As filed with the Securities and Exchange Commission on March 9, 2006

                              Registration No. 333-

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                              AMERITYRE CORPORATION
             (Exact name of registrant as specified in its charter)

              Nevada                      3011                    87-0535207
 (State or Other Jurisdiction  (Primary Standard Industrial   (I.R.S. Employer
       of Incorporation or           Classification            Identification
         Organization)                Code Number)                 Number)


                              1501 Industrial Road
                           Boulder City, Nevada 89005
                                 (702) 294-2689
                   ------------------------------------------
       (Address, including zip code, and telephone number, including area
               code, of Registrant's principal executive offices)


                               Richard A. Steinke
                      President and Chief Executive Officer
                              AMERITYRE CORPORATION
                              1501 Industrial Road
                           Boulder City, Nevada 89005
                                 (702) 294-2689
                   ------------------------------------------
(Name, address, including zip code, and telephone number, including area
                          code, of agent for service)

                                 WITH COPIES TO:

                            Richard A. Friedman, Esq.
                              Eric A. Pinero, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                                 (212) 930-9700
                    ----------------------------------------

If any of the  securities  being  registered on this Form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [x]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number of the  earlier  effective
registration statement for the same offering. [ ] ________

If this Form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ] ________

If this form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ] ________

If delivery  of the  prospectus  is  expected  to be made  pursuant to Rule 434,
please check the following box. [ ] ________

<PAGE>
<TABLE>
<CAPTION>
                         CALCULATION OF REGISTRATION FEE

-------------------------------------------------- ------------------- ------------------ -------------------- --------------
    Title of each class of securities to be          Amount to be          Proposed        Proposed maximum     Amount of
                   registered                         registered           maximum            aggregate        registration
                                                                        offering price      offering price         fee
                                                                          per share
-------------------------------------------------- ------------------- ------------------ -------------------- --------------
<S>           <C>                                          <C>                <C>                 <C>                <C>
Common stock, $.001 par value                           1,360,000(1)       $7.03(2)            $9,560,800.00      $1,023.01

-------------------------------------------------- ------------------- ------------------ -------------------- --------------
Common stock, $.001 par value, issuable upon              107,500(4)       $5.00(3)              $537,500.00         $57.51
exercise of Class A warrants
-------------------------------------------------- ------------------- ------------------ -------------------- --------------
Common stock, $.001 par value, issuable upon              107,500(5)       $5.50(3)              $591,250.00         $63.26
exercise of Class B warrants
-------------------------------------------------- ------------------- ------------------ -------------------- --------------

-------------------------------------------------- ------------------- ------------------ -------------------- --------------
                                           Total        1,575,000                              $10,689,550.00      $1,143.78
-------------------------------------------------- ------------------- ------------------ -------------------- --------------
</TABLE>

(1)  Includes  (i) 860,000  shares of our common  stock  issued  pursuant to our
February  2006 private  placement,  and (ii) 500,000  shares of our common stock
issued  upon  the  exercise  of stock  options  in 2005  which  were  issued  as
compensation for consulting  services performed on our behalf, each of which may
be offered pursuant to this registration statement.

(2)  Estimated  solely for  purposes  of  calculating  the  registration  fee in
accordance with Rule 457(c) under the Securities Act of 1933,  using the average
of the high and low price as reported on the Over-The-Counter  Bulletin Board on
March 8, 2006, which was $7.03 per share.

(3)  Estimated  solely for  purposes  of  calculating  the  registration  fee in
accordance with Rule 457(g) under the Securities Act of 1933, using the exercise
price  of the  Class  A and  Class  B  warrants,  which  are  $5.00  and  $5.50,
respectively.

(4) Includes shares of our common stock underlying Class A warrants  exercisable
at $5.00 per share issued to the selling stockholders.

(5) Includes shares of our common stock underlying Class B warrants exercisable
at $5.50 per share issued to the selling stockholders.

The Registrant hereby amends this  Registration  Statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this Registration  Statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933  or  until  the  Registration  Statement  shall  become
effective  on such  date  as the  Securities  and  Exchange  Commission,  acting
pursuant to said Section 8(a), may determine.

                                       2
<PAGE>
                   SUBJECT TO COMPLETION, DATED MARCH 9, 2006

PRELIMINARY PROSPECTUS

                               [GRAPHIC OMMITED]
                              AMERITYRE CORPORATION

                     Up to 1,575,000 Shares of Common Stock

This  prospectus  relates to the  resale by the  selling  stockholders  of up to
1,575,000  shares of our common  stock,  including  up to (i) 860,000  shares of
common  stock  issued  pursuant to our February  2006  private  placement,  (ii)
500,000  shares of our common stock issued upon the exercise of stock options in
2005,  (iii)  107,500  shares of common stock  issuable upon the exercise of our
Class A warrants,  and (iv)  107,500  shares of common stock  issuable  upon the
exercise of our Class B warrants.  1,075,000  shares  being  registered  in this
prospectus  relate to our  February  2006  private  placement of an aggregate of
107,500  units at a purchase  price of $36.00 per unit.  Each unit consists of 8
shares of our common stock, a Class A warrant to purchase of one share of common
stock for 3 years from the date of issuance  at an  exercise  price of $5.00 per
share, and a Class B warrant for the purchase of one share of common stock at an
exercise price of $5.50, exercisable for 5 years from the date of issuance.

The  selling  stockholders  may  sell  common  stock  from  time  to time in the
principal market on which the stock is traded at the prevailing  market price or
in  negotiated  transactions.  We will pay the  expenses  of  registering  these
shares.  We will not receive any portion of the proceeds  from the sale of these
shares.  See "Plan of  Distribution"  on page 18.  However,  we will receive the
exercise  price of the Class A and Class B warrants in the  aggregate  amount of
$537,500 and $591,250,  respectively, if such warrants are exercised and if such
warrants are exercised for cash.

Our common  stock is quoted on the  Over-The-Counter  Bulletin  Board  under the
symbol  "AMTY".  The last reported  sales price per share of our common stock as
reported by the Over-The-Counter Bulletin Board on March 8, 2006, was $7.03.

Investing in these  securities  involves  significant  risks. See "Risk Factors"
beginning on page 9.

Neither  the  Securities  and  Exchange  Commission  nor  any  state  securities
commission has approved or disapproved of these securities or determined if this
Prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.

                 The date of this prospectus is ________, 2006.

The  information  in this  Prospectus  is not complete and may be changed.  This
Prospectus is included in the Registration Statement that was filed by Amerityre
Corporation   with  the   Securities  and  Exchange   Commission.   The  selling
stockholders  may not sell these  securities  until the  registration  statement
becomes effective.  This Prospectus is not an offer to sell these securities and
is not  soliciting an offer to buy these  securities in any state where the sale
is not permitted.

                                       3
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page

Prospectus Summary                                                             6
Supplementary Financial Information                                            8
Risk Factors                                                                   9
Use of Proceeds                                                               14
Selling Shareholders                                                          14
Plan of Distribution                                                          18
Indemnification For Securities Act Liabilities                                20
Description of Securities                                                     20
Legal Matters                                                                 20
Experts                                                                       20
Change in Accountants                                                         21
Description of Business                                                       22
Description of Properties                                                     25
Legal Proceedings                                                             25
Market for Common Equity and Related Stockholder Matters                      25
Selected Consolidated Historical Financial Data                               27
Management's Discussion and Analysis                                          29
Quantitative and Qualitative Disclosures About Market Risk                    39
Management                                                                    39
Executive Compensation                                                        42
Security Ownership of Certain Beneficial Owners and Management                47
Certain Relationships and Related Transactions                                49
Where You Can Find More Information                                           49
Index to Consolidated Financial Statements                                    50


                                       4
<PAGE>
                           IMPORTANT NOTICE TO READERS

You should rely only on the information  contained in this  prospectus.  We have
not  authorized  any other person to provide you with  different  or  additional
information.  If anyone  provides you with different or additional  information,
you should not rely on it. The selling  stockholders  are offering to sell,  and
seeking offers to buy,  shares of our common stock only in  jurisdictions  where
such offers and sales are  permitted.  The  information  in this  prospectus  is
accurate  only as of the  date on the  front  cover,  regardless  of the time of
delivery of this  prospectus or of any sale of shares of our common  stock.  Our
business,  financial  condition,  results of  operations  and prospects may have
changed since this date and may change again.

For investors  outside the United  States:  We have not done anything that would
permit this  offering or possession or  distribution  of this  prospectus in any
jurisdiction where action for that purpose is required, other than in the United
States.  You  are  required  to  inform  yourselves  about  and to  observe  any
restrictions relating to this offering and the distribution of this prospectus.


                                       5
<PAGE>
                                     PART I.

                               PROSPECTUS SUMMARY

The  following  summary  highlights  selected  information   contained  in  this
prospectus.  This  summary  does not  contain  all the  information  you  should
consider  before  investing  in the  securities.  Before  making  an  investment
decision,  you should read the entire prospectus carefully,  including the "risk
factors"  section,  the  financial  statements  and the  notes to the  financial
statements.

                             AMERITYRE CORPORATION

We were incorporated as a Nevada  corporation on January 30, 1995 under the name
American  Tire  Corporation  and changed our name to  Amerityre  Corporation  in
December  1999.  We own certain  proprietary  and  nonproprietary  technology to
manufacture  tires  from  polyurethane  foam  and  polyurethane   elastomer.  We
currently produce Flatfree  polyurethane  foam tires for bicycles,  wheelchairs,
lawn and garden products,  and outdoor power equipment  products.  Recently,  we
have been engaged in the development of polyurethane elastomer tires for highway
and agricultural use based on our proprietary technology and various methods and
processes  relating to the manufacturing of those tires from liquid  elastomers.
We have  produced  a limited  number  of  prototype  polyurethane  car tires and
conducted independent  laboratory testing to demonstrate that these tires comply
with existing United States safety standards for new-pneumatic tires [FMVSS 109]
and the proposed revisions to those standards,  FMVSS 139, which takes effect in
July 2007.

Pursuant to this prospectus,  we are registering  1,575,000 shares of our common
stock,  including up to (i) 860,000 shares of common stock,  (ii) 107,500 shares
of common  stock  issuable  upon the  exercise  of our Class A  warrants,  (iii)
107,500  shares  of  common  stock  issuable  upon the  exercise  of our Class B
warrants,  and (iv) 500,000  shares of our common stock issued upon the exercise
of stock options in 2005, each for resale by our selling stockholders identified
on page 14 of this  prospectus.  These  shares  may be  offered  by the  selling
stockholders through public or private transactions, at prevailing market prices
or at privately  negotiated  prices.  See "Plan of Distribution" on page 18. Our
common stock is quoted on the  Over-the-Counter  Bulletin Board under the symbol
"AMTY."

We are incorporated in the state of Nevada and our corporate offices are located
at 1501 Industrial  Road,  Boulder City, NV 89005,  and our telephone  number is
(702) 294-2689.  General  information,  financial news releases and filings with
the Securities and Exchange Commission, including annual reports on Form 10-KSB,
quarterly reports on Form 10-Q and Form 10-QSB, current reports on Form 8-K, and
all  amendments to these reports are available  free of charge on our website at
www.amerityre.com.  We are not  including the  information  contained on our web
site as part of, or incorporating it by reference into, this prospectus.
<TABLE>
<CAPTION>
                                  The Offering

<S>                                                                          <C>
Common stock outstanding before the offering...............    20,977,460 shares as of March 8, 2006
Common stock offered by selling stockholders...............    Up to 1,575,000  shares,  assuming  full
                                                               exercise  of  outstanding  common  stock
                                                               purchase   warrants   by   the   selling
                                                               stockholders.   This  number  represents
                                                               approximately   7.51%  of  our   current
                                                               outstanding  stock  and  includes  up to
                                                               215,000  shares of common stock issuable
                                                               pursuant   to   Class  A  and   Class  B
                                                               warrants.
Common stock to be outstanding after the offering............  Up to 21,192,460 shares
Use of proceeds..............................................  We will not  receive any  proceeds  from
                                                               the sale of the common stock  hereunder.
                                                               We will, however, receive the sale price
                                                               of any common  stock we sell for cash to
                                                               the selling  stockholders  upon exercise
                                                               of Class A and Class B  warrants  in the
                                                               aggregate   amount   of   $537,500   and


                                       6
<PAGE>
                                                               $591,250, respectively, if such warrants
                                                               are  exercised  and if such warrants are
                                                               exercised   for   cash.   See   "Use  of
                                                               Proceeds" for a complete description.
OTCBB Symbol.................................................  AMTY
</TABLE>

The  above  information  regarding  common  stock to be  outstanding  after  the
offering is based on 20,977,460  shares of common stock  outstanding as of March
8,  2006  and  assumes  the  subsequent  exercise  of  warrants  by our  selling
stockholders,  although  there can be no  assurances  that any warrants  will be
exercised.

FEBRUARY 2006 PRIVATE PLACEMENT

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement  for  $3,870,000  in offering  proceeds.  We sold 107,500 units of our
securities  at a purchase  price of $36.00  per unit.  Each unit  consists  of 8
shares of our common stock, $0.001 par value, a Class A warrant for the purchase
of one share of common stock at an exercise price of $5.00  exercisable  for a 3
year period, and a Class B Warrant for the purchase of one share of common stock
at an  exercise  price of $5.50  exercisable  for a 5 year  period.  The Class A
Warrants and Class B Warrants may also be exercised  through a cashless exercise
based on the difference between the market price on the date of exercise and the
exercise price. The exercise prices of the Class A Warrants and Class B Warrants
are subject to adjustment in certain events, including, without limitation, upon
our  consolidation,  merger or sale of all or substantially all of our assets, a
reclassification  of our common stock, or any stock splits or combinations  with
respect to the common stock.

Purchasers of the units have been granted registration rights in connection with
the  private  placement.  We have  agreed  to use  our  best  efforts  to file a
registration  statement  with the SEC within 45 days after the Closing  Date and
cause the registration  statement to be declared effective by the SEC within 120
days after the Closing Date (if there are no comments  from the SEC) or 180 days
(if  comments  are  received  from the SEC) (the  "Effective  Date") in order to
register  the shares of common stock  underlying  the units sold in the offering
(the "Registrable  Securities") for resale and distribution by the investors. We
are  registering  1,075,000  shares of common stock which  represents  the total
number of shares of common stock plus the shares of common stock  issuable  upon
exercise of the Class A and Class B Warrants.  The Registrable  Securities shall
be reserved and set aside exclusively for the benefit of each investor.

The Class A and Class B Warrants  are subject to  redemption  by us. We have the
right to redeem  either the Class A or Class B Warrants  beginning  90 days from
the Effective Date of the registration  statement,  if at any time following the
Effective  Date,  the  average  closing  bid price for the  common  stock in the
over-the-counter market is at least $5.50 per share (with respect to the Class A
Warrants) or $6.05 per share (with respect to the Class B Warrants),  for the 20
consecutive  trading day period  ending not more than 15 days prior to notice of
redemption of the Class A and Class B Warrants.  Our right to redeem the Class A
and  Class B  Warrants  requires  us to  give  the  holders  written  notice  of
redemption of not less than 30 days,  and is subject to the right of the holders
of the Class A and Class B Warrants to exercise the same in accordance  with the
terms hereof during the redemption period. The redemption price for each Class A
and Class B Warrant is $0.10 per share.

We claim an exemption from the  registration  requirements of the Securities Act
of 1933, as amended (the "Act"),  for the private  placement of these securities
pursuant to Section 4(2) of the Act and/or  Regulation D promulgated  thereunder
since,  among other things,  the transaction did not involve a public  offering,
the investors were accredited investors and/or qualified  institutional  buyers,
the  investors  had access to  information  about us and their  investment,  the
investors  took  the  securities  for  investment  and not  resale,  and we took
appropriate measures to restrict the transfer of the securities.

CONSULTANT STOCK OPTIONS

Furthermore,  in this  prospectus  we are  registering  an  aggregate of 500,000
shares of common  stock  issued  upon the  exercise  of  options  included  in a
marketing  and  advertising  advisory  consulting  agreement  with Focus Sales &
Marketing,  LLC,  dated August 1, 2000,  that  included  piggyback  registration
rights.  The options vested on January 31, 2001 and were exercisable  until July
31,  2005 at an exercise  price of $3.00 per share.  The options and the related
registration  rights were  transferable.  All of the options were transferred by
Focus  Sales & Marketing  in private  transactions  to the  various  individuals
listed  in the  selling  shareholders  table as  receiving  shares  through  the
exercise of options.  All of the options were  exercised by the  transferees  in
2005.

                                       7
<PAGE>
<TABLE>
<CAPTION>
                       SUPPLEMENTARY FINANCIAL INFORMATION

                  Summarized unaudited quarterly financial data
 for Fiscal 2005 and 2004 are as follows (in thousands, except per share data):

--------------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 2005                             First Quarter     Second Quarter       Third Quarter      Fourth Quarter
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>                  <C>                 <C>
Total Sales                                             $   340          $   304              $   487             $   551
                                                    ----------------------------------------------------------------------------

Net loss                                                $(7,156)         $  (858)             $  (989)            $(1,070)
                                                    ============================================================================

Basic loss per share                                    $ (0.38)         $ (0.05)             $ (0.05)            $ (0.05)
                                                    ============================================================================

--------------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 2004                             First Quarter     Second Quarter       Third Quarter      Fourth Quarter
--------------------------------------------------------------------------------------------------------------------------------
Total Sales                                             $   349          $   235              $   449             $   387
                                                    ----------------------------------------------------------------------------

Net loss                                                $  (780)         $(1,037)             $(1,097)            $(1,809)
                                                    ============================================================================

Basic loss per share                                    $ (0.04)         $ (0.06)             $ (0.06)            $ (0.10)
                                                    ============================================================================
</TABLE>

                                       8
<PAGE>
                                  RISK FACTORS

An  investment  in our common stock  involves a high degree of risk.  You should
consider  carefully the following  information about these risks,  together with
the other information contained or incorporated by reference in this prospectus,
before you decide to invest.  If any of the following risks actually occur,  our
business,  financial  condition or results of operations would likely suffer. In
this case,  the market  price of our common stock could  decline,  and you could
lose all or part of your investment.

                          RISKS RELATED TO OUR BUSINESS


HISTORICALLY,  WE HAVE LOST  MONEY FROM  OPERATIONS  AND OUR  FINANCIALS  DO NOT
INCLUDE  PROVISIONS  FOR ANY  CONTINGENCY,  UNEXPECTED  EXPENSES OR INCREASES IN
COSTS THAT MAY ARISE.

Since  inception we have been able to cover our  operating  losses from accounts
receivables and the sale of our securities.

Our business  operations  and plans could be adversely  affected in the event we
need additional financing and are unable to obtain such funding when needed.

It is possible that our available short-term assets and anticipated revenues may
not be sufficient to meet our operating expenses,  business expansion plans, and
capital expenditures for the next twelve months.  Insufficient funds may prevent
us from  implementing  our business  strategy or may require us to delay,  scale
back  or  eliminate  certain  opportunities  for  the  commercialization  of our
technology and products.  If we cannot generate  adequate sales of our products,
or increase our revenues  through  licensing of our  technology  or other means,
then we may be forced to cease operations.

In order to succeed  as a  company,  we must  continue  to develop  commercially
viable products and sell adequate  quantities of products at a high enough price
to generate a profit.  We may not accomplish  these  objectives.  Even if we are
successful in increasing our revenue base, a number of factors may affect future
sales of our product.  These factors include:  (i) whether  competitors  produce
alternative or superior products;  and (ii) whether the cost of implementing our
products is competitive in the marketplace.

In addition,  we are proposing to attempt to increase revenues through licensing
our  technology  and  manufacturing  rights,  and offering  contract  design and
engineering services.  If these proposals are not viable in the marketplace,  we
may not generate any revenues from these efforts.


BECAUSE WE HAVE  LIMITED  EXPERIENCE,  WE MAY BE UNABLE TO  SUCCESSFULLY  MANAGE
PLANNED  GROWTH AS WE COMPLETE  THE  TRANSITION  FROM A  TECHNOLOGY  DEVELOPMENT
COMPANY TO A LICENSING MANUFACTURING AND MARKETING COMPANY.

We have limited experience in the commercial  manufacturing and marketing arena,
limited  product sales and marketing  experience,  and limited staff and support
systems,  especially  compared to competitors in the tire industry.  Although we
have hired consultants to assist us in this transition  period,  there can be no
assurance  that we will properly  ascertain or assess any and all risks inherent
in the industry.

In addition,  our success depends, in part, on our ability to license market and
distribute our products effectively.  We have limited experience in the sale and
marketing  of our lawn and garden  products and little to no  experience  in the
marketing  and  sale of our  proposed  highway  use  products.  We have  limited
manufacturing,  marketing  and  distribution  capabilities  and we will  need to
retain  consultants  that have  contacts  in and  understand  the tire  industry
marketplace.  We may not be  successful  in entering  into new  licensing and or
marketing arrangements, whether engaging independent distributors or recruiting,
training and retaining a larger internal  marketing staff and sales force. If we
do not  meet  the  challenges  posed by our  planned  licensing,  manufacturing,
distribution and sales growth, the company may fail.

                                       9
<PAGE>
BECAUSE OF OUR RELIANCE ON TRADE SECRETS, WE MAY BE AT RISK FOR POTENTIAL CLAIMS
OR LITIGATION RELATED TO OUR TECHNOLOGY.

In certain  cases,  where the  disclosure  of  information  required to obtain a
patent would divulge  proprietary data, we may choose not to patent parts of the
proprietary  technology and processes  which we have developed or may develop in
the future and rely on trade secrets to protect the  proprietary  technology and
processes.  The  protection of  proprietary  technology  through claims of trade
secret  status has been the  subject of  increasing  claims  and  litigation  by
various  companies  both in order to protect  proprietary  rights as well as for
competitive  reasons  even where  proprietary  claims are  unsubstantiated.  The
prosecution  of  proprietary  claims or the defense of such claims is costly and
uncertain given the  uncertainty and rapid  development of the principles of law
pertaining  to this area. We may also be subject to claims by other parties with
regard  to the  use of  technology  information  and  data  that  may be  deemed
proprietary to others.

OUR BUSINESS  DEPENDS ON THE  PROTECTION  OF OUR  INTELLECTUAL  PROPERTY AND MAY
SUFFER IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY.

We have  been  granted  several  U.S.  patents  and  have  several  U.S.  patent
applications pending relating to certain aspects of our manufacturing technology
and use of  polyurethane  to make tires.  We believe  that our ability to either
manufacture products and/or license our technology is substantially dependent on
the validity and  enforcement  of these patents and patents  pending.  We cannot
provide  assurance  that our patents will not be  invalidated,  circumvented  or
challenged,  that the rights  granted under the patents will give us competitive
advantages or that our patent applications will be granted.

PROPOSED  NEW  PRODUCTS  FOR  HIGHWAY USE MUST MEET  SAFETY  STANDARDS  PRIOR TO
MARKETING WHICH COULD DELAY ANTICIPATED REVENUES AND INCREASE EXPENSES.

Our proposed new products for highway use must meet  applicable  federal  safety
standards  through various testing  processes.  Our prototype  polyurethane  car
tires and proposed temporary spare tire are both subject to such standards.  The
testing  procedures  involve  submission  of products  to  approved  independent
testing  facilities,  a  process  that  may  entail  both  significant  time and
significant  expense.  Therefore,  the timing of new  product  placement  in the
market may be hard to determine,  additional  research,  development and testing
expenses may be incurred,  and we may not receive revenues from such products as
planned.  Such delays and potential  additional  expenses  could have a negative
impact on cash flows and business planning.

BECAUSE OUR  PROPOSED  HIGHWAY USE  PRODUCTS  ARE DERIVED  FROM NEW  TECHNOLOGY,
PRODUCT LIABILITY  INSURANCE COSTS WILL LIKELY INCREASE AND WE MAY BE EXPOSED TO
PRODUCT LIABILITY RISKS THAT COULD ADVERSELY AFFECT PROFITABILITY.

Despite prior  testing and approval of new highway use  products,  such products
may subject us to unforeseen liabilities because the technology is new and there
is no extensive  history of use.  Introduction  of such new  products  will most
likely increase product liability premiums and defense of potential claims could
increase  insurance  cost even further  which could  substantially  increase our
expenses.

SIGNIFICANT  INCREASES IN THE PRICE OF STEEL AND OTHER RAW MATERIALS USED IN OUR
PRODUCTS COULD INCREASE OUR PRODUCTION  COSTS AND DECREASE OUR PROFIT MARGINS OR
MAKE OUR PRODUCTS LESS COMPETITIVE IN THE MARKETPLACE DUE TO PRICE INCREASES.

Over  the  last  year,  we have  experienced  an  increase  in the cost of wheel
components for our tire/wheel assemblies due to the increasing cost of steel. We
have not passed the  additional  cost of the steel  wheel  components  on to our
customers,  however,  if the cost of steel wheel  components  continues  to rise
during the next  twelve  months,  we may elect to amend our  product  pricing to
reflect the increase in component costs.  Also, during the last six months we've
seen a 14%  increase in our chemical  pricing and there is no guarantee  pricing
will remain at current  levels.  Although we continually  seek reductions in raw
material  and  component  costs from our  suppliers,  and even seek  alternative
suppliers in some cases,  large price  increases may have to be passed on to our
customers and could adversely affect our sales.

                                       10
<PAGE>
               RISKS RELATED TO OUR CURRENT FINANCING ARRANGEMENT

THERE ARE A LARGE NUMBER OF SHARES AND SHARES  UNDERLYING  WARRANTS  THAT MAY BE
AVAILABLE FOR FUTURE SALE UNDER THIS PROSPECTUS AND THE SALE OF THESE SHARES MAY
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.

As of the date of this prospectus,  we had  approximately  20,977,460  shares of
common stock issued and  outstanding.  We are  registering  1,360,000  shares of
common  stock  previously  issued  to  the  selling  stockholders  and  we  have
outstanding  warrants to purchase 215,000 shares of our common stock,  which are
being  registered in this  prospectus.  All of the shares,  including all of the
shares issuable upon exercise of our warrants,  are being registered  hereunder.
Upon registration such shares may be sold without restriction. The sale of these
shares may adversely affect the market price of our common stock.

THE  ISSUANCE OF SHARES AND  EXERCISE OF WARRANTS  MAY RESULT IN DILUTION TO THE
INTERESTS OF OTHER STOCKHOLDERS.

The  issuance of shares and  exercise of warrants  may result in dilution to the
interests of other  stockholders  since the selling  stockholders may ultimately
receive and sell the full amount issuable under the warrants.

THE ISSUANCE OF SHARES AND EXERCISE OF WARRANTS COULD  ENCOURAGE  SHORT SALES BY
THIRD PARTIES,  WHICH COULD  CONTRIBUTE TO THE FUTURE DECLINE OF OUR STOCK PRICE
AND MATERIALLY DILUTE EXISTING STOCKHOLDERS' EQUITY AND VOTING RIGHTS.

The  issuance of shares and  exercise of warrants  have the  potential  to cause
downward  pressure on the price of our common stock.  This is  particularly  the
case if the shares being placed into the market  exceed the market's  ability to
absorb  the  increased  number of shares of  stock.  Such an event  could  place
further  downward  pressure on the price of our common stock,  which presents an
opportunity  to short sellers and others to contribute to the future  decline of
our stock price.  If there are significant  short sales of our stock,  the price
decline  that would  result  from this  activity  will cause the share  price to
decline  more so,  which,  in turn,  may cause long holders of the stock to sell
their shares thereby  contributing to sales of stock in the market.  If there is
an imbalance on the sell side of the market for the stock,  our stock price will
decline.

                        RISKS RELATED TO OUR COMMON STOCK

FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE.

Some of our outstanding restricted shares are eligible for resale by the holders
under Rule 144 and the sale or even the  perception  that a sale of such  shares
may occur could cause our stock price to decline.  We are unable to estimate the
amount,  timing, or nature of future sales of outstanding  restricted shares. If
we issue  additional  shares of common  stock in a  private  financing  under an
exemption from registration, then those shares will constitute restricted shares
as defined in Rule 144 under the Securities Act. The restricted  shares may only
be sold if they are registered under the Securities Act, or sold under Rule 144,
or another exemption from registration under the Securities Act.

In  addition,  we may issue stock in a registered  offering or in a  transaction
that would require registration of the underlying shares. In either case, once a
registration  was  effective,  there  could be an  increased  number  of  shares
available for sale in the public market which could reduce the market price.

Anticipated fund-raising activities include possible equity placements that will
dilute current shareholders.

