Amerityre is a Consumer Products & Services/Automotive Services company based in Boulder City, Nevada. Amerityre's investors include Vanguard Group, Waj Enterprises, Cumulus Investors, Catalyst Investors and HSBC.
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Sep 19, 2022
09/19/2022 | 02:30pm EDT Message : For the fiscal year ended June 30, 2022 OR For the transition period fromto Commission file number000-50053 Nevada incorporation or organization) Securities registered pursuant to Section12(b) of the Exchange Act: Title of each class N/A Securities registered pursuant to Section12(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 19, 2022 there were 75,787,868 shares of common stock of the Registrant outstanding. As of December 31, 2021, the Registrant's most recent second quarter, there were 41,492,787 shares of common stock of the Registrant held by non-affiliates outstanding with a market value $2,074,639 (based upon the closing price of $0.05 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 TABLE OF CONTENTS 2022 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 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 Amerityre incorporated as a Nevada corporation on January 30, 1995. Amerityre engages in the development, manufacture, and sale of solid 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 competitive 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 2022 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: ● Custom application 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 North American customers as international sales are adversely affected by high freight costs and more recently a strong dollar that creates an unfavorable exchange rate versus other currencies. 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 larger tires, including golf cart, personnel carrier and baggage cart tires, reached record levels during the year ended June 30, 2022. Our results were achieved despite the headwinds of higher material costs, supply chain disruptions, and adverse fiscal policies introduced by the government to fight inflation 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 continue to increase, resulting in strong record level sales revenues in Q4 of fiscal year 2022 and for the entire fiscal year 2022. 5 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. Our Elastothane® 500 material, a lighter density formulation than our standard polyurethane elastomer, continues to be well received by the agricultural applications market. Common applications for this formulation are baggage carts, personnel carriers, stock chasers, and lawn mowers, applications where enhanced abrasion resistance and increased weight bearing capacity is required. 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 initiatives to develop joint products with OEM partners is key to long-term success in this market segment. Amerityre offers elastomer-based products for the agricultural tire market, such as flat-free pivot tires used in irrigation systems, seeder tires, and hay baler tires. As farm incomes have improved during fiscal year 2022 due to higher agricultural commodity pricing, we have seen higher sales of these agricultural tires. However, we continue to believe that the market opportunity in this segment is substantial, and we continue to pursue partnerships to take advantage of joint product development and marketing opportunities in these market segments. 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. During Q4 of the year ended June 30, 2022, the availability of chemical raw materials improved, and material pricing stabilized. Since our chemical raw materials are mainly sourced domestically, we have been able to avoid many of the supply chain problems that currently plague other manufacturers. We have been able to reduce our quoted lead times for tire shipments to our standard of 2 weeks or less. While availability of materials has improved, we expect the costs for these materials to continue to increase, as general inflation in the US economy impacts all of our costs. 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. A significant increase in sales of our 18 x 8.50 tire assemblies in the year ended June 30, 2022 has resulted in the requirement for more 12" x 7" rim shipments from our Chinese supplier. We continue to be impacted by the tariffs on Chinese goods, and freight costs are still high, although we expect the freight costs increases to moderate as the overall slowing US economy eases demand for Chinese shipping services. However, our future business plan does not assume significant material cost decreases from current levels. 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 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 our tires are manufactured at our Boulder City, Nevada facility. Due to increased demand for our products we have been running overtime shifts. We expect this level of overtime to decrease in fiscal year 2023 if the US economy slows as forecasted. During fiscal year 2022 we upgraded the electronic control systems of our 3 polyurethane pouring machines. Our major capital investment for fiscal year 2023 will likely include the refurbishment of our two production carousel systems. This investment will increase the manufacturing reliability of these machines. 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. 6 Sales, Marketing and Distribution Amerityre utilizes independent manufacturer representatives with tire industry experience to promote and sell our products. 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, which was originally designed to be a marketing and educational tool for current and potential customers. However, direct sales through our website continues to grow. 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 27% of our sales for fiscal year ended June 30, 2022, and 28% for the fiscal year ended June 30, 2021. We expect sales with this customer to continue to remain strong as their business is forecast to continue to grow in fiscal year 2023. Our customers include OEMs of lawn and garden, agricultural, and mobility, and outdoor power equipment, as well as regional tire distributors, retail cooperatives, agricultural tire distributors, and retailers of lawn and garden tires, bicycle tires and hand truck tires. Our brand awareness among consumers grows as we enlarge our customer base and engage new OEMs and distributors. 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. 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 for their customers when making the buying decision. Despite the presence of larger competitors, we believe that the performance of our superior proprietary formulations gives 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. We expect spending in the agricultural space to increase during fiscal year 2023, although this spend might be tempered if the US economy slows as expected, we continue to pursue partnerships with OEMs in the agricultural equipment market space to promote our products and increase our agricultural tire sales. 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®. 7 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 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 14, 2022, we had 16 full-time employees and 1 part time employee, including 4 salaried and 13 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 for current customers and development of new formulations to address an identified need, in our product portfolio. 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. Less profitable, or more risky projects are put on hold and are revisited at a later date when sufficient resources are available. All research and development expenses of the Company, including both internal and external expenses, were $101,817 and $102,265, for fiscal years 2022 and 2021, respectively. 9 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. 