

    (45,176

)

    (93,667

)

Accounts payable and accrued expenses

    82,155       (40,383

)

Deferred revenue

    13,700       (7,216

)

Lease liability, operating lease

    (145,799

)

    (141,000

)

Net Cash (Used In)/Provided By Operating Activities

    (135,563

)

    41,809  

CASH FLOWS FROM INVESTING ACTIVITIES

               

Purchase of property and equipment

    (3,675

)

    (56,488

)

Cash paid for leasehold improvements of an operating lease asset

    (10,786

)

    -  

Net Cash Used In Investing Activities

    (14,461

)

    (56,488

)

CASH FLOWS FROM FINANCING ACTIVITIES

               

Proceeds from notes payable

    -       149,570  

Payments on notes payable

    (540

)

    (25,161

)

Net Cash Used In Financing Activities

    (540

)

    124,409  

NET (DECREASE) INCREASE IN CASH

    (150,564

)

    109,730  

CASH AT BEGINNING OF YEAR

    666,756       557,026  

CASH AT END OF YEAR

  $ 516,192     $ 666,756  

 

NON-CASH FINANCING ACTIVITIES

               
                 

Interest paid

  $ -     $ 1,223  

Income taxes paid

  $ -     $ -  

 

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

               
                 

Write off of fully depreciated and disposed fixed assets

  $ 131,131     $ -  

Use of store inventory, capitalized as fixed asset

  $ 31,203     $ -  

Accrued preferred stock dividends

  $ -     $ 83,300  

Issuance of stock for stock payable

  $ -     $ 583  

Preferred stock conversion to common stock

  $ -     $ 2,000  

 

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

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

Amerityre Corporation (the “Company”) incorporated as a Nevada corporation on January 30, 1995.  The Company was organized to take advantage of existing proprietary and non-proprietary technology available for the manufacturing of specialty tires. The Company engages in the manufacturing, marketing, distribution and sales of “flat free” specialty tires and tire-wheel assemblies and currently is manufacturing these tires at its facility located in Boulder City, Nevada.

 

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.

 

Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles 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 period. Management routinely makes judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

 

Concentrations of Risk

 

The Company places its cash accounts with high credit quality financial institutions and generally limits the amount of credit exposure to the amount in excess of the FDIC insurance coverage limit of $250,000 for interest bearing accounts.  As of June 30, 2021 and 2020, the Company has a series of accounts at one bank that collectively exceed this amount at each year end.  The Company has not experienced losses in such accounts and believes it is not exposed to any significant credit risk to cash.

 

Credit losses, if any, have been provided for in the financial statements and are based on management’s expectations. The Company’s accounts receivables are subject to potential concentrations of credit risk. The Company does not believe that it is subject to any unusual risks or significant risks in the normal course of its business.

 

We have one customer who accounted for 28% of our sales for the year ended June 30, 2021. This same customer accounted for 27% of our sales for the year ended June 30, 2020.

 

While the Company conducts the majority of its business in the United States, revenue related to foreign sales was $1,656,937 and $1,338,836 as of June 30, 2021 and 2020.  For both years, sales to foreign countries amounted to 34% of total net revenues.

 

Cash and Cash Equivalents

 

We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.  As of June 30, 2021 and 2020, respectively, we had no cash equivalents.

 

Accounts Receivables

 

We generally charge-off trade receivables that are more than 120 days outstanding as bad-debt expense, unless management believes the amount to be collectable. The charge-off amounts are included in general and administrative expenses.   As of June 30, 2021 and 2020, the reserve for uncollectible accounts was $0, respectively.  

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

Inventory

 

Inventory is stated at the lower of cost (computed on a first-in, first-out basis) or net realizable value.  The inventory consists primarily of chemicals, finished goods produced in our plant and products purchased for resale.

 

   

June 30,

 
   

2021

   

2020

 

Raw materials

  $ 416,709     $ 263,573  

Finished goods

    525,565       618,104  

Inventory reserve

    (119,652

)

    (87,006

)

Inventory – net (current and long term)

  $ 822,622     $ 794,671  

 

Our inventory reserve reflects items that were deemed to be defective or obsolete based on an analysis of all inventories on hand.