WE ARE AUTHORIZED TO ISSUE UP TO 40,000,000 SHARES OF COMMON STOCK. OUR BOARD OF
DIRECTORS HAS THE AUTHORITY TO ISSUE THE AUTHORIZED  BUT UNISSUED  SHARES OF OUR
COMMON STOCK WITHOUT ACTION BY THE SHAREHOLDERS.

We have authorized  5,000,000 shares of preferred  stock.  Although no preferred
shares have been issued to date,  the board of  directors  has the  authority to

                                       11
<PAGE>
determine  rights and privileges  respecting  voting  rights,  preferences as to
dividends and liquidation,  and conversion  rights with respect to any preferred
shares issued,  all of which  designations  may be superior to those attached to
the common  stock.  The board of directors  has the authority to issue up to the
entire amount of the authorized but unissued  shares of preferred  stock without
action by the shareholders.

Any  such  issuances,  whether  of  common  stock  or some  designated  class of
preferred shares,  will reduce the percentage  ownership and may dilute the book
value of the shares held by existing shareholders.

OUR STOCK PRICE CAN BE EXTREMELY VOLATILE.

Our common stock is traded on the OTC Bulletin Board.  There can be no assurance
that an active public  market will  continue for the common  stock,  or that the
market price for the common stock will not decline below its current price. Such
price may be influenced by many factors, including, but not limited to, investor
perception  of us and our industry and general  economic and market  conditions.
The trading price of the common stock could be subject to wide  fluctuations  in
response to  announcements  of our  business  developments  or our  competitors,
quarterly  variations  in operating  results,  and other  events or factors.  In
addition,  stock markets have  experienced  extreme  price  volatility in recent
years.  This  volatility  has had a  substantial  effect on the market prices of
companies,  at times for reasons unrelated to their operating performance.  Such
broad market fluctuations may adversely affect the price of our common stock.

WE DO NOT EXPECT TO PAY DIVIDENDS.

We have not paid dividends  since  inception on our common stock,  and we do not
contemplate  paying  dividends in the foreseeable  future on our common stock in
order to use all of our earnings,  if any, to finance  expansion of our business
plans.

                                       12
<PAGE>
                    CAUTION ABOUT FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus constitute  forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 (the "Securities
Act") and Section 21E of the Securities  Exchange Act of 1934.  These statements
relate to future events or our future  financial  performance  and involve known
and unknown risks,  uncertainties  and other factors that may cause our business
or  our  industry's   actual  results,   levels  of  activity,   performance  or
achievements  to be materially  different from those expressed or implied by any
forward-looking statements.  Such statements include, in particular,  statements
about our plans, strategies,  prospects,  changes and trends in our business and
the  markets  in  which we  operate  as  described  in this  prospectus  and any
amendment or  supplement  to this  prospectus.  In some cases,  you can identify
forward-looking  statements  by  terminology  such as "may,"  "could,"  "would,"
"should,"  "expect,"  "plan,"  "anticipate,"  "intend,"  "believe,"  "estimate,"
"forecast,"  "predict," "propose,"  "potential" or "continue" or the negative of
those  terms  or  other  comparable  terminology.   These  statements  are  only
predictions.

Important  factors that could cause actual results to differ materially from our
forward-looking  statements  are set  forth in the  section  of this  prospectus
entitled  "Risk  Factors"  and in the  section  entitled  "Risk  Factors" in any
amendment or  supplement to this  prospectus.  These factors are not intended to
represent a complete list of the general or specific factors that may affect us.
It should be recognized that other factors,  including  general economic factors
and  business  strategies,  may be  significant,  now or in the future,  and the
factors  set forth in this  prospectus  may affect us to a greater  extent  than
indicated.  All forward-looking  statements attributable to us or persons acting
on our  behalf are  expressly  qualified  in their  entirety  by the  cautionary
statements set forth in this prospectus. Except as required by law, we undertake
no obligation to update any  forward-looking  statement,  whether as a result of
new information, future events or otherwise.

We caution the reader that the risk factors  contained in or  incorporated  into
this  prospectus  may not be  exhaustive.  We operate in a continually  changing
business environment,  and new risk factors emerge from time to time. Management
cannot predict these new risk factors,  nor can it assess the impact, if any, of
these new risk  factors on our  business or the extent to which any  factor,  or
combination of factors, may cause actual results to differ materially from those
projected  in  any  forward-looking  statements.  Accordingly,   forward-looking
statements should not be relied upon as a prediction of actual results.

                                       13
<PAGE>
                                 USE OF PROCEEDS

We will not receive any portion of the proceeds  from the sale of these  shares.
However, we will receive the exercise price of the Class A and Class B warrants,
if exercised, in the aggregate amount of $537,500 and $591,250, respectively, if
such  warrants are  exercised  and if such  warrants are  exercised for cash. We
intend to utilize such proceeds for working capital purposes.

                              SELLING SHAREHOLDERS

We are filing this registration statement to register the resale of an aggregate
of 1,575,000  shares of our common stock,  including up to (i) 860,000 shares of
common  stock  issued  pursuant to our February  2006  private  placement,  (ii)
500,000  shares of our common stock issued upon the exercise of stock options in
2005 which were issued as compensation for consulting  services performed on our
behalf (iii)  107,500  shares of common stock  issuable upon the exercise of our
Class A warrants,  and (iv)  107,500  shares of common stock  issuable  upon the
exercise of our Class B warrants.

FEBRUARY 2006 PRIVATE PLACEMENT

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement  for  $3,870,000  in offering  proceeds.  We sold 107,500 units of our
securities  at a purchase  price of $36.00  per unit.  Each unit  consists  of 8
shares of our common stock, $0.001 par value, a Class A warrant for the purchase
of one share of common stock at an exercise price of $5.00  exercisable  for a 3
year period, and a Class B Warrant for the purchase of one share of common stock
at an  exercise  price of $5.50  exercisable  for a 5 year  period.  The Class A
Warrants and Class B Warrants may also be exercised  through a cashless exercise
based on the difference between the market price on the date of exercise and the
exercise price. The exercise prices of the Class A Warrants and Class B Warrants
are subject to adjustment in certain events, including, without limitation, upon
our  consolidation,  merger or sale of all or substantially all of our assets, a
reclassification  of our common stock, or any stock splits or combinations  with
respect to the common stock.

Purchasers of the units have been granted registration rights in connection with
the  private  placement.  We have  agreed  to use  our  best  efforts  to file a
registration  statement  with the SEC within 45 days after the Closing  Date and
cause the registration  statement to be declared effective by the SEC within 120
days after the Closing Date (if there are no comments  from the SEC) or 180 days
(if  comments  are  received  from the SEC) (the  "Effective  Date") in order to
register  the shares of common stock  underlying  the units sold in the offering
(the "Registrable  Securities") for resale and distribution by the investors. We
are  registering  1,075,000  shares of common stock which  represents  the total
number of shares of common stock plus the shares of common stock  issuable  upon
exercise of the Class A and Class B Warrants.  The Registrable  Securities shall
be reserved and set aside exclusively for the benefit of each investor.

The Class A and Class B Warrants  are subject to  redemption  by us. We have the
right to redeem  either the Class A or Class B Warrants  beginning  90 days from
the Effective Date of the registration  statement,  if at any time following the
Effective  Date,  the  average  closing  bid price for the  common  stock in the
over-the-counter market is at least $5.50 per share (with respect to the Class A
Warrants) or $6.05 per share (with respect to the Class B Warrants),  for the 20
consecutive  trading day period  ending not more than 15 days prior to notice of
redemption of the Class A and Class B Warrants.  Our right to redeem the Class A
and  Class B  Warrants  requires  us to  give  the  holders  written  notice  of
redemption of not less than 30 days,  and is subject to the right of the holders
of the Class A and Class B Warrants to exercise the same in accordance  with the
terms hereof during the redemption period. The redemption price for each Class A
and Class B Warrant is $0.10 per share.

We claim an exemption from the  registration  requirements of the Securities Act
of 1933, as amended (the "Act"),  for the private  placement of these securities
pursuant to Section 4(2) of the Act and/or  Regulation D promulgated  thereunder
since,  among other things,  the transaction did not involve a public  offering,
the investors were accredited investors and/or qualified  institutional  buyers,
the  investors  had access to  information  about us and their  investment,  the
investors  took  the  securities  for  investment  and not  resale,  and we took
appropriate measures to restrict the transfer of the securities.

                                       14
<PAGE>
CONSULTANT STOCK OPTIONS

Furthermore,  in this  prospectus  we are  registering  an  aggregate of 500,000
shares of common  stock  issued  upon the  exercise  of  options  included  in a
marketing  and  advertising  advisory  consulting  agreement  with Focus Sales &
Marketing,  LLC,  dated August 1, 2000,  that  included  piggyback  registration
rights.  The options vested on January 31, 2001 and were exercisable  until July
31,  2005 at an exercise  price of $3.00 per share.  The options and the related
registration  rights were  transferable.  All of the options were transferred by
Focus  Sales & Marketing  in private  transactions  to the  various  individuals
listed  in the  selling  shareholders  table as  receiving  shares  through  the
exercise of options.  All of the options were  exercised by the  transferees  in
2005.

Ownership Table

The  following  table sets  forth the  common  stock  ownership  of the  selling
stockholder as of March 8, 2006,  including the number of shares of common stock
issuable to the selling  shareholder  upon the exercise of warrants  held by the
selling shareholder. Other than as set forth in the following table, the selling
shareholder  has not held any  position  or  office  or had any  other  material
relationship  with us or any of our  predecessors or affiliates  within the past
three years. The selling  shareholder may sell all, some or none of their shares
in this offering. See "Plan of Distribution."

The  number  and  percentage  of  shares  beneficially  owned is  determined  in
accordance  with Rule  13d-3 of the  Securities  Exchange  Act of 1934,  and the
information is not necessarily  indicative of beneficial ownership for any other
purpose.  Under such rule,  beneficial ownership includes any shares as to which
the selling  shareholder has sole or shared voting power or investment power and
also any shares,  which the selling  shareholder has the right to acquire within
60 days. The information as to the number of shares of our common stock owned by
the  selling  security  holder  is based  upon our  books  and  records  and the
information provided by our transfer agent.

We may amend or  supplement  this  Prospectus,  from time to time, to update the
disclosures set forth in the following  table.  Because the selling  shareholder
identified  in the table may sell some or all of the shares  owned by them which
are included in this Prospectus,  and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of the shares, no
estimate  can be given as to the number of shares  available  for resale  hereby
that will be held by the selling  shareholder upon termination of this offering.
Therefore,  we have  assumed for the  purposes of the  following  table that the
selling  shareholder  will sell all of the shares  owned  beneficially  by them,
which are covered by this Prospectus.
<TABLE>
<CAPTION>
Name of selling security            Shares of Common     Number of Shares         Percentage of       Beneficial       Percentage of
holder                              Stock Included in      Beneficially           Common Stock     Ownership After     Common Stock
                                     Prospectus (1)        Owned Before         Owned Before the         the            Owned After
                                                             Offering               Offering         Offering (2)      Offering (2)
<S>                 <C>                 <C>                   <C>                     <C>              <C>                  <C>
WAJ Enterprises LLC (3)                 397,640               697,790                 3.33%            300,150              1.43%

Norman H. Tregenza IV Trust,              7,000                 7,000                  *                     0               0
dated 9/26/86, Richard R.
Keller, Trustee (4)

Richard R. Keller (5)                     7,000                14,500                  *                 7,500               *

Howard Kaneff (6)                        13,900                13,900                  *                     0               0

George Paidas (7)                         5,000                10,000                  *                 5,000               *

Neale F. Hooley (8)                      10,000                50,000                  *                40,000               *

Wesley G. Sprunk (9)                     33,890               157,442                  *               123,552               *

Marsha Crouzet (10)                      21,000                33,500                  *                12,500               *

Giant Trading, Inc. (11)                 27,780                33,280                  *                 5,500               *


                                       15
<PAGE>
Denis D. Taggart (12)                    13,890                59,890                  *                46,000               *

The Catalyst Master Fund (13)            62,550                62,550                  *                     0               0

Fleet Maritime, Inc. (14)               117,150               117,150                  *                     0               0

Chamberlin Investments Ltd.              61,410                61,410                  *                     0               0
(15)
DCM Limited (16)                          8,750                 8,750                  *                     0               0

Farvane Limited (17)                      5,690                 5,690                  *                     0               0

HSBC Guyerzeller Trust                   44,450                44,450                  *                     0               0
Company, as Trustee of The
Green Forest Trust c/o HSBC
Guyerzeller Bank AG (18)

Joseph J. Grano, Jr. (19)               131,900             1,481,900                 7.06%           1,350,00              6.44%

Concetta B. Kristan (20)                  7,000                 7,000                  *                     0               0

Cumulus Investors, LLC (21)             138,890               138,890                  *                     0               0

John Reinke (22)                         13,900                18,400                  *                 4,500               *

Steven G. Earl (23)                      11,000                11,000                  *                     0               0

David P. and Peggy Martin (24)           10,000               116,000                  *                106,00               *

Vanguard Fiduciary Trust                 30,000                50,000                  *                20,000               *
Company, as Custodian FBO IRA
FBO Thomas P. Hollo
(25)
Whitney Small Cap Opportunity           138,890               138,890                  *                     0               0
Fund, L.P. (26)

Sheryl J. Phillips (27)                  10,070                10,070                  *                     0               0

Gilbert D. Moyle  (28)                   12,500                90,000                  *                77,500               *

Larry Clark (29)                         30,000                55,000                  *                25,000               *

George H. Tissen and Ellen M.            60,000                60,000                  *                     0               0
Tissen, JTWROS (29)

Geoffrey E. Schwan (29)                  20,000                20,000                  *                     0               0

Thomas P. Hollo and Mary                 25,000               191,000                  *               166,000               *
Elizabeth Hollo TIC (29)

Paul R. Green (29)                       86,250               245,750                 1.17%            159,500               *

Gilbert D. Moyle III (30)                12,500                58,875                  *                46,375               *
</TABLE>
*       Less than 1%

(1)     Includes all of the shares issuable upon the exercise of the warrants.

                                       16
<PAGE>

(2)     Assumes all securities registered will be sold.
(3)     Represents  (i) 111,112  shares of common stock  issued  pursuant to our
        February  2006 private  placement,  (ii) 258,750  shares of common stock
        issued upon the exercise of stock options in 2005 (iii) 13,889 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iv) 13,889 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities  exchange act of 1934,  Wesley  Johnson,  the
        principal of the selling  stockholder,  may be deemed a control  person,
        with voting and investment  control, of the shares owned by such entity.
        The selling stockholder has notified us that they are not broker-dealers
        and/or affiliates of broker-dealers.
(4)     Represents  (i) 5,600 shares of common stock,  (ii) 700 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 700 shares of common stock issuable upon exercise of a Class B
        common stock purchase  warrant.  In accordance with rule 13d-3 under the
        securities  exchange act of 1934,  Richard R. Keller, the Trustee of the
        selling  stockholder,  may be deemed a control  person,  with voting and
        investment  control,  of the shares  owned by such  entity.  The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(5)     Represents  (i) 5,600 shares of common stock,  (ii) 700 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 700 shares of common stock issuable upon exercise of a Class B
        common stock purchase warrant.
(6)     Represents  (i) 11,120  shares of common  stock,  (ii)  1,390  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,390 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(7)     Represents  (i) 4,000 shares of common stock,  (ii) 500 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 500 shares of common stock issuable upon exercise of a Class B
        common stock purchase warrant.
(8)     Represents (i) 8,000 shares of common stock, (ii) 1,000 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,000 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(9)     Represents  (i) 11,112  shares of common  stock  issued  pursuant to our
        February  2006  private  placement,  (ii) 20,000  shares of common stock
        issued upon the exercise of stock  options in 2005 (iii) 1,389 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant, and (iv) 1,389 shares of common stock issuable upon exercise of
        a Class B common stock purchase warrant.
(10)    Represents  (i) 16,800  shares of common  stock,  (ii)  2,100  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 2,100 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(11)    Represents  (i) 22,224  shares of common  stock,  (ii)  2,778  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 2,778 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Don  Friedland,  the
        principal of the selling  stockholder,  may be deemed a control  person,
        with voting and investment  control, of the shares owned by such entity.
        The selling stockholder has notified us that they are not broker-dealers
        and/or affiliates of broker-dealers.
(12)    Represents  (i) 11,112  shares of common  stock,  (ii)  1,389  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,389 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(13)    Represents  (i) 50,040  shares of common  stock,  (ii)  6,255  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 6,255 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(14)    Represents  (i) 93,720  shares of common  stock,  (ii) 11,715  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 11,715 shares of common stock issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(15)    Represents  (i) 49,128  shares of common  stock,  (ii)  6,141  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 6,141 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(16)    Represents  (i) 7,000 shares of common stock,  (ii) 875 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 875 shares of common stock issuable upon exercise of a Class B
        common stock purchase  warrant.  In accordance with rule 13d-3 under the
        securities exchange act of 1934, Catalyst Investment Management Company,
        LLC, is a registered  investment  advisor and is responsible  for making
        the investment decisions of the selling stockholder,  and therefore, may
        be deemed a control person,  with voting and investment  control, of the
        shares owned by such  entity.  The selling  stockholder  has notified us
        that they are not broker-dealers and/or affiliates of broker-dealers.

                                       17
<PAGE>
(17)    Represents  (i) 4,552 shares of common stock,  (ii) 569 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 569 shares of common stock issuable upon exercise of a Class B
        common stock purchase  warrant.  In accordance with rule 13d-3 under the
        securities exchange act of 1934, Catalyst Investment Management Company,
        LLC, is a registered  investment  advisor and is responsible  for making
        the investment decisions of the selling stockholder,  and therefore, may
        be deemed a control person,  with voting and investment  control, of the
        shares owned by such  entity.  The selling  stockholder  has notified us
        that they are not broker-dealers and/or affiliates of broker-dealers.
(18)    Represents  (i) 35,560  shares of common  stock,  (ii)  4,445  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 4,445 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(19)    Represents  (i) 105,520  shares of common  stock,  (ii) 13,190 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 13,190 shares of common stock issuable upon exercise
        of a Class B common stock purchase warrant.
(20)    Represents  (i) 5,600 shares of common stock,  (ii) 700 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 700 shares of common stock issuable upon exercise of a Class B
        common stock purchase warrant.
(21)    Represents  (i) 111,112  shares of common  stock,  (ii) 13,889 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 13,889 shares of common stock issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities exchange act of 1934, Nader C. Kazeminy,  the
        controlling  principal  of the  selling  stockholder,  may be  deemed  a
        control person,  with voting and investment control, of the shares owned
        by such entity.  The selling  stockholder  has notified us that they are
        not broker-dealers and/or affiliates of broker-dealers.
(22)    Represents  (i) 11,120  shares of common  stock,  (ii)  1,390  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,390 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(23)    Represents (i) 8,800 shares of common stock, (ii) 1,100 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,100 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(24)    Represents (i) 8,000 shares of common stock, (ii) 1,000 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,000 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(25)    Represents  (i) 24,000  shares of common  stock,  (ii)  3,000  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 3,000 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities  exchange act of 1934,  Thomas P. Hollo,  the
        beneficiary of the selling stockholder,  may be deemed a control person,
        with voting and investment  control, of the shares owned by such entity.
        The selling stockholder has notified us that they are not broker-dealers
        and/or affiliates of broker-dealers.
(26)    Represents  (i) 111,112  shares of common  stock,  (ii) 13,889 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 13,889 shares of common stock issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities  exchange act of 1934,  Whitney Small Cap GP,
        LLC,  the general  partner of the selling  stockholder,  may be deemed a
        control person,  with voting and investment control, of the shares owned
        by such entity.  The selling  stockholder  has notified us that they are
        not broker-dealers and/or affiliates of broker-dealers.
(27)    Represents (i) 8,056 shares of common stock, (ii) 1,007 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,007 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(28)    Represents  (i) 10,000  shares of common  stock,  (ii)  1,250  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 2,500 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(29)    Represents  shares of common  stock  issued  upon the  exercise of stock
        options in 2005.
(30)    Represents  (i) 10,000  shares of common  stock,  (ii)  1,250  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,250 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.


                              PLAN OF DISTRIBUTION

Each Selling  Shareholder (the " Selling  Shareholders ") of the common stock ("
Common Stock ") of Amerityre Corporation, a Nevada corporation (the " Company ")
and any of their pledgees,  assignees and successors-in-interest  may, from time
to time,  sell any or all of their shares of Common Stock on the Trading  Market
or any other stock exchange,  market or trading facility on which the shares are
traded or in private  transactions.  These  sales may be at fixed or  negotiated
prices. A Selling  Shareholder may use any one or more of the following  methods
when selling shares:

                                       18
<PAGE>
     o    ordinary   brokerage   transactions  and  transactions  in  which  the
          broker-dealer solicits purchasers;

     o    block  trades  in which the  broker-dealer  will  attempt  to sell the
          shares as agent but may  position and resell a portion of the block as
          principal to facilitate the transaction;

     o    purchases  by  a   broker-dealer   as  principal  and  resale  by  the
          broker-dealer for its account;

     o    an  exchange   distribution  in  accordance  with  the  rules  of  the
          applicable exchange;

     o    privately negotiated transactions;

     o    settlement  of  short  sales  entered  into  after  the  date  of this
          prospectus;

     o    broker-dealers  may  agree  with the  Selling  Shareholders  to sell a
          specified number of such shares at a stipulated price per share;

     o    a combination of any such methods of sale;

     o    through  the  writing  or  settlement  of  options  or  other  hedging
          transactions, whether through an options exchange or otherwise; or

     o    any other method permitted pursuant to applicable law.

The  Selling  Stockholders  may  also  sell  shares  under  Rule 144  under  the
Securities  Act of 1933,  as amended  (the "  Securities  Act "), if  available,
rather than under this prospectus.

Broker-dealers  engaged  by the  Selling  Shareholders  may  arrange  for  other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Shareholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated.  Each  Selling  Shareholder  does not expect these  commissions  and
discounts  relating  to its sales of shares to exceed what is  customary  in the
types of transactions involved.

In  connection  with the sale of our  common  stock or  interests  therein,  the
Selling  Shareholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
common stock in the course of hedging the  positions  they  assume.  The Selling
Shareholders  may also sell shares of our common  stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the common
stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Shareholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

The Selling  Shareholders and any  broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters"  within the meaning of the
Securities Act in connection  with such sales.  In such event,  any  commissions
received  by such  broker-dealers  or agents and any profit on the resale of the
shares  purchased  by them  may be  deemed  to be  underwriting  commissions  or
discounts  under the Securities  Act. Each Selling  Shareholder has informed the
Company  that it does not have  any  agreement  or  understanding,  directly  or
indirectly, with any person to distribute the Common Stock.

The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to indemnify
certain  Selling  Shareholders  against  certain  losses,  claims,  damages  and
liabilities, including liabilities under the Securities Act.

Because  Selling  Shareholders  may be deemed to be  "underwriters"  within  the
meaning of the Securities  Act, they will be subject to the prospectus  delivery
requirements of the Securities Act. In addition,  any securities covered by this
prospectus  which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather  than  under  this  prospectus.  Each  Selling
Stockholder  has  advised  us that they have not  entered  into any  agreements,

                                       19
<PAGE>
understandings or arrangements  with any underwriter or broker-dealer  regarding
the sale of the resale shares.  There is no underwriter or  coordinating  broker
acting in connection  with the proposed sale of the resale shares by the Selling
Shareholders.

We agreed to keep this prospectus effective until the earlier of (i) the date on
which the shares may be resold by the Selling  Shareholders without registration
and without regard to any volume  limitations by reason of Rule 144(e) under the
Securities  Act or any other  rule of  similar  effect or (ii) all of the shares
have been sold pursuant to the  prospectus or Rule 144 under the  Securities Act
or any other rule of similar effect. The resale shares will be sold only through
registered or licensed  brokers or dealers if required  under  applicable  state
securities  laws. In addition,  in certain states,  the resale shares may not be
sold unless they have been  registered or qualified  for sale in the  applicable
state or an exemption  from the  registration  or  qualification  requirement is
available and is complied with.

Under  applicable  rules and  regulations  under the  Exchange  Act,  any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement of the  distribution.  In addition,  the
Selling  Shareholders  will be subject to applicable  provisions of the Exchange
Act and the rules and regulations thereunder,  including Regulation M, which may
limit the timing of  purchases  and sales of shares of our  common  stock by the
Selling Shareholders or any other person. We will make copies of this prospectus
available  to the Selling  Shareholders  and have  informed  them of the need to
deliver a copy of this  prospectus to each  purchaser at or prior to the time of
the sale.

                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our Articles of Incorporation  provide to the fullest extent permitted by Nevada
law,  our  directors  or officers  shall not be  personally  liable to us or our
shareholders  for damages for breach of such  director's or officer's  fiduciary
duty. The effect of this provision of our Articles of Incorporation, as amended,
is to eliminate our right and our shareholders (through shareholders' derivative
suits on behalf of our company) to recover damages against a director or officer
for breach of the  fiduciary  duty of care as a director  or officer  (including
breaches resulting from negligent or grossly negligent  behavior),  except under
certain  situations  defined by  statute.  We believe  that the  indemnification
provisions  in our  Articles of  Incorporation,  as amended,  are  necessary  to
attract and retain qualified persons as directors and officers.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred or paid by a director,  officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed  in the  Securities  Act and will be  governed by the final
adjudication of such issue.

                   DESCRIPTION OF SECURITIES TO BE REGISTERED

Common  Stock.  As of March 8, 2006,  we had  40,000,000  shares of common stock
authorized  and  there  were  20,977,460  shares  of  common  stock  issued  and
outstanding,  held of record by approximately 550 registered  stockholders.  Our
common stock is traded on the  Over-the-Counter  Bulletin Board under the symbol
"AMTY."  Each  holder of common  stock is entitled to one vote per share held of
record on all matters  submitted  to a vote of the  stockholders.  All shares of
common stock are entitled to participate in any  distributions or dividends that
may be declared by the board of directors,  subject to any preferential dividend
rights of  outstanding  shares of  preferred  stock.  Subject to prior rights of
creditors,  all  shares  of  common  stock  are  entitled,  in the  event of our
liquidation,   dissolution  or  winding  up,  to  participate   ratably  in  the
distribution  of all  our  remaining  assets,  after  distribution  in  full  of
preferential  amounts,  if any, to be distributed to holders of preferred stock.
There are no sinking fund provisions  applicable to the common stock. Our common
stock has no preemptive or conversion rights or other  subscription  rights. All
of the shares of common stock offered under this  prospectus  will, when issued,
be fully paid and non-assessable.

                                  LEGAL MATTERS

Sichenzia  Ross Friedman  Ference LLP, New York,  New York will issue an opinion
with respect to the validity of the shares of common stock being offered hereby.

                                     EXPERTS

The consolidated  financial  statements of Amerityre  Corporation as of June 30,
2005,  2004 and 2003  included  in this  Prospectus  have  been so  included  in
reliance on the report of HJ & Associates,  LLC  independent  registered  public

                                       20
<PAGE>
accounting  firm, given on the authority of said firm as experts in auditing and
accounting.

                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements  with our certified public accountants with respect
to accounting practices or procedures or financial disclosure.

                                       21
<PAGE>
                            DESCRIPTION OF BUSINESS

General
-------

We were incorporated as a Nevada  corporation on January 30, 1995 under the name
American  Tire  Corporation  and changed our name to  Amerityre  Corporation  in
December  1999.  We own certain  proprietary  and  nonproprietary  technology to
manufacture tires from polyurethane foam and polyurethane elastomer.

Polyurethane Foam Tire Technology
---------------------------------

We  currently  produce  Flatfree(TM)   polyurethane  foam  tires  for  bicycles,
wheelchairs, lawn and garden products, and outdoor power equipment products (the
"Products").

Polyurethane Elastomer Passenger Car Tire Technology
----------------------------------------------------

We are engaged in the  development of  polyurethane  elastomer tires for highway
and agricultural use based on our proprietary technology and various methods and
processes  relating to the manufacturing of those tires from liquid  elastomers.
The  polyurethane  elastomer  material is identified  by us as  Elastothane(TM).
Elastothane (TM) and the technology to produce tires using  Elastothane(TM)  are
significant  to us because we believe that  combined  they result in a tire that
can be produced quickly and less  expensively than traditional  rubber pneumatic
tires, while meeting or exceeding the performance of those tires.

