10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: December 31, 2021

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

For the transition period from ____________________ to ____________________.

Commission file number: 000-50053

AMERITYRE CORPORATION

(Exact name of small business issuer as specified in its charter)

NEVADA	87-0535207
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1501 INDUSTRIAL ROAD, BOULDER CITY, NEVADA	89005
(Address of principal executive offices)	(Zip Code)

(702) 293-1930

(Issuer’s telephone number)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), 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 large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of Registrant’s Common Stock as of February 9, 2022: 74,667,868

TABLE OF CONTENTS

		Page
PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	19
SIGNATURES		20

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMERITYRE CORPORATION

Balance Sheets

	December 31, 2021			June 30, 2021
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	542,857		$	516,192
Accounts receivable		292,161			728,315
Current inventory - net		905,562			659,333
Prepaid and other current assets		149,144			94,483
Total Current Assets		1,889,724			1,998,323
RIGHT TO USE LEASE ASSETS, OPERATING, NET		466,104			544,070
PROPERTY AND EQUIPMENT
Molds and models		583,611			583,611
Equipment		3,094,067			2,910,018
Furniture and fixtures		73,423			73,423
Software		233,528			233,528
Less - accumulated depreciation		(3,719,968	)		(3,690,515	)
Property and Equipment - net		264,661			110,065
OTHER ASSETS
Patents and trademarks - net		66,221			75,977
Non-current inventory		185,672			163,289
Deposits		11,000			11,000
Total Other Assets		262,893			250,266
TOTAL ASSETS	$	2,883,382		$	2,902,724
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	681,427		$	767,193
Current portion of long-term debt		2,000			2,000
Current portion of lease liability		148,500			147,600
Deferred revenue		20,124			25,892
Total Current Liabilities		852,051			942,685
Long-term debt		60,878			61,326
Long-term lease liability		225,900			300,600
TOTAL LIABILITIES		1,138,829			1,304,611
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common Stock: 100,000,000 shares authorized of $0.001 par value, 73,047,868 and 74,667,868 shares issued and outstanding, respectively		74,668			73,048
Additional paid-in capital		62,866,097			62,805,404
Accumulated deficit		(61,196,212	)		(61,280,339	)
Total Stockholders’ Equity		1,744,553			1,598,113
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,883,382		$	2,902,724

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

3

AMERITYRE CORPORATION

Statements of Operations

(Unaudited)

	For the Three Months Ended December 31,					For the Six Months Ended December 31,
	2021		2020			2021		2020
NET SALES	$	1,453,499	$	1,204,990		$	2,849,113	$	2,256,276
COST OF SALES		1,123,434		903,543			2,134,276		1,611,109
GROSS PROFIT		330,065		301,447			714,837		645,167
EXPENSES
Research and development		24,399		30,507			45,966		50,978
Sales and marketing		74,048		51,102			142,421		110,902
General and administrative		213,392		186,014			446,240		396,500
Total Expenses		311,839		267,623			634,627		558,380
INCOME FROM OPERATIONS		18,226		33,824			80,210		86,787
OTHER INCOME (EXPENSE)
Interest income		294		423			660		841
Gain on debt extinguishment		-		149,570			-		149,570
Loss on asset disposal		-		(17,225	)		-		(20,078	)
Other income		507		10,260			3,257		13,515
Total Other Income, net		801		143,028			3,917		143,848
NET INCOME	$	19,027	$	176,852		$	84,127	$	230,635
BASIC AND DILUTED INCOME PER SHARE	$	0.00	$	0.00		$	0.00	$	0.00
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		73,452,868		70,566,890			73,250,368		70,369,879

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

4

AMERITYRE CORPORATION

Statements of Stockholders’ Equity

(Unaudited)

	Common Stock				Additional Paid in		Stock			Accumulated
	Shares		Amount		Capital		Payable			Deficit			Total
Balance, June 30, 2020		70,172,868	$	70,173	$	62,719,473	$	-		$	(61,538,675	)	$	1,250,971
Stock option based compensation expense – options		-		-		-		12,323			-			12,323
Net income for the quarter		-		-		-		-			53,783			53,783
Balance, September 30, 2020		70,172,868		70,173		62,719,473		12,323			(61,484,892	)		1,317,077
Stock option based compensation expense – options		-		-		-		(12,323	)		-			(12,323	)
Stock based compensation expense for employee and Board of Director service		1,250,000		1,250		22,560		-			-			23,810
Net income for the quarter		-		-		-		-			176,852			176,852
Balance, December 31, 2020		71,422,868		71,423		62,742,033		-			(61,308,040	)		1,505,416
Stock option based compensation expense – options		-		-		-		31,590			-			31,590
Net income for the quarter		-		-		-		-			80,651			80,651
Balance, March 31, 2021		71,422,868		71,423		62,742,033		31,590			(61,227,389	)		1,617,657
Stock option based compensation expense – options		-		-		-		33,406			-			33,406
Stock based compensation expense for employee and Board of Director service		1,625,000		1,625		63,371		(64,996	)		-			-
Net loss for the quarter		-		-		-		-			(52,950	)		(52,950	)
Balance, June 30, 2021		73,047,868		73,048		62,805,404		-			(61,280,339	)		1,598,113
Stock based compensation expense for employee and Board of Director service		-		-		-		33,156			-			33,156
Net income for the quarter		-		-		-		-			65,100			65,100
Balance, September 30, 2021		73,047,868	$	73,048	$	62,805,404	$	33,156		$	(61,215,239	)	$	1,696,369
Stock based compensation expense for employee and Board of Director service		1,620,000		1,620		60,693		(33,156	)		-			29,157
Net income for the quarter		-		-		-		-			19,027			19,027
Balance, December 31, 2021		74,667,868	$	74,668	$	62,866,097	$	-		$	(61,196,212	)	$	1,744,553

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

5

AMERITYRE CORPORATION

Statements of Cash Flows

(Unaudited)

	For the Six Months Ended December 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	84,127		$	230,635
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization expense		119,925			108,161
Stock based compensation		62,313			23,810
Gain on debt extinguishment		-			(149,570	)
Loss on asset disposal		-			20,078
Changes in operating assets and liabilities:
Accounts receivable		436,154			10,060
Prepaid and other current assets		(90,988	)		21,195
Inventory and any change in inventory reserve		(268,612	)		(42,890	)
Accounts payable and accrued expenses		(85,766	)		(166,270	)
Deferred revenue		(5,768	)		(11,351	)
Lease liability payable, operating lease		(73,800	)		(72,900	)
Net Cash Provided (Used) by Operating Activities		177,585			(29,042	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(147,722	)		-
Cash paid for leasehold improvements of an operating lease		(2,750	)		(10,785	)
Net Cash Used by Investing Activities		(150,472	)		(10,785	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable		(448	)		(315	)
Net Cash Used by Financing Activities		(448	)		(315	)
NET INCREASE (DECREASE) IN CASH		26,665			(40,142	)
CASH AT BEGINNING OF PERIOD		516,192			666,756
CASH AT END OF PERIOD	$	542,857		$	626,614
NON-CASH FINANCE ACTIVITIES
Interest paid	$	-		$	776
Income taxes paid	$	-		$	-
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
Write off of fully depreciated and disposed fixed assets	$	-		$	124,287
Use of store inventory, capitalized as fixed asset	$	36,327		$	6,600

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

6

AMERITYRE CORPORATION

Notes to the Unaudited Financial Statements

December 31, 2021

NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. We believe the disclosures and information presented are adequate to make the information not misleading. These interim condensed financial statements should be read in conjunction with our most recent audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the “2021 Annual Report”). Operating results for the fiscal quarter ended December 31, 2021 are not necessarily indicative of the results that may be expected for the current fiscal year ending June 30, 2022.

COVID-19 Update

Despite our revenue gains the past 2 quarters, the COVID-19 pandemic affected the Company’s overall financial results for the three and six months ended December 31, 2021. We continue to experience supply chain delays and increased costs from our raw material suppliers, many which are being attributed to COVID-19 effects in the marketplace. This has resulted in downward pressure on our Gross Profit margins. We continue to see strong demand for our products from our customers, and we continue to be diligent in minimizing COVID-19 exposure risk in our facility. We have implemented price increases on our tire products where possible to reduce the negative impact of increasing costs.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies disclosed herein have not changed since our audited financial statements and notes thereto included in our June 30, 2021 Annual Report on Form 10-K, except as noted below.

Revenue Recognition

The majority of our revenue is derived from short-term sales contracts. We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”.

Revenue for our products is recognized at the time in which our performance obligation is satisfied which we have defined as “control” of the product by the customer. “Control” is defined as a customer having “rights/obligations of physical control over the product or has the rights and intention to control the product.” Based on the terms of our contracts, a customer’s “control” is based on analysis of the following: (i) when a customer arranges shipment of product themselves, and once the product has left our dock, Amerityre Corporation (the “Company” or “Amerityre”), recognizes revenue for the product. In effect by arranging their own freight, the customer is “taking control” of the product when it leaves our warehouse; or (ii) when a customer does not arrange shipment of product themselves, we cannot recognize revenue until it is delivered and the customer takes “control” of the product. This establishes a “deferred revenue” event until such time as delivery of the product has been completed and we have proof from the shipper of the delivery (and change in control).

Deferred revenue was $20,124, inclusive of $2,294 of shipping and handling revenue (see below), as of December 31, 2021. Deferred revenue was $841, inclusive of $122 of shipping and handling revenue (see below), as of December 31, 2020.

Shipping and Handling

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

The result of this accounting is a deferral of $2,294 as of December 31, 2021 and $122 as of December 31, 2020.

7

AMERITYRE CORPORATION

Notes to the Unaudited Financial Statements

December 31, 2021

Basic and Fully Diluted Net Income (Loss) Per Share

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

Our outstanding stock options have been excluded from the basic and fully diluted net loss per share calculation. We excluded 0 and 1,030,000 common stock equivalents for the periods ended December 31, 2021 and 2020, respectively, because they are anti-dilutive. All options expired as of December 31, 2021.

Recent Accounting Pronouncements

Other recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC, did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.

NOTE 3 – INVENTORY

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

	December 31, 2021			June 30, 2021
	(Unaudited)
Raw Materials	$	460,164		$	416,709
Finished Goods		743,747			525,565
Inventory reserve		(112,677	)		(119,652	)
Inventory – net (Current and long term)	$	1,091,234			822,622

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

The Company critically reviews all slow-moving inventory to determine if it is defective or obsolete. If not defective or obsolete we presented these items as non-current inventory, although all inventory is ready and available for immediate sale. Finished good inventory levels were higher on December 31, 2021 due to the timing of the shipment of a large customer order. This order was expected to ship in mid-December but was delayed until early January 2022. We continue to maintain higher than normal raw material inventories as we execute our strategy of strategic raw material purchases when they are available.