 

In fiscal years 2021 and 2020, the Company critically reviewed all slow-moving inventory to determine if defective or obsolete.  If not defective or obsolete, but slow moving, we presented these items as non-current inventory, although all inventory is ready and available for sale at any moment.  

 

For those items that are spare maintenance materials or parts kept on hand as backup components of major production lines, or “store inventories”, the Company capitalizes the amount if above our capitalization policy for property and equipment. 

 

Right to Use Assets Leases

 

We account for all Company leases following a multi-step analysis process which includes:

 

 

Analysis of all agreements to determine if a lease exists, inclusive of this analysis is the length of the agreement and amount of the resulting liability. Based on this we have determined the following:

 

 

Assets with a length less than 1 year are not considered leases and,

 

 

Assets with a value of less than our capitalization policy of $2,500 are not considered a lease.

 

Items that do not qualify as leases are treated similar to service agreements and expensed as incurred.

 

Once an item qualifies for lease accounting, we analyze the item for operating or finance lease treatment with the major difference that finance leases include interest as a term note would. In the case that a finance lease does not have a stated interest rate, we will impute the interest.

 

Both operating and finance leases result in a right to use asset and related lease liability on our balance sheet.

 

Items that enhance a lease asset, such as leasehold improvements, are capitalized with the related right to use asset. Amortization of that improvement is based on all known facts inclusive of the lease term. 

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

Property and Equipment

 

Property and equipment are stated at cost, generally with a cost of $2,500 or greater. Expenditures for small tools, ordinary maintenance and repairs are charged to operations as incurred. Major additions and improvements are capitalized. When we retire or dispose of assets, the costs and accumulated depreciation or amortization are removed from the respective accounts and we recognize any related gain or loss. Major replacements that substantially extend the useful life of an asset are capitalized and depreciated. Assets which qualify for capital lease treatment and follow our property and equipment capitalization policy are also capitalized. Depreciation and amortization, collectively depreciation expense, is computed using the straight-line method over estimated useful lives as follows:

 

Leasehold improvements

5 years, or over lease term

Equipment

5 to 10 years

Furniture and fixtures

7 years

Software

2 years

 

Depreciation expense for the years ended June 30, 2021 and 2020 was $47,969 and $67,893, respectively.

 

Patents and Trademarks

 

Patent and trademark costs have been capitalized at June 30, 2021, totaling $487,633 with accumulated amortization of $411,656 for a net book value of $75,977. Patent and trademark costs capitalized at June 30, 2020, totaled $487,633 with accumulated amortization of $394,728 for a net book value of $92,905.

 

The patents which have been granted are being amortized over a period of 20 years. Patents which are pending or are being developed are not amortized. Amortization begins once the patents have been issued. As of June 30, 2021 and 2020, respectively, there were no pending patents.  Annually, pending or expired patents are inventoried and analyzed, which resulted in the recognition of a loss on abandonment, expiration or retirement of patents and trademarks of $-0- for the years ended June 30, 2021 and 2020, respectively.

 

Amortization expense for the years ended June 30, 2021 and 2020 was $16,927and $17,696 respectively.  The Company evaluates the recoverability of intangibles and reviews the amortization period on a continual basis utilizing the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, Intangibles Goodwill and Other.  We consider the following indicators, among others, when determining whether or not our patents are impaired:

 

 

any changes in the market relating to the patents that would decrease the life of the asset;

 

 

any adverse change in the extent or manner in which the patents are being used;

 

 

any significant adverse change in legal factors relating to the use of the patents;

 

 

current period operating or cash flow loss combined with our history of operating or cash flow losses;

 

 

future cash flow values based on the expectation of commercialization through licensing; and

 

 

current expectations that, more likely than not, the patents will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

 

The estimated amortization expense, based on current intangible balances, for the next five fiscal years beginning July 1, 2021 is as follows:

 

2022

 

$

17,763

 

2023

 

$

13,896

 

2024

 

$

16,337

 

2025

 

$

7,464

 

2026

 

$

5,270

 

Thereafter

 

$

15,246

 

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

Financial and Derivative Instruments

 

The Company periodically enters into financial instruments. Upon entry, each instrument is reviewed for debt or equity treatment.  In the event that the debt or equity treatment is not readily apparent, FASB ASC 480-10-S99 is consulted for temporary treatment.  Once an event takes place that removes the temporary element the Company appropriately reclassifies the instrument to debt or equity.