We have  produced  a limited  number  of  prototype  polyurethane  car tires and
conducted independent  laboratory testing to demonstrate that these tires comply
with existing federal safety standards for new-pneumatic  tires,  FMVSS 109, and
the proposed revisions to those standards, FMVSS 139, which takes effect in July
2007.  Compliance  with FMVSS 109 and  subsequently,  FMVSS 139, is necessary to
commercially  market  pneumatic  car tires within the United  States.  FMVSS 139
retains  many of the test  components  of FMVSS 109,  with the  following  major
changes:

(1)  Endurance  and Low  Inflation  Pressure  Test.  Test remains 34 hours,  but
extends  the final load step from 22 hours to 24 hours.  Load  percentages  have
been reduced from 90/100/110% to 85/90/100%.  In addition,  at the end of the 34
hours of endurance testing,  the tire will be run under-inflated  (20psi) at 120
km/h (75 mph) for 90 minutes;

(2) Speed  test.  Test  remains  a total of 90  minutes  with a 2 hour  warm-up;
however, speeds for each 30 minute segment have been increased from 75/80/85 mph
to 140/150/160 km/h [87/93/99 mph], respectively; and

(3)  Aging  effects  performance  test.  Implementation  of  the  aging  effects
performance  test has been  deferred  until the NHTSA has  completed  additional
research and issues a new proposal.

In addition to inventing  polyurethane  elastomer  passenger car tires,  we have
invented the manufacturing equipment necessary to produce these tires in limited
quantities.  We have filed several  applications  for method and process patents
with  respect  to  various  aspects  of  this  technology.   We  have  completed
fabrication  of  prototype  manufacturing  equipment  to mold  the  polyurethane
elastomer  tires  and  we  are   fabricating   certain   additional   pieces  of
manufacturing  equipment  that  are  necessary  to  assemble  the  reinforcement
materials   (i.e.,   beads,   belts  and  plies)  utilized  in  connection  with
manufacturing  the  tire.  This  work  is  continuing  and  we  expect  to  make
improvements to the method,  process and equipment as needed so that these tires
can be produced in commercial qualities.

During the quarter we announced  that we had entered into a Product  Development
Agreement with Genmar Holdings, Inc., Minneapolis, Minnesota, one of the world's
largest  manufacturers  of recreational  boats, to design and develop  prototype
polyurethane  "run-flat"  boat  trailer  tires based on our  passenger  car tire
technology.  We estimated the time frame for completing the development  project
to be  approximately  six  months  (May  2006).  If the  development  project is
successfully  completed,  and evaluation and testing by Genmar is  satisfactory,
the parties  will move to an agreement  that will allow  Genmar to  commercially
manufacture "run-flat" boat trailer tires.

                                       22
<PAGE>
Non-pneumatic Temporary/Spare Tire Technology
---------------------------------------------

We also are developing a temporary/spare tire out of polyurethane elastomer. Our
initial  project,  a 'zero'  pressure  non-pneumatic  temporary/spare  tire, was
developed for prospective use as a temporary/spare  tire for passenger vehicles.
These tires do not contain air and do not require  inflation.  In April 2005, we
announced that prototype non-pneumatic temporary/spare tire had passed FMVSS 129
testing.  FMVSS 129, is the applicable  safety  standard for new,  non-pneumatic
tires that must be met before the tires can be offered commercially.  We believe
that this is a major breakthrough in tire technology because, to the best of our
knowledge,  no  other  company  has  developed  a  non-pneumatic  tire  that has
successfully  met  FMVSS  129  standard.  We  have  initiated  discussions  with
automobile  manufacturers  about making these tires available to their customers
as original equipment  temporary/spare  tires. In addition,  we continue testing
prototype   designs  of  the  non-pneumatic   temporary/spare   tire  for  other
vehicles/applications.

Polyurethane Retread Material
------------------------------

During the quarter we began development of a compound and manufacturing  process
for retreading medium commercial truck tires with a polyurethane elastomer tread
compound. We believe our retreading process has broad application for the medium
commercial  truck tire market.  The tire  retreading  process being developed by
Amerityre  involves applying the polyurethane  tread compound to the rubber tire
casing  in such a way that  the  tread  "seamlessly  locks"  to the tire  casing
without pressure or  re-vulcanization.  We have conducted a series of pull tests
at an independent  laboratory to test the adhesion of our polyurethane elastomer
tread  compound to rubber tire casings.  The results of the test have  indicated
that our compounds meet acceptable industry requirements. We are continuing with
the development of the process for applying the polyurethane  tread materials to
the rubber tire casings.

In addition to laboratory  testing,  we have been conducting  field tests of the
polyurethane  elastomer  retreads  on a number  of truck  tires  that are  being
evaluated by a mining  company.  We are continuing to test these tires to better
assess their performance characteristics in such a high duty application.

Competition
------------

Currently,  we know of a few  companies  that  utilize a  manufacturing  process
similar to ours to produce tires from polyurethane  foam (i.e.,  Green Tire, UK;
Alshin Tire, USA; KIK Technology International,  Inc., USA; Woo Tire, China; and
Krypton-India,  India). In addition to manufacturers of polyurethane foam tires,
as a potential OEM supplier, we compete directly with firms that manufacture and
market  conventional  low-duty  pneumatic  and  semi-pneumatic  tires  made from
rubber. Our technology  differs from existing  polyurethane foam tire technology
in at least two ways,  including:  (1) the formulation of the polyurethane;  and
(2) the manner in which the polyurethane is distributed throughout the mold.

The underlying basis of our foam tire technology and processes make our Products
the only polyurethane based Flatfree[TM] tires that utilize a foam consisting of
millions of closed cells containing compressed air. Therefore, our Products have
an equivalent "pneumatic ride-quality" without going flat when punctured.

Tires that our Products  compete against are  essentially a commodity.  The not-
for-highway  use tire  industry has  historically  been highly  competitive  and
several of our competitors have financial resources which  substantially  exceed
ours. In addition,  many  competitors are large companies (i.e.,  Kenda,  Japan;
Chengshin  Rubber,  China; and Carlisle Tire, USA) that have  established  brand
name recognition, have established distribution networks for their products, and
have developed consumer loyalty to such products.

We know of no other  companies that have  technology  capable of formulating and
producing  polyurethane elastomer compounds suitable for passenger car tire use,
in particular,  pneumatic and/or  non-pneumatic  passenger car tires that comply
with U.S. Federal Motor Vehicle Safety Standards for those tires.

Manufacturing, Supplies, and Quality Control
--------------------------------------------

Substantially   all  of  our  Products   produced  with  polyurethane  foam  are
manufactured   utilizing  single  and/or  multiple  head,   centrifugal  molding
machines.  These  machines  produce  Products  by  pouring a  proprietary  based
polyurethane  formula  into a mold,  which then  spreads out in the mold through
centrifugal  force.  The molding  process  occurs  when the liquid  polyurethane
formula  (made up of isocyanide  and polyol) is combined  with a catalyst.  This

                                       23
<PAGE>
combination  causes a chemical reaction that results in the cross linking of the
chemicals,  which  thereafter  become  solid.  The mold  then  moves to the next
station where the Product is removed and the process is repeated.

Our  chemicals are available  from  multiple  suppliers.  We believe that we can
obtain sufficient  quantities of raw materials without  significant  problems or
delays.

Although we have one customer  that  accounted  for  approximately  12% of total
sales  during the fiscal year ended June 30,  2005,  we don't  believe  that our
business operations are dependent on that customer.

All of our Products are inspected following the manufacturing  process and prior
to shipment to ensure  quality.  Any Product  considered by our quality  control
personnel to be defective is disposed of through  traditional  refuse collection
services or can be ground into  pellets,  which can be melted and reused to make
other products and reduce waste of raw materials.

Patents
--------

Our technology is proprietary.  Set forth in the schedule below are patents that
have been issued or for which a patent  application  is pending  with respect to
our technology.


Description of Patents                          U.S. Patent No.    Issued Date
----------------------                          ---------------   -------------
Method for Making Polyurethane Tires
 with an Outer Skin                                 4,855,096       8/08/1989
Apparatus for Making Foam Products                  4,943,223       7/24/1990
Apparatus and Method for Manufacturing
 an Item From Polyurethane Foam and the Like        5,906,836       5/25/1999
Improved Method for Making Tires and the Like       6,165,397      12/26/2000
Non-Pnuematic Tire and Rim Combination              6,431,235       8/13/2002
Run Flat Tire with Elastomeric Inner Support        6,679,306       1/20/2004
Elastomeric Tire with Arch Shaped Shoulders         6,971,426      12/06/2005
Tire Core Package for Use in Manufacturing a Tire
  with Belts, Plies and Beads and Process of Tire
  Manufacture                                       6,974,519      12/13/2005


Description of Patents Pending                            Action    Status
------------------------------                            ------    ------
Method for Manufacturing a Tire with Belts, Plies and
 Beads Utilizing a Precured Elastomer and Cold Rolling    Filed     Pending
Air No-Air Elastomeric Tire                               Filed     Pending
Method for Manufacturing an Air No-Air Tire with
 Belts and Beads                                          Filed     Pending
Improved Method and Apparatus for Forming a Core of
 Plies, Belts and Beads and for Positioning the Core
 in a Mold for Forming an Elastomeric Tire                Filed     Pending
Improved Method and Apparatus for Suspending a Core of
 Plies, Belts and Beads and for Positioning the Core in
 a Mold for Forming and Elastomeric Tire                  Filed     Pending
Method and Apparatus for Forming an
 Elastomeric Tire                                         Filed     Pending
Method and Apparatus for Forming a Wheel
 from a Urethane Material
Run Flat Tire Insert System                               Filed     Pending

Trademarks
-----------

We have used various  trademarks  in  association  with  marketing our Products,

                                       24
<PAGE>
including the names Arcus(R), Flatfree(TM), Amerityre(R) , Elastothane(TM), Tire
Technology for the 21st Century(TM).

Regulation and Environmental Compliance
----------------------------------------

We  know  of no  particular  federal  or  state  regulations  applicable  to our
manufacturing  processes.  We are subject to various local,  state,  and federal
laws and regulations including,  without limitation,  regulations promulgated by
federal and state  environmental and health agencies,  the federal  Occupational
Safety and Health  Administration,  and laws  pertaining  to hiring,  treatment,
safety, and discharge of employees.  Our manufacturing operations must also meet
federal,  state, and local regulatory  standards in the areas of labor,  safety,
and health.  We believe  that we operate in  compliance  with such  regulations,
including  laws relating to the handling and use of materials that may be deemed
to be hazardous materials.

Employees
----------

As of March 8, 2006 we had 26 full-time employees,  including 15 salaried and 11
hourly  employees.  We may  hire  temporary  labor  for  manufacturing  needs as
required.  None of our employees are  represented  by a labor union.  We believe
that we will be able to hire a sufficient  quantity of qualified laborers in the
local area to meet our  employment  needs.  Our  manufacturing  process does not
require special  training,  other than orientation to our production  techniques
and specific  equipment.  None of our employees is  represented  by a collective
bargaining agreement. We consider our relations with our employees to be good.

                             DESCRIPTION OF PROPERTY

In October 2002, we leased our executive and manufacturing facilities located at
1501 Industrial Road,  Boulder City,  Nevada.  The property consists of a 49,200
square foot building,  which includes  approximately 5,500 square feet of office
space, situated on approximately 4.15 acres. The term of the lease is five years
expiring  October 14, 2007,  subject to our right to purchase the property.  The
base rent is $16,000 per month for the first year, with annual increases of $500
per  month  during  the term of the  lease.  We  believe  the  facility  will be
sufficient to handle our office and production  needs for the next few years. It
is our opinion that we maintain adequate  insurance  coverage for loss or damage
to our leased facilities under our existing insurance policy.

                                LEGAL PROCEEDINGS

We are not presently subject to any material legal proceedings other than as set
forth below:

In November 2005, Continental Automotive Licensing Corp.  ("Petitioner") filed a
Petition for Cancellation #92045199 ("Petition") in the United States Patent and
Trademark  Office (the  "Trademark  Office")  against  Richard A.  Steinke,  our
Chairman,  President and Chief Executive Officer.  Petitioner alleges that it is
being,  has  been,  and  will  be  damaged  by the  continued  existence  of the
Amerityre(R)  trademark  and has  asked  the  Trademark  Office  to  cancel  the
registration.  This registered trademark (Registration No. 2,401,989) was issued
November 7, 2000 by the Trademark  Office to Mr.  Steinke and assigned by him to
us in June 2001.  We believe that the Petition is without merit and we expect to
vigorously defend our use of the trademark.

          MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common  stock is currently  traded on the  Over-the-Counter  Bulletin  Board
under the  symbol  "AMTY."  The  following  table  sets  forth  for the  periods
indicated  the high and low sale prices of our common  stock.  Prices  represent
inter-dealer  quotations  without  adjustment for retail  markups,  markdowns or
commissions and may not represent actual transactions.

                                       25
<PAGE>
                                                     HIGH             LOW
                                               ---------------   -------------
YEAR ENDED JUNE 30, 2004

First Quarter                                  $          5.38   $       3.45
Second Quarter                                            6.42           3.90
Third Quarter                                            12.74           6.69
Fourth Quarter                                           11.95           8.20

YEAR ENDED JUNE 30, 2005

First Quarter                                  $          9.75   $       6.45
Second Quarter                                            8.06           6.00
Third Quarter                                             7.85           4.95
Fourth Quarter                                            7.45           4.80

YEAR ENDED JUNE 30, 2006
First Quarter                                  $          7.45   $       5.25
Second Quarter                                            6.50           4.15

As of March 8,  2006,  there  were  approximately  550  holders of record of our
common stock and 20,977,460 shares of common stock outstanding.

We have never declared or paid cash dividends on our capital stock. We currently
expect to retain our future  earnings for use in the  operation and expansion of
our business and do not anticipate  paying any cash dividends in the foreseeable
future.  Any future  determination  to pay  dividends  on our common  stock will
depend  upon  our  results  of  operations,   financial  condition  and  capital
requirements,  applicable  restrictions  under any  credit  facilities  or other
contractual  arrangements and such other factors deemed relevant by our Board of
Directors.

                                       26
<PAGE>
                 SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

You  should  read  the  following  selected   consolidated   financial  data  in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations"  and our  consolidated  financial  statements and the
related notes appearing elsewhere in this prospectus.

The  consolidated  statements  of  operations  data for the years ended June 30,
2003,  2004 and 2005, and the  consolidated  balance sheet data at June 30, 2004
and  2005,  are  derived  from our  audited  consolidated  financial  statements
appearing  elsewhere  in  this  prospectus.   The  consolidated   statements  of
operations  data for the years  ended June 30, 2001 and June 30,  2002,  and the
consolidated  balance sheet data at June 30, 2001 and 2002, are derived from our
audited  consolidated  financial  statements  that  are  not  included  in  this
prospectus.  The  consolidated  statements of operations data for the six months
ended  December  31, 2004 and 2005 and the  consolidated  balance  sheet data at
December  31,  2005  are  derived  from  our  unaudited  consolidated  financial
statements  included in this prospectus.  The unaudited  consolidated  financial
statements  include,  in  the  opinion  of  management,   all  adjustments  that
management  considers  necessary  for the  fair  presentation  of the  financial
information  set  forth in those  statements.  The  historical  results  are not
necessarily indicative of the results to be expected in any future period.

Because the following is only a financial  summary,  it does not contain all the
financial  information  that may be  important  to you.  Therefore,  you  should
carefully read all the information in this  prospectus,  including the financial
statements from which this information was derived and their  explanatory  notes
and Management's Discussion and Analysis, before making an investment decision.
<TABLE>
<CAPTION>
                                                                      Year Ended June 30,                           Six Months
                                                ----------------------------------------------------------      Ended-December 31,
                                                                                                              ---------------------
                                                 2001         2002         2003         2004         2005      2004          2005
                                                -------     --------     --------     --------     -------   --------      --------
                                                               (in thousands, except per share data)
                                                                                                                     (unaudited)
Consolidated Statements of Operations Data:
<S>                                                <C>        <C>          <C>          <C>          <C>         <C>          <C>
Net sales                                       $   116   $     506    $   1,040    $   1,419    $   1,681   $   643      $     738
Cost sales                                          126         525          976        1,114        1,233       462            613

Gross profit (deficit)                              (10)        (19)          64          305          448       181            125

Consulting                                        1,315       1,505          340          371           77         0             99
Advisory group expense (2)                            0           0            0            0        6,134     6,134              0
Payroll and payroll taxes                           755         819        1,084        2,345        1,905       846          1,010
Depreciation and amortization                       175         223          299          296          386       195            181
Research and development (1)                          0           0           29          572          881       409            388
Selling, general and administrative               2,370       1,211        1,421        1,462        1,188       632            699

Total  expenses                                   4,616       3,758        3,173        5,046       10,571     8,216          2,377

Loss from operations                             (4,626)     (3,777)      (3,109)      (4,741)     (10,123)   (8,035)        (2,252)
Other income                                         62          31           17           20           50        21             26

Net loss                                        $(4,564)  $  (3,746)   $  (3,092)   $  (4,721)   $ (10,073)  $(8,014)     $  (2,226)

Basic loss per share                            $  (.38)  $    (.27)   $    (.21)   $    (.26)   $    (.53)  $  (.43)     $    (.11)
Weighted average number of shares outstanding    12,106      13,662       14,797       17,847       18,932    18,697         19,877
</TABLE>
     (1)  Research  and  development  expenses  were not broken out of  Selling,
     general and administrative expenses until 2003.

     (2)  During the period  ended  September  30,  2004,  we issued  options to
     acquire an  aggregate  of  3,000,000  shares of our common stock to certain
     non-employees  in connection  with an advisory  agreement.  We recognized a
     total of  $6,134,000  in  expense  associated  with the  issuance  of these

                                       27
<PAGE>
     options and  deferred  $1,000,000  as stock  offering  costs until  related
     funding was  received.  We estimated the fair value of the stock options at
     the grant date by using the Black-Scholes option pricing model.
<TABLE>
<CAPTION>
                                                                                At June 30,                            At
                                                    ---------------------------------------------------------     December-31,
                                                                                                                      2005
                                                                                                               ----------------
                                                      2001      2002        2003       2004         2005
                                                    --------  ---------  ----------  ----------  ----------
                                                                                  (in thousands)
<S>                                                     <C>       <C>        <C>         <C>           <C>             <C>
        Consolidated Balance Sheet Data:                                                                          (unaudited)
Cash and cash equivalents                           $    530  $     774  $    2,491  $    1,591  $    2,122    $          2,578
Total current assets                                $    965  $   1,341  $    3,137  $    2,415  $    3,081    $          3,704
Total assets                                        $  1,856  $   2,045  $    4,584  $    4,061  $    4,627    $          5,265
Total liabilities (3)                               $    356  $     115  $       95  $       59  $       85    $          1,216
Total stockholders' equity                          $  1,500  $   1,930  $    4,488  $    4,002  $    4,542    $          4,049
</TABLE>
     (3) All liabilities are current  liabilities;  we do not have any long-term
     liabilities.


                                       28
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

This discussion and analysis  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"
as well as those discussed elsewhere in this Prospectus.  The historical results
set forth in this  discussion  and analysis 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 Prospectus.

Overview

We were incorporated as a Nevada  corporation on January 30, 1995 under the name
American  Tire  Corporation  and changed our name to  Amerityre  Corporation  in
December  1999.  We own certain  proprietary  and  nonproprietary  technology to
manufacture tires from polyurethane foam and polyurethane elastomer.

Polyurethane Foam Tire Technology
----------------------------------

We  currently  produce  Flatfree(TM)   polyurethane  foam  tires  for  bicycles,
wheelchairs, lawn and garden products, and outdoor power equipment products (the
"Products").

Polyurethane Elastomer Passenger Car Tire Technology
-----------------------------------------------------

We are engaged in the  development of  polyurethane  elastomer tires for highway
and agricultural use based on our proprietary technology and various methods and
processes  relating to the manufacturing of those tires from liquid  elastomers.
The  polyurethane  elastomer  material is identified  by us as  Elastothane(TM).
Elastothane (TM) and the technology to produce tires using  Elastothane(TM)  are
significant  to us because we believe that  combined  they result in a tire that
can be produced quickly and less  expensively than traditional  rubber pneumatic
tires, while meeting or exceeding the performance of those tires.

We have  produced  a limited  number  of  prototype  polyurethane  car tires and
conducted independent  laboratory testing to demonstrate that these tires comply
with existing federal safety standards for new-pneumatic  tires,  FMVSS 109, and
the proposed revisions to those standards, FMVSS 139, which takes effect in July
2007.  Compliance  with FMVSS 109 and  subsequently,  FMVSS 139, is necessary to
commercially  market  pneumatic  car tires within the United  States.  FMVSS 139
retains  many of the test  components  of FMVSS 109,  with the  following  major
changes:

(1)  Endurance  and Low  Inflation  Pressure  Test.  Test remains 34 hours,  but
extends  the final load step from 22 hours to 24 hours.  Load  percentages  have
been reduced from 90/100/110% to 85/90/100%.  In addition,  at the end of the 34
hours of endurance testing,  the tire will be run under-inflated  (20psi) at 120
km/h (75 mph) for 90 minutes;

(2) Speed  test.  Test  remains  a total of 90  minutes  with a 2 hour  warm-up;
however, speeds for each 30 minute segment have been increased from 75/80/85 mph
to 140/150/160 km/h [87/93/99 mph], respectively; and

(3)  Aging  effects  performance  test.  Implementation  of  the  aging  effects
performance  test has been  deferred  until the NHTSA has  completed  additional
research and issues a new proposal.

In addition to inventing  polyurethane  elastomer  passenger car tires,  we have
invented the manufacturing equipment necessary to produce these tires in limited
quantities.  We have filed several  applications  for method and process patents
with  respect  to  various  aspects  of  this  technology.   We  have  completed
fabrication  of  prototype  manufacturing  equipment  to mold  the  polyurethane
elastomer  tires  and  we  are   fabricating   certain   additional   pieces  of
manufacturing  equipment  that  are  necessary  to  assemble  the  reinforcement
materials   (i.e.,   beads,   belts  and  plies)  utilized  in  connection  with
manufacturing  the  tire.  This  work  is  continuing  and  we  expect  to  make
improvements to the method,  process and equipment as needed so that these tires
can be produced in commercial qualities.

                                       29
<PAGE>
During the quarter  ended  December 31, 2005,  we announced  that we had entered
into a Product Development  Agreement with Genmar Holdings,  Inc.,  Minneapolis,
Minnesota,  one of the world's largest  manufacturers of recreational  boats, to
design and develop prototype polyurethane "run-flat" boat trailer tires based on
our passenger car tire  technology.  We estimated the time frame for  completing
the  development  project to be  approximately  six months  (May  2006).  If the
development  project is  successfully  completed,  and evaluation and testing by
Genmar is  satisfactory,  the parties will move to an agreement  that will allow
Genmar to commercially manufacture "run-flat" boat trailer tires.

Non-pneumatic Temporary/Spare Tire Technology
----------------------------------------------

We also are developing a temporary/spare tire out of polyurethane elastomer. Our
initial  project,  a  zero  pressure  non-pneumatic  temporary/spare  tire,  was
developed for prospective use as a temporary/spare  tire for passenger vehicles.
These tires do not contain air and do not require  inflation.  In April 2005, we
announced that prototype non-pneumatic temporary/spare tire had passed FMVSS 129
testing.  FMVSS 129, is the applicable  safety  standard for new,  non-pneumatic
tires that must be met before the tires can be offered commercially.  We believe
that this is a major breakthrough in tire technology because, to the best of our
knowledge,  no  other  company  has  developed  a  non-pneumatic  tire  that has
successfully  met  FMVSS  129  standard.  We  have  initiated  discussions  with
automobile  manufacturers  about making these tires available to their customers
as original equipment  temporary/spare  tires. In addition,  we continue testing
prototype   designs  of  the  non-pneumatic   temporary/spare   tire  for  other
vehicles/applications.

Polyurethane Retread Material
------------------------------

During the quarter we began development of a compound and manufacturing  process
for retreading medium commercial truck tires with a polyurethane elastomer tread
compound. We believe our retreading process has broad application for the medium
commercial  truck tire market.  The tire  retreading  process being developed by
Amerityre  involves applying the polyurethane  tread compound to the rubber tire
casing  in such a way that  the  tread  "seamlessly  locks"  to the tire  casing
without pressure or  re-vulcanization.  We have conducted a series of pull tests
at an independent  laboratory to test the adhesion of our polyurethane elastomer
tread  compound to rubber tire casings.  The results of the test have  indicated
that our compounds meet acceptable industry requirements. We are continuing with
the development of the process for applying the polyurethane  tread materials to
the rubber tire casings.

In addition to laboratory  testing,  we have been conducting  field tests of the
polyurethane  elastomer  retreads  on a number  of truck  tires  that are  being
evaluated by a mining  company.  We are continuing to test these tires to better
assess their performance characteristics in such a high duty application.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations
are based on our  financial  statements,  which have been prepared in accordance
with  U.S.  generally  accepted  accounting   principles,   or  U.S.  GAAP.  The
preparation of these financial  statements in accordance with U.S. GAAP requires
us to utilize  accounting  policies and make certain  estimates and  assumptions
that affect the reported  amounts of assets and  liabilities,  the disclosure of
contingencies  as of the  date of the  financial  statements  and  the  reported
amounts of revenues  and expense  during a fiscal  period.  The  Securities  and
Exchange  Commission  considers  an  accounting  policy to be  critical if it is
important to a company's financial  condition and results of operations,  and if
it requires  significant judgment and estimates on the part of management in its
application.   Although  we  believe  that  our   judgments  and  estimates  are
appropriate and correct, actual results may differ from those estimates.

We believe the following to be our critical accounting policies because they are
important to the portrayal of our financial  condition and results of operations
and they require critical management  judgments and estimates about matters that
are  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.

Revenue Recognition
--------------------

Revenue is recognized when the sales amount is determined,  shipment of goods to
the customer  has occurred and  collection  is  reasonably  assured.  Product is
shipped FOB origination.

                                       30
<PAGE>
Patents and Trademarks
-----------------------

Patent and  trademark  costs have been  capitalized  at June 30,  2005  totaling
$407,642.  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 being
amortized.   Amortization   will  begin  once  the  patents  have  been  issued.
Amortization  expense  for the years  ended June 30,  2005 and June 30, 2004 was
$30,847 and $1,309,  respectively.  The Company evaluates the  recoverability of
intangibles and reviews the  amortization  period on a continual basis utilizing
the  guidance  of SFAS 142,  "Goodwill  and Other  Intangible  Assets."  Several
factors  are  used to  evaluate  intangibles,  including,  but not  limited  to,
management's  plans  for  future   operations,   recent  operating  results  and
projected, undiscounted cash flows.

Inventory
----------

Inventory  is stated at the lower of cost  (computed  on a  first-in,  first-out
basis) or market. The inventory  consists of chemicals,  finished goods produced
in the Company's plant and products purchased for resale.

Equity Securities
------------------

Equity  securities  issued for services  rendered have been accounted for at the
fair market value of the securities on the date of authorization.

Stock Options
--------------

As permitted by FASB Statement 148  "Accounting  for Stock Based  Compensation -
Transition and  Disclosure"  (SFAS No. 148), the Company  elected to measure and
record  compensation  cost relative to employee stock option costs in accordance
with  Accounting  Principles  Board ("APB")  Opinion 25,  "Accounting  for Stock
Issued to Employees," and related  interpretations and make proforma disclosures
of net income  and  earnings  per share as if the fair  value  method of valuing
stock  options had been  applied.  Under APB opinion  25,  compensation  cost is
recognized for stock options  granted to employees when the option price is less
that the market price of the underlying common stock on the date of grant.

Valuation of Options and Warrants
----------------------------------

The valuation of options and warrants granted to unrelated  parties for services
are  measured  as of the  earlier  of (1) the  date at  which a  commitment  for
performance by the counterparty to earn the equity instrument is reached, or (2)
the  date  the   counterparty's   performance  is  complete.   Pursuant  to  the
requirements  of EITF  96-18,  the  options  and  warrants  will  continue to be
revalued in  situations  where they are granted  prior to the  completion of the
performance.

