1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
[ ] 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: 33-94318-C
AMERITYRE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 87-0535207
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1501 INDUSTRIAL ROAD, BOULDER CITY, NEVADA 89005
------------------------------------------ ------------------
(Address of principal executive offices) (Zip Code)
(702) 294-2689
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), Yes [X] No [ ] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, was 14,649,942 shares of common stock, par value $0.001, as of February
10, 2003.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
our financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
Our unaudited balance sheet as of December 31, 2002 and our audited balance
sheet as of June 30, 2002; and the related unaudited statements of operations
for the three and six month periods ended December 31, 2002 and unaudited
statement of cash flows for the six month period ended December 31, 2002, are
attached hereto and incorporated herein by this reference.
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AMERITYRE CORPORATION
BALANCE SHEETS
ASSETS
DECEMBER 31, JUNE 30,
2002 2002
------------ -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 29,132 $ 774,345
Accounts receivable - net 92,129 102,996
Inventory 381,525 407,136
Prepaid expenses 111,719 56,228
------------ ------------
Total Current Assets 614,505 1,340,705
------------ ------------
PROPERTY AND EQUIPMENT
Leasehold improvements 112,047 41,613
Equipment 1,553,961 1,499,512
Furniture and fixtures 48,154 19,730
Vehicles 31,541 31,541
Construction in progress 269,647 -
Less - accumulated depreciation (1,095,580) (976,840)
------------ ------------
Total Property and Equipment 919,770 615,556
------------ ------------
OTHER ASSETS
Patents and trademarks - net 89,242 82,080
Deposits 43,180 7,180
------------ ------------
Total Other Assets 132,422 89,260
------------ ------------
TOTAL ASSETS $ 1,666,697 $ 2,045,521
============ ============
The accompanying notes are an integral part of these unaudited financial
statements.
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AMERITYRE CORPORATION
BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, JUNE 30,
2002 2002
------------ -------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 208,269 $ 95,584
Accrued expenses 9,659 10,992
Stock subscription deposit 34,000 9,000
------------ ------------
Total Current Liabilities 251,928 115,576
------------ ------------
Total Liabilities 251,928 115,576
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: 5,000,000 shares authorized
of $0.001 par value, -0- shares issued and
outstanding - -
Common stock: 25,000,000 shares authorized of
$0.001 par value, 14,493,192 and 14,187,731
shares issued and outstanding, respectively 14,493 14,188
Additional paid-in capital 20,700,051 20,090,261
Stock subscriptions receivable (203,608) (562,721)
Expenses prepaid with common stock (265,250) (150,750)
Deferred consulting (58,188) (103,433)
Deficit accumulated during the development
stage (14,831,189) (14,831,189)
Deficit accumulated subsequent to the
development stage (3,941,540) (2,526,411)
------------ ------------
Total Stockholders' Equity 1,414,769 1,929,945
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,666,697 $ 2,045,521
============ ============
The accompanying notes are an integral part of these unaudited financial
statements.
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AMERITYRE CORPORATION
Statements of Operations
(Unaudited)
For the Three Months Ended
December 31,
----------------------------
2002 2001
------------ ------------
NET SALES $ 239,772 $ 66,687
COST OF SALES 247,907 46,713
------------ ------------
GROSS (DEFICIT) MARGIN (8,135) 19,974
------------ ------------
EXPENSES
Consulting 82,093 97,999
Payroll and payroll taxes 244,930 280,798
Depreciation and amortization 60,607 54,921
Selling, general and administrative 395,758 373,675
------------ ------------
Total Expenses 783,388 807,393
------------ ------------
LOSS FROM OPERATIONS (791,523) (787,419)
------------ ------------
OTHER INCOME
Interest income 4,123 21,170
Other Income 164 -
Gain on disposal of assets - -
------------ ------------
TOTAL OTHER INCOME 4,287 21,170
------------ ------------
NET LOSS $ (787,236) $ (766,249)
------------ ------------
BASIC LOSS PER SHARE $ (0.05) $ (0.06)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 14,480,269 13,528,301
============ ============
The accompanying notes are an integral part of these unaudited financial
statements.