 

The Company periodically assesses its financial and equity instruments to determine if they require derivative accounting. Instruments which may potentially require derivative accounting are conversion features of debt, equity, and common stock equivalents in excess of available authorized common shares, and contracts with variable share settlements.  In the event of derivative treatment, we mark the instrument to market.

 

Stock-Based Compensation

 

We account for stock-based compensation under the provisions of FASB ASC 718, Compensation Stock Compensation.  Our financial statements as of and for the fiscal years ended June 30, 2021 and 2020 reflect the impact of FASB ASC 718. Stock-based compensation expense recognized under FASB ASC 718 for the fiscal years ended June 30, 2021 and 2020 was $88,806 and $44,300, respectively, related to employee stock options and employee stock grants.

 

FASB ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our Statement of Operations. Stock-based compensation expense recognized in our Statements of Operations for fiscal years ended June 30, 2021 and 2020 assume all awards will vest; therefore, no reduction has been made for estimated forfeitures.

 

Basic and Fully Diluted Net Loss per Share

 

Basic and Fully Diluted net income per share is computed using the weighted-average number of common shares outstanding during the period.

 

The Company’s outstanding stock options, warrants, stock grants not yet earned and shares issuable upon conversion of outstanding convertible notes, if any, have been excluded from the diluted net loss per share calculation. The Company excluded a total of 1,030,000 and 2,870,000 common stock equivalents for the years ended June 30, 2021 and 2020, respectively because they are anti-dilutive.

 

Income Taxes

 

FASB ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of FASB ASC 740, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740.

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  Net deferred tax assets consist of the following components as of June 30, 2021 and 2020:

 

   

2021

   

2020

 

Deferred tax assets:

               

Net operating loss (“NOL”) carryover

  $ 8,334,200     $ 8,892,000  

Section 1231 loss carryover

    4,000       200  

Inventory reserve

    25,100       18,300  

R & D carryover

    209,800       207,100  

Related party accruals

    8,000       4,300  

Deferred revenue

    5,400       2,600  

Deferred tax liabilities:

               

Depreciation

    (19,700 )     29,700  

Valuation allowance

    (8,566,800

)

    (9,154,200

)

Net deferred tax asset

  $ -     $ -  

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended June 30, 2021 and 2020 due to the following:

 

   

2021

   

2020

 

Book income (loss) tax effected

  $ 54,300     $ 8,900  

Depreciation

    (5,900

)

    6,200  

Nondeductible expenses

    18,600       9,300  

Inventory reserve

    6,900       5,400  

Deferred revenue

    2,900       (1,500

)

R&D Section 6765 Addback

    600       -  

Related party accruals

    3,700       (3,000

)

Loss on asset impairment

    300       3,800  

Valuation allowance

    (81,400

)

    (29,100

)

    $ -     $ -  

 

At June 30, 2021, the Company had net operating loss carry-forwards of approximately $39,687,000 that may be offset against future taxable income. Effective with tax years beginning June 30, 2018, future net operating losses may be offset against future taxable income, subject to annual limitations. No tax benefit has been reported in the June 30, 2021 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

NOL’s arising in tax years beginning in 2017 or earlier are subject to a 20-year limit. Because Amerityre’s NOL’s were generated from fiscal year end June 30, 2001 to fiscal year end June 30, 2016, there will be some NOL’s expiring each year through fiscal year 2036. The following table shows the amounts that would expire per year it not utilized:

 

2023

   

2,568,876

 

2024

   

4,921,923

 

2025

   

9,912,014

 

2026

   

4,478,509

 

2027

   

3,954,682

 

2028

   

3,434,035

 

2029

   

2,893,639

 

2030

   

1,161,192

 

2031

   

1,027,013

 

2032

   

780,467

 

2033

   

1,035,050

 

2034

   

651,035

 

2035

   

237,572

 

2036

   

107,053

 

 

NOL’s arising in tax years beginning in 2022 or later will be subject to 80% of taxable income limitations. NOL carryforwards arising in year beginning in 2021 or earlier are not subject to these limitations.