Recent Accounting Pronouncements

During  the year ended  June 30,  2005,  we  adopted  the  following  accounting
pronouncements:

On December 16, 2004 the FASB issued SFAS No. 123(R), Share-Based Payment, which
is an amendment to SFAS No. 123, Accounting for Stock-Based  Compensation.  This
new  standard  eliminates  the ability to account for  share-based  compensation
transactions   using  Accounting   Principles  Board  ("APB")  Opinion  No.  25,
Accounting  for  Stock  Issued  to  Employees,   and  generally   requires  such
transactions  to be  accounted  for  using  a  fair-value-based  method  and the
resulting  cost  recognized  in our financial  statements.  This new standard is
effective  for awards that are  granted,  modified or settled in cash in interim
and annual periods beginning after June 15, 2005. In addition, this new standard
will apply to unvested  options  granted  prior to the  effective  date. We will
adopt this new standard effective for the first fiscal quarter of 2006, and have
not yet determined what impact this standard will have on our financial position
or results of operations.

In November 2004, the FASB issued SFAS No. 151,  Inventory  Costs - an amendment
of ARB No. 43,  Chapter 4. This  Statement  amends the  guidance  in ARB No. 43,
Chapter 4, "Inventory  Pricing," to clarify the accounting for abnormal  amounts
of  idle  facility  expense,   freight,  handling  costs,  and  wasted  material

                                       31
<PAGE>
(spoilage).  Paragraph  5 of ARB 43,  Chapter 4,  previously  stated that ". . .
under  some  circumstances,  items  such as  idle  facility  expense,  excessive
spoilage,  double freight, and rehandling costs may be so abnormal as to require
treatment as current period  charges.  . ." This  Statement  requires that those
items be recognized as  current-period  charges  regardless of whether they meet
the  criterion of "so  abnormal."  In addition,  this  Statement  requires  that
allocation of fixed production  overheads to the costs of conversion be based on
the normal  capacity of the production  facilities.  This statement is effective
for inventory  costs incurred during fiscal years beginning after June 15, 2005.
Management  does not  believe  the  adoption  of this  Statement  will  have any
immediate material impact on us.

In December  2004,  the FASB issued  SFAS No.  152,  Accounting  for Real Estate
Time-sharing  Transactions,  which amends FASB statement No. 66,  Accounting for
Sales of Real Estate,  to  reference  the  financial  accounting  and  reporting
guidance  for real estate  time-sharing  transactions  that is provided in AICPA
Statement  of Position  (SOP)  04-2,  Accounting  for Real  Estate  Time-Sharing
Transactions.  This statement also amends FASB Statement No. 67,  Accounting for
Costs and Initial Rental  Operations of Real Estate Projects,  to state that the
guidance  for (a)  incidental  operations  and (b) costs  incurred  to sell real
estate  projects does not apply to real estate  time-sharing  transactions.  The
accounting  for those  operations  and costs is subject to the  guidance  in SOP
04-2.  This  Statement is effective  for financial  statements  for fiscal years
beginning  after  June  15,  2005.  Management  believes  the  adoption  of this
Statement will have no impact on our financial statements.

In December 2004, the FASB issued SFAS No.153,  Exchange of Nonmonetary  Assets.
This Statement addresses the measurement of exchanges of nonmonetary assets. The
guidance in APB Opinion No. 29,  Accounting  for  Nonmonetary  Transactions,  is
based on the principle that  exchanges of nonmonetary  assets should be measured
based on the fair value of the assets  exchanged.  The guidance in that Opinion,
however,  included certain  exceptions to that principle.  This Statement amends
Opinion 29 to  eliminate  the  exception  for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial  substance if the future cash flows of the entity are expected to
change  significantly  as a result of the exchange.  This Statement is effective
for financial statements for fiscal years beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges  incurred during fiscal
years beginning after the date of this statement is issued.  Management believes
the adoption of this Statement will have no impact on our financial statements.

The implementation of the provisions of these pronouncements are not expected to
have a significant effect on our consolidated financial statement presentation.

Results of Operations - Three and Six Months Ended December 31, 2005 and 2004

Net Sales

For the three month period ended December 31, 2005 we had net sales of $302,255,
a slight  decrease  from net sales of  $303,801,  for the same period last year.
However,  for the six month period ended  December 31, 2005, we had net sales of
$738,224,  a 15% increase over net sales of $643,573 for the  comparable  period
last year. The increase in net sales for the six-month  period in 2005 over 2004
was due primarily to further  expansion of our Products sales among retail chain
customers and distributors.

Cost of Goods Sold

Our cost of sales  for the  three  month  period  ended  December  31,  2005 was
$258,439,  or 86% of sales as compared to $215,891, or 71% of sales for the same
period last year,  resulting in a gross profit of $43,816, or 14% as compared to
a gross  profit of $87,910 or 29% for the prior year  period.  Our cost of sales
for the six month period ended  December 31, 2005 was $612,781,  or 83% of sales
as compared to $462,678, or 72%, resulting in a gross profit of $125,443, or 17%
of sales  compared  to a gross  profit of  $180,895,  or 28% for the prior  year
period.  The reduction in our gross profit as compared to the prior year periods
is a result of a  revaluation  of our  standard  costs after taking into account
increases  in base  chemicals  and steel wheel  component  costs for  tire/wheel
assemblies.  To offset these  increases in material costs, we have increased the
sales price of our Products effective January 1, 2006 in an attempt to recapture
the decrease in gross margin we have experienced.

Corporate  Expense.  For three and six month  periods  ended  December 31, 2005,
total  operating   expenses  were   $1,210,803  and  $2,377,275,   respectively,

                                       32
<PAGE>
consisting  primarily of consulting expense of $99,498 and $99,498,  payroll and
payroll  taxes of $519,060 and  $1,009,407,  depreciation  and  amortization  of
$91,873 and $181,129,  research and development  costs of $151,825 and $388,208,
and  selling,  general and  administrative  expenses of $348,336  and  $698,822,
respectively.

For the three and six month periods  ended  December 31, 2004,  total  operating
expenses were $953,124 and  $8,216,157,  respectively,  consisting  primarily of
payroll  and  payroll   taxes  of  $428,908  and  $846,470,   depreciation   and
amortization of $102,607 and $194,953,  research and development of $110,798 and
$409,166, selling, general and administrative expenses of $310,620 and $630,795,
respectively,  and,  in the six month  period,  an  expense  of  $6,134,000  for
advisory  group  services  associated  with the grant of  options  to acquire an
aggregate of 3,000,000  shares of our common  stock to  third-party  consultants
during  the  period.   The  value  of  the  options  was  calculated  using  the
Black-Scholes option pricing model.

During the six month period ended December 31, 2004, we recognized an expense of
$6,134,000 for advisory group services  associated  with the grant of options to
acquire an  aggregate of  3,000,000  shares of our common  stock to  third-party
consultants during the period. The value of the options was calculated using the
Black-Scholes  option pricing  model.  Our selling,  general and  administrative
expenses since that time have not included deferred stock offering costs,  which
at December 31, 2005 aggregated  $1,083,278.  This amount has been recorded as a
reduction  in  stockholders'  equity due to its  association  with the  proposed
offering of our securities.  In February 2006, we closed a private  placement of
our  securities  for gross  offering  proceeds of $3.87  million,  therefore the
deferred offering costs will be expensed in the subsequent period.

Excluding  the effect of the  one-time  $6,134,000  expense for  advisory  group
services  associated  with the grant of options for the 2004 periods as detailed
above, our corporate  expenses for the six month period ended December 31, 2005,
when compared to our corporate  expenses for the six month period ended December
31, 2004, increased approximately $295,000 due to annual increases in salary and
payroll,  increased  sales,  marketing  and media  relations  expenses,  and the
payment of outside  consulting fees for specialty  services.  We anticipate that
our monthly  operating  expenses for the next six months will remain  consistent
with the average  monthly  expenses of the first six  months,  at  approximately
$400,000 per month.

Interest  Expense.  We had no  interest  expense  during the three and six month
periods ended December 31, 2005 and 2004, respectively.

Other Income.  For the three and six month  periods ended  December 31, 2005, we
had  other  income of  $7,658  and  $26,014,  respectively,  earned  on  account
receivables and temporary investments of cash not immediately needed in ordinary
daily business.  For the three and six month periods ended December 31, 2004, we
had  other  income of  $7,407  and  $21,176,  respectively,  earned  on  account
receivables and temporary investments of cash not immediately needed in ordinary
daily business.

We experienced  net losses of $1,159,329 and $2,225,818,  respectively,  for the
three and six month periods ended  December 31, 2005,  compared to net losses of
$857,807 and $8,014,086 for the same periods in 2004. The basic losses per share
for the current  periods were $0.06 and $0.11,  respectively,  compared to basic
losses per share of $0.05 and $0.43 for prior year periods.

Liquidity and Capital Resources

During the three and six month periods ended  December 31, 2005, we financed our
operations through collecting  accounts  receivable and issuing common stock for
cash paid in  connection  with the  exercise of  outstanding  stock  options and
prepayment of certain salaries.

At  December  31,  2005,  we  had  current  assets  of  $3,704,381  and  current
liabilities  of  $1,215,751,  for a working  capital  surplus of  $2,488,630,  a
decrease of $507,890  over the working  capital  surplus of $2,996,520 we had at
June 30, 2005. We had cash and cash  equivalents  of $2,577,694 and net accounts
receivable of $75,617 at December 31, 2005 compared to cash and cash equivalents
of  $2,122,320  and net accounts  receivable  of $168,838 at June 30, 2005.  Our
increase in cash and  equivalents at December 31, 2005, is  attributable  to the
exercise of outstanding options during the period. Our cash and cash equivalents
include  $836,820 of cash received as part of an ongoing private offering of our
securities during the period. The subscription amounts were recorded at December

                                       33
<PAGE>
31,  2005,  as a  current  liability  under the line  item  "stock  subscription
deposits."  Subsequent to December 31, 2005, we completed the stock offering. As
a result of completing the offering the "stock subscription  deposits" liability
will be reduced to $0 for the period ending March 31, 2006.

At December 31, 2005,  we had net property and  equipment of  $1,125,751,  after
deduction of accumulated  depreciation of $2,027,326.  At December 31, 2005, our
property and equipment  consisted  mainly of leasehold  improvements,  $120,767;
molds and models,  $353,591;  equipment,  $2,324,730;  furniture  and  fixtures,
$73,652; and software, $280,337.

Net  cash  used by our  operating  activities  for the six  month  period  ended
December 31, 2005 was $1,686,062,  compared to $1,211,739 for the same period in
2004.  Our  operations  for the six month  period  ended  December 31, 2005 were
funded primarily by cash and cash  equivalents,  accounts  receivables,  and the
issuance of common stock for services and salaries.  Our  operations for the six
month period ended December 31, 2004 were funded primarily the same way.

Net cash used by investing  activities  for the six month period ended  December
31,  2005 was  $105,384,  including  payments  for patents  and  trademarks  and
purchase of property and equipment, compared to $93,609 in the prior year period
for similar purposes.

Cash provided by financing  activities  for the six month period ended  December
31, 2005  totaled  $2,246,820  comprised  of  $836,820 in proceeds  from a stock
subscription  deposits and additional  cash proceeds from the issuance of common
stock for the  exercise of  outstanding  options.  Cash  provided  by  financing
activities  for the prior year period  totaled  $880,000  in  proceeds  from the
issuance of common stock.

To  supplement  our cash needs  during the 2006 fiscal year we have (1) obtained
approximately $1,400,000 in funding through the exercise of outstanding options;
(2)  issued  common  stock  in  lieu of cash  as  compensation  for  employment,
development,  and other professional  services;  and (3) raised $3.87 million in
working  capital  through the  private  offering  of our  securities.  We do not
anticipate  needing any additional  working  capital  through the balance of the
2006 fiscal year to implement our operating plan.

Off-Balance Sheet Arrangements
-------------------------------

We currently have no off balance sheet arrangements.

Impact of Inflation
-------------------

We do not anticipate  that inflation will have a material  impact on our current
operations.

Seasonality
------------

Because the significant  portion of our current  customers  reside in the United
States,  we anticipate  that sales of certain of our lawn and garden Products to
those  customers  located in  Northern  portion of the  United  States  could be
reduced as a result of fall and winter climate and weather conditions.

Results of Operations--Years Ended June 30, 2005 and 2004

Net Sales

Since  inception we have focused on the  development of our technology and for a
number of years we were  considered a development  stage  company.  The past two
fiscal years we had limited revenues from the sale of our services and products.
For the fiscal year ended June 30, 2005 we had net sales of  $1,681,091,  an 18%
increase over net sales of $1,419,124,  the previous year. This increase was due
primarily  further  expansion of our Products sales among retail chain customers
and original equipment manufacturers.

Cost of Goods Sold

Our cost of sales for the year ended  June 30,  2005 was  $1,233,181,  or 73% of
sales as compared to  $1,114,230,  or 78.5% of sales for the year ended June 30,
2004,  resulting  in a gross  margin of  $447,910  or 27% as compared to a gross

                                       34
<PAGE>
margin of $304,894 or 21% for the  respective  periods.  The  improvement in our
gross  margin for the current  year as compared to the prior year is a result of
manufacturing  efficiencies such as (a) increasing the size of chemical batches,
(b) dedicating  production shifts to manufacturing single products (i.e., longer
production  runs), and (c) reducing labor costs by implementing line automation.
We believe that our gross  margin can  continue to improve as our sales  efforts
generate  additional product orders in such quantities to take further advantage
of the  manufacturing  efficiencies.  We believe we  currently  have  sufficient
manufacturing  equipment  and  employees  to  merit a  substantial  increase  in
production  without  incurring a  proportionately  equivalent  increase in labor
costs.

We have  experienced  an  increase  in the  cost  of  wheel  components  for our
tire/wheel  assemblies due to the increasing  cost of steel.  We have not passed
the increases on to our customers and have elected to seek alternative suppliers
for components that are priced more competitively. However, if the cost of steel
wheel components continues to rise, we may elect to amend our product pricing to
reflect the increase in component  costs.  Also,  during the last six months our
chemical  pricing  increased  approximately  14%  and  we  expect  to  see  some
additional upward pressure on chemical pricing during the next fiscal year.

Corporate  Expense.   For  fiscal  year  2005,  total  operating  expenses  were
$10,571,052,  consisting of consulting expenses of $77,000,  payroll and payroll
taxes of $1,905,177,  depreciation  and  amortization of $385,726,  research and
development costs of $880,748,  bad debt expense of $14,087,  loss on impairment
of  assets  of  $18,054,   selling,   general  and  administrative  expenses  of
$1,156,260,  and an expense of $6,134,000 for advisory group services associated
with the grant of options to acquire an  aggregate  of  3,000,000  shares of our
common stock to third-party consultants. The value of the options was calculated
using the  Black-Scholes  option pricing model and was expended during the three
month period ended  September 30, 2004,  as reported in our quarterly  report on
Form 10QSB for that period.

For fiscal year 2004, total operating  expenses were  $5,045,895,  consisting of
consulting  expenses  of  $370,666,  payroll and  payroll  taxes of  $2,345,082,
depreciation  and  amortization of $296,232,  research and  development  cost of
$572,002,  bad debt  expense of $3,713 and selling,  general and  administrative
expenses of $1,458,200.

Our  corporate  expenses  increased  from  $5,045,895  in  fiscal  year  2004 to
$10,571,052  in fiscal year 2005,  for two main reasons:  (1) the $6,134,000 for
advisory group services  associated  with the grant of options and (2) increases
in research  and  development  expenses  attributed  to the  development  of our
polyurethane  elastomer car tire technology.  However,  for fiscal year 2005, we
had reductions in consulting expenses of $293,666;  payroll and payroll taxes of
$439,905, and selling, general and administrative expenses of $301,940.

For fiscal year 2006 we are estimating that our total operating expenses will be
approximately $5,000,000.

Interest Expense. We had no interest expense during fiscal years 2005 and 2004.

Other Income.  For fiscal year 2005, we had other income of $50,134,  consisting
of  interest  income of $35,181  (earned on account  receivables  and  temporary
investments  of cash not  immediately  needed in ordinary  daily  business)  and
miscellaneous  income of $14,953.  For fiscal year 2004,  we had other income of
$19,746, consisting of interest income of $17,234 (earned on account receivables
and  temporary  investments  of cash not  immediately  needed in ordinary  daily
business) and miscellaneous income of $2,512.

We  experienced  a net loss of  $10,073,008  for the year ended  June 30,  2005,
compared to a net loss of $4,721,255 for the year ended June 30, 2004. The basic
loss per share for fiscal year 2005 was $0.53  compared to $0.26 for fiscal year
2004, based on the weighted  average number of shares  outstanding of 18,931,779
and 17,846,910 for the respective periods.

Results of Operations--Years Ended June 30, 2004 and 2003

Net Sales

For a substantial portion of our operating history we focused on the development
of our technology and have been a development stage company. During this time we
had limited  revenues  from the sale of or Products.  In October  2001, we began
selling our Products to bicycle  shops,  hardware  stores and tire stores in the
United   States   through  the  use  of  a  few   independent   regional   sales
representatives traveling throughout their respective regions. In April 2003, we

                                       35
<PAGE>
began to implement  changes to our sales and  marketing  plan based on a product
sector  approach.  This change helped us to increase our sales,  so that our net
sales for the year ended June 30, 2004 were $1,419,124,  a 36% increase over net
sales for the year ended June 30, 2003 of $1,040,246.

Cost of Goods Sold

Our cost of sales for the year ended June 30, 2004 was  $1,114,230,  or 78.5% of
sales as  compared  to  $976,132,  or 93.8% of sales for the year ended June 30,
2003,  resulting  in a gross  margin of $304,894 or 21.5% as compared to a gross
margin of $64,114 or 6.2% for the respective periods.  The increase in our gross
margin for the year ended June 30,  2004,  is a direct  result of  incorporating
revisions  to our  methods,  processes  and costs in order to  achieve  increase
manufacturing  efficiencies.  We are continuing to effect these revisions and we
believe  that,  for the fiscal year ending June 30, 2005,  our direct costs as a
percent of sales  will  continue  to be  reduced as our volume of Product  sales
exceeds  the fixed  costs of minimum  Product  production  (i.e.,  labor and raw
material costs,  etc.).  We believe we currently have  sufficient  manufacturing
equipment and employees to merit a  substantial  increase in production  without
incurring a proportionately  equivalent increase in labor costs. In addition, we
continue  to seek  reductions  in raw  material  and  component  costs  from our
principal suppliers.

During the year ended June 30, 2004, we  experienced  an increase in the cost of
wheel  components  for our tire/wheel  assemblies due to the increasing  cost of
steel.  We did not pass the  increases on to our  customers  and elected to seek
alternative  suppliers  for  components  that were  priced  more  competitively.
However,  if the cost of steel wheel components  continues to rise during fiscal
year 2005, we may elect to amend our product  pricing to reflect the increase in
component  costs.  During the reporting  period,  our chemical  pricing remained
relatively  constant.  We know of no other  predictable  events or uncertainties
that may be reasonably  expected to have a material  negative  impact on the net
sales revenues or income from our operations  other than a the  continuation  of
the sluggish U.S. economy that has occurred over the past several months and the
reduced consumer spending resulting therefrom.

Corporate  Expense.   For  fiscal  year  2004,  total  operating  expenses  were
$5,045,895,  consisting of consulting expenses of $370,666,  payroll and payroll
taxes of $2,345,082,  depreciation  and  amortization of $296,232,  research and
development  cost of $572,002,  bad debt expense of $3,713 and selling,  general
and administrative  expenses of $1,458,200,  resulting in a loss from operations
of $4,741,001.  For fiscal year 2003, total operating  expenses were $3,173,149,
consisting mainly of consulting expenses of $339,934,  payroll and payroll taxes
of  $1,083,910,   depreciation  and  amortization  of  $298,625,   research  and
development  costs of $28,607,  bad debt expense of $51,  loss on  impairment of
assets  of  $67,982  and  selling,   general  and  administrative   expenses  of
$1,354,040, resulting in a loss from operations of $3,109,035.

Our  corporate  expenses  increased  from  $3,173,149  in  fiscal  year  2003 to
$5,045,895 in fiscal year 2004, in large part to the following  reasons:  (1) An
increase in outside product and marketing consulting fees as a result of issuing
common  stock  for  services  valued  at  current  market  value in lieu of cash
payments;  (2) An increase in executive and employee compensation as a result of
issuing common stock for services valued at current market value in lieu of cash
payments;  and (3) An increase in research and  development  expenses,  in large
part attributed to the specific  endeavor to develop our polyurethane  elastomer
car tire technology. In connection with the foregoing,  during fiscal year 2004,
we issued  equity  instruments  for  services in lieu of cash with an  aggregate
value of $2,176,692.

For  fiscal  year  2005  we  are  estimating  that  our  selling,   general  and
administrative  expenses will remain relatively  constant with the approximately
$5,000,000 expended in fiscal year 2004.

Interest Expense. We had no interest expense during fiscal years 2004 and 2003.

Other Income.  For fiscal year 2004, we had other income of $19,746,  consisting
of  interest  income of $17,234  (earned on account  receivables  and  temporary
investments  of cash not  immediately  needed in ordinary  daily  business)  and
miscellaneous  income of $2,512.  In fiscal  year 2003,  we had other  income of
$17,063,  consisting  of interest  income of $16,397  and $666 of  miscellaneous
income.

We  experienced  a net loss of  $4,721,255  for the year  ended  June 30,  2004,
compared  with a net loss of  $3,091,972  for the year ended June 30, 2003.  The
basic loss per share for  fiscal  year 2004 was $0.26 as  compared  to $0.21 for
fiscal year 2003, based on the weighted average number of shares  outstanding of
17,846,910 and 14,796,744 for the respective periods.

                                       36
<PAGE>
Liquidity and Capital Resources

During the fiscal year ended June 30, 2005, we financed our  operations  through
collecting  accounts  receivable  and issuing  common  stock for:  cash (paid in
connection  with the  exercise of  outstanding  stock  options);  prepayment  of
certain  salaries;  and payment of  professional  services.  For the fiscal year
ended June 30, 2004, we financed our operations in the same manner.

At June 30, 2005, we had current assets of $3,081,348 and current liabilities of
$84,828,  for a working capital  surplus of $2,996,520,  an increase of $640,389
over the working  capital  surplus of $2,356,131 we had at June 30, 2004. We had
cash and cash equivalents of $2,122,320 and net accounts  receivable of $168,838
at June 30, 2005 compared to cash and cash  equivalents  of  $1,591,289  and net
accounts  receivable  of $167,002  at June 30,  2004.  Our  increase in cash and
equivalents  at June 30, 2005, is  attributable  to the exercise of  outstanding
options during the year.

Net  cash  used  by our  operating  activities  for the  fiscal  year  2005  was
$2,618,898,  compared to $2,197,583 for the fiscal year 2004. Our operations for
fiscal year 2005 were funded  primarily by cash and cash  equivalents,  accounts
receivables,  and the  issuance of common  stock for  services  and salary.  Our
operations for fiscal 2004 were funded primarily the same way.

At June 30,  2005,  we had net  property  and  equipment  of  $1,141,315,  after
deduction of accumulated  depreciation  of $1,858,950.  At June 30, 2004, we had
net  property and  equipment  of  $1,445,993,  after  deduction  of  accumulated
depreciation  of  $1,567,187.  At June 30,  2005,  our  property  and  equipment
consisted mainly of leasehold improvements, $120,767; mold and models, $343,031;
equipment,  $2,280,888; furniture and fixtures, $70,678; and software, $184,901,
compared  to  leasehold  improvements,  $163,896;  molds and  models,  $315,282;
equipment,  $2,253,217;  furniture and fixtures, $70,033; vehicles, $25,851; and
software, $184,901, at June 30, 2004.

Our  financial  statements  are prepared  using  generally  accepted  accounting
principles  applicable to a going concern which  contemplates the realization of
assets and liquidation of liabilities in the normal course of business.  We have
historically incurred significant losses which have resulted in a total retained
deficit of $36,463,835 at June 30, 2005 which raises substantial doubt about our
ability to continue as a going concern.  Our financial statements do not include
any  adjustments  relating to the  recoverability  and  classification  of asset
carrying  amounts or the amount and  classification  of  liabilities  that might
result from the outcome of this uncertainty.

We have taken certain steps to maintain our operating and financial requirements
in an effort to enable us to  continue as a going  concern  until such time that
revenues are  sufficient to cover  expenses,  including:  (1) evaluating (A) our
cost of goods and equipment  utilization and  requirements of our  manufacturing
operations,  and (B) our sales and marketing plan on a product sector basis; (2)
continued  revisions  to our  methods,  processes  and costs in order to achieve
necessary  manufacturing  efficiencies (i.e., line automation,  reduced material
costs,  reduced  product  waste,  etc.);  and (3) seeking  reduced  material and
component costs from suppliers.

In addition,  to expanding revenue  opportunities during the fiscal year we have
commenced a program of (1) licensing  manufacturing  and distribution  rights to
certain of our polyurethane tire products to third-party  manufacturers based on
such factors as geographical locations and boundaries; (2) selling manufacturing
equipment to third-party  manufacturers  to manufacture  products  utilizing our
manufacturing equipment and processes;  (3) selling our proprietary polyurethane
chemical  systems to third-party  manufacturers  that utilize our  manufacturing
equipment  and  processes;  and (4)  offering  contract  design and  engineering
services to the tire and auto industries.

To  supplement  our cash needs  during the 2006 fiscal year we have (1) obtained
approximately $1,500,000 in funding through the exercise of outstanding options;
and (2)  expect  to  issued  common  stock in lieu of cash as  compensation  for
employment, development, and other professional services.

The combination of our accounts  receivables  and our cash and cash  equivalents
are expected to meet the balance of our operational needs during the 2006 fiscal
year. We are  currently  evaluating  funding  strategies to help outset any cash
shortfalls that may occur after during the 2006 fiscal year.

We  anticipate  that  during  the 2006  fiscal  year we will need  approximately
$4,000,000 to implement our plan and to meet our working capital requirements.

                                       37
<PAGE>
Our  ability to  continue as a going  concern is  dependent  upon our ability to
successfully   accomplish  the  plan  described  above,  and  eventually  attain
profitable operations.

The accompanying  financial statements do not include any adjustments that might
be necessary should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements
-------------------------------

We currently have no off balance sheet arrangements.

Impact of Inflation
--------------------

We do not anticipate that inflation will have a material impact on our current
operations.

Seasonality
------------

Because the significant  portion of our current  customers  reside in the United
States,  we anticipate  that sales of certain of our lawn and garden Products to
those  customers  located in  Northern  portion of the  United  States  could be
reduced as a result of fall and winter climate and weather conditions.


                                       38
<PAGE>
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to changes in  prevailing  market  interest  rates  affecting the
return on our  investments  but do not consider  this  interest rate market risk
exposure to be material to our financial condition or results of operations.  We
invest  primarily in United States Treasury  instruments  with short-term  (less
than one year) maturities. The carrying amount of these investments approximates
fair value due to the short-term  maturities.  Under our current policies, we do
not use derivative financial  instruments,  derivative commodity  instruments or
other financial  instruments to manage our exposure to changes in interest rates
or commodity prices.

                  MANAGEMENT--DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers

     The following sets forth certain information  regarding our directors as of
     March 8, 2006:

Name of Nominee*        Age   Principal Occupation
----------------       -----  ---------------------
Richard A. Steinke      63    Chief Executive Officer, President and Chairman of
                              our Board of Directors

Elliott N. Taylor       47    Executive  Vice  President,  General  Counsel  and
                              Chief Administrative Officer

James G. Moore, Jr.     57    Vice President of Operations and Engineering

Gary N. Benninger       64    Executive  Vice  President  and  Chief   Operating
                              Officer

Anders A. Suarez        40    Chief Financial Officer

David K. Griffiths      68    Secretary and Treasurer

Louis M. Haynie         78    Director

Henry D. Moyle          75    Director

Wesley G. Sprunk        68    Director

Norman H. Tregenza      68    Director

Steve M. Hanni          37    Director

Kenneth C. Johnsen      47    Director

Richard  A.  Steinke  is our  founder  and  currently  serves as our  President,
Chairman and Chief  Executive  Officer.  From January 1992 to December  1994, he
served as  Chairman  and  C.E.O.  of Alanco  Environmental  Resources,  Inc.,  a
manufacturer of environmental/pollution control equipment, Salt Lake City, Utah.
From  June  1985  to  December  1991,  he was the  Chairman  and  C.E.O.  of UTI
Chemicals,  Inc., a developer and manufacturer of urethane  chemicals,  El Toro,
California.  He received a B.A. in  Political  Science  and  Economics  from the
University of Arizona, Tucson, Arizona, in 1967.

