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: ~~March 31,~~September 30, 2020

☐ 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~~Industrial Rd., Boulder City, NV	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 a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting ~~company, or an emerging growth~~ company. See ~~definition~~the definitions of “large accelerated filer,” ~~accelerated~~“accelerated filer” and “smaller reporting ~~company,” and “emerging growth~~ company” in Rule 12b-2 of the Exchange ~~Act:~~Act.

Large accelerated filer ~~☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company~~ ☐	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☒

Emerging Growth Companies ☐

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 ☒

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

The number of shares outstanding of Registrant’s Common Stock as of ~~May 15,~~November 9, 2020: ~~68,922,868~~70,172,868

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	1110
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1816
Item 4.	Controls and Procedures	1816
PART II
Item 1.	Legal Proceedings	1917
Item 1A.	Risk Factors	1917
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1917
Item 3.	Defaults Upon Senior Securities	1917
Item 4.	~~Mine Safety Disclosures~~Not Applicable	2017
Item 5.	Other Information	2017
Item 6.	Exhibits	2017

SIGNATURES		2118

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMERITYRE CORPORATION

Balance Sheets

March 31,
2020

June 30,
2019

(Unaudited)

ASSETS

CURRENT ASSETS

Cash
$ 421,653 $ 557,026
Accounts receivable
392,764 277,690
Inventory - net
584,544 448,407
Prepaid and other current assets
119,437 82,596
Total Current Assets
1,518,398 1,365,719

RIGHT TO USE LEASE ASSETS, OPERATING, NET
730,320 845,256

PROPERTY AND EQUIPMENT

Molds and models
583,611 583,611
Equipment
3,033,823 3,003,797
Furniture and fixtures
73,423 66,173
Software
247,610 247,610
Less - accumulated depreciation
(3,816,853
)
(3,763,672
)
Total Property and Equipment - net
121,614 137,519

OTHER ASSETS

Patents and trademarks - net
97,328 110,601
Non-current inventory
255,702 269,824
Deposits
11,000 11,000
Total Other Assets
364,030 391,425
TOTAL ASSETS
$ 2,734,362 $ 2,739,919

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable and accrued expenses
$ 662,922 $ 649,046
Current portion of long-term debt
2,000 13,609
Current portion of lease liability
144,600 141,000
Deferred revenue
6,275 19,408
Total Current Liabilities
815,797 823,063

Long-term debt, net of current portion
61,906 75,418
Long-term lease liability
484,650 594,000
TOTAL LIABILITIES
1,362,353 1,492,481

STOCKHOLDERS’ EQUITY

Preferred stock: 5,000,000 shares authorized of $0.001 par value, 2,000,000 shares issued and outstanding, respectively
2,000 2,000
Common Stock: 75,000,000 shares authorized of $0.001 par value, 48,922,868 and 47,727,867 shares issued and outstanding, respectively
48,923 47,728
Additional paid-in capital
62,714,077 62,695,035
Stock payable
12,323 583
Accumulated deficit
(61,405,314
)
(61,497,908
)
Total Stockholders’ Equity
1,372,009 1,247,438
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 2,734,362 $ 2,739,919

	September 30, 2020			June 30, 2020
ASSETS	(Unaudited)

CURRENT ASSETS
Cash	$	619,000		$	666,756
Accounts receivable		323,253			292,642
Current inventory - net		489,070			493,892
Prepaid and other current assets		119,534			86,467
Total Current Assets		1,550,857			1,539,757

RIGHT TO USE LEASE ASSETS, OPERATING, NET		652,495			692,007

PROPERTY AND EQUIPMENT
Molds and models		583,611			583,611
Equipment		2,927,269			3,037,474
Furniture and fixtures		73,423			73,423
Software		247,610			247,610
Less – accumulated depreciation		(3,715,407	)		(3,816,004	)
Property and Equipment - net		116,506			126,114

OTHER ASSETS
Patents and trademarks – net		88,479			92,905
Non-current inventory		318,745			300,778
Deposits		11,000			11,000
Total Other Assets		418,224			404,683
TOTAL ASSETS	$	2,738,082		$	2,762,561

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	632,615		$	691,962
Current portion of long-term debt		92,844			59,440
Current portion of lease liability		146,250			145,800
Deferred revenue		17,667			12,192
Total Current Liabilities		889,376			909,394

Long-term debt		120,329			153,996
Long-term lease liability		411,300			448,200
TOTAL LIABILITIES		1,421,005			1,511,590

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Common stock: 100,000,000 shares authorized of $0.001 par value, 70,172,868 and 70,172,868 shares issued and outstanding, respectively		70,173			70,173
Additional paid-in capital		62,719,473			62,719,473
Stock payable		12,323			0
Accumulated deficit		(61,484,892	)		(61,538,675	)
Total Stockholders’ Equity		1,317,077			1,250,971
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,738,082		$	2,762,561

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

Table of Contents

AMERITYRE CORPORATION

Statements of Operations

(Unaudited)

For the Three Months Ended
March 31,

For the Nine Months Ended
March 31,

2020

2019

2020

2019

NET SALES
$ 1,121,805 $ 926,811 $ 3,168,542 $ 2,539,160

COST OF GOODS SOLD
768,943 637,804 2,228,300 1,836,081

GROSS PROFIT
352,862 289,007 940,242 703,079

EXPENSES

Research and development
26,614 23,297 88,527 71,087
Sales and marketing
52,652 43,184 147,432 147,433
General and administrative
173,297 168,984 539,663 522,427

Total Expenses
252,563 235,465 775,622 740,947

INCOME/(LOSS) FROM OPERATIONS
100,299 53,542 164,620 (37,868
)

OTHER INCOME/(EXPENSE)

Interest expense
(785
)
(711
)
(1,223
)
(3,049
)
Interest income
286 86 579 318
Other income
496 16,962 3,618 20,051
Total Other Income/(Expense), net
(3
)
16,337 2,974 17,320

NET INCOME/(LOSS)
100,296 69,879 167,594 (20,548
)

Preferred Stock Dividend
(25,000
)
(25,000
)
(75,000
)
(75,000
)

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
$ 75,296 $ 44,879 $ 92,594 $ (95,548
)

BASIC AND DILUTED INCOME/(LOSS) PER SHARE
$ 0.00 $ 0.00 $ 0.00 $ (0.00
)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
48,260,422 46,532,867 48,301,467 45,638,048

	For the Three Months Ended September 30,
	2020			2019

NET SALES	$	1,051,286		$	979,297

COST OF REVENUES		707,566			690,599

GROSS PROFIT		343,720			288,698

EXPENSES
Research and development		20,471			26,016
Sales and marketing		59,800			43,471
General and administrative		210,486			193,430

Total Expenses		290,757			262,917

INCOME FROM OPERATIONS		52,963			25,781

OTHER INCOME (EXPENSE)
Interest income		418			174
Interest expense		0			(335	)
Loss on asset disposal		(2,853	)		0
Other income		3,255			3,283

Total Other Income, net		820			3,122

NET INCOME		53,783			28,903

Preferred Stock Dividend		0			(25,000	)

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	53,783		$	3,903

BASIC AND DILUTED INCOME PER SHARE	$	0.00		$	0.00

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		70,172,868			47,727,867

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

Table of Contents

AMERITYRE CORPORATION

Statements of Stockholders’ Equity

(Unaudited)