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forwards may be limited as to use in future years.

 

The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. As of June 30, 2021, the Company had no accrued interest or penalties related to uncertain tax positions.

 

The Company files income tax returns in the U.S. federal jurisdiction.  With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2015.

 

Fair Value Accounting

 

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on 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 three levels of the fair value hierarchy are described below:

 

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 

Level 2

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

 

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

Revenue Recognition

 

The majority of our revenue is derived from short-term sales contracts. We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”, which we adopted on July 1, 2017, using the modified retrospective method. This change in revenue principle was applied to all contracts effective on the adoption date above.

 

Revenue for our products is recognized at the time in which our performance obligation is satisfied which we have defined as “control” of the product by the customer. “Control” is defined as a customer having “rights/obligations of physical control over the product or has the rights and intention to control the product.” Based on the terms of our contracts, a customer’s “control” is based on analysis of the following; (i) when a customer arranges their own shipping, and once the product has left our dock, Amerityre recognizes revenue for the product.  In effect by arranging their own shipping the customer is “taking control” of the product when it leaves our warehouse; or (ii) when a customer does not arrange their own shipping, we cannot recognize revenue until it is delivered and the customer takes “control” of the product. Due to a very robust process to determine when control, as described above, occurs, there is limited judgement applied in the above process. In cases where we enter into sales arrangements with customers for non-standard products, such as custom formulation materials, revenue items are recognized as separate and distinct contracts with revenue recognition occurring upon acceptance by the customer. These types of transactions have been historically rare and non-routine in nature. We had no revenue from these types of transactions in either fiscal year 2021 or 2020.

 

This establishes a “deferred revenue” event until such time as delivery of the product has been completed and we have proof from the shipper of the delivery (and change in control).

 

We invoice the customer at shipping, starting the accounts receivable process.  Our Company collection policies on products does not change (this includes any prepayment and credit establishment processes). Nor do our refund and return policies change where credit is provided on account for the next purchase as no refunds are given.

 

Deferred revenue was $25,892, inclusive of $3,252 of shipping and handling revenue (see below), as of June 30, 2021.  Deferred revenue was $12,192, inclusive of $120 of shipping and handling revenue, as of June 30, 2020. 

 

Shipping and Handling

 

Shipping and Handling Fees require that freight costs charged to customers be classified as revenues. Freight expenses are included in costs of sales and are recognized as incurred.  However, due to our adoption of ASC 606 as discussed above, we defer the revenues of shipping and handling until the related product revenue is also recognized.

 

The result of this accounting is a deferral of $3,252 as of June 30, 2021 and $120 as of June 30, 2020.

 

Product Warranties

 

The Company’s standard sales terms include a limited warranty on workmanship and materials to the original purchaser if items sold are used in the service for which they are intended. Specifically the Company warrants wheels, bearings, and bushings for one year from the date of purchase. Due to historical warranty results, we recognize warranty expense based on actual warranty recognition as historical rates for accrual are inconsistent and infrequent.  

 

Advertising

 

The Company follows the policy of charging the costs of advertising to expense as incurred.  Advertising expense for the years ended June 30, 2021 and 2020 was $2,177 and $3,000, respectively.

 

Sales Tax

 

In accordance with FASB ASC 605-45, formerly EITF Issue No. 06-3, How Taxes Collected from Customers and Remitted to Government Authorities Should Be Presented in the Income Statement, the Company accounts for sales taxes and value added taxes imposed on its good and services on a net basis in the Statement of Operations.

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

Recent Accounting Pronouncements

 

Financial Accounting Standards Board, Accounting Standards Updates which are not effective until after June 30, 2020, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

 

NOTE 2 DEBT

 

A former board member, Silas O. Kines, who passed away on January 11, 2012, was also the principal owner of Forklift Tire of Florida and K-2 Industrial Tire, Inc.  In accordance with the Commission Agreement with Forklift Tire of Florida, dated February 2, 2011, between Amerityre Corporation and K-2 Industrial Tire, Inc., K-2 is due a five percent (5%) commission on all forklift tire sales.  In exchange for the forklift models transferred to Amerityre under that agreement, the first $96,000 in commission payments will be used to extinguish the long term liability recorded on the transaction.  As of June 30, 2021, $2,000 and $61,326 (2020, $2,000 and $61,867) were recorded for the current and long-term portion, respectively, of the related liability.