Elliott N. Taylor became  Executive Vice  President and General  Counsel in June
2002.  Prior to  joining  us,  he was the  principal  attorney  for  Taylor  and
Associates,  Inc., a law firm in Salt Lake City, Utah, specializing in corporate
and  securities  law since May 1993.  From August 1991 to March 1993, he was the
general  counsel and chief financial  officer for Carbon Fiber  Products,  Inc.,
Ogden,  Utah, a manufacturer of composite  products for the golf industry.  From
November  1987 to July 1991,  he was an  associate  attorney  at Kruse,  Landa &
Maycock,  a law firm in Salt  Lake  City,  Utah.  He  received  a J.D.  from the
University  of Tulsa,  Tulsa,  Oklahoma in 1986 and a B.S. in Political  Science
from Utah State University, Logan, Utah in 1982.

                                       39
<PAGE>
James G. Moore,  Jr. joined us in August 1997. Prior to his employment by us, he
worked at The Goodyear Tire & Rubber Company,  in Akron, Ohio, where he had over
25 years of experience as a master tire carver, which included five years at the
Goodyear apprentice school for tire tread pattern carving and mold carving.

Dr. Gary N. Benninger  became our Chief  Operating  Officer in October 2005. Dr.
Benninger  served as Director  of  Technology  Development  from 1999 to 2005 by
Magna  International,  Inc., a $20+billion  diversified auto parts supplier.  In
this  capacity,   Dr.   Benninger  was   responsible  for  identifying  key  new
technologies  as well as managing  the  design,  engineering  and  manufacturing
launch of target  products.  During 1998 and 1999,  Dr.  Benninger was the Chief
Operating  Officer of the North  American  Operations  of Becker  Group,  a $1.5
billion privately held automotive  interior systems  supplier.  Prior to joining
Becker,  he was the Executive Vice President of Engineering and R&D at Magna and
also  served  as  Division   General  Manager  and  Vice  President  of  Product
Development. He has also worked for Ford Motor Company as an engineering manager
and the  National  Aeronautics  and Space  Administration  (NASA) as a  research
scientist. Dr. Benninger received his B.S. (1964), M.S. (1965), and Ph.D. (1970)
degrees  all in  physics  at the  West  Virginia  University,  Morgantown,  West
Virginia.

Anders Suarez was appointed our chief financial  officer in July 2004.  Prior to
his appointment he worked as our Financial Systems  Administrator  since October
2003.  Prior to joining us, from 1999 to 2003,  Mr.  Suarez  worked as a project
manager/senior  consultant  for ePartners,  Inc.,  Phoenix,  Arizona,  a leading
provider of Microsoft-based  business solutions for middle market companies.  He
received his B.S. in Finance from the University of Arizona,  Tucson, Arizona in
1995,  and  his  M.B.A.  from   Thunderbird-The   American  Graduate  School  of
International Management, Glendale, Arizona in 1996.

David K. Griffiths has been our Secretary/Treasurer  since December 2000 and was
our principal  accounting  officer from February 1995 to June 2004. From 1960 to
1995,  he  was  self-employed  as an  accountant/consultant  for  various  small
businesses.  He  offers  the  Company  45 years  experience  in  accounting  and
accounting related systems.  He received a B.S. in Accounting from Arizona State
University, Tempe, Arizona in 1959.

Louis M. Haynie has been a member of our Board of Directors since July 1997. Mr.
Haynie's past board services include,  Research  Medical,  Inc., Salt Lake City,
Utah, the University of Utah Regents Advisory Board, Redwood Land Co., Salt Lake
City,  Utah,  and MIS  Corporation,  Franklin,  Tennessee.  Mr. Haynie has a law
degree from the  University of Utah and has been in the private  practice of law
since 1951.

Henry D. Moyle has been a member of our Board of  Directors  since  March  1999.
Since  1992,  he has been  President  and C.E.O.  of Silver  Lake  Company,  and
formerly President and C.E.O. of Brighton Properties, Inc. From 1970 to 1983, he
was President and C.E.O. of Research Industries Corporation.  He received a B.A.
from Stanford in 1957, and a J.D. degree from the University of Utah in 1959. He
is the owner of Sunset Canyon Ranch,  raising cattle and racehorses,  and serves
on the Board of Directors of Silver Lake Company and Sunset Medical Corporation.

Wesley G. Sprunk, joined our board in January 2003. Mr. Sprunk owns and operates
Saf-Tee Siping & Grooving,  a tire siping  equipment  manufacturing  company and
Tire Service Equipment Mfg. Co., Inc., a manufacturer and marketer of automotive
wheel  service  equipment  and  recycling  equipment,  both  located in Phoenix,
Arizona.

Norman  H.  Tregenza,  joined  our  board  in  April  2003 and has over 40 years
experience in corporate finance,  including 12 years as an investment officer in
the securities  division of TIAA-CREF,  New York City. Mr.  Tregenza co- founded
Tempo  Enterprises,  Inc.  in  1976  to  act  as a  common  carrier  for  Turner
Communication's  Superstation's  signal to the RCA  satellite.  Tempo obtained a
listing  on  the  American  Stock  Exchange  in  1986.   Before  being  sold  to
Telecommunications,  Inc. (TCI) in 1988, Tempo owned several cable TV companies,
radio   stations  and  its  own  satellite  TV  network   while   supplying  the
Superstation's  signal to  approximately  50 million homes.  TCI was acquired by
AT&T in 2000. Mr. Tregenza received a B.A. from St. Lawrence University, Canton,
NY, in 1959, and a MBA from NYU in 1963.

Steve M. Hanni is currently a partner in the accounting firm of Stayner, Bates &
Jensen,  PC in Salt Lake City,  Utah. He was formerly an audit partner with HJ &
Associates,  LLC from 1997 to 2001.  Since  November  2002,  he also serves on a
part-time basis as Chief Financial  Officer for Emergency  Filtration  Products,
Inc.,  Las Vegas,  a public  company that produces masks and filters for medical
devices  that  are  designed  to  reduce  the  possibility  of  transmission  of
contagious diseases, and distributes a blood clotting device for surgery, trauma
and burn wound management.  Emergency Filtration Products, Inc. is traded on the

                                       40
<PAGE>
NASDAQ OTCBB under the symbol "EMFP". Mr. Hanni received his BA from Weber State
University in 1993 and an MA in Accounting from Weber State  University in 1994.
He has worked extensively with small public companies in numerous industries.

Kenneth C.  Johnsen,  currently  serves as a member of the Board of Directors of
Joy Global,  Inc.,  Milwaukee,  Wisconsin (NASDAQ:  JOYG), a worldwide leader in
manufacturing,  servicing and distributing equipment for surface and underground
mining. From April 2001 to June 2005, Mr. Johnsen was a Director,  President and
Chief Executive Officer of Geneva Steel, Vineyard, Utah. Mr. Johnsen also served
in various other capacities at Geneva Steel, including Executive Vice President,
Secretary  and General  Counsel for the period  between  October  1991 and April
2001. Prior to joining Geneva, Mr. Johnsen was an attorney with Parr,  Waddoups,
Brown,  Gee & Loveless in Salt Lake City,  Utah from 1986 to 1991.  Mr.  Johnsen
earned a B.A. in Finance from Utah State University (1982), and a J.D. from Yale
Law School in 1985.

Audit Committee

Our Audit Committee includes directors Wesley Sprunk,  Norman Tregenza and Steve
Hanni  (appointed  September  2005 to the Board of Directors  and  designated as
chairman of the Audit  Committee).  Our Board of Directors has  determined  that
Steve Hanni is an "audit  committee  financial  expert" as defined under new SEC
regulations, who is independent of management. The tasks and responsibilities of
the Audit  Committee  include  (i) the  review  and  discussion  of the  audited
financial  statements  with  management,  (ii)  discussing  with the independent
auditors  the matters  required to be  discussed  by the  Statement  of Auditing
Standards No. 61, as may be modified or  supplemented,  and (iii) receiving from
auditors  disclosure  regarding  the  auditors'   Independence  Standards  Board
Standard  No.  1, as may be  modified  or  supplemented.  Members  of the  audit
committee met 4 times during the fiscal year ended June 30, 2005.

Executive Committee

Our Executive Committee consists of Richard A. Steinke, Louis M. Haynie, Kenneth
Johnsen and Henry D. Moyle,  Jr. The  Executive  Committee's  purpose is to: (1)
review and make recommendations regarding our short-term and long-term operating
plan; and (2) review management's plans regarding product  development,  product
pricing  structure,  product market segments and product marketing  strategy and
make recommendations regarding changes and/or modifications thereto.

The Executive Committee meets on an ad hoc basis from time to time as determined
by Mr. Steinke,  who serves as chairman of the Executive  Committee,  until such
time as the Executive  Committee is disbanded or until their successors are duly
elected and shall  qualify.  Members of the  executive  committee met four times
during the fiscal year ended June 30, 2005.

Compensation Committee

Our Compensation  Committee includes Louis M. Haynie,  Steve Hanni and Wesley G.
Sprunk. The Compensation Committee meets as necessary but at least once annually
to review executive compensation and make recommendations regarding compensation
to the full board. The  Compensation  Committee met twice during the fiscal year
ended June 30, 2005.

Nominating Committee

Our Nominating Committee includes Henry D. Moyle , Kenneth Johnsen and Norman H.
Tregenza. The Nominating Committee meets as necessary but at least once annually
to consider  and  recommend  potential  nominees for  directorships  to the full
board.   The  Nominating   Committee   charter  is  posted  on  our  website  at
www.amerityre.com.  Pursuant  to the  charter,  the  Nominating  Committee  will
consider candidates for directorships proposed by any shareholder although there
is no formal procedure for making such proposals.

Meetings of our Board of Directors

Our Board of Directors held ten meetings  during the 2005 fiscal year (including
those meetings conducted by telephone conferencing).

                                       41
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and
10%  stockholders  (collectively,  "Reporting  Persons")  to file  with  the SEC
initial  reports of  ownership  and changes in  ownership  of our Common  Stock.
Reporting  Persons are required by SEC  regulations to furnish us with copies of
all Section  16(a)  reports  they file.  To our  knowledge,  based solely on our
review of the copies of such reports  received or written  representations  from
certain Reporting  Persons that no other reports were required,  we believe that
during our fiscal year ended June 30, 2005,  all Reporting  Persons timely filed
all such reports.

Code of Ethics

We have adopted a Code of Business  Conduct  that applies to all our  directors,
officers and  employees.  A copy of the code of ethics will be provided  free of
charge  upon  written  request  to our  Secretary  at the  address  shown on the
coverage page of this report and is  accessible,  free of charge at our Internet
website,  http://www.amerityre.com.  If we grant waivers from or make amendments
to this  code of  ethics  that are  required  to be  disclosed  pursuant  to the
Securities Exchange Act of 1934 or applicable listing requirements, we will make
those disclosures on our website within four business days following the date of
such  waiver or  amendment.  Our  website and the  information  contained  in or
connected to our website are not part of this report.

Compensation to Executive Officers

The following table shows the  compensation  received for the fiscal years ended
June 30, 2005, 2004, 2003 and 2002 by (1) the individual who served as our Chief
Executive Officer and (2) the four other most highly compensated individuals who
served as one of our executive  officers  during the fiscal years ended June 30,
2005, 2004, 2003 and 2002 (the "Named Executive Officers").
<TABLE>
<CAPTION>
                           Summary Compensation Table
                                                            Long Term Compensation
                                                            ----------------------
                     Annual Compensation                    Awards       Payouts
                                              Other         Restricted
Name and                                      Annual        Stock       Options  LTIP     All other
Principal Position Year   Salary    Bonus($)  Compensation  Awards      /SARs    Payout  Compensation
------------------ ---- ---------  ---------  ------------  ---------  --------  -------  ------------
<S>                <C>     <C>        <C>         <C>        <C>         <C>      <C>         <C>
Richard A. Steinke 2005  $598,000     -0-     $    -0-       $-0-        $-0-     $-0-     $  48,750
CEO, Pres. and     2004  $474,500     -0-     $  492,000     $-0-        $-0-     $-0-     $   -0-
Chairman           2003  $424,000     -0-     $    -0-       $-0-        $-0-     $-0-     $   -0-
                   2002  $400,000     -0-     $   30,000      -0-         -0-      -0-         -0-

Elliott N. Taylor, 2005  $180,000     -0-     $    -0-       $-0-        $-0-     $-0-     $   -0-
Executive V.P.     2004   120,000     -0-     $   81,999     $-0-        $-0-     $-0-     $   -0-
                   2003   120,000     -0-          -0-       $-0-        $-0-     $-0-     $   -0-
                   2002     5,000     -0-          -0-        -0-         -0-      -0-         -0-
</TABLE>

In July 2004,  our board  authorized the issuance of 65,000 shares of restricted
common stock to Richard  Steinke as  employment  compensation  from July 1, 2004
through June 30, 2005. The value of the shares was $598,000,  based on $9.20 per
share,  the  closing  price  of the  common  stock  on  the  date  of the  board
resolution.

In July 2004,  we issued 5,000 shares of our  restricted  common stock as a one-
time payment to the Richard Steinke,  in exchange for an assignment and transfer
of certain  patents to the  Company.  The shares  were valued at $9.75 per share
based on the  closing  price of our common  stock as quoted on the OTC  Bulletin
Board  July  1,  2004.  The  expense  associated  with  the  acquisition  of the
technology will be amortized over the remaining life of the applicable  patents.
Due to Mr.  Steinke's  relationship to the Company,  the  transaction  cannot be
considered to have been negotiated at arm's length.

Pursuant to a resolution of our board of directors in December 2001,  Richard A.
Steinke was issued  100,000  shares of  restricted  common stock in lieu of cash
compensation for services  through  December 31, 2001 and an additional  100,000
shares of restricted common stock as prepaid compensation through June 30, 2002.
The  aggregate  value of the 200,000  shares was  $400,000  based on the closing

                                       42
<PAGE>
price of our common stock on the date of the board resolution. In November 2002,
the board  authorized the issuance of 200,000 shares of restricted  common stock
to Mr.  Steinke as  employment  compensation  from July 1, 2002 through June 30,
2003.  The  aggregate  value of the 200,000  shares was  $424,000,  based on the
closing price of our common stock on the date of the board resolution.

In  October  2003,  our board  authorized  the  issuance  of  125,000  shares of
restricted  common stock to Mr. Steinke as employment  compensation from July 1,
2003 through June 30, 2004.  The value of the shares was $472,500,  based on the
closing  price of the common stock on the date of the board  resolution.  In May
2004,  the board  approved the issuance of 60,000  shares of common stock to Mr.
Steinke as additional  compensation for service provided during the fiscal year.
The value of the shares was  $492,000,  based on the closing price of our common
stock on the date of the board resolution.

During the year ended June 30, 2004, Elliott N. Taylor received a base salary of
$120,000.  In addition,  the board  approved  the  issuance of 10,000  shares of
common stock to Mr.  Taylor as  additional  compensation  for services  provided
during  the fiscal  year.  The value of the  shares  was  $81,999,  based on the
closing price of our common stock on the date of the board resolution.

Employment Benefits

We provided health and medical  insurance to our executive  officers  similar to
that which is made available to all full time  employees,  and we reimbursed our
executive officers for reasonable  out-of-pocket expenses incurred in connection
with our business.

As a condition to  employment,  our management and key personnel are required to
sign a  non-disclosure  and  non-competition  agreement.  Under the terms of the
agreement,  employees  are not able to provide  services or  information  deemed
confidential  by us to any other company or person which  directly or indirectly
competes with us in the tire industry or an industry which we intended to enter.
There is no time limitation on the non-disclosure  aspect of the agreement.  The
non-competition  clause  is for a period  of two  years  and  prevents  a former
employee or  consultant  from acting as an employee,  consultant or in any other
capacity for a  competitor.  Additionally,  all  employees  are  required,  as a
condition of their employment,  to enter into a non-disclosure agreement related
to any information or process deemed confidential by us.

Option/SAR Grants in Fiscal Year Ended June 30, 2005

The following  table  summarizes  stock option grants during fiscal year 2005 to
our Chief Executive Officer and our other Named Executive Officers.



                     OPTION/SAR GRANTS DURING LAST FISCAL YEAR
                                     Individual Grants
                     -----------------------------------------------------
                     Number of     % of Total
                     Securities    Options/SARs
                     Underlying    Granted to      Exercise or
                     Options/SARs  Employees       Base Price   Expiration
Name                 Granted       in Fiscal Year  ($/Share)    Date
-------------------  ------------  --------------  -----------  ----------
       (a)               (b)            (c)            (d)         (e)

Elliott N. Taylor      25,000           24          $6.40       12/15/09

Aggregated  Option/SAR  Exercises in Last Fiscal Year and Fiscal Year-End Option
Values

The following table sets forth certain information with respect to stock options
exercised by our Chief Executive Officer and our other Named Executive  Officers
during the fiscal year ended June 30, 2005.


                                       43
<PAGE>
                                                   Number of
                                                   Securities    Value of
                                                   Underlying    Unexercised
                                                   Unexercised   In-the-Money
                                                   Options/SARs  Options/SARs
                     Shares                        at FY-End(#)  at FY-End($)
                     Acquired       Value          Exercisable/  Exercisable/
Name                 on Exercise(#) Realized($)    Unexercisable Unexerciable
-------------------  -------------  -------------  ------------  ------------
       N/A               N/A           N/A             N/A            N/A

Pension Table
-------------
Not Applicable.

Other Compensation
------------------
None.

Compensation of Directors

In December  2004, we issued options to acquire an aggregate of 80,000 shares of
our common stock to  non-employee  directors for annual  service on our Board of
Directors  pursuant to our 2004  Non-Employee  Directors'  Stock Incentive Plan.
These options  vested on June 15, 2005,  are  exercisable at $6.40 per share and
expire on December 15, 2007.

In addition to the above compensation,  as compensation for serving on the audit
committee,   in  September   2005,  the  Board  of  Directors   approved  annual
compensation  for the  chairman  of the  Audit  Committee  of  $25,000,  payable
quarterly in cash or stock.

Employment Contracts and Change in Control Arrangements

Effective  October  2005,  we have written  employment  agreements  with Richard
Steinke,  Elliott Taylor, Gary Benninger,  Anders Suarez, James Moore, and David
Griffiths, as follows:
<TABLE>
<CAPTION>
     Schedule of Employment Agreement and Key Terms for Executive Officers
----------------------- ------- -------- -------------- --------------- ------------ -------------------------------
                                                             Additional    Adjusted
                                 Base       ($) Value       ($) Value      Annual
Name Executive                  Annual         Cash           Stock        Salary           Stock Award and/or
Officer/Title           Term    Salary      Compensation   Compensation    FY 2006            Option Grants
----------------------- ------- -------- -------------- --------------- ------------ -------------------------------
<S>                       <C>       <C>          <C>            <C>            <C>               <C>
Richard A. Steinke,      7/05     $500K       $300,000       *$200,000     $500,000   * 30,303 shares valued at
Pres and CEO             thru                                                         $6.60/sh and 300,000 options
                         6/08                                                         at $6.60/sh; 5 year term;
                                                                                      options vest 1/3 annually
Gary N. Benninger       10/05     $250K       $250,000        *$53,600     $303,600
Chief Operating          thru                                                         * 10,000 shares valued at
Officer                 10/06                                                         $5.36/sh vesting 1/15/06; and
                                                                                      150,000 options at $5.36/sh;
                                                                                      5 yr term; options vest 1/3
                                                                                      annually
Elliott N. Taylor,       7/05     $250K       $250,000               -     $250,000
ExecVP/Gen'l Counsel     thru                                                         150,000 options at $6.60/sh;
                         7/08                                                         5 yr term; options vest 1/3
                                                                                      annually
Anders A. Suarez,        7/05     $125K       $125,000               -     $125,000
Chief Financial          thru
Officer                  7/08                                                         75,000 options at $6.60/sh; 5
                                                                                      yr term; vest 1/3 annually

James G. Moore, Jr.,     7/05     $125K       $125,000               -     $125,000
VP -  Engineering &      thru                                                         75,000 options at $6.60/sh; 5
Manufacturing            6/08                                                         yr term; vest 1/3 annually

David K. Griffiths       7/05      $72K        $72,000               -      $72,000
Secretary/Treasurer      thru                                                         25,000 options at $6.60/sh; 5
                         6/06                                                         year term; 100% vesting at 6/30/06
----------------------- ------- -------- -------------- --------------- ------------ -------------------------------
</TABLE>
In the event of either termination for cause or due to a change of control,  the
above employees are entitled to salary,  earned bonus  compensation and benefits
for the lesser of the balance of the respective  employment  agreement or twelve
(12) months.

Other  than the  above,  there are no change of  control  arrangements  with any
person.

Benefit Plans

2002 Plan and 2005 Plan Summary
--------------------------------

Both the 2002 Plan and the 2005 Plan (the "Award  Plans") are intended to reward
employees  and other  individuals  who  contribute to our success and to provide
them  with a stake in the  enterprise  as  shareholders.  Consistent  with  this
belief, the award of stock options has been and will continue to be an important
element of our compensation program.

We intend to use the Award Plans to (a) attract competent  directors,  executive
personnel,  and other  employees,  (b) aid in the  retention  of the services of
existing  directors,   executive  personnel,  and  employees,  and  (c)  provide
incentives to all of such personnel to devote the utmost effort and skill to our
advancement  by  permitting   them  to  participate  in  ownership  and  thereby
permitting them to share in increases in the value which they help produce.

The  Award  FPlans  are   administered  by  our   Compensation   Committee  (the
"Committee")  appointed  from  time to time by our  board of  directors.  Awards
granted under the Award Plan may be incentive stock options  ("ISOs") as defined
in the Internal  Revenue Code of 1986,  as amended  (the  "Code"),  appreciation
rights,  options  which do not qualify as ISOs,  or stock bonus awards which are
awarded to our employees,  including officers and directors, who, in the opinion
of the board or the Committee, have contributed,  or are expected to contribute,
materially  to our  success.  In  addition,  at the  discretion  of our Board of
Directors or the Committee, options or bonus stock may be granted to individuals
who are not employees but contribute to our success.

The exercise  price of options  granted under the Award Plans (as  determined by
our Board of Directors), may be based on the fair market value of the underlying
common  stock at the time of grant and, in the case of ISOs may not be less than

                                       44
<PAGE>
100% of the fair market  value of such  capital  stock on the date the option is
granted (110% of the fair market value in the case of 10% stockholders).

Options granted under the Award Plans shall expire no later than ten years after
the date of grant (five years in the case of ISOs granted to 10%  stockholders).
The  option  price  may be paid by cash or,  at the  discretion  of our Board of
Directors or Committee, by delivery of a promissory note or shares of our Common
Stock  already  owned by the optionee  (valued at their fair market value at the
date of exercise), or a combination thereof.

All of our employees,  officers, and directors are eligible to participate under
the Award Plans.  A maximum of 2,000,000  shares are  available  for grant under
each Award Plan. The  identification of individuals  entitled to receive awards,
the terms of the awards,  and the number of shares subject to individual awards,
are  determined  by our  Board of  Directors  or the  Committee,  in their  sole
discretion  provided,  however,  that in no event may the aggregate  fair market
value of shares for which an ISO is first  exercisable  in any calendar  year by
any eligible employee exceed $100,000.

The aggregate number of shares with respect to which options or stock awards may
be  granted  under the  Award  Plans,  the  number  of  shares  covered  by each
outstanding  option,  and the purchase price per share shall be adjusted for any
increase  or  decrease  in  the  number  of  issued  shares   resulting  from  a
recapitalization,  reorganization,  merger,  consolidation,  exchange of shares,
stock  dividend,  stock split,  reverse  stock split,  or other  subdivision  or
consolidation of shares.

Our Board of  Directors  or the  Committee  may from time to time alter,  amend,
suspend,  or discontinue  the Award Plans with respect to any shares as to which
options or stock awards have not been granted.  However,  no such  alteration or
amendment  (unless  approved by our  stockholders)  shall (a)  increase  (except
adjustment  for an event of  dilution)  the  maximum  number of shares for which
options  or stock  awards  may be granted  under the Award  Plans  either in the
aggregate or to any eligible  employee:  (b) reduce  (except  adjustment  for an
event of dilution) the minimum option prices which may be established  under the
Award  Plans;  (c)  extend the period or periods  during  which  options  may be
granted or exercised;  (d) materially  modify the requirements as to eligibility
for  participation  in the Award Plans;  (e) change the  provisions  relating to
events of dilution;  or (f)  materially  increase  the benefits  accruing to the
eligible participants under the Award Plans.

If a participant  to whom an option is granted  exercises such option by payment
of the exercise  price in whole or in part with  previously  owned  shares,  the
optionee will not realize  income with respect to the number of shares  received
on exercise  which equals the number of shares  delivered by the  optionee.  The
optionee's  basis for the delivered  shares will carry over to the option shares
received.  With regard to the number of  non-qualified  option  shares  received
which exceeds the number of shares delivered, the optionee will realize ordinary
income at the time of exercise; and the optionee's tax basis in these additional
option shares will equal the amount of ordinary  income realized plus the amount
of any cash paid.

Recipients  of ISOs will not be required to recognize  income at the time of the
grant of the  options or at the time of  exercise  of the options as long as the
stock  received  on exercise is held for at least two years from the date of the
grant of the ISOs or one year from the date of exercise (although the difference
between the fair market  value of the stock and the  exercise  price paid at the
time of  exercise  must be  taken  into  account  for  alternative  minimum  tax
purposes). If the stock received upon exercise of an ISO is disposed of prior to
the expiration of either of such time periods,  the optionee will be required to
recognize  as ordinary  income the amount by which the fair market  value of the
stock received at the time of exercise exceeds the exercise price of the ISOs.

Under the Award Plans, stock appreciation  rights ("SARs") can be granted at the
time an option is granted with respect to all or a portion of the shares subject
to the  related  option.  SARs can only be  exercised  to the extent the related
option is exercisable and cannot be exercised for the six-month period following
the date of grant,  except in the event of death or  disability of the optionee.
The exercise of any portion of either the related option or the tandem SARs will
cause a corresponding reduction in the number of shares remaining subject to the
option or the tandem SARs thus maintaining a balance between outstanding options
and SARs.  SARs  permit the holder to receive an amount (in cash,  shares,  or a
combination  of cash and shares,  as determined by our Board of Directors at the
time of grant) equal to the number of SARs exercised multiplied by the excess of
the fair market value of the shares on the exercise date over the exercise price
of the related options.

Under the terms of the Award Plans,  our board of directors or the Committee may
also grant stock awards which may, at the  discretion  of our Board of Directors
or Committee,  be subject to forfeiture under certain conditions.  Recipients of
stock  awards  will  realize  ordinary  income  at the time of the  lapse of any
forfeiture  provisions  equal to the fair  market  value of the shares  less any
amount paid in  connection  with the  issuance  (our Board of  Directors  or the
Committee  can require  the  payment of par value at the time of the grant).  We

                                       45
<PAGE>
will  realize a  corresponding  compensation  deduction.  The holder will have a
basis in the shares  acquired  equal to any  amount  paid on  exercise  plus the
amount of any ordinary income  recognized by the holder.  On sale of the shares,
the holder will have a capital gain or loss equal to the sale proceeds minus his
or her basis in the shares.

2004 Non-Employee Directors' Stock Incentive Plan
--------------------------------------------------

The 2004  Plan  was  established  to  attract,  motivate  and  retain  qualified
non-employee  Directors.  The 2004  Plan will  provide a means for  non-employee
Directors to increase their equity ownership  consistent with our guidelines for
stock ownership by non-employee Directors.  The 2004 Plan has not been submitted
to our shareholders for approval.

The date of grant to eligible directors is December 15th of each year during the
life of the 2004 Plan and for any  supplemental  grant,  on a date determined by
the Board of  Directors.  An eligible  director is any person who on the date of
grant is a member of the Board of Directors.

A total of 1,200,000  shares of common stock may be awarded under the 2004 Plan.
If any shares  subject to any award  granted  thereunder  are  forfeited or such
award  otherwise  terminates  without  the  issuance  of such shares or of other
consideration  in lieu of such shares,  the shares subject to such award, to the
extent of such  termination  or  forfeiture,  shall again be available for grant
under the 2004 Plan during the term of the Plan.

The 2004 Plan has a duration of five (5) years  commencing on December 15, 2004.
Awards of Stock Options and of Restricted Stock under this Plan shall be made at
the discretion of the Board of Directors,  subject to a maximum individual award
of up to 10,000 Stock  Options or up to 10,000 shares of  Restricted  Stock,  or
some  combination  aggregating  no more  than  10,000  total  in any  one  year.
Determination of such awards, if any, shall be made annually by the entire board
of  directors,  with the  exercise  price of Stock  Options  or the value of the
Restricted  Stock to be determined as of December 1st. The term of Stock Options
shall be three years from the date of grant.  Under no  circumstances  shall any
option vest in less than six months from the date of grant.