NOTE 4 – RIGHT TO USE LEASE ASSETS

Based on our lease accounting policy, we have identified the following operating leases. As of December 31, 2021, we have no financing leases:

	December 31, 2021			June 30, 2021
	(Unaudited)
Facility lease	$	374,400		$	448,200
Leasehold improvements related to our facility		289,604			286,854
Accumulated amortization – leasehold improvements		(197,900	)		(190,984	)
Right to use leased assets, operating, net	$	466,104		$	544,070

In March 2019 we negotiated a five-year extension of the lease for our executive office and manufacturing facility located at 1501 Industrial Road, Boulder City, Nevada. The property consists of a 49,200 square foot building. We currently occupy all 49,200 square feet, inclusive of approximately 5,500 square feet of office space, situated on approximately 4.15 acres. Our remaining liability under this agreement is $374,400, payable at amounts ranging from $12,450 to $12,600 a month until June 30, 2024.

8

AMERITYRE CORPORATION

Notes to the Unaudited Financial Statements

December 31, 2021

NOTE 5 – DEBT

A former board member, Silas O. Kines, was the principal owner of Forklift Tire of Florida and K-2 Industrial Tire, Inc. In accordance with the Commission Agreement with Forklift Tire of Florida, dated February 2, 2011, between Amerityre Corporation and K-2 Industrial Tire, Inc., K-2 is due a five percent (5%) commission on all forklift tire sales. In exchange for the forklift models transferred to Amerityre under that agreement, the first $96,000 in commission payments will be used to extinguish the long-term liability recorded on the transaction. As of December 31, 2021, $2,000 and $60,878 (June 30, 2021, $2,000 and $61,326) were recorded for the current and long-term portion, respectively, of the related liability.

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

NOTE 6 – STOCK OPTIONS AND WARRANTS

On July 22, 2020, the Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”) which contains provisions for up to 5,000,000 stock-based instruments to be granted to employees, consultants and directors.

On October 26, 2021, the Board of Directors adopted the 2022 Equity Incentive Plan (the “2022 Plan”) which contains provisions for up to 10,000,000 stock-based instruments to be granted to employees, consultants and directors.

Effective September 24, 2020, the Company filed a Certificate of Withdrawal of the Certificate of Designation related to the Company’s 2013 Series Convertible Preferred Stock. In doing so, the 2,000,000 shares of preferred stock previously designated as 2013 Series Convertible Preferred Stock returned to the status of authorized and unissued shares of “blank check” preferred stock, and as a result we now have a total of 5,000,000 shares of preferred stock under our Articles of Incorporation which may be designated in one or more series with such relative rights, preferences and limitations as the Board of Directors may determine. The Company may file one or more new designations authorizing the issuance of preferred shares should this be needed in the future as may be determined by the Board of Directors.

All previously granted stock options expired as of December 31, 2021; no stock options have been granted as of December 31, 2021 or thus far in fiscal year 2022.

A summary of the status of our outstanding stock options as of December 31, 2021 and June 30, 2021 and changes during the periods then ended is presented below:

	December 31, 2021								June 30, 2021
				Weight Average			Intrinsic					Weight Average			Intrinsic
	Shares			Exercise Price			Value		Shares			Exercise Price			Value
Outstanding beginning of period		1,030,000		$	0.12					2,870,000		$	0.12
Granted		-		$	0.00					-		$	0.00
Expired/Cancelled		(1,030,000	)	$	(0.12	)				(1,840,000	)	$	(0.12	)
Exercised		-		$	0.00					-		$	0.00
Outstanding end of period		-		$	0. 00		$	-		1,030,000		$	0.12		$	-
Exercisable		-		$	0. 00		$	-		1,030,000		$	0.12		$	-

9

AMERITYRE CORPORATION

Notes to the Unaudited Financial Statements

December 31, 2021

NOTE 7 – SUBSEQUENT EVENTS

Effective January 1, 2022, the Company renewed the Chief Executive Officer’s Employment Agreement. The new Agreement extends his term of employment to December 31, 2022. Inclusive in this new Agreement is a stock award of 1.68 million shares of the Company’s common stock vesting ratably over 12 months (January 2022 – December 2022), valued at a fixed rate of $0.049 per share, the average price per share of the Company’s common stock for the period December 27, 2021 to December 31, 2021.

On January 1, 2022, 60,000 shares of common stock were granted to the Company’s Chief Financial Officer as part of her employment renewal. These shares of the Company’s common stock vest ratably over 12 months (January 2022 – December 2022), and are valued at a fixed rate of $0.049 per share, the average price per share of the Company’s common stock for the period December 27, 2021 to December 31, 2021.

10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis section contains 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 “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021, 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 and polyurethane elastomer 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 (“OEMs”) 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, lawn/garden tires, golf car tires, and light industrial vehicle tires.

Despite the ongoing 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 second quarter 2022 were 32.3% higher than the sales level in fiscal second quarter 2021. We continue to see the strong sales trends that we saw during fiscal year 2021 as our current customer base is experiencing strong sales and our domestically produced tires are attractive to those new customers looking for an alternative source for their tires

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 outstanding demand in the marketplace. We expect this trend to continue 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 opportunity, 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, and consequently we have decided not to devote 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, which may lead to new revenue sources in the future.

Light Density Elastomer Tires – Demand for our light density elastomer formulation (Elastothane^TM 500) is higher in applications requiring greater abrasion resistance and load bearing capability than our polyurethane foam tires. Lawn and garden tire applications continue to drive increased sales of this formulation, although we have seen some custom tire applications for this formulation as well. We expect Agricultural tires sales to continue to increase in the coming quarters as farmers continue to see higher levels of disposable income. However, economic challenges such as raw material supply shortages could limit anticipated benefits or our ability to capitalize on them. We continue to approach OEMs and large distributors about promoting and utilizing our tires for specific targeted applications, and several are evaluating sample tires.

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.

11

A major component of our strategic operating plan is to establish a partnership or other type of business combination with a larger OEM or tire manufacturer who would have a larger distribution channel as well as financial resources to fully leverage our current tire portfolio as well as new products that can be developed using our formulations. We continue to pursue opportunities with larger entities that we believe may help us maximize the potential of our intellectual property and the overall value of the business.

We continue to manage supply chain issues and increases in raw material and operating costs, which continue to pressure our Gross Profit Margins. In January 2022 we implemented another price increase on our tire assemblies to mitigate the effects of these cost increases. However, as evidenced by our lower Gross Margins for the recent quarter, we are slightly “behind the cost curve” as our previous price increases were not successful in offsetting all cost increases during the Fiscal 2022 second quarter. We expect that our newest price increase will help to improve our Gross Margins and we will continue to closely manage the cost drivers of our business and take appropriate corrective actions, including further price increases if warranted. However, there can be no assurance that any corrective measures we are undertaking now or that we may attempt in the future will improve our Gross Margins or otherwise achieve their intended purpose, including due to economic conditions and other factors which are beyond our control.

Our sales growth over the past year has been very strong. However, it is unclear if the environment of rising costs and the corresponding higher sales prices will adversely affect demand for our products moving forward. We expect raw material availability to continue to be an issue in the upcoming quarters due to ongoing supply chain issues. While we continue to enjoy a strong backlog of business, we may be restricted as to how much product we can produce and sell if raw material is not available on a timely basis or at reasonable costs. We continue to work with our suppliers to ensure that negative supply impacts are minimized to the extent practicable, although in some cases this may result in Amerityre incurring higher raw material costs.

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

Factors Affecting Results of Operations

Our operating expenses consisted primarily of the following:

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

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

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

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

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

•  Stock based compensation expense related to stock and stock option awards issued to 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.

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Results of Operations

Our management reviews and analyzes several key performance indicators 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 following summary table presents a comparison of our results of operations for the fiscal quarters ended December 31, 2021 and 2020 with respect to certain key financial measures. The comparisons illustrated in the table are discussed in greater detail below.

	For the Three Months Ended December 31,									For the Six Months Ended December 31,
	(in 000’s)						Change			(in 000’s)						Change
	2021			2020			2021 vs. 2020			2021			2020			2021 vs. 2020
Net revenues	$	1,453		$	1,205			20.6	%	$	2,849		$	2,256			26.3	%
Cost of revenues		(1,123	)		(904	)		24.4	%		(2,134	)		(1,611	)		32.5	%
Gross profit		330			301			9.6	%		715			645			10.9	%
Research & Development		(24	)		(31	)		(22.6	%)		(46	)		(51	)		(9.8	%)
Sales and Marketing		(74	)		(51	)		45.1	%		(142	)		(111	)		27.9	%
General and Administrative		(213	)		(186	)		13.9	%		(445	)		(396	) )		12.4	%
Other income (expense)		1			143			(99.3	%)		4			144			(97.2	%)
Net income	$	20		$	176			(88.6	%)	$	86		$	231			(62.8	%)

Quarter Ended December 31, 2021 Compared to December 31, 2020

Net Revenues. Net revenues of $1,453,499 for the quarter ended December 31, 2021, represents a 20.6% increase over net revenues of $1,204,990 for the same period in 2020. These results exceeded our expectations as we continued to successfully navigate the challenges presented by the COVID-19 pandemic, including limited raw material availability, higher material costs and other supply chain issues. We expect our polyurethane foam products to continue to constitute the majority of our sales going forward. The increase is due to increases in our prices to offset the raw material prices plus increase in demand.

Cost of Revenues. Cost of revenues for the quarter ended December 31, 2021 was $1,123,434 or 77.3% of sales compared to $903,543 or 75.0% of sales for the same period in 2020. We experienced higher raw material costs, particularly chemical feedstocks, during the recent quarter which pressured gross profit margins. Our raw material chemical suppliers have informed us that there will likely be continued price increases in the coming months due to tight raw material supplies as well as continued high market demand. The supply chain issues in procuring material from overseas has caused higher costs and long delays for our steel rims. We expect these headwinds to continue to pressure our Gross Margins throughout the remainder of fiscal year 2022. We have mitigated some of these issues by increasing the sales prices of our tires. However, continuing increases in raw material costs may result in reduced product sales if we are forced to turn away sales because they are at sales price levels that are unprofitable, or if customers refuse to purchase our products at the increased prices.

Gross Profit. Gross profit for the quarter ended December 31, 2021 was $330,065 compared to $301,447 for the same period in 2020. This increase of $28,618 or 9.6% over the same period in 2020, was primarily driven by greater sales volumes. The December 31, 2021 gross profit reflects a 22.7% gross margin for product sales compared to a gross margin on product sales of 25.0% in 2020. Higher raw material costs that were not completely offset by higher sales prices for our tire products reduced our Gross Margins in the recent quarter.

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Research & Development Expenses (R&D). Research and development expenses for the quarter ended December 31, 2021 were $24,399 compared to $30,507 for the same period in 2020. We continue to invest in product formulation and new product development where appropriate to support our business plan.