 

In February 2020, the Company secured a $50,000 line of credit from its bank for working capital coverage. As of June 30, 2021, the debt associated with this line was $0.

 

In April 2020, the Company secured a loan from the Small Business Administration Paycheck Protection Program. The loan amount was $149,570 and had a term of 2 years at 1% interest. In November 2020, the Company’s received full forgiveness by the Small Business Administration. 

 

NOTE 3 RIGHT TO USE LEASE ASSETS

 

Based on our lease accounting policy, we have identified the following operating leases. As of June 30, 2021, we have no financing leases:

 

   

For the Years Ended June 30,

 
   

2021

   

2020

 

Facility lease

  $ 448,200     $ 594,000  

Leasehold improvements related to our facility

    286,854       280,376  

Accumulated amortization – leasehold improvements

    (190,984

)

    (182,369

)

Right to use leased assets, operating, net

  $ 544,070     $ 692,007  

 

In March 2019, we negotiated a five-year extension of the lease on our executive office and manufacturing facility located at 1501 Industrial Road, Boulder City, Nevada.  The property consists of a 49,200 square foot building.  We currently occupy all 49,200 square feet, inclusive of approximately 5,500 square feet of office space, situated on approximately 4.15 acres.  Our remaining liability under this agreement is $448,200 payable at amounts ranging from $12,150 to $12,600 a month until June 30, 2024.

 

Total lease costs for the years ended June 30, 2021 and 2020 was $145,800 and $141,000, respectively.

 

NOTE 4 STOCK TRANSACTIONS

 

During the years ended June 30, 2021 and 2020, the Company had the following stock transactions:

 

On December 13, 2013, the Board of Directors approved a resolution designating 2,000,000 shares of preferred stock, $0.001 par value, as 2013 Series Convertible Preferred Stock (the “2013 Series Shares”) and a Certificate of Designation was subsequently file with the Nevada Secretary of State. On April 28, 2020, the Company filed Certificate of Amendment with the Nevada Secretary of State amending the 2013 Series Shares to remove section 3.06 on limitation on conversions. On May 13, 2020 the holder of the 2013 Series Shares converted all 2,000,000 preferred shares into 20,000,000 shares of common stock.

 

Effective September 24, 2020, the Company filed a withdrawal of designation related to the 2013 Series Convertible Preferred Stock designation. In doing so, the State of Nevada also withdrew all preferred shares authorized. The Company will file a new designation authorizing preferred shares should this be needed in the future.

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

On May 28, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Nevada Secretary of State increasing its authorized shares of common stock from 75,000,000 to 100,000,000.

 

On September 26, 2018, the Company replaced and extended the Chief Executive Officer’s Employment Agreement.  The Agreement extended his term of employment to December 31, 2019.  Inclusive in this new Agreement is a stock award of 1.98 million shares of the Company’s common stock vesting ratably over 12 months (January 2019 – December 2019), valued at a fixed rate of $0.0163, the closing stock price on September 28, 2018.  As of June 30, 2020, all of these shares have vested and were issued.

 

As of November 28, 2018, 350,000 shares were granted to the Company’s Board of Director’s as Board compensation for the term ending November 2019.  Each non-executive Board member receives 75,000 shares, with the Audit Committee Chair receiving 125,000 shares.  The shares vest ratably December 2018 – November 2019, valued at $0.02 the closing stock price on November 28, 2018.  As of June 30, 2020, all of these shares have vested and were issued.

 

On December 18, 2019, the Company renewed the Chief Executive Officer’s Employment Agreement.  The new Agreement extends his term of employment to December 31, 2020.  Inclusive in this new Agreement is a stock award of 1.98 million shares of the Company’s common stock vesting ratably over 12 months (January 2020 – December 2020), valued at a fixed rate of $0.0192, the average price per share of the Company’s common stock for the period December 24, 2019 to December 31, 2019. As of June 30, 2020, 990,000 shares of stock vested and were issued, and as of June 30, 2021 the remaining 990,000 shares of stock vested and were issued.