Preferred Stock

Common Stock

Additional
Paid in

Stock

Accumulated

Shares

Amount

Shares

Amount

Capital

Payable

Deficit

Balance, June 30, 2018
2,000,000 $ 2,000 44,476,346 $ 44,476 $ 62,638,754 $ 14,601 $ (61,438,920
)
Preferred stock dividends
- - - - - - (25,000
)
Stock option based compensation expense – options
- - - - 2,901 - -
Stock based compensation expense for employee and Board of Director service
- - 1,155,796 1,156 18,035 (4,806
)
-
Net income for the quarter
- - - - - - 4,317
Balance, September 30, 2018
2,000,000 2,000 45,632,142 45,632 62,659,690 9,795 (61,459,603
)
Preferred stock dividends
- - - - - - (25,000
)
Stock option based compensation expense – options
- - - - 967 - -
Stock based compensation expense for employee and Board of Director service
- - 900,725 901 15,336 (9,212
)
-
Net loss for the quarter
- - - - - - (94,744
)
Balance, December 31, 2018
2,000,000 2,000 46,532,867 46,533 62,675,993 583 (61,579,347
)
Preferred stock dividends
- - - - - - (25,000
)
Stock based compensation expense for employee and Board of Director service
- - - - - 10,119 -
Net income for the quarter
- - - - - - 69,879
Balance, March 31, 2019
2,000,000 2,000 46,532,867 46,533 62,675,993 10,702 (61,534,468
)
Preferred stock dividends
- - - - - - (25,000
)
Stock based compensation expense for employee and Board of Director service
- - 1,195,000 1,195 19,042 (10,118
)
-
Net income for the quarter
- - - - - - 61,560
Balance, June 30, 2019
2,000,000 2,000 47,727,867 47,728 62,695,035 583 (61,497,908
)
Preferred stock dividends
- - - - - - (25,000
)
Stock based compensation expense for employee and Board of Director service
- - - - - 10,119 -
Net income for the quarter
- - - - - - 28,903
Balance, September 30, 2019
2,000,000 2,000 47,727,867 47,728 62,695,035 10,702 (61,494,005
)
Preferred stock dividends
- - - - - - (25,000
)
Stock based compensation expense for employee and Board of Director service
- - 1,195,001 1,195 19,042 (10,702
)
-
Net income for the quarter
- - - - - - 38,395
Balance, December 31, 2019
2,000,000 $ 2,000 48,922,868 $ 48,923 $ 62,714,077 $ - $ (61,480,610
)
Preferred stock dividends
- - - - - - (25,000
)
Stock based compensation expense for employee and Board of Director service
- - - - - 12,323 -
Net income for the quarter
- - - - - - 100,296
Balance, March 31, 2020
2,000,000 $ 2,000 48,922,868 $ 48,923 $ 62,714,077 $ 12,323 $ (61,405,314
)

	Preferred Stock						Common Stock				Additional Paid in			Stock			Accumulated
	Shares			Amount			Shares		Amount		Capital			Payable			Deficit
Balance, June 30, 2019		2,000,000		$	2,000			47,727,867	$	47,728	$	62,695,035		$	583		$	(61,497,908	)
Preferred stock dividends		-			-			-		-		-			-			(25,000	)
Stock option based compensation expense – options		-			-			-		-		-			-			-
Stock based compensation expense for employee and Board of Director service		-			-			-		-		-			10,119			-
Net income for the quarter		-			-			-		-		-			-			28,903
Balance, September 30, 2019		2,000,000			2,000			47,727,867		47,728		62,695,035			10,702			(61,494,005	)
Preferred stock dividends		-			-			-		-		-			-			(25,000	)
Stock option based compensation expense – options		-			-			-		-		-			-			-
Stock based compensation expense for employee and Board of Director service		-			-			1,195,001		1,195		19,042			(10,702	)		-
Net loss for the quarter		-			-			-		-		-			-			38,395
Balance, December 31, 2019		2,000,000			2,000			48,922,868		48,923		62,714,077			-			(61,480,610	)
Preferred stock dividends		-			-			-		-		-			-			(25,000	)
Stock based compensation expense for employee and Board of Director service		-			-			-		-		-			12,323			-
Net income for the quarter		-			-			-		-		-			-			100,296
Balance, March 31, 2020		2,000,000			2,000			48,922,868		46,923		62,714,077			12,323			(61,497,908	)
Preferred stock dividends		-			-			-		-		-			-			(8,300	)
Preferred stock conversion to common stock		(2,000,000	)		(2,000	)		2,000,000		2,000		(18,000	)
Stock based compensation expense for employee and Board of Director service		-			-			1,250,000		1,250		23,396			(12,323	)		-
Net income for the quarter		-			-			-		-		-			-			32,467
Balance, June 30, 2020		-			-			70,172,868		70,173		62,719,473			-			(61,538,675	)
Stock based compensation expense for employee and Board of Director service		-			-			-		-		-			12,323			-
Net income for the quarter		-			-			-		-		-			-			53,783
Balance, September 30, 2020		-		$	-			70,172,868	$	70,173	$	62,719,473		$	12,323		$	(61,484,892	)

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

Table of Contents

AMERITYRE CORPORATION

Statements of Cash Flows

(Unaudited)

For the Nine Months Ended
March 31,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)
$ 167,594 $ (20,548
)
Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities:

Depreciation and amortization expense
181,390 65,282
Stock based compensation
31,977 27,897
Changes in operating assets and liabilities:

Accounts receivable
(115,074
)
(56,417
)
Inventory and inventory reserve
(122,015
)
(40,260
)
Prepaid and other current assets
(36,841
)
(15,737
)
Accounts payable and accrued expenses
(61,124
)
187,805
Deferred revenue
(13,133
)
40,318
Lease liability payable, operating lease
(105,750
)
-
Net Cash (Used) Provided by Operating Activities
(72,976
)
188,340
CASH FLOWS USED IN INVESTING ACTIVITIES

Purchase of property and equipment
(37,276
)
(21,436
)
Cash paid for leasehold improvements of an operating lease asset
- (78,302
)
Net Cash Used by Investing Activities
(37,276
)
(99,738
)
CASH FLOWS USED IN FINANCING ACTIVITIES

Payments on notes payable
(25,121
)
(14,065
)

NET INCREASE (DECREASE) IN CASH
(135,373
)
74,537

CASH AT BEGINNING OF PERIOD
557,026 213,854
CASH AT END OF PERIOD
$ 421,653 $ 288,391

	For the Three Months Ended September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	53,783		$	28,903
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization expense		55,062			25,194
Stock based compensation		12,323			10,119
Loss on asset disposal		2,853			0
Changes in operating assets and liabilities:
Accounts receivable		(30,611	)		(2,124	)
Prepaid and other current assets		(39,668	)		(14,276	)
Inventory and any change in inventory reserve		(13,144	)		(86,372	)
Accounts payable and accrued expenses		(57,116	)		(39,299	)
Deferred revenue		5,475			(1,004	)
Lease liability payable, operating lease		(36,450	)		0
Net Cash Used by Operating Activities		(47,493	)		(78,859	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		0			(12,641	)
Net Cash Used by Investing Activities		0			(12,641	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable		(263	)		(2,842	)
Net Cash Used by Financing Activities		(263	)		(2,842	)