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. During the past 2 years we have evaluated and increased our product pricing, most recently in May 2022, 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 the inflationary pressures in the United States and elsewhere continue, we could experience reduced margins and lose future business. The current inflationary pressures may adversely affect our margins particularly since we have lacked the capital to accumulate material inventory. Although we have blanket order with some of our customers the duration on fixed pricing is limited, often to three months, due to increasing price risk on our materials. This customer pricing pressure may also result in the loss of contracts and/or future business. Finally, we are experiencing rising labor costs which may further tighten margins. Additionally, given our location next to California that recently enacted legislation requiring fast food locations to pay hourly employees at least $22 per hour and beginning in 2024 with mandatory inflationary increases even capped at 3.5% per year, we may see pressure on our wages to hourly employees as well as other labor cost increases. The effects of Russia's invasion of Ukraine on the capital markets and the economy is uncertain, we may have to deal with a recessionary economy and economic uncertainty including possible adverse effects upon the capital markets. While the effects of Russia's invasion of Ukraine and the resulting international sanctions are uncertain, they have already had an immediate effect on the global and United States economy by causing, among other things, increased inflation and substantial increases in the prices of oil, gas and other commodities. The conflict has created increased uncertainty in the capital markets with declines in leading market indexes. The duration of this conflict and its impacts are uncertain but may contribute to a likely recession. If we incur material losses due to a weakening economy or other factors, we may encounter difficulty in raising capital to meet our capital expenditure or 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 regarding the strength of the world economy in the coming year. 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. 10 Table of Contents 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 are subject to a variety of risks including the recent weakness that is adversely affecting smaller companies like us, such as 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. Our results of operations have been and may in the future be adversely impacted by anotherCOVID-19 pandemic. The COVID-19 pandemic resulted in significant volatility in the U.S. and global economies and led to a dramatic reduction in economic activity worldwide. We continue to experience adverse supply chain issues which are attributable to COVID-19. During the pandemic Amerityre continued normal operations as an essential business. Due to COVID-19, we have sustained price increases from our suppliers which have reduced our gross profit margins, although we seemingly have avoided issues. 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 supply chain shortages. We cannot predict whether new strains of the virus pose the risk of future shutdowns, which could hinder our ability to manufacture and sell our products and materially adversely affect our results of operations. 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. 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 recovered, current financial market conditions and US government fiscal policy has begun to adversely affect the economy, and it appears the economy is heading for an extended slowdown as the US Federal Reserve raises market interest rates to fight inflation. Further, while market conditions in the agricultural commodity markets have improved over the past year, 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 because 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. 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. 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. Several 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 can 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. 11 Table of Contents 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. 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. 12 Table of Contents 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: ● 13 Table of Contents 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 have recently resulted 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. Chinese tariffs have resulted in an increase in our cost of our imported components. 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. 14 Table of Contents 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. 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. Additionally, in November 2020, California enacted the California Privacy Rights Act of 2020 (the "CPRA"), which amends and expands the scope of the CCPA, while introducing new privacy protections that extend beyond those included in the CCPA and its implementing regulations. The CCPA, as amended and expanded by the CPRA, is one of the most prescriptive general privacy law in the United States and may lead to similar laws being enacted in other U.S. states or at the federal level. Most of the provisions of the CPRA become fully operative beginning on January 1, 2023. 15 Table of Contents 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. As to Nevada, as of October 1, 2021, Nevada's amended privacy law imposes additional obligations on qualifying "data brokers" and permits consumers to opt out of a broader range of sales of their personal information. The Nevada act applies to any person whose primary business is "purchasing covered information" about Nevada residents "with whom the person does not have a direct relationship" if the information is purchased "from operators or other data brokers and making sales of such covered information." Qualifying data brokers must establish a designated request address through which a Nevada consumer can ask to opt out of the sale of their covered information. In summary, Nevada consumers now have a broad right to opt out whenever a qualifying "operator" or "data broker" makes covered information available in exchange for money. This aligns Nevada's opt-out right more closely with similar consumer privacy rights in Colorado and Virginia. At least 35 states and the District of Columbia in 2022 introduced or considered almost 200 consumer privacy bills. More and more states may continue to enact similar laws. Proposed federal legislation, like the American Data Privacy and Protection Act, will likely continue to be debated and, at some point, may be enacted in some form. As to other states, 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 Section 6(3) of a Connecticut statute signed May 10, 2022, states a data controller shall "establish, implement and maintain reasonable administrative, technical and physical data security practices to protect the confidentiality, integrity and accessibility of personal data appropriate to the volume and nature of the personal data at issue." The effective date for that law is July 1, 2023. Utah's Consumer Privacy Act provides consumers the right to know what personal data a business collects, how the business uses the personal data, and whether the business sells the personal data. The effective date is December 31, 2023. Additionally, Maine recently enacted the Data Collection Protection Act, creating the Maine Data Collection Protection Act, which prohibits data collectors from collecting and aggregating, selling, or using specific types of public documents or information. 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. 16 Table of Contents 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: • • 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 pre
Amerityre Frequently Asked Questions (FAQ)
When was Amerityre founded?
Amerityre was founded in 1995.
Where is Amerityre's headquarters?
Amerityre's headquarters is located at 1501 Industrial Road, Boulder City.
What is Amerityre's latest funding round?
Amerityre's latest funding round is Unattributed VC.
How much did Amerityre raise?
Amerityre raised a total of $3.87M.
Who are the investors of Amerityre?
Investors of Amerityre include Waj Enterprises, HSBC, Catalyst Investors, Vanguard Group and Cumulus Media Partners.
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