Sales & Marketing Expenses. Sales and marketing expenses for the quarter ended December 31, 2021 were $74,048 as compared to $51,102 for the same period in 2020. The difference between periods relates to higher sales commissions paid and trade show expenses as the Company attended its first trade show since 2019 in October 2021, when compared to the same three-month period in 2020.

General & Administrative Expenses. General and administrative expenses for the quarter ended December 31, 2021 were $213,392 compared to $186,014 for the same period in 2020, driven by higher compensation costs, bank fees, consulting expense partially offset by lower legal costs.

Other Income (Expense), net. Other income, net, for the quarter ended December 31, 2021 was $801 compared to $143,028 for the same period in 2020. The forgiveness of our loan from the Small Business Administration Paycheck Protection Program (“PPP loan”) was received in November 2020 and accounted for the majority of the gain in the quarter ended December 31, 2020.

Net Income. Net income for the quarter ended December 31, 2021 was $19,027, compared to net income of $176,852 for the same period in 2020. The forgiveness of our PPP loan in the quarter ended December 31, 2020 resulted in a gain of $149,570. Without this one-time gain, the difference in net income between the periods was $27,282, or a 31.3% decrease in net income. The decrease in net income for the period ended December 31, 2021 was also driven by lower Gross Margins due to higher material and operating costs incurred during the quarter

Six Months Ended December 31, 2021 Compared to December 31, 2020

Net Revenues. Net revenues of $2,849,113 for the six-month period ended December 31, 2021, represents a 26.3% increase over net sales of $2,256,276 for the same period in 2020. These results exceeded our expectations as we continued to navigate the challenges presented by the COVID-19 pandemic, including limited raw material availability, higher supply costs and other supply chain issues. We expect our polyurethane foam products to continue to constitute the majority of our sales going forward. The increase is due to increases in our prices to offset the raw material prices plus increase in demand.

Cost of Revenues. Cost of revenues for the six-month period ended December 31, 2021 was $2,134,276 or 74.9% of sales compared to $1,611,109 or 71.4% of sales for the same period in 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 due to a tight supply of available raw materials in the market, as well as increased market demand. The supply chain issues, particularly in procuring material from overseas, has caused higher costs and long delays for our steel rims. We expect these headwinds to continue to pressure our Gross Margins throughout fiscal year 2022. We have mitigated some of these issues by increasing the sales prices of our tires.

Gross Profit. Gross profit for the six-month period ended December 31, 2021 was $714,837 compared to $645,167 for the same period in 2020, an increase of $69,670 or 10.9% over the same period in 2020. The December 31, 2021 gross profit reflects a 25.1% gross margin for product sales compared to a gross margin on product sales of 28.6% in 2020. The current period results were adversely affected by higher raw material prices.

Research & Development Expenses (R&D). Research and development expenses for the six-month period ended December 31, 2021 were $45,966 compared to $50,978 for the same period in 2020. We continue to invest in product formulation and new product development where management deems appropriate to support our business plan.

Sales & Marketing Expenses. Sales and marketing expenses for the six-month period ended December 31, 2021 were $142,421 compared to $110,902 for the same period in 2020. The difference between periods relates to higher sales commissions paid and trade show expenses.

General & Administrative Expenses. General and administrative expenses for the six-month period ended December 31, 2021 were $446,200 compared to $396,500 for the same period in 2020, driven by higher compensation costs, bank fees, consulting expense partially offset by lower legal costs.

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Other Income, net. Other income for the quarter ended December 31, 2021 was $3,917 compared to $143,848 for the same period in 2020. The primary driver of this variance is the forgiveness of our loan from the Small Business Administration Paycheck Protection Program, received in November 2020.

Net Income. Net income for the six-month period ended December 31, 2021 of $84,127 compared to a net income of $230,635 for the same period in 2020, a decrease in net income of $146,508, or 62.8%. Without the effect of the PPP loan forgiveness mentioned earlier, the net income for the six-month period ending December 31, 2020 would be $81,065, and the comparison with the period ending December 31, 2021 would show a net income increase of $3,062, or 3.63% compared to the period ending December 31, 2020.

Liquidity and Capital Resources

Cash Flows

The following table sets forth a summary of our cash flows for the periods below.

	Six Months ended Dec. 31,
	(in 000’s)
	2021			2020
Net cash provided (used) by operating activities	$	178		$	(29	)
Net cash used by investing activities		(150	)		(11	)
Net cash used by financing activities		-			-
Net increase (decrease) in cash during the period	$	28		$	(40	)

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 increased costs and 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 completed its upgrade of its Production pouring systems in September 2021, which was completely paid from cash reserves. The increase in cash provided by operating activities is due to lower levels of Account Receivables compared to the year earlier period.

The major driver in our cash provided by operating activities was the collection of accounts receivable offset by increased costs (and therefore value) of inventory on the balance sheet.

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 December 31, 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 February 9, 2022, our total cash balance was $359,764, none of which is restricted, accounts receivables was $660,321, inventory, net of reserves for slow moving or obsolete inventory, and other current assets was $713,581. Our total indebtedness, specifically which management reviews for cash management, was $1,102,085 and includes $652,662 in accounts payable and accrued expenses, $24,445 in deferred revenue, $2,000 in current portion of long-term debt, $60,878 in long-term debt and $362,100 in total operating lease liability.

We continue to take actions to improve our liquidity and access to capital resources. Management continues to maintain that an equity financing in the current market environment would be too dilutive and not in the best interests of our shareholders. We have been successful in securing a line of credit with our bank.

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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 fiscal year ended June 30, 2021, we have analyzed our cash needs for the next 12 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 a disruption in our markets that causes a 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 variants of COVID-19 may lead to possible resurgences of the virus. This could result in new restrictions on our customers or suppliers located or servicing these affected jurisdictions. Among the adverse consequences caused by the pandemic have been continued supply chain disruptions, resulting in material shortages and delays, as well as increased material costs. 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” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for a description of the material risks that the Company currently faces including 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 February 9, 2022, the Company has approximately 16,937,000 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, positive sales trends and resulting profits, continued demand for our products and those produced by our customers, our intention to seek out and engage in a partnership or other arrangement with one or more OEMs, our ability to successfully manage and respond to supply chain issues and other uncertainties, our sales prospects in light of new products such as the potential development of tires for large industrial and agricultural equipment, price increases in response to increases in raw material costs and the results of such price increases on our gross margins, and the availability of capital and liquidity. All statements other than statements of historical facts contained in this report, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021. In addition, there is a risk that the economic repercussions from COVID-19 and supply chain disruptions may be more severe or prolonged 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. Additionally, there is a risk that our price increases or other challenges we face and actions we take in response may result in lower revenues or the loss of future business from our customers, or that any strategic partnerships or business arrangements do not yield the positive results intended or result in unanticipated adverse consequences, including due to potential friction between the parties. 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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

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

As required by SEC Rule 13a-15(b), an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive and Financial Officers, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this quarterly report to ensure the information required to be disclosed by us in reports is timely recorded, processed, summarized and reported in accordance with the SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

For information regarding risk factors, see “Part I. Item 1A. Risk Factors,” in our 2021 Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

		Incorporated by Reference			Filed or Furnished
Exhibit #	Exhibit Description	Form	Date	Number	Herewith
3.1	Articles of Incorporation of the Company	8-A12G	10/28/02	3.01
3.2	Certificate of Amendment to the Articles of Incorporation of the Company	8-A12G	10/28/02	3.01
3.3	Certificate of Amendment to the Articles of Incorporation	10-Q	2/14/13	3(i)
3.4	Amended and Restated Bylaws of the Company	8-K	12/8/21	3.02
10.1	Employment Agreement between the Company and Michael Sullivan	8-K	1/13/22	10.1
10.2	2022 Equity Incentive Plan				Filed
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				Filed
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				Filed
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				Filed
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				Filed
101 INS	XBRL Instance Document
101 SCH	XBRL Taxonomy Extension Schema Document				Filed
101 CAL	XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document				Filed
101 LAB	XBRL Taxonomy Extension Label Linkbase Document				Filed
101 PRE	XBRL Taxonomy Extension Presentation Linkbase Document				Filed
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

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

Dated: February 11, 2022

AMERITYRE CORPORATION
By:
/s/ Michael F. Sullivan	/s/ Lynda R. Keeton-Cardno
Michael F. Sullivan Chief Executive Officer (Principal Executive Officer)	Lynda R. Keeton-Cardno Chief Financial Officer (Principal Financial and Accounting Officer)

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EX-10.2

EXHIBIT 10.2

AMERITYRE CORPORATION

2022 EQUITY INCENTIVE PLAN

1.    Scope of Plan; Definitions.

(a)    This 2022 Equity Incentive Plan (the “Plan”) is intended to advance the interests of Amerityre Corporation (the “Company”) by enhancing the ability of the Company to attract and retain qualified employees, consultants, Officers, and directors, by creating incentives and rewards for their contributions to the success of the Company. The name of this plan relates to the fiscal year that the plan was approved in, e.g., the 2022 plan was approved in the Company’s 2022 fiscal year. This Plan will provide to (a) Officers and other employees of the Company opportunities to purchase common stock (“Common Stock”) of the Company pursuant to Options granted hereunder which qualify as incentive stock options (“ISOs”) under Section 422(b) of the Internal Revenue Code of 1986 (the “Code”), (b) directors, Officers, employees, and consultants of the Company opportunities to purchase Common Stock in the Company pursuant to options granted hereunder which do not qualify as ISOs (“Non-Qualified Options”); (c) directors, Officers, employees, and consultants of the Company opportunities to receive shares of Common Stock of the Company which normally are subject to restrictions on sale “Restricted Stock”; (d) directors, Officers, employees, and consultants of the Company opportunities to receive grants of stock appreciation rights (“SARs”); and (e) directors, Officers, employees, and consultants of the Company opportunities to receive grants of restricted stock units (“RSUs”). ISOs and Non-Qualified Options are referred to hereafter as “Options”. Options, Restricted Stock and RSUs are sometimes referred to hereafter collectively as “Stock Rights”. Any of the Options and/or Stock Rights may, in the Compensation Committee’s discretion, be issued in tandem to one or more other Options and/or Stock Rights to the extent permitted by law.

(b)    For purposes of the Plan, capitalized words and terms shall have the following meaning:

“Board” means the board of directors of the Company.

“Change of Control” means the occurrence of any of the following events: (i) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction which requires shareholder approval under applicable state law; or (ii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

“Code” has the meaning given to it in Section 1(a).

“Common Stock” has the meaning given to it in Section 1(a).

“Company” has the meaning given to it in Section 1(a).

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“Compensation Committee” means the compensation committee of the Board, if any, which shall consist of two or more members of the Board, each of whom shall be both an “outside director” within the meaning of Section 162(m) of the Code and a “non-employee director” within the meaning of Rule 16b-3. All references in this Plan to the Compensation Committee shall mean the Board when (i) there is no Compensation Committee or (ii) the Board has retained the power to administer this Plan.