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AMERITYRE CORPORATION
Statements of Operations
(Unaudited)
For the Six Months Ended
December 31,
----------------------------
2002 2001
------------ ------------
NET SALES $ 440,001 $ 90,379
COST OF SALES 461,343 61,591
------------ ------------
GROSS (DEFICIT) MARGIN (21,342) 28,788
------------ ------------
EXPENSES
Consulting 108,470 225,653
Payroll and payroll taxes 471,965 414,079
Depreciation and amortization 119,534 109,251
Selling, general and administrative 705,306 613,643
------------ ------------
Total Expenses 1,405,275 1,362,626
------------ ------------
LOSS FROM OPERATIONS (1,426,617) (1,333,838)
------------ ------------
OTHER INCOME
Interest income 10,879 44,862
Other Income 609 -
Gain on disposal of assets - 18,036
------------ ------------
TOTAL OTHER INCOME 11,488 62,898
------------ ------------
NET LOSS $ (1,415,129) $ (1,270,940)
------------ ------------
BASIC LOSS PER SHARE $ (0.10) $ (0.09)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 14,241,236 13,567,718
============ ============
The accompanying notes are an integral part of these unaudited financial
statements.
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AMERITYRE CORPORATION
Statements of Cash Flows
(Unaudited)
For the Six Months Ended
December 31,
---------------------------
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,415,129) $ (1,270,940)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Depreciation and amortization 119,534 109,251
(Gain) on disposition of assets - (18,036)
Common stock issued for services 212,000 300,000
Stock options issued for services 2,870 -
Services provided in lieu of cash payment
on subscriptions receivable 14,249 -
Interest on subscriptions receivable (4,408) (6,427)
Exercise of stock options for services 23,592 -
Amortization of expenses prepaid with
common stock 97,500 -
Amortization of deferred consulting expense 2,745 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable
and accounts receivable - related 10,867 (12,466)
(Increase) decrease in inventory 25,611 (141,211)
(Increase) decrease in prepaid expenses (55,491) 17,341
(Increase) decrease in other assets (36,000) 2,252
Increase (decrease) in accounts payable
and accrued expenses 110,494 (42,813)
------------- -------------
Net Cash (Used) by Operating Activities (891,566) (1,063,049)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for patents (7,955) (23,905)
Proceeds from sale of fixed assets - 322,919
Purchase of equipment (422,954) (57,218)
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Net Cash Provided (Used) by
Investing Activities $ (430,909) $ 241,796
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The accompanying notes are an integral part of these unaudited financial
statements.
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AMERITYRE CORPORATION
Statements of Cash Flows (Continued)
(Unaudited)
For the Six Months Ended
December 31,
---------------------------
2002 2001
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt of subscriptions receivable $ 362,262 $ 36,990
Increase (decrease) in stock subscription
deposit 25,000 (25,000)
Common stock issued for cash 190,000 543,000
------------ ------------
Net Cash Provided by Financing Activities 577,262 554,990
------------ ------------
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS (745,213) (266,263)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 774,345 530,052
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29,132 $ 263,789
============ ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
CASH PAID FOR:
Interest $ - $ -
Income taxes $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services rendered $ 212,000 $ 300,000
Common stock issued for prepaid expenses $ - $ 220,000
Common stock issued for in lieu of debt
and interest $ - $ 80,000
The accompanying notes are an integral part of these unaudited financial
statements.
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AMERITYRE CORPORATION
Notes to the Unaudited Financial Statements
December 31, 2002 and June 30, 2002
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles in the United States of America have been
condensed or omitted in accordance with such rules and regulations. The
information furnished in the interim condensed financial statements include
normal recurring adjustments and reflects all adjustments, which, in the
opinion of management, are necessary for a fair presentation of such financial
statements. Although management believes the disclosures and information
presented are adequate to make the information not misleading, it is suggested
that these interim condensed financial statements be read in conjunction with
the Company's most recent audited financial statements and notes thereto
included in its June 30, 2002 Annual Report on Form 10-KSB. Operating results
for the three month and six months ended December 31, 2002 are not necessarily
indicative of the results that may be expected for the year ending June 30,
2003.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has historically incurred significant losses which have
resulted in a total accumulated deficit of approximately $18.8 million at
December 31, 2002 which raises substantial doubt about the Company's ability
to continue as a going concern. The accompanying financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty. It is the intent of
management to create additional revenues through the development and sales of
its patented tires and to obtain additional equity financing if required to
sustain operations until revenues are adequate to cover the costs.