NET DECREASE IN CASH		(47,756	)		(94,342	)
CASH AT BEGINNING OF PERIOD		666,756			557,026
CASH AT END OF PERIOD	$	619,000		$	462,684

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

Interest paid
$ 1,223 $ 3,049
Income taxes paid
$ - $ -

NON-CASH INVESTING AND FINANCING ACTIVITIES

Accrued preferred stock dividends
$ 75,000 $ 75,000
Issuance of common stock previously accrued for
$ 583 $ 35,427
Application of last payment of lease liability prepaid in previous period
$ - $ 726
Reclassification of accrued expense to stock payable
$ - $ 7,500
Recognition of operating lease right to use asset and related liability
$ - $ 172,500

NON-CASH FINANCING ACTIVITIES

Interest paid	$	0	$	335
Income taxes paid		0		0

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

Use of store inventory, capitalized as fixed asset	$	6,600	$	0
Accrued preferred stock dividends	$	0	$	25,000
Operating lease renewal, decrease in right to use asset and related liability	$	0	$	35,250

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

Table of Contents

AMERITYRE CORPORATION

Notes to the Unaudited Condensed Financial Statements

~~March 31,~~September 30, 2020

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 June 30, 2020 Annual Report on Form ~~10-K for the fiscal year ended June 30, 2019 (the “2019 Annual Report”).~~10-K. Operating results for the ~~fiscal~~ quarter ended ~~March 31,~~September 30, 2020 are not necessarily indicative of the results that may be expected for the current fiscal year ending June 30, ~~2020.~~2021.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies disclosed ~~therein~~herein have not changed since our audited financial statements and notes thereto included in our ~~2019~~June 30, 2020 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,~~their own shipping, 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,~~shipping 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,~~their own shipping, 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 ~~$6,275,~~$17,667, inclusive of ~~$945~~$1,633 of shipping and handling revenue (see below), as of ~~March 31,~~September 30, 2020. Deferred revenue was ~~$61,030~~$18,404, inclusive of ~~$4,879~~$45 of shipping and handling revenue (see below), as of ~~March 31,~~September 30, 2019.

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 ~~$945~~$1,633 as of ~~March 31,~~September 30, 2020 and ~~$4,879~~$45 as of ~~March 31,~~September 30, 2019.

~~Right to Use Assets – Leases~~

~~We account for all Company leases following a multi-step analysis process which includes:~~

●

~~Analysis of all agreements to determine if a lease exists, inclusive of this analysis is the length of the agreement and amount of the resulting liability. Based on this analysis we then would asses:~~

~~●Assets with a length less than one year are not considered leases and,~~

~~●Assets with a value of less than our capitalization policy of $2,500 are not considered a lease.~~

~~Table of Contents~~

~~Items that do not qualify as leases are treated similar to service agreements and expensed as incurred.~~

Once an item qualifies for lease accounting, we analyze the item for operating or finance lease treatment with the major difference that finance leases include interest as a term note would. In the case that a finance lease does not have a stated interest rate, we will impute the interest.

~~Both operating and finance leases result in a right to use asset and related lease liability on our balance sheet.~~

Items that enhance a lease asset, such as leasehold improvements, are capitalized with the related right to use such asset. Amortization of that improvement is based on all known facts inclusive of the lease term.

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 and warrants and shares issuable upon conversion of outstanding convertible notes have been excluded from the basic and fully diluted net ~~income (loss)~~loss per share calculation. We excluded 2,870,000 and ~~6,360,000~~3,970,000 common stock equivalents for the ~~periods~~quarters ended ~~March 31,~~September 30, 2020 and 2019, respectively, because they are ~~anti-dilutive as our closing stock price at the period end was lower than the strike price of options outstanding.~~anti-dilutive.

Other recent accounting pronouncements issued by the ~~Financial Accounting Standards Board (“FASB”)~~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.

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.

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~~slow moving inventory to determine if it is defective or obsolete. If not defective or obsolete we ~~presented~~present these items as non-current inventory, although all inventory is ready and available for sale at any moment.

Based on our lease accounting policy, we have identified the following operating leases. As of ~~March 31,~~September 30, 2020 we have no financing leases:

In March 2019 we negotiated a ~~five-year~~five year extension of the lease ~~for~~on 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 ~~$629,250,~~$557,550, payable at amounts ranging from $11,750 to $12,600 a month until June 30, 2024.

A former board member, Silas O. Kines, who passed away on January 11, 2012, was also 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~~long term liability recorded on the transaction. As of ~~March 31,~~September 30, 2020, $2,000 and ~~$61,906~~$61,604 (June 30, 2019, $2,000 and $62,089) were recorded for the current and long-term portion, respectively, of the related liability.

In June 2016, the Company executed a term note with U.S. Bank to finance critical manufacturing equipment and operating enhancements. The total amount financed was $55,068, at 5.59% interest, with payments of $1,059 due for 60 months starting July 2016. This note was paid in full in October 2019.

~~In February 2020, the Company secured a $50,000 line of credit with a local community bank. As of March 31, 2020, the line had not been used.~~

On January 1, 2018, 480,000 options were granted to the Company’s Chief Executive Officer as part of his employment offer. The options have an exercise price of $0.10, vest ratably January 1, 2018 to December 31, 2018 and expire December 31, 2021. We estimated the fair value of the stock options above at the grant date based on the following weighted average assumptions:

~~A summary of the status of our outstanding stock options as of March 31, 2020 and June 30, 2019 and changes during the periods then ended is presented below:~~

In April 2020, the Company secured a loan from the Small Business Administration Paycheck Protection Program. The ~~following table summarizes~~loan amount is $149,570 and has a term of 2 years at 1% interest. Per the ~~range~~terms of ~~outstanding~~the loan, the first payment is expected on or about November 15, 2020, unless the loan is fully forgiven. All or a portion of the loan can be forgiven to the extent that at least 60% of the loan proceeds are used for payroll costs and ~~exercisable options as~~the Company does not reduce its total number of ~~March 31, 2020:~~employees or reduce employee salaries or wages by 25% or more during the covered period of the loan. In October 2020, the Company’s bank that brokered this loan has recommended full forgiveness be provided by the Small Business Administration.

After an analysis of the above stock options expiration and in association with the Company’s desire to retain its Chief Executive Officer, the Board of Directors approved the termination of the 2017 Omnibus Stock Option and Award Plan on December 4, 2019. Any stock instrument available but unencumbered under this plan was also released.

On ~~December 4, 2019,~~July 22, 2020, the Board of Directors adopted the ~~2019~~2020 Equity Incentive Plan (the “2020 Plan”) which contains provisions for up to 2,500,000 stock-based instruments to be granted to employees, consultants and directors.

~~On December 18, 2019,~~Effective September 24, 2020, the Company ~~renewed~~filed a withdraw of designation related to the ~~Chief Executive Officer’s Employment Agreement.~~2013 Series Convertible Preferred Stock designation. In doing so, the State of Nevada also withdrew all preferred shares authorized. The Company will file a new ~~Agreement extends his term~~designation authorizing preferred shares should this be needed in the future.

No stock or options have been granted as of ~~employment to December 31, 2020. Inclusive~~September 30, 2020 or in ~~this new Agreement is a stock award of 1.98 million shares~~fiscal year 2021.

A summary of the ~~Company’s common~~status of our outstanding stock ~~vesting ratably over 12 months (January~~options as of September 30, 2020 ~~– December 2020), valued at a fixed rate of $0.0192, the average price per share of the Company’s common stock for the period December 24, 2019 to December 31, 2019.~~ and June 30, 2020, and changes during these periods is presented below:

On January 22, 2020, 60,000 shares of common stock were granted to the Company’s Chief Financial Officer as part of her employment renewal. The shares are valued as of January 21, 2020 and vest ratably on a quarterly basis through December 2020. No additional changes were made to her compensation on renewal of her employment.

On January 24, 2020, 460,000 shares of common stock were granted to the Company’s Board members as compensation for the term ending November 2020. Each non-executive Board member receives 93,750 shares, with the Audit Committee Chair receiving 156,250 shares and the Compensation Committee Chair receiving 116,250 shares. The shares vest ratably on a monthly basis over the January 2020 – November 2020 period. The shares are valued at $0.02, the closing price per share of our common stock on January 24, 2020.

In ~~April~~October 2020, the ~~Company secured a loan from~~Company’s bank that brokered the Company’s Small Business Administration Paycheck Protection ~~Program. The~~Program loan ~~amount is $149,570 and~~ has ~~a term of 2 years at 1% interest. Per~~recommended full forgiveness be provided by the ~~terms of the loan, the first payment is expected on or about November 15, 2020.~~Small Business Administration.

In April 2020, the Company modified, and filed with the State of Nevada, its 2013 Series Convertible Preferred Stock Designation of Rights (the “Designation of Rights”). The modification removed section 3.06 of the original Designation of Rights, which involved limitations on the automatic conversion of Preferred Stock to common stock.

~~In May 2020, the outstanding Preferred Shares automatically converted to 20,000,000 shares of common stock in accordance with the Designation of Rights conversion provisions.~~

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

~~The following~~This discussion and analysis ~~contain~~contains statements of a forward-looking ~~statements~~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 ~~the~~“Part I. Item 1A. Risk ~~Factors contained in our 2019 Annual Report~~Factors” as well as those discussed elsewhere in this report. The historical results set forth in this discussion and ~~analysis~~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.

Amerityre engages in the research and development, manufacturing, and sale of ~~solid~~ polyurethane ~~foam~~ tires. We have developed unique polyurethane formulations that allow us to make products with superior performance characteristics in the areas of abrasion resistance, energy efficiency and load-bearing capabilities, when compared to conventional rubber tires. We also believe that our manufacturing processes are more energy efficient than the traditional, rubber tire, manufacturing processes, in part because our polyurethane compounds do not require the multiple processing steps, extreme heat, and high pressure that are necessary to cure rubber. 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.

Our strategy continues to be based on focusing resources on the development of market segments where we have identified technological and product performance advantages. Top line sales revenue growth in the fiscal 2020 3rd quarter was 21.9% higher than the third quarter of fiscal 2019. Costs for raw materials remained stable during the fiscal third quarter of 2020. We continue to broaden our customer base while working to increase product sold to existing customers. With the US economy facing a major downturn in the coming months due to the COVID-19 pandemic, weakness in the overall economy remains a significant risk factor in the last quarter of fiscal year 2020 as well as fiscal year 2021.

To date, we have been successful in continuing to operate our business as a supplier to essential businesses. We have implemented social distancing in our workplace and implemented new work practices for cleaning work areas. These measures have not impacted the performance of our plant, and none of our employees have been infected. We have had some customers inform us that their business has slowed due to mandated business closures, and as a result their Amerityre orders will be reduced and/or delayed. Our suppliers have told us they do not expect any issues with supplying us raw materials when we require them. Several customers have requested additional time to pay their bills but currently all customer account balances are paid.

We ~~continue to~~ concentrate on three segments of the flat free tire market: light duty polyurethane foam tires, polyurethane elastomer industrial tires and agricultural tires. Our focus continues to be applications and markets where our advantages in product technology, tire performance, and customer service give us an opportunity to obtain premium pricing. Our most recent activities in these areas are set forth below:

Light Duty Polyurethane Foam Tires – The sale of polyurethane foam tires to original equipment manufacturers, distributors and dealers accounts for the majority of our revenue. We produce a broad range of products for the light duty tire market. Our product development and marketing efforts are focused on building customer relationships and expanding sales with original equipment manufacturers and tire distributors. Our competitive advantage is creating unique product solutions for customers who have challenging tire performance requirements that cannot be met by competitor offerings.

~~We continued~~Due to ~~experience strong~~the effect of COVID-19, we experienced lower than expected demand for our polyurethane foam tires in the 4th quarter of fiscal year 2020. However, sales have rebounded from a heavily depressed level in May 2020, ~~third quarter, exceeding our expectations. Higher~~and current sales ~~were driven by a strong overall economy~~levels are comparable to sales levels experienced pre-COVID. Sales for the ~~majority of~~fiscal first quarter 2021 were 7.4% higher than the ~~quarter, as well as seasonal factors that have traditionally boosted~~ sales ~~this time of year. The Coronavirus pandemic did not adversely affect our fiscal 2020 third quarter results, however, we expect there will be an adverse effect on demand for our product~~level in fiscal ~~2020 4~~^thfirst quarter as2020. Some of these sales are likely “catch up” sales related to the ~~USA and many parts~~reopening of our customers from the ~~world face an historical drop-in economic activity. At this time, it is not possible to estimate the exact magnitude of the revenue drop we will experience,~~COVID shutdown, but we ~~expect~~are seeing similar strong sales trends that ~~our sales will be adversely affected for at least~~we saw last year during the ~~next 2 fiscal quarters.~~pre-COVID period

Polyurethane Elastomer Industrial Tires – ~~We had negligible~~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. Due to other project priorities, we do not plan to devote significant resources towards promoting this product line.

The Company continues to see greater interest in its light-density elastomer formulation for use in tire applications where customers need higher abrasion resistance and load bearing capability. Elastothane TM 500 formulation provides better performance in these areas compared to our closed cell foam formulation. Lawn and garden tires continue to drive increased sales of ~~elastomer forklift and elastomer industrial tires during the fiscal 2020 third quarter.~~this formulation We continue to ~~generate interest in~~believe this new formulation represents a significant upside opportunity for our ~~elastomer tires produced in our Elastothane~~^TM~~500 formulation. Our trial programs for these tires continues to generate interest in various market segments.~~product portfolio.

Agricultural Tires – Agricultural tires sales continue again to ~~remain under pressure due~~be negatively impacted by poor farm income levels. However, we have seen some recent strength in farm commodity prices which may improve the financial position of farmers and allow them to ~~international trade issues and low farm incomes. The recent breakout of~~restart spending on equipment upgrades. However, we are not convinced yet that the ~~Coronavirus pandemic has introduced another significant headwind to the Agricultural sector. Adding to these factors, the collapse in oil prices has reduced demand~~prospect for ~~and the price of ethanol, which~~improved agricultural commodity pricing will ~~further reduce demand for corn.~~continue. We continue to ~~have discussions with original equipment manufacturers (OEMs)~~approach OEMs and large distributors about promoting and utilizing our tires for certain applications, but their belief that farmers will not pay extra for a premium product has limited our success to ~~identify new opportunities~~date. The introduction of our Elastothane^TM 500 formulation has enabled us to offer a better product alternative for ~~our elastomer products, but lack of demand from the farming community will continue to depress demand for our products in the Agricultural sector.~~abrasive applications.

~~Due to the Company’s limited resources and the current business climate, business development projects which require significant investment have been put on hold.~~ We believe investment in R&D for new and improved products is important to the continued growth and success of our overall business, and we will ~~continue to~~ selectively invest in promising opportunities that ~~fit~~can be supported within our current financial ~~plan.~~model. We have several product evaluation 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.

As described above, our product line covers ~~a wide range of~~ diverse market segments which are unrelated in terms of customer base, product distribution, market demands and competition. Our external sales team is comprised of independent manufacturer representatives, ~~with strong tire industry experience.~~whose experience is complementary to our product portfolio. The Company’s ~~strategy of targeted marketing campaigns, custom product development, and~~continued emphasis on proper product pricing and new marketing campaigns continue to drive more profitable sales. Our website ~~remains a valuable tool for educating our customers~~educates the marketplace about our ~~products.~~products as well as generates some online sales.

The Company recently borrowed $149,570 under the Small Business Administration Paycheck Protection Program and will be working with the Small Business Administration starting first quarter fiscal year 2021 on forgiveness provisions. This sum likely be recognized as income in the second quarter of fiscal 2021.

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.

We believe the following accounting policies are our critical accounting policies because they are important to the portrayal of our financial condition and results of operations and ~~they~~are in addition to revenue, inventory and stock valuation with accounting policies disclosed in our financial statements. The following require critical management judgments and estimates about matters that may be uncertain. If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations for future periods could be materially affected.

Patent and trademark costs have been capitalized at ~~March 31,~~September 30, 2020, totaling $487,633 with accumulated amortization of ~~$390,305~~$399,154 for a net book value of ~~$97,328.~~$88,479. Patent and trademark costs capitalized at ~~March 31,~~September 30, 2019, the prior year, totaled $487,633 with accumulated amortization of ~~$372,172~~$381,456 for a net book value of ~~$115,461.~~$106,177.

The patents which have been granted are being amortized over a period of 20 years. Patents which are pending or are being developed are not amortized. Amortization begins once the patents have been issued. As of ~~March 31,~~September 30, 2020 and 2019, respectively, there were no pending patents. Annually, pending or expired patents are inventoried and analyzed, which resulted in the recognition of a loss on abandonment, expiration or retirement of patents and trademarks of $-0- for each of the ~~three and nine month~~ periods ended ~~March 31,~~September 30, 2020 and 2019, respectively.

Amortization expense for the ~~nine month~~years ended ~~March 31,~~September 30, 2020 and 2019 was ~~$13,273~~$4,425 and ~~$17,144~~$4,425 respectively. The Company evaluates the recoverability of intangibles and reviews the amortization period on a continual basis utilizing the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other. We consider the following indicators, among others, when determining whether or not our patents are impaired:

Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our sales and cash flows. These key performance indicators include:

The following summary table presents a comparison of our results of operations for the fiscal quarters ended ~~March 31,~~September 30, 2020 and 2019 with respect to certain key financial measures. The comparisons illustrated in the table are discussed in greater detail below.

Quarter Ended ~~March 31,~~September 30, 2020 Compared to ~~March 31,~~September 30, 2019

Net Revenues. Net revenues of ~~$1,121,805~~$1,051,286 for the quarter ended ~~March 31,~~September 30, 2020, represents ~~a 21.0%~~an 7.4% increase over net revenues of ~~$926,811~~$979,297 for the same period in 2019. These ~~better than expected~~ results ~~were driven by higher polyurethane foam tires~~exceeded our expectations. We did not expect sales to rebound quickly from ~~current customers.~~the depressed sales levels seen in the previous quarter ending June 30^th, 2020, due to the COVID-19 pandemic. We expect our polyurethane foam products to continue to ~~account for~~constitute the majority of our sales during the ~~upcoming~~remainder of the fiscal ~~quarter.~~year.

Cost of Revenues. Cost of revenues for the quarter ended ~~March 31,~~September 30, 2020 was ~~$768,943~~$707,566 or ~~68.5%~~67.3% of sales compared to ~~$637,804~~$690,599 or ~~68.8%~~70.5% of sales for the same period in ~~2019~~2019. This increase in Gross Margin was due to a favorable product mix compared to the year ago period. We ~~anticipate~~have started to see indications that raw material ~~cost volatility~~costs, particularly chemical feedstocks, will increase in price due to a tightening of supply in the marketplace. We also expect tariffs to remain ~~stable~~in place for the foreseeable future, regardless of the results of the US national elections in November 2020. These scenarios will likely keep pressure on our Gross Margins for the rest of the fiscal ~~year 2020, with no additional costs associated with trade tariffs.~~ year.

Gross Profit. Gross profit for the quarter ended ~~March 31,~~September 30, 2020 was ~~$352,862~~$343,720 compared to ~~$289,007~~$288,698 for the same period in ~~2019. Gross profit for the quarter ended March 31, 2020 increased by $63,855~~2019, an increase of $55,022 or ~~22.1% over~~18.7% ,over the same period in ~~2019 due to higher revenues.~~2019. The ~~March 31,~~September 30, 2020 gross profit reflects a 32.7% gross margin for product sales compared to a gross margin on product sales of ~~31.5 was slightly higher than the 31.2% achieved in the same period~~29.5% in 2019.

Research & Development Expenses (R&D). Research and development expenses for the quarter ended ~~March 31,~~September 30, 2020 were ~~$26,614~~$20,471 compared to ~~$23,297~~$26,016 for the same period in 2019. 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 ~~March 31,~~September 30, 2020 were ~~$52,652~~$59,800 as compared to ~~$43,184~~$43,471 for the same period in 2019. The difference between periods isreflects higher commission expenses paid during the recent period due to ~~increased commissions expense.~~higher sales volumes.

General & Administrative Expenses. General and administrative expenses for the quarter ended ~~March 31,~~September 30, 2020 were ~~$173,297~~$210,486 compared to ~~$168,984 for the same period in 2019.~~

~~Other Income (Expense), net.~~ Other expense, net, for the quarter ended March 31, 2020 was ($3) compared to other income, net, of $16,337 for the same period in 2019. The primary driver of this variance is lower interest expense due to the payoff of debt offset by the absence of the receipt of a USDA federal grant for building lighting upgrades in 2019.

~~Net Income~~~~. Net income for the quarter ended March 31, 2020 of $100,296 compared to $69,879~~$193,430 for the same period in 2019, ~~an increase in net income of $30,417.~~

~~Net Revenues.~~ Net revenues of $3,168,542 for the nine-month period ended March 31, 2020, represents a 24.8% increase over net revenues of $2,539,160 for the same period in 2019. These results were above our expectations and driven by ~~increased demand for polyurethane foam tires from current customers.~~

~~Cost of Revenues.~~ Cost of revenues for the nine-month period ended March 31, 2020 was $2,228,300 or 70.3% of sales compared to $1,836,081 or 72.3% of sales for the same period in 2019. The Gross margin of 29.66% for the nine months ending March 31, 2020 was approximately 2% higher ~~than the 27.69% from the same period in 2019, and was driven by sales of higher margin products.~~compensation costs. We ~~expect raw material costs to remain steady in the FY 2020 4~~^th ~~quarter.~~

~~Gross Profit.~~ ~~Gross profit for the nine-month period ended March 31, 2020 was $940,242 compared to $703,079 for the same period in 2019, an increase of $237,163 or 33.7% over the same period in 2019.~~

~~Research & Development Expenses (R&D).~~ Research and development expenses for the nine-month period ended March 31, 2020 were $88,527 compared to $71,087 for the same period in 2019. The higher expenses in the fiscal year 2020 period are due to costs associated with payroll and our new bike tire evaluation and test program. The Company plans to continue to ~~invest in R&D as a key component of~~control costs and find more efficient ways to conduct our ~~new product and~~ business ~~improvement initiatives.~~activities.

~~Sales & Marketing Expenses.~~ ~~Sales and marketing expenses for the nine-month period ended March 31, 2020 were $147,432 compared to $147,433 for the same period in 2019.~~

~~General & Administrative Expenses~~. General and administrative expenses for the nine-month period ended March 31, 2020 were $539,663 compared to $522,427 for the same period in 2019. The difference between periods was due to higher payroll costs, planned higher legal costs related to the engagement of new SEC counsel, offset by lower repairs, amortization and depreciation expenses.

Other Income, net. Other income for the ~~nine-month period~~quarter ended ~~March 31,~~September 30, 2020 was ~~$2,974~~$820 compared to ~~$17,320~~other income of $3,122 for the same period in 2019. The primary driver in this variance is ~~lower interest expense due to the payoff~~loss on asset disposal of ~~debt offset by the absence of the receipt of a USDA federal grant for building lighting upgrades in 2019.~~$2,853.

Net Income ~~(Loss)~~. Net income for the ~~nine-month period~~quarter ended ~~March 31,~~September 30, 2020 of ~~$167,594~~$53,783 compared to a net ~~loss~~income of ~~$20,548~~$28,903 for the same period in 2019, an increase in ~~positive~~ net income of ~~$188,142.~~$24,880.

The following table sets forth ~~a summary of~~ our cash flows for the ~~periods below.~~ quarters ended September 30, 2020 and 2019.

Net Cash ~~Provided/~~(Used)/Provided by Operating Activities. ~~In 2019,~~Our primary sources of operating cash during the ~~Company decided~~quarter ended September 30, 2020 came from collections from customers on balances from June 30, 2020 and sales for the quarter. Our primary use of operating cash was an increase in prepaid and other current assets, specifically related to ~~use~~renewal of insurance policies (a normal reoccurrence in our first quarter of fiscal year 2021), increase in inventory levels in preparation for shipment of a ~~portion of its available cash to make~~large order in early October and a lump sum payment for annual insurance premiums rather than finance these expenditures over the course of the year. As a result, our prepaid assets increased in the period. Finished good inventories were higher than normallarger accounts payable balance at ~~the end of the FY~~September 30, 2020 ~~third quarter~~versus June 30, 2020 (a timing variance due to ~~an inventory build of product which we shipped in~~when the first week of April 2020. In addition, our receivable balance at period end was high, much of which has subsequently been collected; offset by a lower accounts payable and accrued expense balance at period end.quarter ended). Net cash used inby operating activities was ~~$72,976~~$47,493 for the ~~period~~quarter ended ~~March 31,~~September 30, 2020 compared to net cash provided by operating activities of ~~$188,340~~$78,859 for the same period in 2019.

Non-cash items include depreciation and amortization and ~~stock-based~~stock based compensation. ~~Amortization includes the amortization of our right to use asset, our facility rent.~~ Our net income was ~~$167,594~~$53,783 for the ~~period~~quarter ended ~~March 31,~~September 30, 2020 compared to a net ~~loss~~income of ~~$20,548~~$28,903 for the same period in 2019. The net income for the ~~period~~quarter ended ~~March 31,~~September 30, 2020 included non-cash expenses for depreciation and amortization of ~~$181,390 and~~$55,062, stock-based compensation of ~~$31,977.~~$12,323 and a loss on asset disposal of $2,853. As of ~~March 31,~~September 30, 2019, depreciation and amortization was ~~$65,282~~$25,194 and stock-based compensation totaled ~~$27,897.~~$10,119.

Net Cash Used by Investing Activities.Net ~~cash~~cased used by investing activities was ~~$37,276~~$-0- for the ~~period~~quarter ended ~~March 31, 2020 and $99,738 for the same period in 2019. In fiscal year 2020, we invested in manufacturing equipment and upgraded our in-house computer infrastructure and server. In fiscal year~~September 30, 2020; as of September 30, 2019 we ~~upgraded our plant lightening.~~used $12,641 as we purchased new computers and rebuilt production equipment.

Net Cash Used by Financing Activities. ~~In line with the Company’s initiative to pay off high interest term debt with available~~Net cash ~~a total of $25,121 was~~ used inby financing activities was $263 for the ~~period~~quarter ended ~~March 31,~~September 30, 2020 and ~~$14,065~~$2,842 for the same period in 2019. The use of cash for the ~~period~~quarter ended ~~March 31,~~September 30, 2020 was ~~used to retire all~~payment of ~~our term debt early.~~notes payable.

Our principal sources of liquidity consist of cash 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 ~~March 31,~~September 30, 2020, the line had not been used. In April 2020, the Company secured a Small Business Administration Paycheck Protection Program loan for $149,570, which has a term of 2 years at 1% interest. The first payment is expected to be due on or about November 15, 2020. ~~However, an analysis of~~In October 2020, the ~~terms of the loan leads management to conclude~~Company’s bank that ~~it is likely that the Company can meet all requirements necessary to have~~brokered this loan ~~forgiven before any loan payments need to~~has recommended full forgiveness be ~~made.~~provided by the Small Business Administration.

Historically, management 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.

As part of its effort to maintain adequate working capital levels, Amerityre has not declared dividends on its preferred stock since June 2016. These unpaid dividends have accrued in the amount of $25,000 per quarter since that time. The preferred stock automatically converted on May 13, 2020 into 20,000,000 shares of common stock.

We continue to have access to a short-term receivable factoring agreement with a third party to sell our receivable invoices. This agreement enables us to sell individual customer invoices for faster cash flow to the Company. As of March 31, 2020, we have not needed to activate this financing option due to increased focus on enforcement of established collection policies and proactive communication with customers.

At ~~May 13,~~November 6, 2020, our total cash balance was ~~$640,124,~~$526,702, none of which is restricted; accounts receivables was ~~$206,069;~~$384,045; and inventory, net of reserves for slow moving or obsolete inventory, and other current assets was ~~$655,795.~~$610,244. Our total indebtedness, specifically which management reviews for cash management, was ~~$1,343,271~~$1,223,386 and includes ~~$1,129,795~~$476,962 in accounts payable and accrued expenses, ~~and operating lease liability; $2,000~~$92,844 in current portion of long-term debt, ~~and $61,906~~$120,329 in long-term ~~debt;~~debt and ~~$149,570~~$533,250 in ~~Paycheck Protection Program funding.~~total operating lease liability.

We continue to take actions to improve our liquidity and access to capital resources. ~~To fully execute the annual strategic business plan discussed during our shareholder meeting in December 2019, we require more capital resources. However, management~~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, and additional financing was secured in April 2020 from the USU.S. government Paycheck Protection Program, a Small Business Administration loan program initiated to combat the negative effects of ~~the novel coronavirus (COVID-19)~~COVID-19 on USU.S. small businesses. These new sources of liquidity ~~will be~~have been key tools to ~~help~~provide the Company with the tools to overcome negative effects of the coronavirus on our business.

We are ~~intent on focusing~~focused on the sale and distribution of profitable product lines. Management continues to look for further financing facilities at affordable terms that will allow the Company to maintain sufficient ~~raw material and finished goods inventory~~working capital to capitalize on new sales growth opportunities. We are limiting our capital expenditures to that required to maintain current manufacturing capability or support key business initiatives identified in our strategic sales plan. ~~We continue to work to reduce our overall costs wherever possible. We believe that the Company’s emphasis on proper product pricing and new marketing campaigns has driven more profitable sales.~~

In assessing our liquidity, management reviews and analyzes our current cash, accounts receivable, accounts payable, capital expenditure commitments and other obligations. In connection with the preparation of our financial statements for the period ended ~~March 31,~~September 30, 2020, we have analyzed our cash needs for the next twelve months. We have concluded that our available cash and accounts receivables are sufficient to meet our current minimum working capital, capital expenditure and other cash requirements for this period. We expect to limit manufacturing and sales operation investments ~~beyond the current level~~ until the negative effects of the COVID-19 pandemic can be fully quantified and addressed. Although we ~~believe~~have seen a significant increase in business activity in the recent quarter, we are not assured that a resurgence of the COVID-19 virus will not cause another significant decrease in demand from our customers If there is a new shutdown of the economy will ultimately improve over this 12 month period, we cannot assure you that the economy will rebound as anticipated. If either the pandemic does not sufficiently abate or the economic consequences are more severe,, 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 ~~May 15~~November 9, 2020, the Company has approximately ~~707,000~~25,707,000 shares ~~of common stock~~ 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.

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.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding ~~the negative impact of COVID-19 on our business and the economy,~~ economic conditions in general and in the agricultural market, in particular, ~~tariffs imposed by China and the US arising from the current geo-political tension between those jurisdictions, our ability to increase our authorized capital and pursue future financings,~~ our sales prospects in light of new products, increased sales and resulting profits, continued strength of our current polyurethane foam tire market segment, our ability to timely obtain raw materials at reasonable costs and in sufficient quantities to manufacture products and meet consumer demand, our ability to have a portion of our Paycheck Protection Program loan forgiven and the amount that will ultimately be forgiven, 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 ~~2019~~ Annual Report ~~and~~on Form 10-K for the ~~COVID-19 risk factor in this report.~~year ended June 30, 2020. 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.

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 ~~SEC’s~~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 athe 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 ~~Securities Exchange Act of 1934 and the~~ SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

For information regarding risk factors, see “Part I. Item 1A. Risk Factors,” in our ~~2019~~2020 Annual Report. ~~We also have the following information regarding additional risk factors:~~

~~Public health epidemics or outbreaks, such as COVID-19, could materially and adversely impact our business.~~

In December 2019, a novel strain of coronavirus (COVID-19 emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread throughout the world and infections have been reported globally.

Because COVID-19 infections have been reported throughout the United States, federal, state and local governmental authorities have issued stay-at-home orders (which vary at the state and local level), proclamations and/or directives aimed at minimizing the spread of COVID-19. Additionally, more restrictive proclamations and/or directives may be issued in the future. To date, Amerityre has continued normal operations as we provide products which support essential businesses and operations. However, there is no guarantee that we will be able to continue regular operations going forward in light of COVID-19. These government restrictions have also negatively impacted the operations of some of our customers, leading to delay and/or cancellation of orders and uncertain order levels going forward. There is also a risk that some customers may not be able to pay for Amerityre products already shipped due to reductions in their revenues and a deterioration of their financial position as a result of COVID-19.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 pandemic and government restrictions and other effects thereof, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, the Company, or our customers may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations and revenue. Further, we cannot be certain when businesses will begin hiring back unemployed workers and the extent to which workers may elect to remain on unemployment insurance where they make more money not working. All of these factors may affect supply chains which can impact our needs to fill customer orders and reduce demand for our products. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations.

~~The counter-COVID-19 measures taken to date will likely negatively impact the Company’s business during the upcoming fiscal 4~~^th quarter and potentially beyond. Management expects that all of its business segments, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 pandemic on the Company’s business and the duration for which it may have an impact cannot be determined at this time. There can therefore be no assurance that the pandemic will not have a material adverse impact on the future results of the Company. The extent of the impact will depend on future developments, including actions that have been or may be taken to contain COVID-19 and the duration of time until businesses can reopen following government shutdowns and resume normal operations.

Our Annual Stockholder’s Meeting is scheduled for 10am, Wednesday, December 2, 2020 at 1501 Industrial Rd., Boulder City, NV 89005.

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.

	March 31, 2020			June 30, 2019
	(Unaudited)
Raw Materials	$	251,244		$	221,767
Finished Goods		673,684			557,977
Inventory reserve		(84,682	)		(61,513	)
Inventory - net	$	840,246			718,231

	September 30, 2020			June 30, 2020
	(Unaudited)
Raw Materials	$	227,096		$	263,573
Finished Goods		670,015			618,104
Inventory reserve		(89,296	)		(87,006	)
Inventory – net (current and long term)	$	807,815		$	794,671

	March 31, 2020			June 30, 2019
	(Unaudited)
Facility lease	$	629,250		$	735,000
Leasehold improvements related to our facility		280,376			280,376
Accumulated amortization – leasehold improvements		(179,306	)		(170,120	)
Right to use leased assets, operating, net	$	730,320		$	845,256

	September 30, 2020			June 30, 2020
	(Unaudited)
Facility lease	$	557,550		$	594,000
Leasehold improvements related to our facility		280,376			280,376
Accumulated amortization – leasehold improvements		(185,431	)		(182,369	)
Right to use leased assets, operating, net	$	652,495		$	692,007

~~Risk-free interest rate~~	~~2.010~~	%
~~Expected life~~	~~3.0~~	~~years~~
~~Expected volatility~~	~~114.38~~	%
~~Dividend yield~~	~~0.00~~	%

	March 31, 2020			June 30, 2019
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	421,653		$	557,026
Accounts receivable		392,764			277,690
Inventory - net		584,544			448,407
Prepaid and other current assets		119,437			82,596
Total Current Assets		1,518,398			1,365,719

RIGHT TO USE LEASE ASSETS, OPERATING, NET		730,320			845,256

PROPERTY AND EQUIPMENT
Molds and models		583,611			583,611
Equipment		3,033,823			3,003,797
Furniture and fixtures		73,423			66,173
Software		247,610			247,610
Less - accumulated depreciation		(3,816,853	)		(3,763,672	)
Total Property and Equipment - net		121,614			137,519

OTHER ASSETS
Patents and trademarks - net		97,328			110,601
Non-current inventory		255,702			269,824
Deposits		11,000			11,000
Total Other Assets		364,030			391,425
TOTAL ASSETS	$	2,734,362		$	2,739,919

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	662,922		$	649,046
Current portion of long-term debt		2,000			13,609
Current portion of lease liability		144,600			141,000
Deferred revenue		6,275			19,408
Total Current Liabilities		815,797			823,063

Long-term debt, net of current portion		61,906			75,418
Long-term lease liability		484,650			594,000
TOTAL LIABILITIES		1,362,353			1,492,481

STOCKHOLDERS’ EQUITY
Preferred stock: 5,000,000 shares authorized of $0.001 par value, 2,000,000 shares issued and outstanding, respectively		2,000			2,000
Common Stock: 75,000,000 shares authorized of $0.001 par value, 48,922,868 and 47,727,867 shares issued and outstanding, respectively		48,923			47,728
Additional paid-in capital		62,714,077			62,695,035
Stock payable		12,323			583
Accumulated deficit		(61,405,314	)		(61,497,908	)
Total Stockholders’ Equity		1,372,009			1,247,438
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,734,362		$	2,739,919

	For the Three Months Ended March 31,						For the Nine Months Ended March 31,
	2020			2019			2020			2019

NET SALES	$	1,121,805		$	926,811		$	3,168,542		$	2,539,160

COST OF GOODS SOLD		768,943			637,804			2,228,300			1,836,081

GROSS PROFIT		352,862			289,007			940,242			703,079

EXPENSES
Research and development		26,614			23,297			88,527			71,087
Sales and marketing		52,652			43,184			147,432			147,433
General and administrative		173,297			168,984			539,663			522,427

Total Expenses		252,563			235,465			775,622			740,947

INCOME/(LOSS) FROM OPERATIONS		100,299			53,542			164,620			(37,868	)

OTHER INCOME/(EXPENSE)
Interest expense		(785	)		(711	)		(1,223	)		(3,049	)
Interest income		286			86			579			318
Other income		496			16,962			3,618			20,051
Total Other Income/(Expense), net		(3	)		16,337			2,974			17,320

NET INCOME/(LOSS)		100,296			69,879			167,594			(20,548	)

Preferred Stock Dividend		(25,000	)		(25,000	)		(75,000	)		(75,000	)

NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	75,296		$	44,879		$	92,594		$	(95,548	)

BASIC AND DILUTED INCOME/(LOSS) PER SHARE	$	0.00		$	0.00		$	0.00		$	(0.00	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		48,260,422			46,532,867			48,301,467			45,638,048

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

Interest paid	$	1,223	$	3,049
Income taxes paid	$	-	$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES

Accrued preferred stock dividends	$	75,000	$	75,000
Issuance of common stock previously accrued for	$	583	$	35,427
Application of last payment of lease liability prepaid in previous period	$	-	$	726
Reclassification of accrued expense to stock payable	$	-	$	7,500
Recognition of operating lease right to use asset and related liability	$	-	$	172,500

	March 31, 2020								June 30, 2019
				Weight Average			Intrinsic					Weight Average			Intrinsic
	Shares			Exercise Price			Value		Shares			Exercise Price			Value
Outstanding beginning of period		3,970,000		$	0.12					3,730,000		$	0.13
Granted		-		$	0.00					480,000		$	0.10
Expired/Cancelled		(1,100,000	)	$	(0.14	)				(240,000	)	$	(0.10	)
Exercised		-		$	0.00					-		$	0.00
Outstanding end of period		2,870,000		$	0.12		$	-		3,970,000		$	0.12		$	-
Exercisable		2,870,000		$	0.12		$	-		3,970,000		$	0.12		$	-

		Outstanding						Exercisable
Range of Exercise Prices		Number Outstanding at March 31, 2020		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable at March 31, 2020		Weighted Average Remaining Contractual Life
$	0.08		150,000		1.67	$	0.08		150,000		1.67
$	0.10		1,920,000		0.94	$	0.10		1,920,000		0.94
$	0.17		800,000		1.17	$	0.17		800,000		1.17
			2,870,000						2,870,000

	September 30, 2020						June 30, 2020
			Weighted Average		Intrinsic					Weighted Average		Intrinsic
	Shares		Exercise Price		Value		Shares			Exercise Price		Value
Outstanding beginning of period		2,870,000	$	0.12				3,970,000		$	0.12
Granted		0	$	0.00						$	0.00
Expired/Cancelled		-	$	0.00				(1,100,000	)	$	0.10
Exercised		0	$	0.00				0		$	0.00
Outstanding end of period		2,870,000	$	0.12	$	0		2,870,000		$	0.12	$	0
Exercisable		2,870,000	$	0.12	$	0		2,870,000		$	0.12	$	0

	•	~~any changes in the market relating to the patents that would decrease the life of the asset;~~
	•	~~any adverse change in the extent or manner in which the patents are being used;~~
	•	~~any significant adverse change in legal factors relating to the use of the patents;~~
	•	~~current period operating or cash flow loss combined with our history of operating or cash flow losses;~~
	•	~~future cash flow values based on the expectation of commercialization through licensing; and~~
	•	~~current expectations that, more likely than not, the patents will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.~~

	For the Three Months Ended March 31,									For the Nine Months Ended March 31,
	(in 000’s)						Change			(in 000’s)						Change
	2020			2019			2020 vs. 2019			2020			2019			2020 vs. 2019
Net revenues	$	1,122		$	927			21.0	%	$	3,169		$	2,539			24.8	%
Cost of revenues		(769	)		(638	)		20.5	%		(2,229	)		(1,836	)		21.4	%
Gross profit		353			289			22.1	%		940			703			33.7	%
Research & Development		(27	)		(23	)		17.4	%		(89	)		(71	)		25.4	%
Sales and Marketing		(53	)		(43	)		23.3	%		(147	)		(147	)		0.0	%
General and Administrative		(173	)		(169	)		2.4	%		(539	)		(522	)		3.3	%
Other income (expense)		-			16			(100.	%)		3			16			(82.4	%)
Net income (loss)		100			70			44.9	%		168			(21	)		(940.0	%)
Preferred stock dividend		(25	)		(25	)		0.00	%		(75	)		(75	)		0.0	%
Net income (loss) attributable to common shareholders	$	75		$	45			70.5	%	$	93		$	(96	)		(197.9	%)

	Three Month Period Ended September 30,						Percent Change
	(in 000’s)
	2020			2019			2020 vs. 2019
Net revenues	$	1,051		$	979			7.4	%
Cost of revenues		(708	)		(690	)		2.5	%
Gross profit		343			289			18.7	%
Research and development expenses		(20	)		(26	)		(23.1	)%
Sales and marketing expense		(60	)		(43	)		39.5	%
General and administrative expense		(210	)		(193	)		8.8	%
Loss on asset disposal		(3	)		-			100.0	%
Other income		4			2			100.0	%
Net income		54			29			86.2	%
Preferred stock dividend		-			(25	)		(100.0	)%
Net income (loss) attributable to common shareholders	$	54		$	4			1,250.0	%

	Nine Months ended Mar. 31,
	(in 000’s)
	2020			2019
Net cash (used) provided by operating activities	$	(73	)	$	188
Net cash used in investing activities		(37	)		(100	)
Net cash used in financing activities		(25	)		(14	)
Net (decrease) increase in cash during the period	$	(135	)	$	74

		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	Bylaws of the Company	8-K	9/25/13	3.02
3.5	Certificate of Amendment to the 2013 Series Convertible Preferred Stock	8-K	4/28/20	3.1
10.1	Employment Agreement between the Company and Michael Sullivan	8-K	12/20/19	5.02

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)

	Periods ended Sept. 30,
	(in 000’s)
	2020			2019
Net cash used by operating activities	$	(48	)	$	(79	)
Net cash used by investing activities		-			(13	)
Net cash used by financing activities		-			(2	)
Net increase (decrease) in cash during the period	$	(48	)	$	(94	)

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)