“Disability” means “permanent and total disability” as defined in Section 22(e)(3) of the Code or successor statute.

“Disqualifying Disposition” means any disposition (including any sale) of Common Stock underlying an ISO before the later of (i) two years after the date of employee was granted the ISO or (ii) one year after the date the employee acquired Common Stock by exercising the ISO.

“Exchange Act” means the Securities Exchange Act of 1934.

“Fair Market Value” shall be determined as of the last Trading Day before the date a Stock Right is granted and shall mean:

(1)    the closing price on the principal market if the Common Stock is listed on a national securities exchange or the OTCQB or OTCQX.

(2)    if the Company’s shares are not listed on a national securities exchange or the OTCQB or OTCQX, then the closing price if reported or the average bid and asked price for the Company’s shares as quoted by Pink Open Market or whatever that market is called;

(3)    if there are no prices available under clauses (1) or (2), then Fair Market Value shall be based upon the average closing bid and asked price as determined following a polling of all dealers making a market in the Company’s Common Stock; or

(4)    if there is no regularly established trading market for the Company’s Common Stock or if the Company’s Common Stock is listed, quoted, or reported under clauses (1) or (2) but it trades sporadically rather than every day, the Fair Market Value shall be established by the Board or the Compensation Committee taking into consideration all relevant factors including the most recent price at which the Company’s Common Stock was sold.

“ISO” has the meaning given to it in Section 1(a).

“Non-Qualified Options” has the meaning given to it in Section 1(a).

“Officer” means a person who is an executive officer of the Company and is required to file ownership reports under Section 16(a) of the Exchange Act.

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“Option” has the meaning given to it in Section 1(a).

“Plan” has the meaning given to it in Section 1(a).

“Restricted Stock” has the meaning given to it in Section 1(a).

“RSU” has the meaning given to it in Section 1(a).

“SAR” has the meaning given to it in Section 1(a).

“Securities Act” means the Securities Act of 1933.

“Stock Rights” has the meaning given to it in Section 1(a).

“Trading Day” means a day on which the New York Stock Exchange is open for business.

This Plan is intended to comply in all respects with Rule 16b-3 (“Rule 16b-3”) and its successor rules as promulgated under Section 16(b) of the Exchange Act for participants who are subject to Section 16 of the Exchange Act. To the extent any provision of the Plan or action by the Plan administrators fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Plan administrators. Provided, however, such exercise of discretion by the Plan administrators shall not interfere with the contract rights of any grantee. In the event that any interpretation or construction of the Plan is required, it shall be interpreted and construed in order to ensure, to the maximum extent permissible by law, that such grantee does not violate the short-swing profit provisions of Section 16(b) of the Exchange Act and that any exemption available under Rule 16b-3 or other rule is available.

2.    Administration of the Plan.

(a)    The Plan may be administered by the entire Board or by the Compensation Committee. Once appointed, the Compensation Committee shall continue to serve until otherwise directed by the Board. A majority of the members of the Compensation Committee shall constitute a quorum, and all determinations of the Compensation Committee shall be made by the majority of its members present at a meeting. Any determination of the Compensation Committee under the Plan may be made without notice or meeting of the Compensation Committee by a writing signed by all of the Compensation Committee members. Subject to ratification of the grant of each Stock Right by the Board (but only if so required by applicable state law), and subject to the terms of the Plan, the Compensation Committee shall have the authority to (i) determine the employees of the Company (from among the class of employees eligible under Section 3 to receive ISOs) to whom ISOs may be granted, and to determine (from among the class of individuals and entities eligible under Section 3 to receive Non-Qualified Options, Restricted Stock, RSUs and SARs) to whom Non-Qualified Options, Restricted Stock, RSUs and SARs may be granted; (ii) determine when Stock Rights may be granted; (iii) determine the exercise prices of Stock Rights other than Restricted Stock and RSUs, which shall not be less than the Fair Market Value; (iv) determine whether each Option granted shall be an ISO or a Non-Qualified Option; (v) determine when Stock Rights shall become exercisable, the duration of the exercise period, and when each Stock Right shall vest; (vi) determine whether restrictions such as repurchase options are to be imposed on shares subject to or issued in connection with Stock Rights, and the nature of such restrictions, if any, and (vii) interpret the Plan and promulgate and rescind rules and regulations relating to it. The interpretation and construction by the Compensation Committee of any provisions of the Plan or of any Stock Right granted under it shall be final, binding, and conclusive unless otherwise determined by the Board. The Compensation Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best.

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No members of the Compensation Committee or the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Stock Right granted under it. No member of the Compensation Committee or the Board shall be liable for any act or omission of any other member of the Compensation Committee or the Board or for any act or omission on his own part, including but not limited to the exercise of any power and discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct.

(b)    The Compensation Committee may select one of its members as its chairman and shall hold meetings at such time and places as it may determine. All references in this Plan to the Compensation Committee shall mean the Board if no Compensation Committee has been appointed. From time to time the Board may increase the size of the Compensation Committee and appoint additional members thereof, remove members (with or without cause), and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Compensation Committee and thereafter directly administer the Plan.

(c)    Stock Rights may be granted to members of the Board, whether such grants are in their capacity as directors, Officers, or consultants. All grants of Stock Rights to members of the Board shall in all other respects be made in accordance with the provisions of this Plan applicable to other eligible persons. Members of the Board who are either (i) eligible for Stock Rights pursuant to the Plan or (ii) have been granted Stock Rights may vote on any matters affecting the administration of the Plan or the grant of any Stock Rights pursuant to the Plan.

(d)    In addition to such other rights of indemnification as anyone may have as a member of the Board, and with respect to administration of the Plan and the granting of Stock Rights under it, each member of the Board and of the Compensation Committee shall be entitled without further act on their part to indemnification from the Company for all expenses (including advances of litigation expenses, the amount of judgment, and the amount of approved settlements made with a view to the curtailment of costs of litigation) reasonably incurred by them in connection with or arising out of any action, suit, or proceeding, including any appeal thereof, with respect to the administration of the Plan or the granting of Stock Rights under it in which they may be involved by reason of their being or having been a member of the Board or the Compensation Committee, whether or not they continues to be such member of the Board or the Compensation Committee at the time of the incurring of such expenses; provided, however, that such indemnity shall be subject to the limitations contained in any indemnification agreement between the Company and the Board member or Officer. The foregoing right of indemnification shall inure to the benefit of the heirs, executors, or administrators of each such member of the Board or the Compensation Committee and shall be in addition to all other rights to which such member of the Board or the Compensation Committee would be entitled to as a matter of law, contract, or otherwise.

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(e)    The Board may delegate the powers to grant Stock Rights to Officers to the extent permitted by the laws of the Company’s state of incorporation.

3.    Eligible Employees and Others. ISOs may be granted to any employee of the Company. Those Officers and directors of the Company who are not employees may not be granted ISOs under the Plan. Subject to compliance with Rule 16b-3 and other applicable securities laws, Non-Qualified Options, Restricted Stock, RSUs, and SARs may be granted to any director (whether or not an employee), Officers, employees, or consultants of the Company. The Compensation Committee may take into consideration a recipient’s individual circumstances in determining whether to grant an ISO, a Non-Qualified Option, Restricted Stock, RSUs, or a SAR. Granting of any Stock Right to any individual or entity shall neither entitle that individual or entity to, nor disqualify him from participation in, any other grant of Stock Rights.

4.    Common Stock. The Common Stock subject to Stock Rights shall be authorized but unissued shares of Common Stock, par value $0.001, or shares of Common Stock reacquired by the Company in any manner, including purchase, forfeiture, or otherwise. The aggregate number of shares of Common Stock which may be issued pursuant to the Plan is 10,000,000 less any Stock Rights previously granted or exercised subject to adjustment as provided in Section 14. Any such shares may be issued under ISOs, Non-Qualified Options, Restricted Stock, RSUs, or SARs, so long as the number of shares so issued does not exceed the limitations in this Section. If any Stock Rights granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, or if the Company shall reacquire any unvested shares, the unpurchased shares subject to such Stock Rights and any unvested shares so reacquired by the Company shall again be available for grants under the Plan.

5.    Granting of Stock Rights.

(a)    The date of grant of a Stock Right under the Plan will be the date specified by the Board or Compensation Committee at the time it grants the Stock Right; provided, however, that such date shall not be prior to the date on which the Board or Compensation Committee acts to approve the grant. The Board or Compensation Committee shall have the right, with the consent of the optionee, to convert an ISO granted under the Plan to a Non-Qualified Option pursuant to Section 17.

(b)    The Board or Compensation Committee shall grant Stock Rights to participants that it, in its sole discretion, selects. Stock Rights shall be granted on such terms as the Board or Compensation Committee shall determine, except that ISOs shall be granted on terms that comply with the Code and regulations thereunder.

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(c)    A SAR entitles the holder to receive, as designated by the Board or Compensation Committee, cash or shares of Common Stock, value equal to (or otherwise based on) the excess of: (a) the Fair Market Value of a specified number of shares of Common Stock at the time of exercise over (b) an exercise price established by the Board or Compensation Committee. The exercise price of each SAR granted under this Plan shall be established by the Compensation Committee or shall be determined by a method established by the Board or Compensation Committee at the time the SAR is granted, provided the exercise price shall not be less than $0.02 per share, subject to equitable adjustment, or such higher price as is established by the Board or Compensation Committee. A SAR shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Board or Compensation Committee. Shares of Common Stock delivered pursuant to the exercise of a SAR shall be subject to such conditions, restrictions, and contingencies as the Board or Compensation Committee may establish in the applicable SAR agreement or document, if any. The Board or Compensation Committee, in its discretion, may impose such conditions, restrictions, and contingencies with respect to shares of Common Stock acquired pursuant to the exercise of each SAR as the Board or Compensation Committee determines to be desirable. A SAR under the Plan shall be subject to such terms and conditions, not inconsistent with the Plan, as the Board or Compensation Committee shall, in its discretion, prescribe. The terms and conditions of any SAR to any grantee shall be reflected in such form of agreement as is determined by the Board or Compensation Committee. A copy of such document, if any, shall be provided to the grantee, and the Board or Compensation Committee may condition the granting of the SAR on the grantee executing such agreement.

(d)    An RSU gives the grantee the right to receive a number of shares of the Company’s Common Stock on applicable vesting or other dates. Delivery of the RSUs may be deferred beyond vesting as determined by the Board or Compensation Committee. RSUs shall be evidenced by an RSU agreement in the form determined by the Board or Compensation Committee. With respect to an RSU that becomes non-forfeitable due to the lapse of time, the Compensation Committee shall prescribe in the RSU agreement the vesting period. With respect to the granting of an RSU that becomes non-forfeitable due to the satisfaction of certain pre-established performance-based objectives imposed by the Board or Compensation Committee, the measurement date of whether such performance-based objectives have been satisfied shall be a date no earlier than the first anniversary of the date of the RSU. A recipient who is granted an RSU shall possess no incidents of ownership with respect to such underlying Common Stock, although the RSU agreement may provide for payments in lieu of dividends to such grantee.

