AMERITYRE CORP - Quarter Report: 2012 September (Form 10-Q)

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(Mark One)

 

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)

The number of shares outstanding of Registrant’s Common Stock as of November 8, 2012: 34,926,620

		Page
PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	18
PART II
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Reserved	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
SIGNATURE		20

 

 

 

 

 

AMERITYRE CORPORATION

		September 30, 2012				June 30, 2012
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash		$	428,849			$	105,838
Accounts receivable - net			398,788				400,458
Accounts receivable - related party - net			26,862				22,981
Inventory			665,583				553,578
Prepaid and other current assets			49,663				67,210
Total Current Assets			1,569,745				1,150,065
PROPERTY AND EQUIPMENT
Leasehold improvements			162,683				162,683
Molds and models			751,842				744,611
Equipment			3,051,587				2,959,233
Leased equipment			27,900				27,900
Furniture and fixtures			100,142				100,142
Construction in progress			64,786				30,122
Software			320,992				309,425
Less - accumulated depreciation			(3,707,310	)			(3,651,903	)
Total Property and Equipment			772,622				682,213
OTHER ASSETS
Patents and trademarks - net			523,848				531,222
Deposits and deferred costs			21,000				36,000
Total Other Assets			544,848				567,222
TOTAL ASSETS		$	2,887,215			$	2,399,500

 

 

		September 30, 2012				June 30, 2012
		(Unaudited)
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable		$	357,815			$	376,721
Convertible notes			350,000				450,000
Accrued expenses			261,837				356,986
Current portion of long-term debt			24,274				27,014
Interest accrued on convertible notes			6,957				9,018
Deferred revenue			3,345				3,345
Total Current Liabilities			1,004,228				1,223,084
Long-term debt			53,840				53,840
Total Long-Term Debt			53,840				53,840
TOTAL LIABILITIES			1,058,068				1,276,924
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: 5,000,000 shares authorized    of $0.001 par value, 1,135,000 and -0- shares issued and    outstanding, respectively			1,135				-
Common Stock: 40,000,000 shares authorized of    $0.001 par value, 34,926,620 and 34,176,620    shares issued and outstanding, respectively			34,926				34,176
Additional paid-in capital			60,133,077				58,890,503
Stock subscription deposits			-				260,000
Retained deficit			(58,339,991	)			(58,062,103	)
Total Stockholders' Equity			1,829,147				1,122,576
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	2,887,215			$	2,399,500

 

 

 

 

		For the Three Months Ended September 30,
		2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss		$	(277,888	)		$	(194,100	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation & amortization expense			62,781				60,661
Change in allowance for bad debt			(18,235	)			-
Common stock issued for services			-				58,000
Stock based compensation			20,346				23,067
Amortization of debt issuance costs			-				8,522
Changes in operating assets and liabilities:
(Increase)/Decrease in accounts receivable			16,025				59,769
(Increase)/Decrease in prepaid and other current assets			17,547				39,388
(Increase)/Decrease in inventory and inventory reserve			(112,005	)			65,109
(Increase)/Decrease in other assets			15,000				-
(Decrease)/Increase in accounts payable and accrued expenses			33,883				111,157
Net Cash Provided (Used) by Operating Activities			(242,546	)			231,573
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			(145,817	)			(15,803	)
Cash paid for patents and trademarks			-				(15,806	)
Net Cash Used by Investing Activities			(145,817	)			(31,609	)
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of convertible notes			(100,000	)			(87,500	)
Proceeds from stock subscriptions - net of issuance costs			814,114				-
Payments on long-term debt			(2,740	)			-
Net Cash Provided/(Used) by Financing Activities			711,374				(87,500	)
NET  INCREASE IN CASH			323,011				112,464
CASH AT BEGINNING OF PERIOD			105,838				127,990
CASH AT END OF PERIOD		$	428,849			$	240,454

 

	For the Three Months Ended September 30,
	2012				2011
Loss (numerator)		$	(277,888	)		$	(194,100	)
Shares (denominator)			34,437,490				32,502,014
Per share amount		$	(0.01	)		$	(0.01	)

 

 

 

 

 

 

Risk free interest rate			0.41 - 0.75	%
Expected life		3.0 – 5.0 years
Expected volatility			72.93 – 84.38	%
Dividend yield			0.00	%

 

·	Cost of sales, which consists primarily of raw materials, components and production 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 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 employees and consultants for services performed for the Company.

·	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 a patent will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

 

·	Net revenues, which consists of product sales revenues and equipment sales revenues, if any;

·	Sales revenue, net of returns and trade discounts, which 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 revenues of our products and the mix of product and equipment sales and license fees, if any;

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

·	Distribution of revenue across our products offered.

		For the Three Months Ended September 30,
		2012				2011				Change
Net revenues		$	913,210			$	1,349,165				(32.3	%)
Cost of revenues			539,428				876,947				(38.5	%)
Gross profit			373,782				472,218				(20.8	%)
Selling, general & administrative expenses			581,837				584,187				0.0	%
Consulting expense			23,862				20,115				18.6	%
Research & development expenses			300				2,756				(89.1	%)
Depreciation & amortization expenses			56,513				49,505				14.2	%
Bad debt expense			(18,235	)			-				100.0	%
Other income			496				5,294				(90.6	%)
Interest expense			(7,889	)			(15,049	)			(47.6	%)
Net loss		$	(277,888	)		$	(194,100	)			(43.2	%)

 

·	A decrease in director compensation, primarily stock based compensation, of approximately $46,000.

·	An increase of approximately $33,200 in warranty expense related to the tire failures and returns for the forklift product line.

·	A decrease of approximately $18,800 in the commissions paid on chemical sales.

·	The reduction of approximately $18,200 in the reserve for uncollectible accounts.

·	A decrease of $12,000 in the monthly building rent resulting from a lease renegotiation.

 

		For the Three Months Ended September 30,
		2012				2011
Net cash provided/(used) by operating activities		$	(242,546	)		$	231,573
Net cash used by investing activities			(145,817	)			(31,609	)
Net cash provided/(used) by financing activities			711,374				(87,500	)
Net increase in cash during period		$	323,011			$	112,464

 

		Payments due by period
		Total				Less than 1 year				1 to 3 years				3 to 5 years				After 5 years
Facility lease (1)		$	231,000			$	132,000			$	99,000			$	-			$	-
Total contractual cash obligations		$	231,000			$	132,000			$	99,000			$	-			$	-

                                            
(1)  In June 2012, we negotiated an extension to the lease for our executive and manufacturing facilities located at 1501 Industrial Road, Boulder City, Nevada.  The property consists of a 49,200 square-foot building, which includes approximately 5,500 square-feet of office space, situated on approximately 4.15 acres.  The two year lease extension commenced on July 1, 2012 and the base rent was reduced $4,000 per month to $11,000 per month.  All other terms and conditions of the building lease remain in effect.