In the event of a reorganization, recapitalization, stock split, stock dividend,
combination  of  shares,  merger,  consolidation  or  any  other  change  in our
corporate  structure  affecting  common  stock,  or a  sale  by us of  all  or a
substantial part of its assets, or any distribution to stockholders other than a
cash dividend,  our Board of Directors will make  appropriate  adjustment in the
number  and kind of  shares  authorized  by the  Plan,  and any  adjustments  to
outstanding  awards as it deems  appropriate.  However,  no fractional shares of
common stock will be issued pursuant to any such adjustment, and the fair market
value of any fractional  shares  resulting from adjustments will be paid in cash
to the awardee.

All options  and  restricted  stock  granted to an awardee  shall  automatically
terminate and be null and void as of the date an eligible  director's service on
the Board of Directors  terminates if the directorship is terminated as a result
of any act of (a) fraud or intentional  misrepresentation,  or (b) embezzlement,
misappropriation, or conversion of assets or opportunities of our company.

Equity Compensation Plan Information

The following  table sets forth  information as of the end of June 30, 2005 with
respect to compensation  plans under which our equity  securities are authorized
for issuance.
<TABLE>
<CAPTION>
                           Number of Securities to              Weighted-Average
                               be Issued upon                  Exercise Price of              Number of Securities
                           Exercise of Outstanding                 Outstanding                Remaining Available
                             Options, Restricted               Options, Restricted            for Future Issuance
                               Stock Units and                   Stock Units and                  Under Equity
                             Performance Units                 Performance Units               Compensation Plans
Plan Category (1)                  A (4)                               B                               C
------------------        -------------------------          ---------------------           ----------------------
<S>                                    <C>                            <C>                               <C>
Equity compensation                    395,000               $             5.04                            209,191
   plans approved by
   security holders

                                       46
<PAGE>
Equity compensation
   plans not approved
   by security
   holders (1) (2) (3)              3,550,000                $             6.59                          1,020,000
                          -------------------------          ---------------------           ----------------------

Total                               3,945,000                $             6.31                          1,229,191
                          -------------------------          ---------------------           ----------------------
</TABLE>

(1)     Includes options to acquire up to 470,000 shares at an exercise price of
        $3.00 per share that expire July 31,  2005,  owned  beneficially  and of
        record by Focus Sales and Marketing,  L.L.C.  and issued as compensation
        in association with product marketing services.

(2)     Includes 3,000,000 Options to certain non-employees at an exercise price
        of $7.00 per share.  The closing  price for our common stock on the date
        the Option grants were authorized was $6.95 per share.  The Options vest
        immediately,  but are exercisable only as follows:  (a) one-third of the
        total  Options are  exercisable  on the earlier of September 13, 2006 or
        the first day after the closing price of our common stock has equaled or
        exceeded a price equal to 150% of the exercise  price for 20 consecutive
        trading days; (b) one- third of the total Options are exercisable on the
        earlier of September  13, 2006 or the first day after the closing  price
        has equaled or  exceeded a price equal to 175% of the closing  price for
        20 consecutive  trading days; and (c) one-third of the total Options are
        exercisable  on the earlier of September 13, 2006 or the first day after
        the  closing  price has equaled or exceeded a price equal to 200% of the
        closing price for 20 consecutive trading days.

(3)     Includes  options to acquire an aggregate of 80,000 shares of our common
        stock to  non-employee  directors  for  annual  service  on our Board of
        Directors  pursuant to our 2004 Non-Employee  Directors' Stock Incentive
        Plan.  These options vested on June 15, 2005,  are  exercisable at $6.40
        per share and expire on December 15, 2007.

(4)     This table does not give effect to the 2005 Stock  Option and Award Plan
        for the  issuance  of up to  2,000,000  options  and/or  shares that was
        approved by our board of directors in July 2005 and by the  shareholders
        in December  2005. A total of 625,000  shares have been issued under the
        2005 Plan.


         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain  information  known to us with respect to
the  beneficial  ownership  of our common stock as of March 8, 2006 by: (1) each
person  known  by us to be a  beneficial  owner of five  percent  or more of our
common stock,  (2) each of our  directors,  (3) each of our  executive  officers
named in the  Summary  Compensation  Table set forth  herein and (4) all current
directors and executive officers as a group.

                                             Number of      Percent of Total
Name and Address                             Shares(1)    Shares Outstanding (1)
------------------                        -------------  -----------------------

Richard A. Steinke (2)                      1,425,000           6.49%

Elliott N. Taylor  (5)                        360,860           1.72%

Gary N. Benninger                              10,000             *

Anders A. Suarez  (6)                          69,400             *

James G. Moore, Jr. (7)                        45,535             *

David K. Griffiths                             73,594             *


                                       47
<PAGE>
Louis M. Haynie (8)                           449,252           2.14%

Henry D. Moyle (9)                            727,252           3.47%

Wesley G. Sprunk (10)                         157,442             *

Norman H. Tregenza (11)                       341,552           1.63%

Steve Hanni                                     3,704             *

Kenneth C. Johnsen                              6,852             *

All current directors and executive
officers as a group (12 persons)            4,007,345          22.51%

Centuion Holdings, LLC
375 Park Avenue, Suite 2008
New York, NY 10152 (3)                       1,300,00           6.49%

Joseph J. Grano, Jr.                        1,481,900           7.06%

 *   Less than one percent.

     Beneficial ownership is determined in accordance with the rules of the SEC.
     In determining the number of shares beneficially owned by a person, options
     or warrants to purchase common stock held by that person that are currently
     exercisable,  or become exercisable within 60 days following March 8, 2006,
     are deemed outstanding; however, such shares are not deemed outstanding for
     purposes of computing  the  percentage  ownership of any other  person.  We
     believe  that all of the  persons  named in this table have sole voting and
     investment  power  with  respect  to all  shares of common  stock  shown as
     beneficially  owned by them,  subject  to  community  property  laws  where
     applicable and except as indicated in the other footnotes to this table.

     As of March 8, 2006,  20,977,460  shares of common  stock  were  issued and
     outstanding.

(1)  All shares  owned  directly are owned  beneficially  and of record and such
     shareholder  has sole voting,  investment,  and dispositive  power,  unless
     otherwise noted.

(2)  Includes 455,000 shares owned  beneficially and of record by Gemini Funding
     Services  Profit  Sharing  Account,  of which  Richard  A.  Steinke  is the
     principal  beneficiary and 800,000 shares owned  beneficially and of record
     by S102 Irrevocable Trust, for which Richard A. Steinke is the trustee.

(3)  Represents  options to acquire  1,300,000  shares at an  exercise  price of
     $7.00 per share that expire September 12, 2009.

(4)  Includes  options to acquire up to 200,000  shares at an exercise  price of
     $4.00 per share that expire June 10, 2007, and 25,000 shares at an exercise
     price of $6.40 per share that  expire  December  15,  2009.  Also  includes
     25,000  shares per power of attorney;  20,692  shares as custodian  for Mr.
     Taylor's minor children; and 80,918 shares as trustee for family trusts.

(5)  Includes  options to acquire up to 30,000  shares at an  exercise  price of
     $3.80 per share that expire  September  30, 2006,  and 25,000  shares at an
     exercise price of $6.40 per share that expire December 15, 2009.

(6)  Includes  options to acquire up to 25,000  shares at an  exercise  price of
     $6.40 per share that expire December 15, 2009.

(7)  Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that expire  December 15, 2007.  Also includes 2,000 shares
     owned  beneficially  and of  record  by Gae B.  Haynie,  spouse of Louis M.
     Haynie, of which Mr. Haynie may be deemed to have beneficial ownership.

(8)  Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that expire  December 15, 2007. Also includes 55,000 shares

                                       48
<PAGE>
     owned  beneficially  and of record by Vickie L.  Moyle,  spouse of Henry D.
     Moyle, and 11,000 shares owned beneficially and of record by a minor child,
     all of which Mr. Moyle may be deemed to have beneficial ownership.

(9)  Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that expire  December 15, 2007,  warrants to acquire  1,389
     shares at an exercise  price of $5 per share that expire  January 31, 2009,
     and  warrants to acquire  1,389  shares at an  exercise  price of $5.50 per
     share that expire January 31, 2011.

(10) Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that  expire  December  15,  2007,  warrants to acquire 700
     shares at an exercise  price of $5 per share that expire  January 31, 2009,
     and warrants to acquire 700 shares at an exercise  price of $5.50 per share
     that expire January 31, 2011.  Also includes  13,000 shares held in an IRA,
     of which Mr.  Tregenza is a  beneficiary;  40,000  shares held of record by
     Norman H.  Tregenza IV Trust,  dated  9/26/86,  Richard R. Keller  trustee;
     56,650  per  power of  attorney  for  Norman  A.  Tregenza,  the son of Mr.
     Tregenza;  20,000  shares held in an IRA, of which Alyce B.  Tregenza,  the
     spouse  of Mr.  Tregenza  is the  beneficiary;  5,000  shares  per power of
     attorney  for Alyce B.  Tregenza;  45,650  shares per power of attorney for
     Suzanne C. Moore, the daughter of Mr. Tregenza.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On October 29, 1999,  we entered into an exclusive  license  agreement  with our
President,  Richard A.  Steinke,  and two unrelated  parties to license  certain
intellectual  property  rights known as "Apparatus for Making Foam Products" and
"Method for Making  Polyurethane  Tires with an Outer  Skin"  embodied in United
States Patent No.'s 4,943,223 and 4,855,096, respectively. The agreement gave us
an exclusive license to use, sell,  license, or otherwise exploit the technology
worldwide  in exchange  for a royalty of $0.25 of the net selling  price for all
units  produced  utilizing the  technology.  The  agreement  required us to meet
certain minimum production/royalty requirements.  However, in October 2002, this
agreement  was  amended to  eliminate  the  provision  requiring  us to maintain
minimum sales or royalties and restricting the royalty  provision to those units
produced and sold having a final production  weight in excess of two (2) pounds.
Effective  July 1, 2004,  the  Agreement  was amended to  eliminate  the royalty
altogether  in exchange for 15,000  shares of the  Company's  restricted  common
stock as a one-time  payment to the licensees for their  assignment and transfer
of the technology to the Company.  The closing price of the Corporation's common
stock as quoted on the OTC  Bulletin  Board on July 1, 2004 was $9.75 per share,
for a value of $146,250.  The expense  associated  with the  acquisition  of the
technology will be amortized over the remaining life of the applicable  patents.
Due to our  President's  relationship  with us, the  agreement  and the  related
amendments cannot be considered to have been negotiated at arm's length.

In June 2002, we entered into an agreement with Taylor and Associates, Inc., our
SEC  counsel  ("Taylor  and  Associates"),  whereby,  in  consideration  for our
employment  of Elliott  Taylor as our  Executive  Vice  President,  we agreed to
compensate Taylor and Associates for the potential  financial detriment it might
incur as the result of Mr.  Taylor's  employment  by us. Mr. Taylor had been the
principal  attorney for Taylor and Associates  since 1993. We have agreed to pay
Taylor and Associates $2,750 per month for a period of 24 months,  commencing on
June 30, 2002 and continuing through May 31, 2004. At June 30, 2004, all amounts
due under this arrangement were paid in full.

                       WHERE YOU CAN FIND MORE INFORMATION

We file  annual,  quarterly  and current  reports,  proxy  statements  and other
documents  with the  Securities  and Exchange  Commission  under the  Securities
Exchange  Act of  1934.  You may read  and  copy  any of  those  reports,  proxy
statements or other documents at the public reference  facilities  maintained by
the  Commission  at 100 F Street  NE,  Washington,  DC  20549.  Please  call the
Commission at  1-800-SEC-0330  for further  information on its public  reference
facilities.  These  filings are also  available  to the public  from  commercial
document retrieval services and at the Commission's Web site at www.sec.gov.

This prospectus constitutes a part of a registration statement on Form S-1 filed
by us with the Commission  under the Securities  Act. This  prospectus  does not
contain all the  information  that is contained in the  registration  statement,
some of which we are  allowed  to omit  under the rules and  regulations  of the
Commission.  We refer to the  registration  statement and to the exhibits  filed


                                       49
<PAGE>
with  the  registration  statement  for  further  information  with  respect  to
Amerityre Corporation.  Copies of the registration statement and the exhibits to
the registration  statement are on file at the offices of the Commission and may
be obtained upon payment of the prescribed fee or may be examined without charge
at the public reference facilities of the Commission described above. Statements
contained  in  this  prospectus  concerning  the  provisions  of  documents  are
summaries  of the  material  provisions  of those  documents,  and each of those
statements  is  qualified  in its  entirety  by  reference  to the  copy  of the
applicable  document filed with the  Commission.  Since this  prospectus may not
contain all of the information  that you may find  important,  you should review
the full text of these documents.

                                       50
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                            OF AMERITYRE CORPORATION

                                                                    Page



Unaudited Financial Statements of Amerityre Corporation
For The Three and Six Months Ended December 31, 2005 and 2004       F-1

Notes to the Unaudited Financial Statements of Amerityre
Corporation For The Three and Six Months Ended December 31, 2005
and 2004                                                            F-6

Audited Financial Statements of Amerityre Corporation
For the Years Ended June 30, 2005, 2004 and 2003                    F-11

Notes to the Audited Financial Statements of Amerityre
Corporation For the Years Ended June 30, 2005, 2004 and 2003        F-20


                                       50
<PAGE>
                              AMERITYRE CORPORATION
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                         December 31, 2005           June 30, 2005
                                                                        ------------------        ------------------
                                                                            (Unaudited)
ASSETS
CURRENT ASSETS

<S>                                                                            <C>                       <C>
      Cash and cash equivalents                                                $ 2,577,694               $ 2,122,320
      Accounts receivable - net                                                     75,617                   168,838
      Inventory                                                                    567,387                   646,798
      Prepaid expenses and other current assets                                    106,151                    62,489
      Special projects in progress                                                       -                       752
      Deferred stock offering expenses                                              83,278                    80,151
      Deposit on equipment                                                         294,254                         -
                                                                        ------------------        ------------------

          Total Current Assets                                                   3,704,381                 3,081,348
                                                                        ------------------        ------------------

PROPERTY AND EQUIPMENT

      Leasehold improvements                                                       120,767                   120,767
      Molds and models                                                             353,591                   343,031
      Equipment                                                                  2,324,730                 2,280,888
      Furniture and fixtures                                                        73,652                    70,678
      Software                                                                     280,337                   184,901
      Less - Accumulated depreciation                                           (2,027,326)               (1,858,950)
                                                                        ------------------        ------------------

          Total Property and Equipment                                           1,125,751                 1,141,315
                                                                        ------------------        ------------------

OTHER ASSETS

      Patents and trademarks - net                                                 398,830                   368,011
      Deposits                                                                      36,000                    36,000
                                                                        ------------------        ------------------

          Total Other Assets                                                       434,830                   404,011
                                                                        ------------------        ------------------

TOTAL ASSETS                                                                   $ 5,264,962               $ 4,626,674
                                                                        ==================        ==================

The accompanying notes are an integral part of these unaudited financial statements.
</TABLE>

                                      F-1
<PAGE>
                              AMERITYRE CORPORATION
                           Balance Sheets (Continued)
<TABLE>
<CAPTION>

                                                                             December 31, 2005        June 30, 2005
                                                                                (Unaudited)
                                                                             ------------------       --------------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

<S>                                                                                 <C>                      <C>
      Accounts payable                                                       $         246,372        $      49,904
      Accrued expenses                                                                  32,559               27,424
      Stock subscription deposits                                                      836,820                    -
      Deferred revenue - special projects                                              100,000                7,500
                                                                             ------------------       --------------

         Total Current Liabilities                                                   1,215,751               84,828
                                                                             ------------------       --------------

TOTAL LIABILITIES                                                                    1,215,751               84,828
                                                                             ------------------       --------------

STOCKHOLDERS' EQUITY

      Preferred stock: 5,000,000 shares authorized
        of $0.001 par value, -0- shares issued and
        Outstanding                                                                          -                    -
      Common Stock: 40,000,000 shares authorized of
        $0.001 par value, 20,065,480 and 19,505,216
        shares issued and outstanding, respectively                                     20,065               19,505
      Additional paid-in capital                                                    43,882,966           41,986,176
      Expenses prepaid with common stock                                              (100,000)                   -
      Deferred stock offering cost                                                  (1,000,000)          (1,000,000)

      Deferred consulting and directors compensation                                   (64,167)                   -
      Retained deficit                                                             (38,689,653)         (36,463,835)
                                                                             ------------------       --------------

         Total Stockholders' Equity                                                  4,049,211            4,541,846
                                                                             ------------------       --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $       5,264,962        $   4,626,674
                                                                             ==================       ==============


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

</TABLE>

                                       F-2
<PAGE>
                              AMERITYRE CORPORATION
                            Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                        For the Three Months Ended               For the Six Months Ended
                                                               December 31,                            December 31,
                                                           2005               2004                  2005               2004
                                                        -----------        -----------           -----------       -----------
<S>                                                     <C>                <C>                   <C>               <C>
NET SALES                                               $   302,255        $   303,801           $   738,224       $   643,573

COST OF SALES                                               258,439            215,891               612,781           462,678
                                                        -----------        -----------           -----------       -----------

GROSS PROFIT                                                 43,816             87,910               125,443           180,895
                                                        -----------        -----------           -----------       -----------
EXPENSES

      Consulting                                             99,498                  -                99,498                 -
      Advisory group expense                                      -                  -                     -         6,134,000
      Payroll and payroll taxes                             519,060            428,908             1,009,407           846,470
      Depreciation and amortization                          91,873            102,607               181,129           194,953
      Research & development                                151,825            110,798               388,208           409,166
      Bad debt expense                                          211                191                   211               773
      Selling, general & administrative                     348,336            310,620               698,822           630,795
                                                        -----------        -----------           -----------       -----------


        Total Expenses                                    1,210,803            953,124             2,377,275         8,216,157
                                                        -----------        -----------           -----------       -----------


LOSS FROM OPERATIONS                                     (1,166,987)          (865,214)           (2,251,832)       (8,035,262)
                                                        -----------        -----------           -----------       -----------
OTHER INCOME

      Interest income                                         7,649              5,702                24,953            13,628
      Other income                                                9              1,705                 1,061             7,548
                                                        -----------        -----------           -----------       -----------
        Total Other Income                                    7,658              7,407                26,014            21,176
                                                        -----------        -----------           -----------       -----------

NET LOSS                                                $(1,159,329)       $  (857,807)          $(2,225,818)      $(8,014,086)
                                                        ===========        ===========           ===========       ===========

BASIC LOSS PER SHARE                                    $     (0.06)       $     (0.05)          $     (0.11)      $     (0.43)
                                                        ===========        ===========           ===========       ===========

WEIGHTED AVG NUMBER OF SHARES                            20,038,287         18,731,168            19,877,047        18,696,978
                                                        ===========        ===========           ===========       ===========


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

</TABLE>
                                      F-3
<PAGE>
                              AMERITYRE CORPORATION
                            Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                              Six Months Ended       Six Months Ended
                                                                                 December 31,          December 31,
                                                                                    2005                  2004
                                                                               ---------------       ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                   <C>                    <C>
     Net loss                                                                  $      (2,225,818)     $    (8,014,086)
     Adjustments to reconcile net loss to
        net cash used by operating activities:
           Depreciation & amortization expense                                          181,129               194,953
           Common stock issued for services rendered                                    126,350                     -
           Amortization of expense prepaid with common stock                            105,834               472,053
           Options issued for advisory group services                                         -             6,134,000
     Changes in operating assets and liabilities:
           Decrease in accounts receivable                                               93,221                89,184
           Increase in prepaid expenses                                                 (43,662)              (35,895)
           Increase in other assets                                                    (296,629)                 (600)
           Decrease (increase) in inventory                                              79,411               (87,087)
           Increase in accounts payable and accrued expenses                            294,103                35,739
                                                                               ----------------       ---------------


              Net Cash Used by Operating Activities                                  (1,686,061)           (1,211,739)
                                                                               ----------------       ---------------
CASH FLOWS FROM INVESTING ACTIVITIES

     Cash paid for patents and trademarks                                               (43,572)              (60,897)
     Purchase of property and equipment                                                 (61,813)              (32,712)
                                                                               ----------------       ---------------

              Net Cash Used by Investing Activities                                    (105,385)              (93,609)
                                                                               ----------------       ---------------
CASH FLOWS FROM FINANCING ACTIVITIES

     Proceeds from stock subscription                                                   836,820                     -
     Proceeds from issuance of common stock                                           1,410,000               880,000
                                                                               ----------------       ---------------

              Net Cash Provided by Financing Activities                               2,246,820               880,000
                                                                               ----------------       ---------------
NET INCREASE (DECREASE) IN CASH

     AND CASH EQUIVALENTS                                                               455,374              (425,348)


CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                      2,122,320             1,591,289
                                                                                  -------------         -------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        $   2,577,694         $   1,165,941
                                                                                  =============         =============


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

</TABLE>
                                      F-4
<PAGE>
                              AMERITYRE CORPORATION
                      Statements of Cash Flows (Continued)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                          Six Months Ended      Six Months Ended
                                                                              December 31,          December 31,
                                                                                  2005                   2004
                                                                          ----------------      ----------------
<S>                                                                       <C>                   <C>
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
                 Cash paid for interest                                   $              -      $              -
                 Cash paid for income taxes                               $              -      $              -

NON-CASH OPERATING ACTIVITIES
                 Common stock issued for services rendered                $        126,350      $              -
                 Common stock issued for prepaid services                 $        270,000      $        598,000

NON-CASH INVESTING/ FINANCING ACTIVITIES
                 Common stock issued for property & equipment             $         91,000      $              -
                 Options issued for advisory group service receivable     $              -      $      6,134,000


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

</TABLE>
                                       F-5
<PAGE>




                              AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

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.  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.  Although  we believe  the
disclosures and  information  presented are adequate to make the information not
misleading, it is suggested that these interim condensed financial statements be
read in conjunction with our most recent audited financial  statements and notes
thereto  included in our June 30, 2005 Annual  Report on Form 10-KSB.  Operating
results  for the  six  months  ended  December  31,  2005  are  not  necessarily
indicative  of the  results  that may be expected  for the  current  fiscal year
ending June 30, 2006.

NOTE 2 - STOCK OPTIONS

During the period  ended  December  31,  2005,  we issued  options to acquire an
aggregate  of  625,000  shares  of our  common  stock to  certain  employees  in
connection with their  employment  (the  "Employment  Options").  The Employment
Options vest annually over a period of one to three years based on the employees
continued  employment  by the  Company.  The exercise  price for the  Employment
Options is $6.60 per share.  The 625,000  options  issued to the employees  were
issued at or above the market price of our common stock on the date of issue and
are accounted for under APB 25,  "Accounting for Stock Issued to Employees".  As
such, no compensation  expense was  recognized.  Had  compensation  cost for the
issuance of the options been determined  based on fair market value at the grant
dates  consistent  with the method of FASB Statement 123,  "Accounting for Stock
Based  Compensation,"  there  would have been no change to our net loss and loss
per share, as noted with the pro forma amounts indicated below:
<TABLE>
<CAPTION>

                                                 For the Three Months Ended             For the Six Months Ended
                                                        December 31,                         December 31,
                                                        ------------                         ------------
                                                      2005               2004               2005              2004
                                                      ----               ----               ----              ----
<S>                                              <C>                <C>               <C>               <C>
Net (loss) as reported                           $ (1,159,329)      $   (857,807)     $ (2,225,818)     $ (8,014,086)
Pro forma                                        $ (1,159,329)      $ (1,384,857)     $ (2,225,818)     $ (8,544,086)

Basic (loss) per share as reported               $      (0.06)      $      (0.05)     $      (0.11)     $      (0.43)
Pro forma                                        $      (0.06)      $      (0.07)     $      (0.11)     $      (0.46)

</TABLE>


               [The balance of this page intentionally left blank]

                                      F-6
<PAGE>
                              AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 2 - STOCK OPTIONS, Continued

A summary  of the  status  of the  Company's  outstanding  stock  options  as of
December 31, 2005 and June 30, 2005 and changes during the periods then ended is
presented below:
<TABLE>
<CAPTION>

                                        December 31, 2005                         June 30, 2005
                                        -----------------                         -------------
                                                          Weighted Average                         Weighted Average
                                        Shares            Exercise Price          Shares           Exercise Price
                                        ----------------- ----------------      -----------        ----------------
<S>                                     <C>                 <C>                   <C>                <C>
Outstanding beginning of period         3,945,000           $ 6.31                1,922,000          $   3.66
Granted                                   625,000           $ 6.60                3,185,000          $   6.97
Expired/Cancelled                         (60,000)          $(6.70)                (195,252)         $  (0.18)
Exercised                                (470,000)          $(3.00)                (966,748)         $  (4.14)
                                        ---------                               -----------
Outstanding end of period               4,040,000           $ 6.74                3,945,000          $   6.31
                                        =========                               ===========
Exercisable                               415,000           $ 5.05                  945,000          $   4.14
                                        =========                               ===========




                  Outstanding                                                   Exercisable
                  -----------                                                   -----------
                                         Weighted
Range of          Number Outstanding at  Average             Weighted           Number              Weighted
Exercise          Dec 31,                Remaining           Average            Exercisable at      Average
Prices            2005                   Contractual Life    Exercise Price     Dec 31, 2005        Exercise Price
--------          ---------------------  ----------------    --------------     --------------      --------------
$3.80             30,000                 0.75                $3.80              30,000              $3.80
4.00              200,000                1.44                $4.00              200,000             $4.00
6.40              185,000                3.09                $6.40              185,000             $6.40
6.60              625,000                6.46                $6.60                    -                 -
7.00              3,000,000              3.70                $7.00                    -                 -
                  ---------                                                     -------
$3.80-$7.00       4,040,000              3.97                $6.74              415,000             $5.05
                  =========                                                     =======

</TABLE>
NOTE 3 - STOCK ISSUANCES

During  the  quarter,  we  issued  5,000  shares of  common  stock  for  outside
consulting  services valued at $26,250,  based on a price of $5.25 per share and
15,000 shares of common stock for outside consulting services valued at $68,250,
based on a price of $4.55 per  share.  We also  issued  20,000  shares of common
stock for software development services valued and capitalized at $91,000, based
on a price of $4.55 per share.  These  shares were  issued  pursuant to our 2002
Stock Option and Award Plan.

During the quarter,  we issued 7,000 shares of our restricted common stock to an
investor  and media  relations  firm as payment for  services.  The value of the
shares was $31,850, based on the closing price of $4.55 per share.

                                      F-7
<PAGE>
                              AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 3 - STOCK ISSUANCES (continued)

During the quarter, we issued 1,852 shares of our restricted common stock to the
Chairman of our audit  committee  as partial  compensation  for his  services as
Chairman.  The value of the shares was  $10,000,  based on the closing  price of
$5.40 per share.

During the quarter,  we issued an aggregate of 11,112 shares (1,852 shares each)
of our restricted  common stock to our six (6) non-employee  directors as annual
compensation  for their  services as members of our board of  directors  for the
period  commencing  December 1, 2005 through  November 30, 2006.  The  aggregate
value of the shares was $60,000, based on the closing price of $5.40 per share.

All of our  securities  issued  in the  foregoing  transactions  were  issued in
reliance on the exemption from registration and prospectus delivery requirements
of the Act set forth in Section 3(b) and/or  Section 4(2) of the  Securities Act
and the regulations promulgated thereunder.


NOTE 4 - INVENTORY

Inventory  is stated at the lower of cost  (computed  on a  first-in,  first-out
basis) or market. The inventory  consists of chemicals,  finished goods produced
in the Company's plant and products purchased for resale.