(e)    Notwithstanding any provision of this Plan, the Board or Compensation Committee may impose conditions and restrictions on any grant of Stock Rights including forfeiture of vested Options, cancellation of Common Stock acquired in connection with any Stock Right, and forfeiture of profits.

(f)    The Options and SARs shall not be exercisable for a period of more than 10 years from the date of grant.

6.    Sale of Shares. The shares underlying Stock Rights granted to any Officer, director, or a beneficial owner of 10% or more of the Company’s securities registered under Section 12 of the Exchange Act shall not be sold, assigned, or transferred by the grantee until at least six months elapse from the date of the grant thereof.

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7.    ISO Minimum Option Price and Other Limitations.

(a)    For purposes of determining the exercise price, the date of the grant shall be the later of (i) the date of approval by the Board or Compensation Committee or the Board, or (ii) for ISOs, the date the recipient becomes an employee of the Company. In the case of an ISO to be granted to an employee owning Common Stock which represents more than 10% of the total combined voting power of all classes of stock of the Company, the price per share shall not be less than 110% of the Fair Market Value per share of Common Stock on the date of grant and such ISO shall not be exercisable after the expiration of five years from the date of grant.

(b)    In no event shall the aggregate Fair Market Value (determined at the time an ISO is granted) of Common Stock for which ISOs granted to any employee are exercisable for the first time by such employee during any calendar year (under all stock option plans of the Company) exceed $100,000.

8.    Duration of Stock Rights. Subject to earlier termination as provided in Sections 3, 5, 9, 10 and 11, each Option and SAR shall expire on the date specified in the original instrument granting such Stock Right (except with respect to any part of an ISO that is converted into a Non-Qualified Option pursuant to Section 17), provided, however, that such instrument must comply with Section 422 of the Code with regard to ISOs and Rule 16b-3 with regard to all Stock Rights granted pursuant to the Plan to Officers, directors, and 10% shareholders of the Company.

9.    Exercise of Options and SARs; Vesting of Stock Rights. Subject to the provisions of Sections 3 and 9 through 13, each Option and SAR granted under the Plan shall be exercisable as follows:

(a)    The Options and SARs shall either be fully vested and exercisable from the date of grant or shall vest and become exercisable in such installments as the Board or Compensation Committee may specify.

(b)    Once an installment becomes exercisable it shall remain exercisable until expiration or termination of the Option and SAR, unless otherwise specified by the Board or Compensation Committee.

(c)    Each Option and SAR or installment, once it becomes exercisable, may be exercised at any time or from time to time, in whole or in part, for up to the total number of shares with respect to which it is then exercisable.

(d)    The Board or Compensation Committee shall have the right to accelerate the vesting date of any installment of any Stock Right; provided that the Board or Compensation Committee shall not accelerate the exercise date of any installment of any Option granted to any employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Section 17) if such acceleration would violate the annual exercisability limitation contained in Section 422(d) of the Code as described in Section 7(b).

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10.    Termination of Employment. Subject to any greater restrictions or limitations as may be imposed by the Board or Compensation Committee or by a written agreement, if the grantee of a Stock Right ceases to be employed by the Company other than by reason of death or Disability, no further installments of their Stock Right shall vest or become exercisable, and any Options shall terminate as provided for in the grant or on the day 12 months after the day of the termination of his employment (except three months for ISOs), whichever is earlier, but in no event later than on their specified expiration dates. Employment shall be considered as continuing uninterrupted during any bona fide leave of absence (such as those attributable to illness, military obligations, or governmental service) provided that the period of such leave does not exceed 90 days or, if longer, any period during which such optionee’s right to re-employment is guaranteed by statute. A leave of absence with the written approval of the Board shall not be considered an interruption of employment under the Plan, provided that such written approval contractually obligates the Company to continue the employment of the optionee after the approved period of absence. ISOs granted under the Plan shall not be affected by any change of employment within or among the Company so long as the optionee continues to be an employee of the Company.

11.    Death; Disability. Unless otherwise determined by the Board or Compensation Committee or by a written agreement:

(a)    If the holder of an Option or SAR ceases to be employed by the Company by reason of death, any Options or SARs held by the optionee may be exercised to the extent they could have exercised it on the date of their death, by their estate, personal representative or beneficiary who has acquired the Options or SARs by will or by the laws of descent and distribution, at any time prior to the earlier of: (i) the Options’ or SARs specified expiration date or (ii) one year (except three months for an ISO) from the date of death.

(b)    If the holder of an Option or SAR ceases to be employed by the Company, or a director or Officer can no longer perform their duties, by reason of Disability, any Options or SARs held by the optionee may be exercised to the extent they could have exercised it on the date of termination due to Disability until the earlier of (i) the Options’ or SARs’ specified expiration date or (ii) one year from the date of the termination.

12.    Assignment, Transfer or Sale.

(a)    No ISO granted under this Plan shall be assignable or transferable by the grantee except by will or by the laws of descent and distribution, and during the lifetime of the grantee, each ISO shall be exercisable only by him or his guardian or legal representative.

(b)    Except for ISOs, all Stock Rights are transferable subject to compliance with applicable securities laws and Section 6 of this Plan.

13.    Terms and Conditions of Stock Rights. Stock Rights shall be evidenced by instruments (which need not be identical) in such forms as the Board or Compensation Committee may from time to time approve. Such instruments shall conform to the terms and conditions set forth in Sections 5 through 12 hereof and may contain such other provisions as the Board or Compensation Committee deems advisable which are not inconsistent with the Plan. In granting any Stock Rights, the Board or Compensation Committee may specify that Stock Rights shall be subject to the restrictions set forth herein with respect to ISOs, or to such other termination and cancellation provisions as the Board or Compensation Committee may determine. The Board or Compensation Committee may from time-to-time confer authority and responsibility on one or more of its own members and/or one or more Officers of the Company to execute and deliver such instruments. The proper Officers of the Company are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of such instruments.

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14.    Adjustments Upon Certain Events.

(a)    Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Stock Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Stock Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of a Stock Right, as well as the price per share of Common Stock (or cash, as applicable) covered by each such outstanding Option or SAR, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination, or reclassification of Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company or the voluntary cancellation, whether by virtue of a cashless exercise of a derivative security of the Company or otherwise, shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board or Compensation Committee, whose determination in that respect shall be final, binding, and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to a Stock Right. No adjustments shall be made for dividends or other distributions paid in cash or in property other than securities of the Company.

(b)    In the event of the proposed dissolution or liquidation of the Company, the Board or Compensation Committee shall notify each participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, a Stock Right will terminate immediately prior to the consummation of such proposed action.

(c)    In the event of a merger of the Company with or into another corporation, or a Change of Control, each outstanding Stock Right shall be assumed (as defined below) or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Stock Rights, the participants shall fully vest in and have the right to exercise their Stock Rights as to which it would not otherwise be vested or exercisable. If a Stock Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board or Compensation Committee shall notify the participant in writing or electronically that the Stock Right shall be fully vested and exercisable for a period of at least 15 days from the date of such notice, and any Options or SARs shall terminate one minute prior to the closing of the merger or sale of assets.

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For the purposes of this Section 14(c), the Stock Right shall be considered “assumed” if, following the merger or Change of Control, the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Stock Right immediately prior to the merger or Change of Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change of Control by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the merger or Change of Control is not solely common stock of the successor corporation or its parent, the Board or Compensation Committee may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Stock Right, for each share of Common Stock subject to the Stock Right, to be solely common stock of the successor corporation or its parent equal in Fair Market Value to the per share consideration received by holders of Common Stock in the merger or Change of Control.

(d)    Notwithstanding the foregoing, any adjustments made pursuant to Section 14(a), (b) or (c) with respect to ISOs shall be made only after the Board or Compensation Committee, after consulting with counsel for the Company, determines whether such adjustments would constitute a “modification” of such ISOs (as that term is defined in Section 425(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Board or Compensation Committee determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments.

(e)    No fractional shares shall be issued under the Plan and the optionee shall receive from the Company cash in lieu of such fractional shares.

15.    Means of Exercising Stock Rights.

(a)    An Option or SAR (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office address. Such notice shall identify the Stock Right being exercised and specify the number of shares as to which such Stock Right is being exercised, accompanied by full payment of the exercise price therefor (to the extent it is exercisable in cash) either (i) in United States dollars by check or wire transfer; or (ii) at the discretion of the Board or Compensation Committee, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Stock Right; or (iii) at the discretion of the Board or Compensation Committee, by any combination of (i) and (ii) above. If the Board or Compensation Committee exercises its discretion to permit payment of the exercise price of an ISO by means of the methods set forth in clauses (ii) or (iii) of the preceding sentence, such discretion need not be exercised in writing at the time of the grant of the Stock Right in question. The holder of a Stock Right shall not have the rights of a shareholder with respect to the shares covered by his Stock Right until the date of issuance of a stock certificate to him for such shares. Except as expressly provided above in Section 14 with respect to changes in capitalization and stock dividends, no adjustment shall be made for dividends or similar rights for which the record date is before the date such stock certificate is issued.

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(b)    Each notice of exercise shall, unless the shares of Common Stock are covered by a then current registration statement under the Securities Act, contain the holder’s acknowledgment in form and substance satisfactory to the Company that (i) such shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Securities Act), (ii) the holder has been advised and understands that (1) the shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act and are subject to restrictions on transfer and (2) the Company is under no obligation to register the shares under the Securities Act or to take any action which would make available to the holder any exemption from such registration, and (iii) such shares may not be transferred without compliance with all applicable federal and state securities laws. Notwithstanding the above, should the Company be advised by counsel that issuance of shares should be delayed pending registration under federal or state securities laws or the receipt of an opinion that an appropriate exemption therefrom is available, the Company may defer exercise of any Stock Right granted hereunder until either such event has occurred.

16.    Term, Termination, and Amendment.

(a)    This Plan was adopted by the Board. This Plan may be approved by the Company’s shareholders, which approval is required for ISOs.

(b)    The Board may terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on June 24, 2030. No Stock Rights may be granted under the Plan once the Plan is terminated. Termination of the Plan shall not impair rights and obligations under any Stock Right granted while the Plan is in effect, except with the written consent of the grantee.

(c)    The Board at any time, and from time to time, may amend the Plan. Provided, however, except as provided in Section 14 relating to adjustments in Common Stock, no amendment shall be effective unless approved by the shareholders of the Company to the extent (i) shareholder approval is necessary to satisfy the requirements of Section 422 of the Code or (ii) required by the rules of the principal national securities exchange or trading market upon which the Company’s Common Stock trades. Rights under any Stock Rights granted before amendment of the Plan shall not be impaired by any amendment of the Plan, except with the written consent of the grantee.