NOTE 3 - MATERIAL EVENTS
During the six month period ended December 31, 2002, the Company issued 95,000
shares of its common stock for cash of $190,000, or $2.00 per share.
During the six months ended December 31, 2002, the Company issued 200,000
shares of its common stock to its Chief Executive Officer for payment of
compensations expense of $212,000 for the six months ended December 31, 2002
and prepayment of $212,000 in compensation expense for the six months ending
June 30, 2003 (which amount is included as a part of expenses prepaid with
common stock and reflected as a reduction in Stockholders' Equity).
During the six month period ended December 31, 2002, the Company granted stock
options to an unrelated consultant to purchase 5,000, 2,604 and 2,857 shares
of common stock at $2.40, $2.14 and $2.10 per share, respectively, as
consideration for services rendered. The Company recognized $2,870 in expense
as a result of these issuances as calculated using the Black-Scholes option-
pricing model with the following assumptions: risk-free interest rates of
1.72%, 1.67% and 1.67%; volatility of 98.82%, 83.56% and 62.49%; expected
dividend rates of 0%; and, expected lives of two months, one month and one
month, respectively.
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AMERITYRE CORPORATION
Notes to the Unaudited Financial Statements
December 31, 2002 and June 30, 2002
NOTE 3 - MATERIAL EVENTS (Continued)
During the six months ended December 31, 2002, all of the above mentioned
options were exercised and a total of 10,461 shares of common stock were
issued.
In August 2002, the Company issued a purchase order to have a rotary molding
machine built by an unrelated party for a total of $425,000. The purchase
order calls for the Company to make three equal installment payments of
$106,250 during the construction of the equipment, after which, the remaining
$106,250 is to be paid upon completion and installment of the machine. The
first payment was made in August 2002 and the second was made in October 2002.
Both payments were classified as "construction-in-progress" at December 31,
2002 and will be reclassified to equipment and depreciated upon completion,
installation and commencement of usage of the equipment. The Company expects
to take possession of the machine during the first quarter of the 2003
calendar year.
On October 15, 2002, the Company entered into a lease for a new corporate
headquarters and manufacturing facility. The lease has a five year term with
monthly payments of $16,000 and annual $500 per month increases each year
beginning the second year. A deposit of $36,000 was made to secure the
facility and the Company has capitalized a total of $70,434 in leasehold
improvements.
NOTE 4 - SUBSEQUENT EVENTS
In January and February 2003, the Company issued a total of 106,750 shares of
its common stock for cash of $213,500, or $2.00 per share.
In January 2003, the Company issued 50,000 shares of its common stock to an
unrelated consultant for prepaid services through April 30, 2003.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Statements
----------------------------------------------------------
This report may contain "forward-looking" statements. Examples of forward-
looking statements include, but are not limited to: (a) projections of our
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of our plans and
objectives; (c) statements of our future economic performance; (d) statements
of assumptions underlying other statements and statements about us and our
business relating to the future; and (e) any statements using the words
"anticipate," "expect," "may," "project," "intend" or similar expressions.
We were incorporated as a Nevada corporation on January 30, 1995 under the
name American Tire Corporation, to take advantage of certain proprietary and
nonproprietary technology available for the manufacturing of Flatfree(TM)
tires from polyurethane. In December 1999 we changed our name to Amerityre
Corporation. Since our inception, we have developed additional proprietary
technology relating to Flatfree(TM) tires so that we have completed the
fundamental technical development of the processes to manufacture non-highway
use Flatfree(TM) tires for markets such as bicycle, wheelbarrow, riding
lawnmowers and golf cars (the "Products").