 

On January 22, 2020, 60,000 shares of common stock were granted to the Company’s Chief Financial Officer as part of her employment renewal.  The shares are valued as of January 21, 2020 and vest ratably on a quarterly basis through December 2020.  No additional changes were made to her compensation on renewal of her employment. As of June 30, 2020, 30,000 shares of stock vested and were issued, and as of June 30, 2021 the remaining 30,000 shares of stock vested and were issued.

 

On January 24, 2020, 460,000 shares of common stock were granted to the Company’s Board members as compensation for the term ending November 2020.  Each non-executive Board member receives 93,750 shares, with the Audit Committee Chair receiving 156,250 shares and the Compensation Committee Chair receiving 116,250 shares.  The shares vest ratably on a monthly basis over the January 2020 – November 2020 period. The shares are valued at $0.02, the closing price per share of our common stock on January 24, 2020. As of June 30, 2020, 230,000 shares of stock vested and were issued, and as of June 30, 2021 the remaining 230,000 shares of stock vested and were issued.

 

Effective January 1, 2021, the Company renewed the Chief Executive Officer’s Employment Agreement.  The new Agreement extends his term of employment to December 31, 2021.  Inclusive in this new Agreement is a stock award of 2.7 million shares of the Company’s common stock vesting ratably over 12 months (January 2021 – December 2021), valued at a fixed rate of $0.031, the average price per share of the Company’s common stock for the period December 24, 2020 to December 31, 2020. As of June 30, 2021, 1,350,000 shares of stock vested and were issued.

 

On January 1, 2021, 60,000 shares of common stock were granted to the Company’s Chief Financial Officer as part of her employment renewal.  The Company’s common stock vesting ratably over 12 months (January 2021 – December 2021), valued at a fixed rate of $0.031, the average price per share of the Company’s common stock for the period December 24, 2020 to December 31, 2020.  As of June 30, 2021, 30,000 shares of stock vested and were issued.

 

In the January 2021 Board Meeting, the Chairman of the Board proposed compensation to the independent members of the Board of Directors such that each such director’s compensation would be in company shares that are both granted and vested as of each Board meeting each independent Director attends, at the following share amounts: Audit Committee Chair 15,000 per meeting, Board Secretary 15,000 per meeting, all other independent Directors 10,000 per meeting. As the shares are both granted and vested per Board meeting attended, the value of the related shares is the closing stock price on each meeting date. The Board approved this plan. The value of these shares ranged between $0.02 and $0.10 per share during the six-month period ended June 30, 2021. As of June 30, 2021, 245,000 shares of stock vested and were issued. 

 

 

AMERITYRE CORPORATION

Notes to the Financial Statements

June 30, 2021 and 2020

 

NOTE 5 STOCK OPTIONS

 

General Option Information

 

On July 22, 2020, the Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”) which contains provisions for up to 5,000,000 stock-based instruments to be granted to employees, consultants and directors. The plan includes the stock awards as described in Note 4 above, and any options which may be contemplated in the future.

 

No options have been granted as of in fiscal year 2021 or fiscal year 2020.  

 

A summary of the status of our outstanding stock options as of June 30, 2021 and June 30, 2020 and changes during the years then ended is presented below: 

 

   

June 30, 2021

   

June 30, 2020

 
           

Weight Average

   

Intrinsic

           

Weight Average

   

Intrinsic

 
   

Shares

   

Exercise Price

   

Value

   

Shares

   

Exercise Price

   

Value

 

Outstanding beginning of period

    2,870,000     $ 0.12               3,970,000     $ 0.12          

Granted

    -     $ 0.00               -     $ 0.00          

Expired/Cancelled

    (1,840,000

)

  $ 0.12               (1,100,000

)

  $ 0.14          

Exercised

    -     $ 0.00               -     $ 0.00          

Outstanding end of period

    1,030,000     $ 0.12     $ -       2,870,000     $ 0.12     $ -  

Exercisable

    1,030,000     $ 0.12     $ -       2,870,000     $ 0.12     $ -  

 

The following table summarizes the range of outstanding and exercisable options as of June 30, 2021:

 

       

Outstanding

   

Exercisable

 

Range of

Exercise Prices

   

Number Outstanding

at

June 30, 2021

   