(d)    The Board at any time, and from time to time, may amend the terms of any one or more Stock Rights; provided, however, that the rights under the Stock Right shall not be impaired by any such amendment, except with the written consent of the grantee.

17.    Conversion of ISOs into Non-Qualified Options; Termination of ISOs. The Board or Compensation Committee, at the written request of any optionee, may in its discretion take such actions as may be necessary to convert such optionee’s ISOs (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the optionee is an employee of the Company at the time of such conversion. Provided, however, the Board or Compensation Committee shall not reprice the Options or extend the exercise period or reduce the exercise price of the appropriate installments of such Options without the approval of the Company’s shareholders. At the time of such conversion, the Board or Compensation Committee (with the consent of the optionee) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Board or Compensation Committee in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any optionee the right to have such optionee’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Board or Compensation Committee takes appropriate action. The Compensation Committee, with the consent of the optionee, may also terminate any portion of any ISO that has not been exercised at the time of such termination.

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18.    Application of Funds. The proceeds received by the Company from the sale of shares pursuant to Options or SARS (if cash settled) granted under the Plan shall be used for general corporate purposes.

19.    Governmental Regulations. The Company’s obligation to sell and deliver shares of the Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance, or sale of such shares.

20.    Withholding of Additional Income Taxes. In connection with the granting, exercise, or vesting of a Stock Right or the making of a Disqualifying Disposition, the Company, in accordance with Section 3402(a) of the Code, may require the optionee to pay additional withholding taxes in respect of the amount that is considered compensation includable in such person’s gross income.

To the extent that the Company is required to withhold taxes for federal income tax purposes as provided above, any optionee may elect to satisfy such withholding requirement by (i) paying the amount of the required withholding tax to the Company; (ii) delivering to the Company shares of its Common Stock (including shares of Restricted Stock) previously owned by the optionee; or (iii) having the Company retain a portion of the shares covered by an Option exercise. The number of shares to be delivered to or withheld by the Company times the Fair Market Value of such shares shall equal the cash required to be withheld.

21.    Notice to Company of Disqualifying Disposition. Each employee who receives an ISO must agree to notify the Company in writing immediately after the employee makes a Disqualifying Disposition of any Common Stock acquired pursuant to the exercise of an ISO. If the employee has died before such stock is sold, the holding periods requirements of the Disqualifying Disposition do not apply and no Disqualifying Disposition can occur thereafter.

22.    Continued Employment. The grant of a Stock Right pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company to retain the grantee in the employ of the Company, as a member of the Company’s Board, or in any other capacity, whichever the case may be.

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23.    Governing Law; Construction. The validity and construction of the Plan and the instruments evidencing Stock Rights shall be governed by the laws of the Company’s state of incorporation. In construing this Plan, the singular shall include the plural and the masculine gender shall include the feminine and neuter, unless the context otherwise requires.

24.    (a)Forfeiture of Stock Rights Granted to Employees or Consultants. Notwithstanding any other provision of this Plan, and unless otherwise provided for in a Stock Rights Agreement, all vested or unvested Stock Rights granted to employees or consultants shall be immediately forfeited at the discretion of the Board if any of the following events occur:

(1)    Termination of the relationship with the grantee for cause including, but not limited to, fraud, theft, dishonesty, and violation of Company policy;

(2)    Purchasing or selling securities of the Company in violation of the Company’s insider trading guidelines then in effect;

(3)    Breaching any duty of confidentiality including that required by the Company’s insider trading guidelines then in effect;

(4)    Competing with the Company;

(5)    Being unavailable for consultation after leaving the Company’s employment if such availability is a condition of any agreement between the Company and the grantee;

(6)    Recruitment of Company personnel after termination of employment, whether such termination is voluntary or for cause;

(7)    Failure to assign any invention or technology to the Company if such assignment is a condition of employment or any other agreements between the Company and the grantee; or

(8)    A finding by the Board that the grantee has acted disloyally and/or against the interests of the Company.

(b)    Forfeiture of Stock Rights Granted to Directors. Notwithstanding any other provision of this Plan, and unless otherwise provided for in a Stock Rights Agreement, all vested or unvested Stock Rights granted to directors shall be immediately forfeited at the discretion of the Board if any of the following events occur:

(1)    Purchasing or selling securities of the Company in violation of the Company’s insider trading guidelines then in effect;

(2)    Breaching any duty of confidentiality including that required by the Company’s insider trading guidelines then in effect;

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(3)    Competing with the Company;

(4)    Recruitment of Company personnel after ceasing to be a director; or

(5)    A finding by the Board that the grantee has acted disloyally and/or against the interests of the Company.

The Company may impose other forfeiture restrictions which are more or less restrictive and require a return of profits from the sale of Common Stock as part of said forfeiture provisions if such forfeiture provisions and/or return of provisions are contained in a Stock Rights Agreement.

(c)    Profits on the Sale of Certain Shares; Redemption. If any of the events specified in Section 24(a) or (b) of the Plan occur within one year from the date the grantee last performed services for the Company in the capacity for which the Stock Rights were granted (the “Termination Date”) (or such longer period required by any written agreement), all profits earned from the sale of the Company’s securities, including the sale of shares of Common Stock underlying the Stock Rights, during the two-year period commencing one year prior to the Termination Date shall be forfeited and immediately paid by the grantee to the Company. Further, in such event, the Company may at its option redeem shares of Common Stock acquired upon exercise of the Stock Right by payment of the exercise price to the grantee. To the extent that another written agreement with the Company extends the events in Section 24(a) or (b) beyond one year following the Termination Date, the two-year period shall be extended by an equal number of days. The Company’s rights under this Section 24(c) do not lapse one year from the Termination Date but are contract rights subject to any appropriate statutory limitation period.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael F. Sullivan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amerityre Corporation for the three and six months ended December 31, 2021;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying office and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 11, 2022

/s/ Michael F. Sullivan

Michael F. Sullivan

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lynda R. Keeton-Cardno, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amerityre Corporation for the three and six months ended December 31, 2021;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying office and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 11, 2022

/s/ Lynda R. Keeton-Cardno

Lynda R. Keeton-Cardno

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Amerityre Corporation (the “Company”) on Form 10-Q for the three and six months ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael F. Sullivan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Michael F. Sullivan

Michael F. Sullivan

Chief Executive Officer

(Principal Executive Officer)

February 11, 2022

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Amerityre Corporation (the “Company”) on Form 10-Q for the three and six months ended December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lynda R. Keeton-Cardno, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Lynda R. Keeton-Cardno

Lynda R. Keeton-Cardno

Chief Financial Officer

(Principal Financial Officer)

February 11, 2022

XML

Document And Entity Information - shares	6 Months Ended
	Dec. 31, 2021	Feb. 09, 2022
Document Information Line Items
Entity Registrant Name	AMERITYRE CORPORATION
Trading Symbol	N/A
Document Type	10-Q
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		74,667,868
Amendment Flag	false
Entity Central Index Key	0000945828
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Dec. 31, 2021
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-50053
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	87-0535207
Entity Address, Address Line One	1501 INDUSTRIAL ROAD
Entity Address, City or Town	BOULDER CITY
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89005
City Area Code	702
Local Phone Number	293-1930
Title of 12(b) Security	N/A
Security Exchange Name	NONE
Entity Interactive Data Current	Yes

XML

Balance Sheets - USD ($)	Dec. 31, 2021	Jun. 30, 2021
CURRENT ASSETS
Cash	$ 542,857	$ 516,192
Accounts receivable	292,161	728,315
Current inventory - net	905,562	659,333
Prepaid and other current assets	149,144	94,483
Total Current Assets	1,889,724	1,998,323
RIGHT TO USE LEASE ASSETS, OPERATING, NET	466,104	544,070
PROPERTY AND EQUIPMENT
Molds and models	583,611	583,611
Equipment	3,094,067	2,910,018
Furniture and fixtures	73,423	73,423
Software	233,528	233,528
Less - accumulated depreciation	(3,719,968)	(3,690,515)
Property and Equipment - net	264,661	110,065
OTHER ASSETS
Patents and trademarks - net	66,221	75,977
Non-current inventory	185,672	163,289
Deposits	11,000	11,000
Total Other Assets	262,893	250,266
TOTAL ASSETS	2,883,382	2,902,724
CURRENT LIABILITIES
Accounts payable and accrued expenses	681,427	767,193
Current portion of long-term debt	2,000	2,000
Current portion of lease liability	148,500	147,600
Deferred revenue	20,124	25,892
Total Current Liabilities	852,051	942,685
Long-term debt	60,878	61,326
Long-term lease liability	225,900	300,600
TOTAL LIABILITIES	1,138,829	1,304,611
STOCKHOLDERS’ EQUITY
Common Stock: 100,000,000 shares authorized of $0.001 par value, 73,047,868 and 74,667,868 shares issued and outstanding, respectively	74,668	73,048
Additional paid-in capital	62,866,097	62,805,404
Accumulated deficit	(61,196,212)	(61,280,339)
Total Stockholders’ Equity	1,744,553	1,598,113
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 2,883,382	$ 2,902,724

XML

Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2021	Jun. 30, 2021
Statement of Financial Position [Abstract]
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	74,667,868	73,047,868
Common stock, shares outstanding	74,667,868	73,047,868

XML

Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
NET SALES	$ 1,453,499	$ 1,204,990	$ 2,849,113	$ 2,256,276
COST OF SALES	1,123,434	903,543	2,134,276	1,611,109
GROSS PROFIT	330,065	301,447	714,837	645,167
EXPENSES
Research and development	24,399	30,507	45,966	50,978
Sales and marketing	74,048	51,102	142,421	110,902
General and administrative	213,392	186,014	446,240	396,500
Total Expenses	311,839	267,623	634,627	558,380
INCOME FROM OPERATIONS	18,226	33,824	80,210	86,787
OTHER INCOME (EXPENSE)
Interest income	294	423	660	841
Gain on debt extinguishment	0	149,570	0	149,570
Loss on asset disposal	0	(17,225)	0	(20,078)
Other income	507	10,260	3,257	13,515
Total Other Income, net	801	143,028	3,917	143,848
NET INCOME	$ 19,027	$ 176,852	$ 84,127	$ 230,635
BASIC AND DILUTED INCOME PER SHARE (in Dollars per share)	$ 0	$ 0	$ 0	$ 0
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (in Shares)	73,452,868	70,566,890	73,250,368	70,369,879