Historically, we have essentially been a technology company in the development
stage, manufacturing a limited number of products for the purpose of
validating our Flatfree(TM) tire technology. During the past year we have
developed, demonstrated and tested various Products for Original Equipment
Manufacturers (OEM) with "low-duty" needs. Understanding that most OEMs
utilize a lengthy evaluation process, in October 2001, we began implementing a
plan to place a limited number of our Products into the replacement tire
aftermarket (i.e., bicycle shops, hardware stores and tire stores throughout
the United States). In an effort to balance our limited manufacturing
capability with the need to gain critical end-user learning curve, we engaged
a few independent sales representatives to directly place our Products with
dealers such as local tire, hardware and bicycle stores.
Our Results of Operations for the Three and Six Month Periods ended December
31, 2002 compared to the Three and Six Month Periods ended December 31, 2001
----------------------------------------------------------------------------
Net sales and cost of sales: Our net sales for the three and six month periods
ended December 31, 2002 were $239,772 and $440,001, respectively, compared to
$66,687 and $90,379 for the comparable periods ended December 31, 2001. Cost
of sales for the three and six months ended December 31, 2002 were $247,907
and $461,343, or 103% and 105% of sales, respectively. Our cost of sales for
three and six month periods ended December 31, 2001 were $46,713 and $61,591,
or 70% and 68% of sales, respectively. However, we believe that, for the
fiscal year ending June 30, 2003, our direct costs as a percent of sales will
be reduced as our volume of Product sales exceeds the fixed costs of minimum
Product production (i.e., labor and raw material costs). We believe we
currently have sufficient employees to merit a substantial increase in
production without incurring a proportionately equivalent increase in labor
costs. In addition, we have negotiated a reduction in raw material cost from
our principal chemical suppliers.
The Company knows of no other predictable events or uncertainties that may be
reasonably expected to have a material negative impact on the net sales
revenues or income from continuing operations other than the general downturn
in the U.S. economy over the several months and any reduced consumer
confidence resulting therefrom.
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Operating Expenses: Our total operating expenses for the three and six months
ended December 31, 2002 were $783,388 and $1,405,275, respectively. These
expenses consisted of: consulting expenses of $82,093 and $108,470; payroll
and payroll taxes of $244,930 and $471,965; depreciation and amortization of
$60,607 and $119,534; and general and administrative expenses of $395,758 and
$705,306, resulting in losses from operations of $791,523 and $1,426,617,
respectively. Our total operating expenses for the three and six month
periods ended December 31, 2001, were $807,393 and $1,362,627, respectively.
These expenses consisted of: consulting expenses of $97,999 and $225,653;
payroll and payroll taxes of $280,798 and $414,079; depreciation and
amortization expenses of $54,921 and $109,251; and general and administrative
expenses of $373,675 and $613,643, resulting in losses from operations of
$787,419 and $1,333,838, respectively.
The overall increase in our operating expenses during the current six month
period compared to the same period the prior year can almost entirely be
attributed to increases in payroll and payroll taxes and selling, general and
administrative expenses, offset by reduced consulting fees, as we have added
administrative and production personnel and relied less on outside consultants
for marketing our Products. We expect our operating expenses to remain
relatively constant for the remainder of the fiscal year at an estimated
$230,000 per month.
Other Income and Expense. During the three and six month periods ended
December 31, 2002, we had interest income of $4,123 and $10,879, respectively,
compared to $21,170 and $44,862, respectively, for the comparable periods in
2001. Our interest income is derived from our cash and cash equivalents held
in interest bearing accounts. During the six month period ended December 31,
2001, we had a gain of $18,036 associated with the disposition of our Ravenna,
Ohio facility. There was no comparable gain in 2002.
We experienced a net loss of $787,236 and $1,415,129, respectively, for the
three and six months ended December 31, 2002, with a basic loss per share of
$0.05 and $0.10 per share, based on the weighted average number of shares
outstanding of 14,480,269 and 14,241,236. In the prior year periods, we
experienced a net loss of $766,249 and $1,270,940, respectively, for the three
and six months ended December 31, 2001, with a basic loss per share of $0.06
and $0.09, based on the weighted average number of shares outstanding of
13,528,301 and 13,567,718.