                       December 31, 2005    June 30, 2005
                          (Unaudited)
                       -----------------    -------------
Raw Materials                   $142,866         $122,834
Work in Progress                       -                -
Finished Goods                   424,521          523,964
                                 -------          -------
Total Inventory                 $567,387         $646,798
                                ========         ========


NOTE 5 - SIGNIFICANT EVENTS

1. Employment of Chief Operating Officer
----------------------------------------

Effective  October 16, 2005,  the Company  hired Gary N.  Benninger as our Chief
Operating Officer.  Dr. Benninger's  employment contract with the Company is for
an initial term of one year  beginning  October 16, 2005, at an annual salary of
$250,000,  renewable by mutual agreement.  The contract also includes provisions
for the payment of a bonus share award of 10,000 shares of the Company's  common
stock  vesting  January 15,  2006,  and a grant of options  for the  purchase of
150,000  shares  of the  Company's  common  stock,  subject  to  annual  vesting
provisions  (50,000 options on June 30th  2006-2008).  The bonus share award and
the options are being issued under the terms of the Company's  2005 Stock Option
and Award  Plan.  Both the bonus  share award and the vesting of the options are
subject to continuing employment with the Company.

2. Settlement of Legal Proceeding
---------------------------------

Effective  October 20, 2005, we entered into a settlement and release  agreement
with the defendant in case number A505333,  8th Judicial  District Court for the
State of Nevada, Amerityre Corporation vs. Prototype Engineering,  Inc., an Ohio
corporation ("Prototype"), and Frederick F. Vannan, Jr. ("Vannan").

                                      F-8
<PAGE>
                              AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 6 - SUBSEQUENT EVENTS

A. Stock Issuances

On January  3,  2006,  we issued  53,100  shares of our common  stock to various
employees  as  compensation  pursuant  to our 2002 Stock  Option and Award Plan,
valued at $239,481, or $4.51 share.

On January 15, 2006, 10,000 shares of our restricted common stock vested to Gary
N.  Benninger,  our  Chief  Operating  Officer,  pursuant  to the  terms  of his
employment  agreement  with the  Company.  The value of the shares was  $53,600,
based on the closing price of the shares on October 16, 2005, the date of grant.
With  respect to the  issuance of the shares on vesting,  the Company  claims an
exemption from the  registration  requirements of the Securities Act of 1933, as
amended pursuant to Section 4(2) of said Act.

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement for $3,870,000 in offering proceeds. The Company sold 107,500 Units of
the  Company's  securities  at a purchase  price of $36.00  per Unit.  Each Unit
consists of eight (8) shares of the Company's  Common  Stock,  a Class A Warrant
(the "Class A  Warrant")  for the  purchase  of one share of Common  Stock at an
exercise  price of $5.00  exercisable  for a 3 year period and a Class B Warrant
(the "Class B  Warrant")  for the  purchase  of one share of Common  Stock at an
exercise price of $5.50  exercisable for a 5 year period.  The Warrants may also
be exercised  through a cashless  exercise based on the  difference  between the
market price on the date of exercise and the exercise price. The exercise prices
of the Class A  Warrants  and Class B Warrants  are  subject  to  adjustment  in
certain events, including, without limitation, upon the Company's consolidation,
merger or sale of all or substantially all of its assets, a reclassification  of
the Company's Common Stock, or any stock splits or combinations  with respect to
the Common Stock.

Purchasers of the Units have been granted registration rights in connection with
the  private  placement.  The  Company  shall  use its  best  efforts  to file a
registration statement with the Commission within 45 days after the Closing Date
and cause the registration  statement to be declared effective by the SEC within
120 days after the Closing  Date (if there are no comments  from the SEC) or 180
days (if comments are received from the SEC) (the "Effective  Date") in order to
register  the shares of Common Stock  underlying  the Units sold in the offering
(the "Registrable Securities") for resale and distribution by the investors (the
"Registration  Statement").  The Company will register  approximately  1,075,000
shares of Common  Stock which  represents  the total  number of shares of Common
Stock plus the shares of Common Stock  issuable upon exercise of the Class A and
Class B Warrants.  The  Registrable  Securities  shall be reserved and set aside
exclusively for the benefit of each investor.

The Class A and Class B Warrants are subject to redemption  by the Company.  The
Company has the right to redeem either the Class A or Class B Warrants beginning
ninety (90) days from the Effective Date of the  Registration  Statement,  if at
any time  following the Effective  Date,  the average  closing bid price for the
Common  Stock in the  over-the-counter  market is at least $5.50 per share (with
respect to the Class A Warrants) or $6.05 per share (with respect to the Class B
Warrants),  for the 20  consecutive  trading day period  ending not more than 15
days  prior to notice of  redemption  of the Class A and Class B  Warrants.  The
Company's right to redeem the Class A and Class B Warrants  requires the Company
to give the holders  written  notice of redemption of not less than 30 days, and
is  subject to the right of the  holders of the Class A and Class B Warrants  to
exercise  the same in  accordance  with the terms hereof  during the  redemption
period.  The redemption  price for each Class A and Class B Warrant is $0.10 per
share.

                                      F-9
<PAGE>
                              AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 6 - SUBSEQUENT EVENTS (Continued)

With respect to the sale of the Units  described  above,  the Company  claims an
exemption from the  registration  requirements of the Securities Act of 1933, as
amended,  pursuant to Section  4(2) of the  Securities  Act and/or  Regulation D
promulgated  thereunder since,  among other things,  (1) the transaction did not
involve a public  offering,  (2) the investors were accredited  investors and/or
qualified  institutional  buyers,  (3) the investors  had access to  information
about the Company and their  investment,  (4) the investors  took the securities
for  investment  and not resale,  (5) the Company took  appropriate  measures to
restrict the transfer of the  securities,  and (6) no  commissions  were paid in
connection with the placement and/or sale of the securities.

B. Deferred Stock Issuance Costs

During the three six month period ended  December 31,  2004,  we  recognized  an
expense of $6,134,000 for advisory group services  associated  with the grant of
options to acquire  an  aggregate  of  3,000,000  shares of our common  stock to
third-party  consultants  during  the  period.  The  value  of the  options  was
calculated using the  Black-Scholes  option pricing model. Our selling,  general
and  administrative  expenses  since that time have not included  deferred stock
offering costs,  which at December 31, 2005 aggregated  $1,083,278.  This amount
has been recorded as a reduction in stockholders'  equity due to its association
with the proposed  offering of our  securities.  In February  2006,  we closed a
private  placement  of our  securities  for  gross  offering  proceeds  of $3.87
million,  therefore  the  deferred  offering  costs  will  be  expensed  in  the
subsequent period.


                                      F-10
<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Amerityre Corporation
Boulder City, Nevada

We have audited the  accompanying  balance sheets of Amerityre  Corporation (the
"Company")  as of  June  30,  2005  and  2004  and  the  related  statements  of
operations,  stockholders'  equity and cash  flows for the years  ended June 30,
2005, 2004, and 2003. These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Amerityre  Corporation as of
June 30, 2005 and 2004, and the results of its operations and its cash flows for
the years ended June 30, 2005, 2004, and 2003 in conformity with U.S.  generally
accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 5 to the  financial
statements,  the Company has incurred significant losses from operations,  which
have resulted in an accumulated  deficit,  raising  substantial  doubt about its
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also described in Note 5 to the financial statements.  The financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.



HJ & Associates, LLC
Salt Lake City, Utah
September 1, 2005 with respect to June 30, 2005 and 2004 and September 24, 2004
with respect to June 30, 2003


                                      F-11
<PAGE>
<TABLE>
<CAPTION>
                              AMERITYRE CORPORATION
                                 Balance Sheets

ASSETS
------
                                                                                           June 30,
                                                                           ---------------------------------------
                                                                                    2005               2004
                                                                           -------------------  ------------------
<S>                                                                                  <C>                  <C>
CURRENT ASSETS

   Cash and cash equivalents                                               $         2,122,320  $        1,591,289
   Accounts receivable - net of zero allowance                                         168,838             167,002
   Inventory (Note 1)                                                                  646,798             557,516
   Prepaid expenses                                                                     62,489              99,007
   Special projects in progress                                                            752                   -
   Deferred stock offering expenses                                                     80,151                   -
                                                                           -------------------  ------------------

    Total Current Assets                                                             3,081,348           2,414,814
                                                                           -------------------  ------------------

PROPERTY AND EQUIPMENT (Note 1)

   Leasehold improvements                                                              120,767             163,896
   Molds and models                                                                    343,031             315,282
   Equipment                                                                         2,280,888           2,253,217
   Furniture and fixtures                                                               70,678              70,033
   Vehicles                                                                                  -              25,851
   Software                                                                            184,901             184,901
   Less: Accumulated depreciation                                                   (1,858,950)         (1,567,187)
                                                                           -------------------  ------------------

    Total Property and Equipment                                                     1,141,315           1,445,993
                                                                           -------------------  ------------------

OTHER ASSETS

   Patents and trademarks - net (Note 1)                                               368,011             156,792
   Deposits                                                                             36,000              43,180
                                                                           -------------------  ------------------

    Total Other Assets                                                                 404,011             199,972
                                                                           -------------------  ------------------

     TOTAL ASSETS                                                          $         4,626,674  $        4,060,779
                                                                           ===================  ==================



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

</TABLE>

                                      F-12
<PAGE>
                              AMERITYRE CORPORATION
                           Balance Sheets (Continued)
<TABLE>
<CAPTION>


LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                           June 30,
                                                                           ---------------------------------------
                                                                                    2005               2004
                                                                           -------------------  ------------------
<S>                                                                        <C>                  <C>
CURRENT LIABILITIES

   Accounts payable                                                        $            49,904  $           42,866
   Accrued expenses                                                                     27,424              15,817
   Deferred revenue - special projects                                                   7,500                   -
                                                                           -------------------  ------------------

    Total Current Liabilities                                                           84,828              58,683
                                                                           -------------------  ------------------

     Total Liabilities                                                                  84,828              58,683
                                                                           -------------------  ------------------

COMMITMENTS AND CONTINGENCIES (Note 2)

STOCKHOLDERS' EQUITY

   Preferred stock: 5,000,000 shares authorized of
    $0.001 par value, -0- shares issued and outstanding                                      -                   -
   Common stock: 40,000,000 shares authorized of
    $0.001 par value, 19,505,216 shares issued and
    outstanding                                                                         19,505              18,429
   Additional paid-in capital                                                       41,986,176          30,594,482
   Deferred Stock Offering - Cost                                                   (1,000,000)           (219,988)
   Retained Deficit                                                                (36,463,835)        (26,390,827)
                                                                           -------------------  ------------------

    Total Stockholders' Equity                                                       4,541,846           4,002,096
                                                                           -------------------  ------------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $         4,626,674  $        4,060,779
                                                                           ===================  ==================

   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                      F-13
<PAGE>
                              AMERITYRE CORPORATION
                            Statements of Operations
<TABLE>
<CAPTION>

                                                                           For the Years Ended
                                                                                June 30,
                                                      ------------------------------------------------------------
                                                              2005                 2004                2003
                                                      --------------------  ------------------  ------------------
<S>                                                   <C>                   <C>                 <C>
NET SALES                                             $          1,681,091  $        1,419,124  $        1,040,246

COST OF SALES                                                    1,233,181           1,114,230             976,132
                                                      --------------------  ------------------  ------------------

GROSS PROFIT                                                       447,910             304,894              64,114
                                                      --------------------  ------------------  ------------------

EXPENSES

   Consulting                                                       77,000             370,666             339,934
   Advisory group expense                                        6,134,000                   -                   -
   Payroll and payroll taxes                                     1,905,177           2,345,082           1,083,910
   Depreciation and amortization                                   385,726             296,232             298,625
   Research and development                                        880,748             572,002              28,607
   Bad debt expense                                                 14,087               3,713                  51
   Loss on sale and impairment of assets                            18,054                   -              67,982
   Selling, general and administrative                           1,156,260           1,458,200           1,354,040
                                                      --------------------  ------------------  ------------------

    Total Expenses                                              10,571,052           5,045,895           3,173,149
                                                      --------------------  ------------------  ------------------

LOSS FROM OPERATIONS                                           (10,123,142)         (4,741,001)         (3,109,035)
                                                      --------------------  ------------------  ------------------

OTHER INCOME

   Interest income                                                  35,181              17,234              16,397
   Miscellaneous income                                             14,953               2,512                 666
                                                      --------------------  ------------------  ------------------

    Total Other Income                                              50,134              19,746              17,063
                                                      --------------------  ------------------  ------------------

NET LOSS                                              $        (10,073,008) $       (4,721,255) $       (3,091,972)
                                                      ====================  ==================  ==================

BASIC LOSS PER SHARE                                  $              (0.53) $            (0.26) $            (0.21)
                                                      ====================  ==================  ==================

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                                             18,931,779          17,846,910          14,796,744
                                                      ====================  ==================  ==================


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

</TABLE>

                                      F-14
<PAGE>
                              AMERITYRE CORPORATION
                       Statements of Stockholders' Equity

<TABLE>
<CAPTION>

                                                                                                        Expenses
                                                                                          Prepaid       Deferred
                                 Common Stock            Additional        Stock           with        Consulting/
                         ----------------------------      Paid-in     Subscription       Common          Stock      Accumulated
                            Shares          Amount         Capital      Receivable         Stock        Offering        Deficit
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

<S>                             <C>            <C>            <C>             <C>             <C>            <C>            <C>
Balance, June 30, 2002      14,187,731  $      14,188  $   21,310,261  $    (562,721) $    (150,750) $     (103,433) $ (18,577,600)

Common stock issued for
 cash at $1.50 per share     2,170,000          2,170       3,252,830              -              -               -              -

Common stock issued for
 cash at $2.00 per share       604,675            605       1,208,745              -              -               -              -

Cancellation of common
 stock issued for stock
 subscription receivable       (45,000)           (45)        (87,705)        87,750              -               -              -

Common stock issued to
 CEO for compensation          200,000            200         423,800              -       (212,000)              -              -

Common stock issued for
 exercise of options            20,000             20          39,980              -              -               -              -

Common stock issued for
 cash-less exercise of
 option                         10,462             10          23,562              -              -               -              -

Common stock issued for
 services and prepaid
 services                      182,500            183         360,493              -       (336,300)              -              -

Common stock issued for
 stock offering costs           50,000             50          99,950              -              -               -              -

Stock offering costs                 -              -        (220,954)             -              -               -              -

Common stock issued for
 stock subscription deposit      4,500              4           8,996              -              -               -              -

Issuance of options for
 services                            -              -           2,906              -              -               -              -

Amortization of expenses
 prepaid with common stock           -              -               -              -        480,950               -              -

Additional interest recorded
 on subscription receivable
 and subscription receivable
 related party                       -              -          15,547        (21,686)             -               -              -

Receipt of cash for subscription
 receivable and interest on
 subscriptions receivable            -              -               -        448,068              -               -              -

Receipt of services and debt
 relief for subscriptions
 receivable                          -              -               -         31,957              -               -              -

Valuation adjustment and
 amortization of deferred
 consulting                          -              -          55,500              -              -         (15,188)             -
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance forward             17,384,868  $      17,385  $   26,493,911  $     (16,632) $    (218,100) $     (118,621) $ (18,577,600)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

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

</TABLE>
                                      F-15
<PAGE>
                              AMERITYRE CORPORATION
                 Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>
                                                                                                        Expenses
                                                                                          Prepaid       Deferred
                                 Common Stock            Additional        Stock           with        Consulting/
                         ----------------------------      Paid-in     Subscription       Common          Stock      Accumulated
                            Shares          Amount         Capital      Receivable         Stock        Offering        Deficit
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------
<S>                         <C>         <C>            <C>             <C>            <C>            <C>             <C>
Balance forward             17,384,868  $      17,385  $   26,493,911  $     (16,632) $    (218,100) $     (118,621) $ (18,577,600)

Net loss for the year
 ended June 30, 2003                 -              -               -              -              -               -     (3,091,972)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance, June 30, 2003      17,384,868         17,385      26,493,911        (16,632)      (218,100)       (118,621)   (21,669,572)

Receipt of Subscriptions
 Receivable                          -              -               -         16,632              -               -              -

Common stock issued for
 services and prepaid
 services at $3.78 per
 share                         240,000            240         906,960              -       (732,375)              -              -

Common stock issued for
 services at $6.10 per
 share                          40,000             40         243,960              -       (244,000)              -              -

Common stock issued for
 cash exercise of options
 at $2.00 per share            130,000            130         259,870              -              -               -              -

Common stock issued for
 cash exercise of options
 at $3.00 per share            500,000            500       1,499,500              -              -               -              -

Common stock issued for
 services rendered at
 $5.48 per share                 2,000              2          10,958              -              -               -              -

Common stock issued for
 cash exercise of options
 at $4.00 per share              4,000              4          15,996              -              -               -              -

Common stock issued to
 employees per stock award
 plan at $6.69 per share         3,900              4          26,087              -              -               -              -

Common stock issued for
 services at $6.69 per share    20,000             20         133,780              -       (133,800)              -              -

Common stock issued to
 employee per stock award
 plan at $9.10 per share           500              -           4,550              -              -               -              -

Common stock issued to
 employees per stock award
 plan at $8.20 per share       103,900            104         851,876              -              -               -              -

Valuation adjustment and
amortization of deferred
consulting                           -              -         147,034              -              -         118,621              -

Amortization of expenses prepaid
 with common stock                   -              -               -              -      1,108,287               -              -
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance forward             18,429,168  $      18,429  $   30,594,482  $           -  $    (219,988) $            -  $ (21,669,572)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                      F-16
<PAGE>
                              AMERITYRE CORPORATION
                 Statements of Stockholders' Equity (Continued)
<TABLE>
<CAPTION>

                                                                                                        Expenses
                                                                                          Prepaid       Deferred
                                 Common Stock            Additional        Stock           with        Consulting/
                         ----------------------------      Paid-in     Subscription       Common          Stock      Accumulated
                            Shares          Amount         Capital      Receivable         Stock        Offering        Deficit
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------
<S>                         <C>         <C>            <C>             <C>            <C>            <C>             <C>
Balance forward             18,429,168  $      18,429  $   30,594,482  $           -  $    (219,988) $            -  $ (21,669,572)

Net loss for the year
ended June 30, 2004                  -              -               -              -              -               -     (4,721,255)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance, June 30, 2004      18,429,168         18,429      30,594,482              -       (219,988)              -    (26,390,827)

Common stock issued to
 CEO for compensation           65,000             65         597,935              -              -               -              -

Common stock issued for
 cash exercise of options
 at $2.00 per share             20,000             20          39,980              -              -               -              -

Common stock issued for
 cash exercise of options
 at $3.00 per share             30,000             30          89,970              -              -               -              -

Common stock issued for
 cash exercise of options
 at $4.00 per share            796,000            796       3,183,204              -              -               -              -

Common stock issued for
 patents                        15,000             15         146,235              -              -               -              -

Common stock issued for
 cash-less exercise of
 option                        120,748            121            (121)             -              -               -              -

Common stock issued for
 services and prepaid
 services                       29,300             29         200,491              -              -               -              -

Options granted for
 services and stock
 offering cost                       -              -       7,134,000              -              -      (1,000,000)             -

Amortization of prepaid
 expenses                            -              -               -              -        219,988               -              -

Net loss for the year
 ended June 30, 2005                 -              -               -              -              -               -    (10,073,008)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance, June 30, 2005      19,505,216  $      19,505  $   41,986,176  $           -  $           -  $   (1,000,000) $ (36,463,835)
                         =============  =============  ==============  =============  =============  ==============  =============

   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                      F-17
<PAGE>
<TABLE>
<CAPTION>
                              AMERITYRE CORPORATION
                            Statements of Cash Flows

                                                                           For the Years Ended
                                                                                June 30,
                                                           -----------------------------------------------------
                                                                 2005               2004              2003
                                                           ----------------  -----------------  ----------------

<S>                                                                  <C>               <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                                   $    (10,073,008) $      (4,721,255) $     (3,091,972)
Adjustments to reconcile net loss to net
 cash used by operating activities:
   Depreciation and amortization                                    385,726            296,232           298,625
   Bad debt expense                                                  14,087              3,713                51
   Loss on sale and impairment of assets                             18,054                  -            67,982
   Common stock issued for services                                 798,520          2,176,692           759,351
   Stock subscription receivable paid through
    services                                                              -                  -             9,880
   Re-valuation of deferred consulting                                    -            265,656            40,312
   Options issued for advisory group services                     6,134,000                  -                 -
`   Amortization of expenses prepaid with
    with common stock                                               219,988                  -                 -
Changes in assets and liabilities:
   (Increase) in accounts receivable                                (15,923)           (42,234)          (25,537)
   (Increase) in inventory                                          (89,282)           (92,532)          (97,444)
   Decrease (increase) in prepaid expenses                           36,518            (46,340)          (24,825)
   (Increase) in other assets                                       (73,723)                 -           (36,000)
   Increase (decrease) in accounts payable and
    accrued expenses                                                 26,145            (37,515)          (11,192)
                                                           ----------------  -----------------  ----------------

    Net Cash Used by Operating Activities                        (2,618,898)        (2,197,583)       (2,110,769)
                                                           ----------------  -----------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Cash paid for patents and trademarks                             (97,226)           (57,847)          (20,560)
   Proceeds from sale of fixed assets                                 8,800                  -                 -
   Cash paid for fixed assets                                       (75,645)          (436,517)         (984,267)
                                                           ----------------  -----------------  ----------------

    Net Cash Used by Investing Activities                          (164,071)          (494,364)       (1,004,827)
                                                           ----------------  -----------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds from stock subscription deposit                               -                  -            25,000
   Receipt of subscriptions receivable                                    -             16,632           448,459
   Cash paid for stock offering costs                                     -                  -          (120,954)
   Common stock issued for cash                                   3,314,000          1,776,000         4,479,350
                                                           ----------------  -----------------  ----------------

    Net Cash Provided by Financing Activities              $      3,314,000  $       1,792,632  $      4,831,855
                                                           ----------------  -----------------  ----------------


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

</TABLE>
                                      F-18
<PAGE>
                              AMERITYRE CORPORATION
                      Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
                                                                             For the Years Ended
                                                                                  June 30,
                                                           -----------------------------------------------------
                                                                 2005               2004              2003
                                                           ----------------  -----------------  ----------------
<S>                                                                 <C>               <C>              <C>
NET  INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                                   531,031           (899,315)        1,716,259

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF YEAR                                                1,591,289          2,490,604           774,345
                                                           ----------------  -----------------  ----------------

CASH AND CASH EQUIVALENTS AT
 END OF YEAR                                               $      2,122,320  $       1,591,289  $      2,490,604
                                                           ================  =================  ================

SUPPLEMENTAL SCHEDULE OF CASH
 FLOW ACTIVITIES

CASH PAID FOR:

   Interest                                                $              -  $               -  $              -
   Income taxes                                            $              -  $               -  $              -

NON_CASH OPERATING ACTIVITIES

   Common stock issued for services rendered               $        798,520  $       2,176,692  $        759,351
   Common stock issued for subscription
    receivable                                             $              -  $               -  $         99,500
   Interest on related party subscription
    receivable                                             $              -  $               -  $         15,547

NON-CASH FINANCING ACTIVITIES

   Options issued for advisory group service               $      6,134,000  $               -  $              -




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

</TABLE>

                                      F-19
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a.   Organization

          Amerityre Corporation, (the "Company") was incorporated under the laws
          of the State of Nevada on January 30,  1995,  under the name  American
          Tire  Corporation.  The Company was  organized  to take  advantage  of
          existing proprietary and non-proprietary  technology available for the
          manufacturing   of  specialty   tires.  The  Company  engages  in  the
          manufacturing,   marketing,   distribution  and  sales  of  "flatfree"
          specialty   tires  and   tire-wheel   assemblies   and   currently  is
          manufacturing  these tires at its  manufacturing  facility  located in
          Boulder City, Nevada. During the year ended June 30, 2001, the name of
          the Company was changed to Amerityre Corporation.

          b.  Accounting Method

          The  Company's  financial  statements  are prepared  using the accrual
          method of accounting. The Company has elected a June 30 year-end.

          c.  Basic Loss Per Share

          The  computation  of basic loss per share of common  stock is based on
          the weighted average number of shares outstanding during the period.

                                                    For the Years Ended
                                                         June 30,
                                    -------------------------------------------
                                      2005            2004           2003
                                    --------------  -------------  ------------

         Loss (numerator)           $  (10,073,008) $  (4,721,255) $ (3,091,972)
         Shares (denominator)           18,931,779     17,846,910    14,796,744
         Per share amount           $        (0.53) $       (0.26) $      (0.21)


          The  Company's  outstanding  stock options have been excluded from the
          basic net loss per share calculation.  The Company excluded 3,945,000,
          1,922,000,  and 2,446,000 common stock equivalents for the years ended
          June  30,  2005,  2004,  and  2003   respectively   because  they  are
          antidilutive.

          d.  Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses during the reporting period.  Actual results could differ
          from those estimates.

                                      F-20
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          e.  Income Taxes

          Deferred taxes are provided on a liability method whereby deferred tax
          assets  are  recognized  for  deductible  temporary   differences  and
          operating  loss  and  tax  credit   carryforwards   and  deferred  tax
          liabilities   are  recognized  for  taxable   temporary   differences.
          Temporary differences are the differences between the reported amounts
          of assets and liabilities and their tax bases. Deferred tax assets are
          reduced by a valuation  allowance  when, in the opinion of management,
          it is more  likely that not that some  portion or all of the  deferred
          tax assets will not be realized.  Deferred tax assets and  liabilities
          are  adjusted  for the effects of changes in tax laws and rates on the
          date of  enactment.  Net deferred tax assets  consist of the following
          components as of June 30, 2005, 2004, and 2003:

                                        2005           2004          2003
                                      --------------  ------------  -----------

          Deferred tax assets:
             NOL Carryover            $    8,154,000  $  6,224,303  $ 5,585,000
          Deferred tax liabilities:
             Valuation allowance          (8,154,000)   (6,224,303)  (5,585,000)
                                      --------------  ------------  -----------

          Net deferred tax asset      $            -  $          -  $         -
                                      ==============  ============  ===========

          The  income  tax  provision  differs  from the  amount of  income  tax
          determined by applying the U.S.  federal and state income tax rates of
          39% to pretax income from  continuing  operations  for the years ended
          June 30, 2005, 2004, and 2003 due to the following:
<TABLE>
<CAPTION>
                                                     2005                 2004                2003
                                             --------------------  ------------------  -----------------
<S>                                          <C>                   <C>                 <C>
          Book income                        $         (3,928,473) $       (1,841,328) $      (1,205,900)
          Meals & entertainment                             1,854                 650                904
          Officer issuance                                      -               9,750                  -
          Other  397,218                                   (2,884)                  -
          Depreciation and amortization                    53,773                   -                  -
          Stock for services/options
           expense                                              -             848,909            363,730
          Advisory group option                         2,392,260                   -                  -
          Valuation allowance                           1,083,368             984,903            841,266
                                             --------------------  ------------------  -----------------

                                             $                  -  $                -  $               -
                                             ====================  ==================  =================
</TABLE>
          At June 30, 2005, the Company had net operating loss  carryforwards of
          approximately  $20,800,000  that may be offset  against future taxable
          income  from the year  2005  through  2025.  No tax  benefit  has been
          reported in the June 30, 2005 financial statements since the potential
          tax benefit is offset by a valuation allowance of the same amount. Due
          to the change in ownership  provisions  of the Tax Reform Act of 1986,
          net  operating  loss  carryforwards  for Federal  income tax reporting
          purposes  are  subject  to  annual  limitations.  Should a  change  in
          ownership occur, net operating loss carryforwards may be limited as to
          use in future years.


                                      F-21
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          Continued)

          f.  Inventory

          Inventory  is  stated at the lower of cost  (computed  on a  first-in,
          first-out  basis) or market.  The  inventory  consists  of  chemicals,
          finished goods produced in the Company's plant and products  purchased
          for resale.

                                                          June 30,
                                           -------------------------------------
                                                   2005               2004
                                           ------------------  -----------------

           Raw materials                   $          122,834  $         109,820
           Work in progress                                 -                  -
           Finished goods                             523,964            447,696
                                           ------------------  -----------------

             Total Inventory               $          646,798  $         557,516
                                           ==================  =================

          During the years  ended June 30,  2005,  2004,  and 2003,  the Company
          recorded  inventory  impairment  expense of $-0-,  $-0-,  and $39,596,
          respectively.

          g.  Property and Equipment

          Property  and  equipment  are stated at cost.  Expenditures  for small
          tools,  ordinary  maintenance and repairs are charged to operations as
          incurred.   Major   additions  and   improvements   are   capitalized.
          Depreciation is computed using the straight-line method over estimated
          useful lives as follows:

             Leasehold improvements             5 years, or over lease term
             Equipment                                         5 to 7 years
             Furniture and fixtures                                 7 years
             Automobiles                                            5 years
             Software                                               3 years

          Depreciation expense for the years ended June 30, 2005, 2004, and 2003
          was $354,879 and $294,923, and $297,037, respectively.

          h.  Revenue Recognition

          Revenue is recognized when the sales amount is determined, shipment of
          goods to the  customer  has  occurred  and  collection  is  reasonably
          assured. Product is shipped FOB origination.