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Statements of Stockholders’ Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Stock Payable [Member]	Total
Balance at Jun. 30, 2020	$ 70,173		$ (61,538,675)		$ 1,250,971
Balance (in Shares) at Jun. 30, 2020	70,172,868	62,719,473
Stock option based compensation expense – options				$ 12,323	12,323
Net income (loss) for the quarter			53,783		53,783
Balance at Sep. 30, 2020	$ 70,173		(61,484,892)	12,323	1,317,077
Balance (in Shares) at Sep. 30, 2020	70,172,868	62,719,473
Balance at Jun. 30, 2020	$ 70,173		(61,538,675)		1,250,971
Balance (in Shares) at Jun. 30, 2020	70,172,868	62,719,473
Net income (loss) for the quarter					230,635
Balance at Dec. 31, 2020	$ 71,423		(61,308,040)		1,505,416
Balance (in Shares) at Dec. 31, 2020	71,422,868	62,742,033
Balance at Sep. 30, 2020	$ 70,173		(61,484,892)	12,323	1,317,077
Balance (in Shares) at Sep. 30, 2020	70,172,868	62,719,473
Stock option based compensation expense – options				(12,323)	(12,323)
Stock based compensation expense for employee and Board of Director service	$ 1,250				23,810
Stock based compensation expense for employee and Board of Director service (in Shares)	1,250,000	22,560
Net income (loss) for the quarter			176,852		176,852
Balance at Dec. 31, 2020	$ 71,423		(61,308,040)		1,505,416
Balance (in Shares) at Dec. 31, 2020	71,422,868	62,742,033
Stock option based compensation expense – options				31,590	31,590
Net income (loss) for the quarter			80,651		80,651
Balance at Mar. 31, 2021	$ 71,423		(61,227,389)	31,590	1,617,657
Balance (in Shares) at Mar. 31, 2021	71,422,868	62,742,033
Stock option based compensation expense – options				33,406	33,406
Stock based compensation expense for employee and Board of Director service	$ 1,625			(64,996)
Stock based compensation expense for employee and Board of Director service (in Shares)	1,625,000	63,371
Net income (loss) for the quarter			(52,950)		(52,950)
Balance at Jun. 30, 2021	$ 73,048		(61,280,339)		1,598,113
Balance (in Shares) at Jun. 30, 2021	73,047,868	62,805,404
Stock based compensation expense for employee and Board of Director service				33,156	33,156
Net income (loss) for the quarter			65,100		65,100
Balance at Sep. 30, 2021	$ 73,048		(61,215,239)	33,156	1,696,369
Balance (in Shares) at Sep. 30, 2021	73,047,868	62,805,404
Balance at Jun. 30, 2021	$ 73,048		(61,280,339)		1,598,113
Balance (in Shares) at Jun. 30, 2021	73,047,868	62,805,404
Net income (loss) for the quarter					84,127
Balance at Dec. 31, 2021	$ 74,668		(61,196,212)		1,744,553
Balance (in Shares) at Dec. 31, 2021	74,667,868	62,866,097
Balance at Sep. 30, 2021	$ 73,048		(61,215,239)	33,156	1,696,369
Balance (in Shares) at Sep. 30, 2021	73,047,868	62,805,404
Stock based compensation expense for employee and Board of Director service	$ 1,620			$ (33,156)	29,157
Stock based compensation expense for employee and Board of Director service (in Shares)	1,620,000	60,693
Net income (loss) for the quarter			19,027		19,027
Balance at Dec. 31, 2021	$ 74,668		$ (61,196,212)		$ 1,744,553
Balance (in Shares) at Dec. 31, 2021	74,667,868	62,866,097

XML

Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 84,127	$ 230,635
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization expense	119,925	108,161
Stock based compensation	62,313	23,810
Gain on debt extinguishment	0	(149,570)
Loss on asset disposal	0	20,078
Accounts receivable	436,154	10,060
Prepaid and other current assets	(90,988)	21,195
Inventory and any change in inventory reserve	(268,612)	(42,890)
Accounts payable and accrued expenses	(85,766)	(166,270)
Deferred revenue	(5,768)	(11,351)
Lease liability payable, operating lease	(73,800)	(72,900)
Net Cash Provided/Used by Operating Activities	177,585	(29,042)
Purchase of property and equipment	(147,722)	0
Cash paid for leasehold improvements of an operating lease	(2,750)	(10,785)
Net Cash Used by Investing Activities	(150,472)	(10,785)
Payments on notes payable	(448)	(315)
Net Cash Used by Financing Activities	(448)	(315)
NET INCREASE (DECREASE) IN CASH	26,665	(40,142)
CASH AT BEGINNING OF PERIOD	516,192	666,756
CASH AT END OF PERIOD	542,857	626,614
Income taxes paid	0	0
Write off of fully depreciated and disposed fixed assets	0	124,287
Use of store inventory, capitalized as fixed asset	36,327	6,600
Interest paid	$ 0	$ 776

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BASIS OF FINANCIAL STATEMENT PRESENTATION

6 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. We believe the disclosures and information presented are adequate to make the information not misleading. These interim condensed financial statements should be read in conjunction with our most recent audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the “2021 Annual Report”). Operating results for the fiscal quarter ended December 31, 2021 are not necessarily indicative of the results that may be expected for the current fiscal year ending June 30, 2022.

COVID-19 Update

Despite our revenue gains the past 2 quarters, the COVID-19 pandemic affected the Company’s overall financial results for the three and six months ended December 31, 2021. We continue to experience supply chain delays and increased costs from our raw material suppliers, many which are being attributed to COVID-19 effects in the marketplace. This has resulted in downward pressure on our Gross Profit margins. We continue to see strong demand for our products from our customers, and we continue to be diligent in minimizing COVID-19 exposure risk in our facility. We have implemented price increases on our tire products where possible to reduce the negative impact of increasing costs.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies disclosed herein have not changed since our audited financial statements and notes thereto included in our June 30, 2021 Annual Report on Form 10-K, except as noted below.

Revenue Recognition

The majority of our revenue is derived from short-term sales contracts. We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”.

Revenue for our products is recognized at the time in which our performance obligation is satisfied which we have defined as “control” of the product by the customer. “Control” is defined as a customer having “rights/obligations of physical control over the product or has the rights and intention to control the product.” Based on the terms of our contracts, a customer’s “control” is based on analysis of the following: (i) when a customer arranges shipment of product themselves, and once the product has left our dock, Amerityre Corporation (the “Company” or “Amerityre”), recognizes revenue for the product. In effect by arranging their own freight, the customer is “taking control” of the product when it leaves our warehouse; or (ii) when a customer does not arrange shipment of product themselves, we cannot recognize revenue until it is delivered and the customer takes “control” of the product. This establishes a “deferred revenue” event until such time as delivery of the product has been completed and we have proof from the shipper of the delivery (and change in control).

Deferred revenue was $20,124, inclusive of $2,294 of shipping and handling revenue (see below), as of December 31, 2021. Deferred revenue was $841, inclusive of $122 of shipping and handling revenue (see below), as of December 31, 2020.

Shipping and Handling

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

The result of this accounting is a deferral of $2,294 as of December 31, 2021 and $122 as of December 31, 2020.

Basic and Fully Diluted Net Income (Loss) Per Share

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

Our outstanding stock options have been excluded from the basic and fully diluted net loss per share calculation. We excluded 0 and 1,030,000 common stock equivalents for the periods ended December 31, 2021 and 2020, respectively, because they are anti-dilutive. All options expired as of December 31, 2021.

Recent Accounting Pronouncements

Other recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC, did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.

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INVENTORY

6 Months Ended

Dec. 31, 2021

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 3 – INVENTORY

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

	December 31, 2021			June 30, 2021
	(Unaudited)
Raw Materials	$	460,164		$	416,709
Finished Goods		743,747			525,565
Inventory reserve		(112,677	)		(119,652	)
Inventory – net (Current and long term)	$	1,091,234			822,622

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

The Company critically reviews all slow-moving inventory to determine if it is defective or obsolete. If not defective or obsolete we presented these items as non-current inventory, although all inventory is ready and available for immediate sale. Finished good inventory levels were higher on December 31, 2021 due to the timing of the shipment of a large customer order. This order was expected to ship in mid-December but was delayed until early January 2022. We continue to maintain higher than normal raw material inventories as we execute our strategy of strategic raw material purchases when they are available.

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RIGHT TO USE LEASE ASSETS

6 Months Ended

Dec. 31, 2021

Disclosure Text Block [Abstract]

Lessee, Operating Leases [Text Block]

NOTE 4 – RIGHT TO USE LEASE ASSETS

Based on our lease accounting policy, we have identified the following operating leases. As of December 31, 2021, we have no financing leases:

	December 31, 2021			June 30, 2021
	(Unaudited)
Facility lease	$	374,400		$	448,200
Leasehold improvements related to our facility		289,604			286,854
Accumulated amortization – leasehold improvements		(197,900	)		(190,984	)
Right to use leased assets, operating, net	$	466,104		$	544,070

In March 2019 we negotiated a five-year extension of the lease for our executive office and manufacturing facility located at 1501 Industrial Road, Boulder City, Nevada. The property consists of a 49,200 square foot building. We currently occupy all 49,200 square feet, inclusive of approximately 5,500 square feet of office space, situated on approximately 4.15 acres. Our remaining liability under this agreement is $374,400, payable at amounts ranging from $12,450 to $12,600 a month until June 30, 2024.

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DEBT

6 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 5 – DEBT

A former board member, Silas O. Kines, was the principal owner of Forklift Tire of Florida and K-2 Industrial Tire, Inc. In accordance with the Commission Agreement with Forklift Tire of Florida, dated February 2, 2011, between Amerityre Corporation and K-2 Industrial Tire, Inc., K-2 is due a five percent (5%) commission on all forklift tire sales. In exchange for the forklift models transferred to Amerityre under that agreement, the first $96,000 in commission payments will be used to extinguish the long-term liability recorded on the transaction. As of December 31, 2021, $2,000 and $60,878 (June 30, 2021, $2,000 and $61,326) were recorded for the current and long-term portion, respectively, of the related liability.

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

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STOCK TRANSACTIONS, OPTIONS AND WARRANTS

6 Months Ended

Dec. 31, 2021

Disclosure Text Block Supplement [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

NOTE 6 – STOCK OPTIONS AND WARRANTS

On July 22, 2020, the Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”) which contains provisions for up to 5,000,000 stock-based instruments to be granted to employees, consultants and directors.

On October 26, 2021, the Board of Directors adopted the 2022 Equity Incentive Plan (the “2022 Plan”) which contains provisions for up to 10,000,000 stock-based instruments to be granted to employees, consultants and directors.

Effective September 24, 2020, the Company filed a Certificate of Withdrawal of the Certificate of Designation related to the Company’s 2013 Series Convertible Preferred Stock. In doing so, the 2,000,000 shares of preferred stock previously designated as 2013 Series Convertible Preferred Stock returned to the status of authorized and unissued shares of “blank check” preferred stock, and as a result we now have a total of 5,000,000 shares of preferred stock under our Articles of Incorporation which may be designated in one or more series with such relative rights, preferences and limitations as the Board of Directors may determine. The Company may file one or more new designations authorizing the issuance of preferred shares should this be needed in the future as may be determined by the Board of Directors.