Liquidity and Capital Resources
-------------------------------
We had current assets of $614,505 and current liabilities of $251,928, for a
working capital surplus of $362,577 at December 31, 2002. Current assets
consisted of cash and cash equivalents of $29,132, accounts receivable of
$92,129, inventory of $381,525, and prepaid expenses of $111,719. Net cash
used in operations was $891,566 and $1,063,049 for the six month periods ended
December 31, 2002 and 2001, respectively. Our operations for the six months
ended December 31, 2002 have been funded primarily by accounts receivables,
the sale of common stock and the issuance of common stock for services and
salary. Our operations for the comparative period ended December 31, 2001 were
funded primarily by the sale of common stock and the issuance of common stock
for services and salary.
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At December 31, 2002, we had net property and equipment of $919,770 after
deduction of $1,095,580 in accumulated depreciation, a net increase of
$304,214 compared to June 30, 2002. The increase was a direct result of our
preparing to consolidate the location of our administrative and manufacturing
facilities to Boulder City. At December 31, 2002, we had property and
equipment consisting of manufacturing equipment, $1,553,961; construction in
progress, $269,647 (see note 3 to the financial statements); leasehold
improvements, $112,047; vehicles, $31,541; and furniture & fixtures, $48,154.
Because we had an accumulated deficit during the development stage of
$14,831,189, and an additional deficit of $2,526,411 accumulated subsequent to
the development stage, our audit report at June 30, 2002 contains a going
concern modification as to our ability to continue as a going concern. At
December 31, 2002, the additional deficit accumulated subsequent to the
development stage is now $3,941,540. We are currently taking steps to maintain
our operating and financial requirements in an effort to enable us to operate
as a going concern until such time as revenues from the sale of our Products
are adequate to cover our expenses, including:
(1) affecting certain Product and pricing refinements, gaining production-
level manufacturing capability and related efficiencies;
(2) revising our distribution, sales and marketing approach;
(3) developing new technology for the production of higher margin flatfree
tires for the lawn and garden market and golf cart/turf equipment market;
(4) obtaining additional funding through the collection of subscriptions
receivable for common stock and/or private placement of our common stock to
qualified investors; and
(5) issuing common stock in lieu of cash for legal and other professional
services.
We anticipate that we will need an additional $2,000,000 through June 30, 2003
to implement our plan and to meet our working capital requirements. We expect
to raise the working capital we need through the private placement of our
equity securities, but we have no commitment for such funding at this time. We
do not anticipate expending any substantial sums for new research and
development during the balance of our fiscal year ending June 30, 2003.
Impact of Inflation
-------------------
At this time we do not anticipate that inflation will have a material impact
on our current or future operations.
Principal Customers
-------------------
Sunrise Medical and The Arizona Masonic Foundation for Children accounted for
approximately 19.1% and 10.8%, respectively, of our sales revenue during the
three month period from October 1, 2002 to December 31, 2002. For the six
month period ended December 31, 2002, Sunrise Medical accounted for
approximately 10.9% of our revenues.
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Seasonality
-----------
Because the significant portion of our current customers reside in the United
States, we anticipate that sales of certain of our lawn and garden Products to
those customers located in Northern portion of the United States could be
reduced as a result of fall and winter climate and weather conditions.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
-----------------------------------------------------
We believe our disclosure controls and procedures (as defined in Sections 13a-
14(c) and 15d- 14(c) of the Securities Exchange Act of 1934, as amended) are
adequate, based on our evaluation of such disclosure controls and procedures
on February 10, 2003.
(b) Changes in internal controls.
---------------------------------
There were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During the three month period ended December 31, 2002, we issued 5,000 shares
of our common stock for cash of $10,000, or $2.00 per share.
During the three months ended December 31, 2002, we issued 200,000 shares of
our common stock to Richard Steinke, our Chief Executive Officer, for payment
of compensation expense of $212,000 for the six months ended December 31, 2002
and prepayment of $212,000 in compensation expense for the six months ending
June 30, 2003.
