Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
  1. Homepage
  2. Equities
  3. United States
  4. OTC Markets
  5. Amerityre Corporation
  6. News
  7. Summary
    AMTY   US03073V1070

AMERITYRE CORPORATION

(AMTY)
SummaryQuotesChartsNewsCompanyFinancials 
SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector news

AMERITYRE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

09/17/2021 | 09:34am EDT
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.



                                       20

--------------------------------------------------------------------------------

Table of Contents




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;




                                       21

--------------------------------------------------------------------------------

  Table of Contents



    •    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.



                                       22

--------------------------------------------------------------------------------

Table of Contents




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.



                                       23

--------------------------------------------------------------------------------

Table of Contents




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.



                                       24

--------------------------------------------------------------------------------

Table of Contents




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.



                                       25

--------------------------------------------------------------------------------

Table of Contents




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.

© Edgar Online, source Glimpses

All news about AMERITYRE CORPORATION
09/17AMERITYRE : Annual Report (SEC Filing - 10-K)
PU
09/17AMERITYRE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPE..
AQ
09/17Amerityre Corporation Reports Earnings Results for the Full Year Ended June 30, 2021
CI
05/14AMERITYRE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPE..
AQ
05/14Amerityre Corporation Reports Earnings Results for the Third Quarter Ended March 31, 20..
CI
02/12AMERITYRE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPE..
AQ
02/12Amerityre Corporation Reports Earnings Results for the Second Quarter Ended December 31..
CI
01/07AMERITYRE CORP : Change in Directors or Principal Officers, Financial Statements and Exhib..
AQ
2020AMERITYRE CORP : Submission of Matters to a Vote of Security Holders, Regulation FD Disclo..
AQ
2020Amerityre Corporation Reports Earnings Results for the First Quarter Ended September 30..
CI
More news