Weighted

Average

Remaining

Contractual Life

   

Weighted

Average

Exercise Price

   

Number

Exercisable at

June 30, 2021

   

Weighted

Average Remaining

Contractual Life

 
$ 0.08       150,000       0.42     $ 0.08       150,000       0.42  
$ 0.10       480,000       0.50     $ 0.10       480,000       0.50  
$ 0.17       400,000       0.42     $ 0.17       400,000       0.42  
          1,030,000                       1,030,000          

 

NOTE 6 – SUBSEQUENT EVENTS

 

The Company has evaluated all activity through September 17, 2021 (the date the Financial Statements were available to be issued) and concluded that no subsequent events have occurred that would require recognition in the Financial Statements or disclosure in the Notes to the Financial Statements.

 

 

F-16
NONE No No No Yes P5Y false --06-30 FY 2021 0000945828 0000945828 2020-07-01 2021-06-30 0000945828 2021-09-17 0000945828 2020-12-31 0000945828 2021-06-30 0000945828 2020-06-30 0000945828 2019-07-01 2020-06-30 0000945828 us-gaap:PreferredStockMember 2019-06-30 0000945828 us-gaap:CommonStockMember 2019-06-30 0000945828 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000945828 amty:StockPayableMember 2019-06-30 0000945828 us-gaap:RetainedEarningsMember 2019-06-30 0000945828 us-gaap:RetainedEarningsMember 2019-07-01 2020-06-30 0000945828 us-gaap:PreferredStockMember 2019-07-01 2020-06-30 0000945828 us-gaap:CommonStockMember 2019-07-01 2020-06-30 0000945828 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2020-06-30 0000945828 amty:StockPayableMember 2019-07-01 2020-06-30 0000945828 us-gaap:CommonStockMember 2020-06-30 0000945828 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0000945828 us-gaap:RetainedEarningsMember 2020-06-30 0000945828 us-gaap:CommonStockMember 2020-07-01 2021-06-30 0000945828 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2021-06-30 0000945828 us-gaap:RetainedEarningsMember 2020-07-01 2021-06-30 0000945828 us-gaap:CommonStockMember 2021-06-30 0000945828 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0000945828 us-gaap:RetainedEarningsMember 2021-06-30 0000945828 2019-06-30 0000945828 amty:OneCustomerMember us-gaap:SalesMember us-gaap:CustomerConcentrationRiskMember 2020-07-01 2021-06-30 0000945828 amty:OneCustomerMember us-gaap:SalesMember us-gaap:CustomerConcentrationRiskMember 2019-07-01 2020-06-30 0000945828 amty:ForeignSalesMember us-gaap:SalesMember us-gaap:CustomerConcentrationRiskMember 2020-07-01 2021-06-30 0000945828 amty:ForeignSalesMember us-gaap:SalesMember us-gaap:CustomerConcentrationRiskMember 2019-07-01 2020-06-30 0000945828 us-gaap:ShippingAndHandlingMember 2020-07-01 2021-06-30 0000945828 us-gaap:ShippingAndHandlingMember 2019-07-01 2020-06-30 0000945828 us-gaap:LeaseholdImprovementsMember 2020-07-01 2021-06-30 0000945828 srt:MinimumMember us-gaap:EquipmentMember 2020-07-01 2021-06-30 0000945828 srt:MaximumMember us-gaap:EquipmentMember 2020-07-01 2021-06-30 0000945828 us-gaap:FurnitureAndFixturesMember 2020-07-01 2021-06-30 0000945828 us-gaap:SoftwareAndSoftwareDevelopmentCostsMember 2020-07-01 2021-06-30 0000945828 amty:Expiring2023Member 2021-06-30 0000945828 amty:Expiring2024Member 2021-06-30 0000945828 amty:Expiring2025Member 2021-06-30 0000945828 amty:Expiring2026Member 2021-06-30 0000945828 amty:Expiring2027Member 