All of our shares issued in the foregoing transactions were issued in reliance
on the exemption from registration and prospectus delivery requirements of the
Act set forth in Section 3(b) and/or Section 4(2) of the Securities Act and
the regulations promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 1, 2002, at our annual meeting of shareholders, a majority of the
shareholders elected Richard A. Steinke, Louis M. Haynie, Henry D. Moyle and
Gene Stipe to the board of directors. Each director will serve until our next
annual meeting and until his or her successor is duly elected and qualified.
Vacancies on the Board during the year may be filled by the majority vote of
the directors in office at the time of the vacancy without further action by
the stockholders. A majority of shareholders also ratified the adoption of
the 2002 Stock Option and Award Plan which was approved by the board of
directors on April 1, 2002. In addition, a majority of the shareholders
approved the selection of HJ & Associates, LLC, as our independent public
accountants for our fiscal year ending June 30, 2003.
ITEM 5. OTHER INFORMATION
On October 15, 2002, the Company entered into a lease for a new corporate
headquarters and manufacturing facility. The lease has a five year term with
monthly payments of $16,000 and annual $500 per month increases each year
beginning the second year. A deposit of $36,000 was made to secure the
facility and the Company has capitalized a total of $70,434 in leasehold
improvements.
In December 2002, we established an Executive Committee to: (1) review our
existing policies and procedures relating to executive compensation and board
compensation, as well as review management's recommendations regarding changes
and/or modifications thereto; (2) review potential nominees for board
membership and make recommendations to the full board regarding the nominees;
(3) review and make recommendations regarding the our short-term and long-term
operating plan; and (4) review management's plans regarding product
development, product pricing structure, product market segments and product
marketing strategy and make recommendations regarding changes and/or
modifications thereto. Richard A. Steinke, Louis M. Haynie and Henry Moyle
were appointed to serve on the Executive Committee. The Executive Committee
meets on an ad hoc basis from time to time as determined by Mr. Steinke, who
serves as chairman of the Executive Committee, but at least once per month
until such time as the Executive Committee is disbanded or until their
successors are duly elected and shall qualify. As compensation for serving on
the Executive Committee, each non-employee director who serves as a member of
the Executive Committee received a cash payment of $22,000 for service through
December 31, 2003. At December 31, 2002, $40,604 was included in prepaid
expenses.
In December 2002, we entered into an agreement with William K. Watkins, a
former director, to assist us with introductions to parties which might be
interested in providing us with funding in the form of debt and/or equity
financing. This agreement is non-exclusive and we reserved the right to seek
funding from other sources. Mr. Watkins was paid a one-time fee of $27,000,
whether or not a transaction with a party introduced by Watkins, directly or
indirectly, is consummated.
On January 17, 2003, Wesley G. Sprunk accepted an appointment to the Board of
Directors. Mr. Sprunk, age 66, owns and operates Saf-Tee Siping & Grooving,
a tire siping equipment manufacturing company and Tire Service Equipment Mfg.
Co., Inc., a manufacturer and marketer of automotive wheel service equipment
and recycling equipment, both located in Phoenix, Arizona.
16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
-------------
Exhibit 99.01 - CERTIFICATION OF RICHARD A. STEINKE PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002.
Exhibit 99.02 - CERTIFICATION OF DAVID K. GRIFFITHS PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002.
(b) REPORTS ON FORM 8-K.
-------------------------
None.
SIGNATURES
Pursuant to the requirements 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: February 14, 2003 AMERITYRE CORPORATION
/S/RICHARD A. STEINKE
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President and Chief Executive Officer
AMERITYRE CORPORATION
Dated: February 14, 2003 /S/DAVID K. GRIFFITHS
-----------------------------------
Secretary/Treasurer and
Principal Accounting Officer
17
CERTIFICATIONS
I, Richard A. Steinke, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Amerityre
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to us by others within
those entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date.
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control.
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there was significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: February 14, 2003 /S/ Richard A. Steinke
17
I, David K. Griffiths, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Amerityre
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant is made known to us by others within
those entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date.
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control.
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there was significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: February 14, 2003 /S/ David K. Griffiths