All previously granted stock options expired as of December 31, 2021; no stock options have been granted as of December 31, 2021 or thus far in fiscal year 2022.

A summary of the status of our outstanding stock options as of December 31, 2021 and June 30, 2021 and changes during the periods then ended is presented below:

	December 31, 2021								June 30, 2021
				Weight Average			Intrinsic					Weight Average			Intrinsic
	Shares			Exercise Price			Value		Shares			Exercise Price			Value
Outstanding beginning of period		1,030,000		$	0.12					2,870,000		$	0.12
Granted		-		$	0.00					-		$	0.00
Expired/Cancelled		(1,030,000	)	$	(0.12	)				(1,840,000	)	$	(0.12	)
Exercised		-		$	0.00					-		$	0.00
Outstanding end of period		-		$	0. 00		$	-		1,030,000		$	0.12		$	-
Exercisable		-		$	0. 00		$	-		1,030,000		$	0.12		$	-

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SUBSEQUENT EVENTS

6 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 7 – SUBSEQUENT EVENTS

Effective January 1, 2022, the Company renewed the Chief Executive Officer’s Employment Agreement. The new Agreement extends his term of employment to December 31, 2022. Inclusive in this new Agreement is a stock award of 1.68 million shares of the Company’s common stock vesting ratably over 12 months (January 2022 – December 2022), valued at a fixed rate of $0.049 per share, the average price per share of the Company’s common stock for the period December 27, 2021 to December 31, 2021.

On January 1, 2022, 60,000 shares of common stock were granted to the Company’s Chief Financial Officer as part of her employment renewal. These shares of the Company’s common stock vest ratably over 12 months (January 2022 – December 2022), and are valued at a fixed rate of $0.049 per share, the average price per share of the Company’s common stock for the period December 27, 2021 to December 31, 2021.

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Accounting Policies, by Policy (Policies)

6 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Revenue [Policy Text Block]

Revenue Recognition

The majority of our revenue is derived from short-term sales contracts. We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”.

Revenue for our products is recognized at the time in which our performance obligation is satisfied which we have defined as “control” of the product by the customer. “Control” is defined as a customer having “rights/obligations of physical control over the product or has the rights and intention to control the product.” Based on the terms of our contracts, a customer’s “control” is based on analysis of the following: (i) when a customer arranges shipment of product themselves, and once the product has left our dock, Amerityre Corporation (the “Company” or “Amerityre”), recognizes revenue for the product. In effect by arranging their own freight, the customer is “taking control” of the product when it leaves our warehouse; or (ii) when a customer does not arrange shipment of product themselves, we cannot recognize revenue until it is delivered and the customer takes “control” of the product. This establishes a “deferred revenue” event until such time as delivery of the product has been completed and we have proof from the shipper of the delivery (and change in control).

Deferred revenue was $20,124, inclusive of $2,294 of shipping and handling revenue (see below), as of December 31, 2021. Deferred revenue was $841, inclusive of $122 of shipping and handling revenue (see below), as of December 31, 2020.

Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and Handling

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

The result of this accounting is a deferral of $2,294 as of December 31, 2021 and $122 as of December 31, 2020.

Earnings Per Share, Policy [Policy Text Block]

Basic and Fully Diluted Net Income (Loss) Per Share

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

Our outstanding stock options have been excluded from the basic and fully diluted net loss per share calculation. We excluded 0 and 1,030,000 common stock equivalents for the periods ended December 31, 2021 and 2020, respectively, because they are anti-dilutive. All options expired as of December 31, 2021.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Other recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC, did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.

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INVENTORY (Tables)

6 Months Ended

Dec. 31, 2021

Inventory Disclosure [Abstract]

Schedule of Inventory [Table Text Block]

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

	December 31, 2021			June 30, 2021
	(Unaudited)
Raw Materials	$	460,164		$	416,709
Finished Goods		743,747			525,565
Inventory reserve		(112,677	)		(119,652	)
Inventory – net (Current and long term)	$	1,091,234			822,622

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RIGHT TO USE LEASE ASSETS (Tables)

6 Months Ended

Dec. 31, 2021

Disclosure Text Block [Abstract]

Property, Plant, and Equipment, Lessor Asset under Operating Lease [Table Text Block]

Based on our lease accounting policy, we have identified the following operating leases. As of December 31, 2021, we have no financing leases:

	December 31, 2021			June 30, 2021
	(Unaudited)
Facility lease	$	374,400		$	448,200
Leasehold improvements related to our facility		289,604			286,854
Accumulated amortization – leasehold improvements		(197,900	)		(190,984	)
Right to use leased assets, operating, net	$	466,104		$	544,070

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STOCK TRANSACTIONS, OPTIONS AND WARRANTS (Tables)

6 Months Ended

Dec. 31, 2021

Disclosure Text Block Supplement [Abstract]

Share-based Payment Arrangement, Option, Activity [Table Text Block]

A summary of the status of our outstanding stock options as of December 31, 2021 and June 30, 2021 and changes during the periods then ended is presented below:

	December 31, 2021								June 30, 2021
				Weight Average			Intrinsic					Weight Average			Intrinsic
	Shares			Exercise Price			Value		Shares			Exercise Price			Value
Outstanding beginning of period		1,030,000		$	0.12					2,870,000		$	0.12
Granted		-		$	0.00					-		$	0.00
Expired/Cancelled		(1,030,000	)	$	(0.12	)				(1,840,000	)	$	(0.12	)
Exercised		-		$	0.00					-		$	0.00
Outstanding end of period		-		$	0. 00		$	-		1,030,000		$	0.12		$	-
Exercisable		-		$	0. 00		$	-		1,030,000		$	0.12		$	-

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2020	Jun. 30, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Deferred Revenue, Current	$ 20,124	$ 841	$ 20,124	$ 841	$ 25,892
Revenues	$ 1,453,499	$ 1,204,990	$ 2,849,113	$ 2,256,276
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)			0	1,030,000
Shipping and Handling Revenue [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Revenues			$ 2,294	$ 122

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INVENTORY (Details) - Schedule of Inventory - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Schedule of Inventory [Abstract]
Raw Materials	$ 460,164	$ 416,709
Finished Goods	743,747	525,565
Inventory reserve	(112,677)	(119,652)
Inventory – net (Current and long term)	$ 1,091,234	$ 822,622

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RIGHT TO USE LEASE ASSETS (Details)	6 Months Ended
	Dec. 31, 2021 USD ($)	Mar. 31, 2019 ft² a
RIGHT TO USE LEASE ASSETS (Details) [Line Items]
Area of Real Estate Property (in Square Feet) | ft²		49,200
Area of Land (in Acres) | a		4.15
Operating Lease, Liability	$ 374,400
Lessee, Operating Lease, Renewal Term		5 years
Building [Member]
RIGHT TO USE LEASE ASSETS (Details) [Line Items]
Area of Real Estate Property (in Square Feet) | ft²		5,500
Minimum [Member]
RIGHT TO USE LEASE ASSETS (Details) [Line Items]
Operating Lease, Expense	12,450
Maximum [Member]
RIGHT TO USE LEASE ASSETS (Details) [Line Items]
Operating Lease, Expense	$ 12,600

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RIGHT TO USE LEASE ASSETS (Details) - Schedule of Property Subject to or Available for Operating Lease - USD ($)	Dec. 31, 2021	Jun. 30, 2021
Schedule of Property Subject to or Available for Operating Lease [Abstract]
Facility lease	$ 374,400	$ 448,200
Leasehold improvements related to our facility	289,604	286,854
Accumulated amortization – leasehold improvements	(197,900)	(190,984)
Inventory - net	$ 466,104	$ 544,070

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DEBT (Details) - USD ($)	1 Months Ended	6 Months Ended
	Apr. 30, 2020	Dec. 31, 2021	Jun. 30, 2021
DEBT (Details) [Line Items]
Debt Instrument, Face Amount	$ 149,570
Long-term Debt, Current Maturities		$ 2,000	$ 2,000
Long-term Debt, Excluding Current Maturities		$ 60,878	61,326
Debt Instrument, Term	2 years
Debt Instrument, Interest Rate, Stated Percentage	1.00%
Notes Payable, Other Payables [Member]
DEBT (Details) [Line Items]
Sales Commission, Percentage		5.00%
Debt Instrument, Face Amount		$ 96,000
Long-term Debt, Current Maturities		2,000	2,000
Long-term Debt, Excluding Current Maturities		$ 60,878	$ 61,326

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STOCK TRANSACTIONS, OPTIONS AND WARRANTS (Details) - shares	Oct. 26, 2021	Sep. 24, 2020	Jul. 22, 2020
STOCK TRANSACTIONS, OPTIONS AND WARRANTS (Details) [Line Items]
Preferred Stock, Shares Authorized		5,000,000
2020 Equity Incentive Plan (the “2020 Plan”) [Member]
STOCK TRANSACTIONS, OPTIONS AND WARRANTS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			5,000,000
2022 Equity Incentive Plan (the “2022 Plan”) [Member]
STOCK TRANSACTIONS, OPTIONS AND WARRANTS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	10,000,000

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STOCK TRANSACTIONS, OPTIONS AND WARRANTS (Details) - Schedule of Share-based Compensation, Stock Options, Activity - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2021	Jun. 30, 2021
Schedule of Share-based Compensation, Stock Options, Activity [Abstract]
Outstanding beginning of period (in Shares)	1,030,000	2,870,000
Outstanding beginning of period	$ 0.12	$ 0.12
Granted (in Shares)	0	0
Granted	$ 0	$ 0
Expired/Cancelled (in Shares)	(1,030,000)	(1,840,000)
Expired/Cancelled	$ (0.12)	$ (0.12)
Exercised (in Shares)	0	0
Exercised	$ 0	$ 0
Outstanding end of period (in Shares)		1,030,000
Outstanding end of period	$ 0	$ 0.12
Outstanding end of period (in Dollars)	$ 0	$ 0
Exercisable (in Shares)		1,030,000
Exercisable	$ 0	$ 0.12
Exercisable (in Dollars)	$ 0	$ 0

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SUBSEQUENT EVENTS (Details) - Subsequent Event [Member]	Jan. 01, 2022 $ / shares shares
Chief Executive Officer [Member]
SUBSEQUENT EVENTS (Details) [Line Items]
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture | shares	1,680,000
Shares Issued, Price Per Share | $ / shares	$ 0.049
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights	vesting ratably over 12 months
Chief Financial Officer [Member]
SUBSEQUENT EVENTS (Details) [Line Items]
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture | shares	60,000
Shares Issued, Price Per Share | $ / shares	$ 0.049
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights	vest ratably over 12 months