2021-06-30 0000945828 amty:Expiring2028Member 2021-06-30 0000945828 amty:Expiring2029Member 2021-06-30 0000945828 amty:Expiring2030Member 2021-06-30 0000945828 amty:Expiring2031Member 2021-06-30 0000945828 amty:Expiring2032Member 2021-06-30 0000945828 amty:Expiring2033Member 2021-06-30 0000945828 amty:Expiring2034Member 2021-06-30 0000945828 amty:Expiring2035Member 2021-06-30 0000945828 amty:Expiring2036Member 2021-06-30 0000945828 us-gaap:NotesPayableOtherPayablesMember 2021-06-30 0000945828 us-gaap:NotesPayableOtherPayablesMember 2020-06-30 0000945828 2020-02-29 0000945828 2020-04-01 2020-04-30 0000945828 2020-04-30 0000945828 us-gaap:BuildingMember 2021-06-30 0000945828 srt:MinimumMember 2020-07-01 2021-06-30 0000945828 srt:MaximumMember 2020-07-01 2021-06-30 0000945828 us-gaap:ConvertiblePreferredStockMember 2013-12-13 0000945828 us-gaap:PreferredStockMember 2020-05-13 2020-05-13 0000945828 2020-05-13 2020-05-13 0000945828 2020-05-28 0000945828 srt:ChiefExecutiveOfficerMember 2018-09-26 2018-09-26 0000945828 srt:ChiefExecutiveOfficerMember 2017-01-31 2017-01-31 0000945828 srt:ChiefExecutiveOfficerMember 2018-09-26 0000945828 srt:DirectorMember 2018-11-28 2018-11-28 0000945828 amty:SharesIssuedToEachNonExecutiveBoardMemberMember srt:DirectorMember 2018-11-28 2018-11-28 0000945828 amty:AuditCommitteeChairMember 2018-11-28 2018-11-28 0000945828 srt:DirectorMember 2018-11-28 0000945828 srt:ChiefExecutiveOfficerMember 2019-12-18 2019-12-18 0000945828 srt:ChiefExecutiveOfficerMember 2019-12-18 0000945828 srt:ChiefExecutiveOfficerMember 2020-07-01 2021-06-30 0000945828 srt:ChiefExecutiveOfficerMember 2019-07-01 2020-06-30 0000945828 srt:ChiefFinancialOfficerMember 2020-01-22 2020-01-22 0000945828 srt:ChiefFinancialOfficerMember 2020-07-01 2021-06-30 0000945828 srt:ChiefFinancialOfficerMember 2019-07-01 2020-06-30 0000945828 srt:DirectorMember 2020-01-24 2020-01-24 0000945828 amty:SharesIssuedToEachNonExecutiveBoardMemberMember 2020-01-24 2020-01-24 0000945828 amty:SharesIssuedToEachNonExecutiveBoardMemberMember amty:AuditCommitteeChairMember 2020-01-24 2020-01-24 0000945828 amty:CompensationCommitteeChairMember 2020-01-24 2020-01-24 0000945828 srt:DirectorMember 2020-01-24 0000945828 srt:DirectorMember 2020-07-01 2021-06-30 0000945828 srt:DirectorMember 2019-07-01 2020-06-30 0000945828 srt:ChiefExecutiveOfficerMember 2021-01-01 2021-01-01 0000945828 srt:ChiefExecutiveOfficerMember 2021-01-01 0000945828 srt:ChiefFinancialOfficerMember 2021-01-01 2021-01-01 0000945828 srt:ChiefFinancialOfficerMember 2021-01-01 0000945828 amty:AuditCommitteeChairMember 2021-01-01 2021-01-31 0000945828 amty:BoardSecretaryMember 2021-01-01 2021-01-31 0000945828 srt:DirectorMember 2021-01-01 2021-01-31 0000945828 srt:MinimumMember 2021-06-30 0000945828 srt:MaximumMember 2021-06-30 0000945828 amty:OmnibusStockOptionAndAwardPlan2017Member 2017-04-25 0000945828 amty:OptionsAt0.08Member 2021-06-30 0000945828 amty:OptionsAt0.08Member 2020-07-01 2021-06-30 0000945828 amty:OptionsAt0.10Member 2021-06-30 0000945828 amty:OptionsAt0.10Member 2020-07-01 2021-06-30 0000945828 amty:OptionsAt0.17Member 2021-06-30 0000945828 amty:OptionsAt0.17Member 2020-07-01 2021-06-30 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure utr:sqft utr:acre


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings