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Articles 

Amerityre Corp. Reports Operating Results (10-Q)

November 14, 2012 | About:

Amerityre Corp. (AMTY) filed Quarterly Report for the period ended 2012-09-30.

Amerityre Corporation has a market cap of $6.1 million; its shares were traded at around $0.15 with and P/S ratio of 1.4.

Highlight of Business Operations:

Cost of revenues. Cost of Revenues for the three month period ended September 30, 2012 was $539,428 or 59.1% of revenues compared to $876,947 or 65.0% of revenues for the same period in 2011. Cost of revenues decreased primarily due to the decrease in net revenues.

Cost of revenues. Cost of Revenues for the three month period ended September 30, 2012 was $539,428 or 59.1% of revenues compared to $876,947 or 65.0% of revenues for the same period in 2011. Cost of revenues decreased primarily due to the decrease in net revenues.

Cost of revenues. Cost of Revenues for the three month period ended September 30, 2012 was $539,428 or 59.1% of revenues compared to $876,947 or 65.0% of revenues for the same period in 2011. Cost of revenues decreased primarily due to the decrease in net revenues.

Gross profit. Gross profit for three month period ended September 30, 2012 was $373,782 compared to $472,218 for the same period in 2011. Gross profit for the three month period ended September 30, 2012 decreased by $98,436 or 20.8% over the same period in 2011 due primarily to the decrease in net revenues.

At September 30, 2012, our total cash was $428,849, none of which is restricted and our total indebtedness was $1,058,068. Our total indebtedness at September 30, 2012 includes $357,815 in accounts payable, $356,957 in principal and interest for secured convertible promissory notes, $261,837 in accrued expenses, $24,274 in current portion of long-term debt, $3,345 in deferred revenue and $53,840 in long-term debt. As of September 30, 2012, our current ratio, which measures a company s ability to pay its short term debt, was 1.56. Our debt ratio as of September 30, 2012 was 0.39. The Company currently does not have a credit facility. Management, over the past year, has worked with our vendors to obtain extended credit terms and increase credit lines. We have improved the lines of communications with our vendors often integrating the vendor into the decision making process. We have succeeded in these endeavors and appreciate the continued support of our vendors. During the same period, management has also improved its customer credit policies and procedures and is aggressively pursuing receivable collections. As of this filing, our accounts receivable and accounts payable turnover rates, as calculated over the past six months, are approximately 40 days and 50 days respectively. Management is intent, in spite of losing a significant number of revenue growth opportunities due to cash flow constraints, on focusing on the sale and distribution of profitable product lines. Management has adopted a more aggressive business plan that involves the acquisition of higher output production equipment and maintaining sufficient raw material and finished goods inventory levels to capitalize on revenue growth opportunities. Over the past nine months, management has invested approximately $116,000 in capital equipment to improve employee efficiency, thus reducing overall costs, and to promote sales growth. These investments include the replacement of an outdated server and computer workstations; the installation of a fully automated telephone system to support customer sales orders; and forklift tire production equipment to support sales orders. No additional capital expenditures are anticipated over the next six months, unless they support sales development and product improvement. Management is also working to reduce its overall costs. For example, we renegotiated the building lease in June 2012, resulting in an annual rent decrease of $48,000. The Company has increased its efforts to obtain financing through means that previously were not considered such as preferred stock offerings and structured debt. As of this filing, we have completed a private offering of convertible preferred stock, which generated net proceeds of $1,074,114. We have also redeemed or converted $605,800 of the $755,800 in secured convertible promissory notes (the “Notes”) placed in September 2010. Negotiations are currently underway to redeem, convert or obtain an 18 month extension on the remaining $150,000 in Notes. In addition, we are currently attempting to obtain approval for financing in the form of structured debt. We anticipate having this financing transaction completed during the third quarter of fiscal 2013. In our Proxy Statement related to the Annual Stockholder Meeting scheduled for December 4, 2012, we have requested that the stockholders approve an increase in the authorized shares of common stock from 40 million to 55 million. The increase would allow us to convert the preferred stock mentioned above into common stock. In addition, the increase would provide the Company with approximately 11,133,000 shares authorized and available for issuance. However, these authorized but unissued and unreserved shares of our common stock could be utilized as necessary to fund the expansion of our manufacturing operations or to obtain additional working capital. The success of the current business strategy is dependent upon obtaining additional working capital. If we are unable to obtain approval for the structured debt mentioned above, we would be required to raise additional working capital to continue operations.

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About the author:

10qk
Charlie Tian, Ph.D., is the founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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