                                      F-22
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          i.  Patents and Trademarks

          Patent and  trademark  costs have been  capitalized  at June 30,  2005
          totaling  $407,642.  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 being amortized.  Amortization will begin once
          the patents have been issued. Amortization expense for the years ended
          June 30, 2005,  June 30, 2004, and June 30, 2003 was $30,847,  $1,309,
          and $1,588, respectively.  The Company evaluates the recoverability of
          intangibles and reviews the  amortization  period on a continual basis
          utilizing  the guidance of SFAS 142,  "Goodwill  and Other  Intangible
          Assets." Several factors are used to evaluate intangibles,  including,
          but not limited to,  management's plans for future operations,  recent
          operating results and projected, undiscounted cash flows.

          j.  Advertising

          The Company follows the policy of charging the costs of advertising to
          expense as incurred.  Advertising expense for the years ended June 30,
          2005, 2004, and 2003 was $160,860, $45,055, and $36,320, respectively.

          k.  Newly Adopted Accounting Pronouncements

          During the year ended June 30, 2005, the Company adopted the following
          accounting pronouncements:

          On December  16, 2004 the FASB  issued  SFAS No.  123(R),  Share-Based
          Payment,  which  is an  amendment  to SFAS  No.  123,  Accounting  for
          Stock-Based Compensation.  This new standard eliminates the ability to
          account for share-based  compensation  transactions  using  Accounting
          Principles  Board ("APB") Opinion No. 25,  Accounting for Stock Issued
          to Employees, and generally requires such transactions to be accounted
          for using a fair-value-based  method and the resulting cost recognized
          in our financial statements. This new standard is effective for awards
          that are  granted,  modified  or settled in cash in interim and annual
          periods beginning after June 15, 2005. In addition,  this new standard
          will apply to unvested options granted prior to the effective date. We
          will adopt this new standard effective for the first fiscal quarter of
          2006, and have not yet determined  what impact this standard will have
          on our financial position or results of operations.

                                      F-24
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          k. Newly Adopted Accounting Pronouncements (continued)

          In November 2004, the FASB issued SFAS No. 151,  Inventory  Costs - an
          amendment of ARB No. 43, Chapter 4. This Statement amends the guidance
          in ARB  No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify  the
          accounting  for abnormal  amounts of idle facility  expense,  freight,
          handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43,
          Chapter 4,  previously  stated  that ". . . under some  circumstances,
          items  such as  idle  facility  expense,  excessive  spoilage,  double
          freight,  and  rehandling  costs  may  be so  abnormal  as to  require
          treatment as current period charges. . ." This Statement requires that
          those items be  recognized  as  current-period  charges  regardless of
          whether they meet the criterion of "so  abnormal."  In addition,  this
          Statement  requires that allocation of fixed  production  overheads to
          the  costs  of  conversion  be  based on the  normal  capacity  of the
          production facilities. This statement is effective for inventory costs
          incurred during fiscal years beginning after June 15, 2005. Management
          does  not  believe  the  adoption  of this  Statement  will  have  any
          immediate material impact on the Company.

          In December  2004,  the FASB issued SFAS No. 152,  Accounting for Real
          Estate Time-sharing Transactions,  which amends FASB statement No. 66,
          Accounting  for  Sales of Real  Estate,  to  reference  the  financial
          accounting  and  reporting  guidance  for  real  estate   time-sharing
          transactions  that is provided in AICPA  Statement  of Position  (SOP)
          04-2,  Accounting  for Real  Estate  Time-Sharing  Transactions.  This
          statement also amends FASB Statement No. 67,  Accounting for Costs and
          Initial Rental  Operations of Real Estate Projects,  to state that the
          guidance for (a) incidental  operations and (b) costs incurred to sell
          real  estate  projects  does  not  apply to real  estate  time-sharing
          transactions. The accounting for those operations and costs is subject
          to the guidance in SOP 04-2. This Statement is effective for financial
          statements for fiscal years beginning after June 15, 2005.  Management
          believes  the  adoption of this  Statement  will have no impact on the
          financial statements of the Company.

          In December 2004, the FASB issued SFAS No.153, Exchange of Nonmonetary
          Assets.  This  Statement  addresses  the  measurement  of exchanges of
          nonmonetary assets. The guidance in APB Opinion No. 29, Accounting for
          Nonmonetary Transactions,  is based on the principle that exchanges of
          nonmonetary  assets should be measured  based on the fair value of the
          assets  exchanged.  The guidance in that  Opinion,  however,  included
          certain exceptions to that principle. This Statement amends Opinion 29
          to  eliminate  the  exception  for  nonmonetary  exchanges  of similar
          productive  assets  and  replaces  it  with a  general  exception  for
          exchanges of nonmonetary assets that do not have commercial substance.
          A  nonmonetary  exchange has  commercial  substance if the future cash
          flows of the entity are expected to change  significantly  as a result
          of the exchange.  This Statement is effective for financial statements
          for fiscal years beginning after June 15, 2005. Earlier application is
          permitted for nonmonetary asset exchanges incurred during fiscal years
          beginning  after  the date of this  statement  is  issued.  Management
          believes  the  adoption of this  Statement  will have no impact on the
          financial statements of the Company.


                                      F-25
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          k. Newly Adopted Accounting Pronouncements (continued)

          The  implementation of the provisions of these  pronouncements are not
          expected to have a significant  effect on the  Company's  consolidated
          financial statement presentation.

          l. Equity Securities

          Equity securities issued for services rendered have been accounted for
          at  the  fair  market  value  of  the   securities   on  the  date  of
          authorization.

          m. Concentrations of Risk

          The Company  maintains  several accounts with financial  institutions.
          The accounts are insured by the Federal Deposit Insurance  Corporation
          up  to  $100,000.   The  Company's  balances  exceed  that  amount  by
          $1,808,640 at June 30, 2005.

          Credit  losses,  if  any,  have  been  provided  for in the  financial
          statements and are based on management's  expectations.  The Company's
          accounts receivable are subject to potential  concentrations of credit
          risk.  The Company  does not believe that it is subject to any unusual
          risks, or significant risks in the normal course of its business.

          The Company has one customer who  accounted  for 12% of the  Company's
          sales for the year ended June 30, 2005.

          n.  Stock Options

          As  permitted  by FASB  Statement  148  "Accounting  for  Stock  Based
          Compensation - Transition and Disclosure"  (SFAS No. 148), the Company
          elected to measure and record  compensation  cost relative to employee
          stock option costs in  accordance  with  Accounting  Principles  Board
          ("APB")  Opinion 25,  "Accounting  for Stock Issued to Employees," and
          related  interpretations  and make proforma  disclosures of net income
          and earnings  per share as if the fair value  method of valuing  stock
          options had been applied.  Under APB opinion 25,  compensation cost is
          recognized  for stock  options  granted to  employees  when the option
          price is less that the market price of the underlying  common stock on
          the date of grant.

          o.  Valuation of Options and Warrants

          The valuation of options and warrants granted to unrelated parties for
          services  are  measured  as of the  earlier of (1) the date at which a
          commitment  for  performance  by the  counterparty  to earn the equity
          instrument is reached, or (2) the date the counterparty's  performance
          is complete.  Pursuant to the  requirements of EITF 96-18, the options
          and warrants will continue to be revalued in situations where they are
          granted  prior  to  the  completion  of  the  performance.

                                      F-26
<PAGE>
                             AMERITYRE CORPORATION
                       Notes to the Financial Statements
                         June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          p.  Cash and Cash Equivalents

          The Company considers all highly liquid investments with a maturity of
          three months or less when purchased to be cash equivalents.

NOTE 2 -  COMMITMENTS AND CONTINGENCIES

          In October 2002, we entered into a five-year lease for a 49,200 square
          foot  executive/manufacturing  facility in Boulder City,  Nevada.  The
          agreement  required a security  deposit of $18,000  and  monthly  rent
          payments of $16,000 for the first twelve months with annual increases.
          At June 30, 2005,  the monthly rent was $17,500.  Future minimum lease
          payments under this non-cancelable operating lease is as follows:

                            2006                     $         208,000
                            2007                               214,000
                            2008                                54,000
                                                     -----------------

                                                     $         476,000
                                                     =================

          On June 13, 2005, we filed case number A505333 in the Eighth  Judicial
          District Court for the State of Nevada against Prototype  Engineering,
          Inc., an Ohio corporation ("Prototype"),  and Frederick F. Vannan, Jr.
          ("Vannan").  Our causes of action  includes  allegations of alter ego,
          misrepresentation/fraud, extortion, declaratory relief, defamation and
          attorney's  fees.  We have  alleged  that  Vannan and  Prototype,  are
          seeking to extort  additional  remuneration  from the Company and have
          made  misrepresentations  regarding  the  existence of an alleged oral
          contract for additional  remuneration  (500,000 to 1,000,000 shares of
          the Company's common stock).  We are seeking a judgment  declaring the
          parties rights relative to a written  contract between the parties and
          a judgment  declaring that Prototype and Vannan have no right or claim
          to any additional remuneration.  We have disputed the existence of any
          such oral contract for additional  remuneration.  Prototype and Vannan
          removed  the matter to the U.S.  District  Court for the  District  of
          Nevada  [CV-S-05-0823-HDM-LRL]  and have  alleged  counter-claims  for
          breach of contract,  breach of contractual  covenant of good faith and
          fair dealing,  unjust enrichment,  and intentional  misrepresentation.
          Our  responsive  pleading  was to file a Motion  to  Remand  or in the
          alternative  to Dismiss all of the  counterclaims.  This motion is now
          pending the court's ruling. We are strongly pursing the litigation and
          we believe a favorable  outcome is highly likely. A favorable  outcome
          for the Company would include a declaratory  judgment  declaring  that
          Prototype and Vannan are not entitled to any further  remuneration and
          may  also  include  attorneys  fees  and  cost  for  the  Company.  An
          unfavorable  outcome for the Company could include a judgment  against
          the Company in an unspecified amount which may be determined at trial.


                                      F-27
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 3 -      STOCK TRANSACTIONS

          During the year ended June 30, 2005,  the Company  issued an aggregate
          of 1,076,048 shares of common stock as follows:

               a.   20,000 shares of common stock for cash of $40,000,  or $2.00
                    per share,  in connection  with the exercise of  outstanding
                    stock options;

               b.   15,000 shares of common stock to acquire  outright three (3)
                    patents  that had  previously  been  assigned to the Company
                    increase  for  periodic  royalty  payments.  The shares were
                    valued at $146,250, or $9.75 per share. Of the above shares,
                    5,000 shares were issued to our CEO;

               c.   65,000  shares  of  common  stock  for  services  valued  at
                    $598,000, or $9.20 per share, to our CEO as compensation for
                    services through June 30, 2005;

               d.   10,000  shares of common stock  valued at $77,000,  or $7.70
                    per share for services to an outside consultant;

               e.   19,300  shares of our common  stock for  services  valued at
                    $123,520 or $6.40 per share,  in connection with an employee
                    stock  award.  The stock was valued at $6.40 per share,  the
                    closing price on the date of grant;

               f.   120,748  shares of common stock to  employees in  connection
                    with the cashless exercise of outstanding stock options;

               g.   30,000 shares of common stock for cash of $90,000,  or $3.00
                    per share,  in connection  with the exercise of  outstanding
                    stock options; and

               h.   796,000  shares of common stock for cash of  $3,184,000,  or
                    $4.00  per  share,   in  connection  with  the  exercise  of
                    outstanding stock options.

NOTE 4 -  STOCK OPTIONS

          During the period  ended  September  30,  2004,  we issued  options to
          acquire  an  aggregate  of  3,000,000  shares of our  common  stock to
          certain  non-employees in connection with an advisory  agreement.  The
          options vested  immediately and the exercise price is $7.00 per share.
          We  recognized a total of $6,134,000  in expense  associated  with the
          issuance of these options and deferred  $1,000,000  as stock  offering
          costs until related  funding is received.  We estimated the fair value
          of the  stock  options  at the grant  date by using the  Black-Scholes
          option pricing model based on the following assumptions:

                    Risk free interest rate                2.49%
                    Expected Life                        2 years
                    Expected volatility                   59.83%
                    Dividend Yield                          0.0%


                                      F-28
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 4 -  STOCK OPTIONS (Continued)

          In December 2004, we issued options to acquire an aggregate of 105,000
          shares of our common stock to certain  employees  under our 2002 Stock
          Option and Award Plan. The options are exercisable at $6.40 per share,
          the closing price on the date of grant, vested immediately, and expire
          on December 15, 2009. At June 30, 2005, we had issued 1,920,000 shares
          of our common  stock  under our 2002 Stock  Option and Award Plan as a
          result of option  exercises and stock awards.  Exercise prices for the
          outstanding  options  range from $3.80 to $6.70 per share and exercise
          terms  range  from one to five  years.  At June 30,  2005,  there were
          209,191 shares available to grant  additional  options or stock awards
          under the Plan.

          In December  2004, we issued options to acquire an aggregate of 80,000
          shares  of our  common  stock to  non-employee  directors  for  annual
          service on our board of  directors  pursuant to our 2004  Non-Employee
          Directors' Stock Incentive Plan. These option vested on June 15, 2005,
          are  exercisable  at $6.40 per share and expire on December  15, 2007.
          There are  1,920,000  shares  available  for the  grant of  additional
          options or stock awards under this plan.

          A summary of the status of the Company's  outstanding stock options as
          of June 30,  2005,  2004,  and 2003 and changes  during the years then
          ended is presented below:
<TABLE>
<CAPTION>
                                       2005                    2004                     2003
                             ------------------------ ----------------------- -------------------------
                                         Weighted                 Weighted                 Weighted
                                          Average                  Average                 Average
                                         Exercise                 Exercise                 Exercise
                               Shares      Price        Shares      Price       Shares      Price
                            ------------ ---------  ------------  --------  -------------- ----------
<S>                            <C>        <C>          <C>        <C>              <C>        <C>
     Outstanding,
      beginning of year        1,922,000 $    3.66     2,466,000  $   3.42       2,616,000    $  3.42
     Granted                   3,185,000      6.97        90,000      5.73         260,461       2.01
     Expired/Cancelled          (195,252)    (0.18)            -         -        (380,000)      2.92
     Exercised                  (966,748)    (4.14)     (634,000)     2.80         (30,461)      2.09
                            ------------ ---------  ------------  --------  --------------    -------

     Outstanding end
      of year                  3,945,000 $    6.31     1,922,000  $   3.66       2,466,000    $  3.42
                            ============ =========  ============  ========  ==============    =======

     Exercisable                 945,000  $   4.14     1,922,000  $   3.66       2,466,000    $  3.42
                            ============  ========  ============  ========  ==============    =======
</TABLE>

                                      F-29
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 4 -      STOCK OPTIONS (Continued)
<TABLE>
<CAPTION>
                                        Outstanding                           Exercisable
                        --------------------------------------------  ----------------------------
                                          Weighted
                           Number          Average       Weighted        Number        Weighted
           Range of      Outstanding     Remaining        Average      Exercisable      Average
           Exercise      at June 30,   Contractual       Exercise       at June 30,    Exercise
            Prices          2005            Life           Price          2005            Price
        --------------  -------------  -------------   -------------  -------------  -------------
<S>     <C>                   <C>               <C>        <C>               <C>          <C>
        $         3.00        470,000           0.08   $        0.36        470,000  $        1.49
                  3.80         30,000           1.25            0.03         30,000           0.12
                  4.00        200,000           1.95            0.20        200,000           0.85
                  6.40        185,000           3.60            0.30        185,000           1.25
                  6.70         60,000           0.50            0.10         60,000           0.43
                  7.00      3,000,000           4.21            5.32              -              -
        --------------  -------------  -------------   -------------  -------------  -------------

        $    3.00-7.00      3,945,000           3.49   $        6.31        945,000  $        4.14
        ==============  =============  =============   =============  =============  =============
</TABLE>
          Other than the 3,000,000  options issued to  non-employees,  all other
          options  issued  during the fiscal year were issued to  employees  and
          were  accounted  for under  APB 25,  "Accounting  for Stock  Issued to
          Employees."  All of these  options were issued  either at or above the
          market price of the Company's common stock on the date of issue and no
          compensation  expense was recognized.  Had  compensation  cost for the
          issuance of the options been determined based on the fair value at the
          grant  dates  consistent  with  the  method  of  FASB  Statement  148,
          "Accounting for Stock Based Compensation - Transition and Disclosure,"
          the Company's net loss and loss per share would have been increased to
          the pro forma amounts indicated below:
<TABLE>
<CAPTION>
                                                       For the Years Ended
                                                             June 30,
                                             ----------------------------------------------
                                                 2005            2004            2003
                                             --------------  ---------------  -------------
<S>                                               <C>             <C>              <C>
           Net (loss) as reported            $  (10,073,008) $    (4,721,255) $  (3,091,972)
           Pro forma                            (10,741,958)      (4,941,080)    (3,293,264)
           Basic (loss) per share
            as reported                      $        (0.53) $         (0.26) $       (0.21)
           Pro forma                                  (0.56)           (0.28)         (0.22)
</TABLE>
NOTE 5 -   GOING CONCERN

          Our  financial   statements  are  prepared  using  generally  accepted
          accounting principles applicable to a going concern which contemplates
          the realization of assets and liquidation of liabilities in the normal
          course of business.  We have historically  incurred significant losses
          which have resulted in a total retained deficit of $36,463,835 at June
          30, 2005 which raises  substantial doubt about our ability to continue
          as a going  concern.  The  accompanying  financial  statements  do not
          include   any   adjustments   relating  to  the   recoverability   and
          classification   of  asset   carrying   amounts   or  the  amount  and
          classification  of  liabilities  that might result from the outcome of
          this uncertainty.


                                      F-30
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                             June 30, 2005 and 2004

NOTE 5 -  GOING CONCERN (Continued)

          We have taken  certain  steps to maintain our  operating and financial
          requirements  in an effort to enable us to continue as a going concern
          until  such time  that  revenues  are  sufficient  to cover  expenses,
          including:  (1)  evaluating  (A)  our  cost  of  goods  and  equipment
          utilization and requirements of our manufacturing operations,  and (B)
          our  sales  and  marketing  plan  on  a  product  sector  basis;   (2)
          incorporating  revisions to our methods,  processes and costs in order
          to  achieve   necessary   manufacturing   efficiencies   (i.e.,   line
          automation,  reduced material costs, reduced product waste, etc.); and
          (3) seeking reduced material and component costs from suppliers.

          In addition, to expanding revenue opportunities during the fiscal year
          we  have  commenced  a  program  of (1)  licensing  manufacturing  and
          distribution  rights to certain of our  polyurethane  tire products to
          third-party  manufacturers  based  on  such  factors  as  geographical
          locations  and  boundaries;  (2) selling  manufacturing  equipment  to
          third-party   manufacturers  to  manufacture  products  utilizing  our
          manufacturing  equipment and  processes;  (3) selling our  proprietary
          polyurethane  chemical  systems  to  third-party   manufacturers  that
          utilize our  manufacturing  equipment and processes;  and (4) offering
          contract  design  and  engineering  services  to  the  tire  and  auto
          industries.

          To  supplement  our cash needs during the 2006 fiscal year we have (1)
          obtained  approximately  $1,500,000 in funding through the exercise of
          outstanding  options; and (2) expect to issued common stock in lieu of
          cash  as   compensation   for  employment,   development,   and  other
          professional services.

          The  combination  of our  accounts  receivables  and our cash and cash
          equivalents are expected to meet the balance of our operational  needs
          during the 2006  fiscal  year.  We are  currently  evaluating  funding
          strategies  to help  offset any cash  shortfalls  that may occur after
          during the 2006 fiscal year.

          We  anticipate   that  during  the  2006  fiscal  year  we  will  need
          approximately $4,000,000 to implement our plan and to meet our working
          capital requirements.

          Our  ability to  continue  as a going  concern is  dependent  upon our
          ability to  successfully  accomplish  the plan  described  above,  and
          eventually attain profitable operations.

          The accompanying  financial  statements do not include any adjustments
          that might be  necessary  should we be unable to  continue  as a going
          concern.

NOTE 6 -  SUBSEQUENT EVENTS

          Subsequent  to June 30,  2005,  we have issued  470,000  shares of our
          common stock for cash of $1,410,000,  in connection  with the exercise
          of 470,000 outstanding stock options at $3.00 per share.


                                      F-31
<PAGE>
                              AMERITYRE CORPORATION
                        Notes to the Financial Statements
                             June 30, 2005 and 2004

NOTE 6 -  SUBSEQUENT EVENTS (Continued)

          Effective July 1, 2005, our Board of Directors authorized the issuance
          of 30,300 shares of restricted common stock to Richard A. Steinke, the
          Company's  President  and  Chief  Executive  Officer  as  part  of his
          employment  compensation  for the  period  beginning  July 1, 2005 and
          ending June 30, 2006.  The value of the shares was $200,000,  based on
          the closing price of $6.60 per share.

          On July 1, 2005,  our Board of  Directors  authorized  the issuance of
          options to acquire up to 625,000 shares of our common stock to various
          employees.  The options vest over the term of their employment up to 3
          years  from the date of grant and are  exercisable  for a 5 year term.
          The exercise  price for the initial  option grants is $6.60 per share,
          the closing  price for our common stock on June 30, 2005.  The options
          were  granted  under the terms of the 2005 Stock Option and Award Plan
          (the "2005 Plan") and  2,000,000  shares of our common stock have been
          set aside for stock  option  grants  and stock  awards  under the 2005
          Plan.

          In August 2005, we entered into a Memorandum of Understanding  ("MOU")
          with Ace Products,  LLC, a Delaware limited liability company ("ACE"),
          outlining the general scope and proposed  terms of a transaction  with
          ACE that is currently still under negotiation. Details of scope, terms
          and conditions are all subject to the execution of final agreements by
          and between the parties (the "Definitive  Agreements") and the closing
          of the contemplated  transaction,  anticipated to take place not later
          than  September  16,  2005 (the  "Closing"),  unless an  extension  is
          mutually agreed to by the parties.

          The Definitive  Agreements are expected to include provisions for: (i)
          the  use  of  certain  manufacturing   equipment;   (ii)  the  use  of
          manufacturing  methods  and  processes,  tire  designs  and  molds and
          models; (iii) the use of chemicals and chemical concentrates; and (iv)
          the use of our  trademarks  on products  that  utilize  the  Company's
          technology.  The  Definitive  Agreements  are expected to consist of a
          License  Agreement  and  various  ancillary  agreements  that  will be
          integral  to the  License  Agreement,  including  agreements  for  the
          purchase  of  certain  manufacturing   equipment  and  finished  goods
          inventory, the continuing supply of chemicals and other items.

          The MOU is  non-binding,  however,  it reflects  the  parties'  stated
          intentions to enter into  Definitive  Agreements  and  consummate  the
          transaction.  However, in the event that the Definitive Agreements are
          not executed and the  transaction  is not  completed by September  16,
          2005,  the  parties  agree that the MOU shall  effectively  supersede,
          replace  and cancel  all  previous  agreements  between  the  parties,
          including without limitation the Joint Market, Product Development and
          Supply  Agreement  entered into September 13, 2004, by and between ACE
          Products,  Inc., a Tennessee  corporation,  and the  Company,  and the
          Standstill  Agreement  dated May 18,  2005 by an  between  ACE and the
          Company,  except that all obligations  relating to confidentiality and
          non-disclosure shall remain in full force and effect.


                                      F-32
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page

Prospectus Summary                                                             6
Supplementary Financial Information                                            8
Risk Factors                                                                   9
Use of Proceeds                                                               14
Selling Shareholders                                                          14
Plan of Distribution                                                          18
Indemnification For Securities Act Liabilities                                20
Description of Securities                                                     20
Legal Matters                                                                 20
Experts                                                                       20
Change in Accountants                                                         21
Description of Business                                                       22
Description of Properties                                                     25
Legal Proceedings                                                             25
Market for Common Equity and Related Stockholder Matters                      25
Selected Consolidated Historical Financial Data                               27
Management's Discussion and Analysis                                          29
Quantitative and Qualitative Disclosures About Market Risk                    39
Management                                                                    39
Executive Compensation                                                        42
Security Ownership of Certain Beneficial
   Owners and Management                                                      47
Certain Relationships and Related Transactions                                49
Where You Can Find More Information                                           49
Index to Consolidated Financial Statements                                    50


                                1,575,000 SHARES
                                     OF OUR
                                  COMMON STOCK

                               [GRAPHIC OMITTED]

                              AMERITYRE CORPORATION


                                   PROSPECTUS

                                  March 9, 2006

<PAGE>

                                     PART II


                     INFORMATION NOT REQUIRED IN PROSPECTUS


Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The  following  table sets forth the estimated  costs and  expenses,  other than
underwriting  discounts  and  commissions,  if any,  all of which are payable by
Amerityre  Corporation  (the  "Registrant"),  in connection with the sale of the
common stock being offered by the selling shareholders.


SEC registration fee                          $1,143.78
Legal fees and expenses                       $50,000*
Accounting fees and expenses                  $3,000*
Printing expenses                             $4,000*
Miscellaneous                                 $4,000*

Total                                         $62,143.78*


*Estimated.

Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles of Incorporation  provide to the fullest extent permitted by Nevada
law,  our  directors  or officers  shall not be  personally  liable to us or our
shareholders  for damages for breach of such  director's or officer's  fiduciary
duty. The effect of this provision of our Articles of Incorporation, as amended,
is to eliminate our right and our shareholders (through shareholders' derivative
suits on behalf of our company) to recover damages against a director or officer
for breach of the  fiduciary  duty of care as a director  or officer  (including
breaches resulting from negligent or grossly negligent  behavior),  except under
certain  situations  defined by  statute.  We believe  that the  indemnification
provisions  in its  Articles of  Incorporation,  as amended,  are  necessary  to
attract and retain qualified persons as directors and officers.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred or paid by a director,  officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed  in the  Securities  Act and will be  governed by the final
adjudication of such issue.

Item 15. RECENT SALES OF UNREGISTERED SECURITIES

During the three month period ended March 31, 2003, we issued  339,515 shares of
its restricted common stock for cash of $679,030 and 12,500 shares restricted of
our common stock for a subscription deposit of $25,000, or $2.00 per share.

During the three month period ended March 31, 2003,  we issued  12,500 shares of
our restricted common stock to an unrelated consultant for services.  The shares
were valued at the market price on the date of issue, or $1.95 per share.

In October 2003,  pursuant to a resolution of our Board of Directors,  we issued
125,000  shares of  restricted  common stock  valued at  $472,500,  or $3.78 per
share,  in lieu of cash  compensation  to  Richard  A.  Steinke,  our CEO.  This
issuance was made as a payment of  employment  compensation  for the period from
July 1, 2003 through June 30, 2004.

In October 2003,  pursuant to a resolution of our Board of Directors,  we issued
100,000 shares of our restricted  common stock valued at $378,000,  or $3.78 per
share, to a third-party consultant for professional services associated with our
endeavor to develop polyurethane elastomer tires.

In  November  2003,  pursuant  to a  resolution  of our Board of  Directors,  we
authorized  the  issuance to  non-employee  directors  of an aggregate of 40,000
shares of  restricted  common stock valued at $244,000,  or $6.10 per share,  in
lieu of cash compensation and reimbursement of out-of-pocket expenses associated
with attending our board meetings through November 30, 2004.

In January 2004, we issued  500,000  shares of our  restricted  common stock for
cash of $1,500,000, in connection with the exercise of outstanding stock options
at $3.00 per share.

                                       51
<PAGE>
In January 2004, pursuant to a resolution of our Board of Directors,  we granted
several  employees  stock  options to purchase an aggregate of 60,000  shares of
common stock at an exercise  price of $6.70 per share.  The stock options expire
on December 31, 2005.

Effective July 1, 2004, our Board of Directors authorized the issuance of 65,000
shares of restricted common stock to Richard A. Steinke, our President and Chief
Executive Office as employment  compensation  from July 1, 2004 through June 30,
2005. The value of the shares was $598,000,  based on the closing price of $9.20
per share on the date of the board resolution.

Effective  July 1, 2004, we amended the  exclusive  license  agreement  with our
President and two unrelated  parties to license  certain  intellectual  property
rights  known as  "Apparatus  for Making Foam  Products"  and "Method for Making
Polyurethane  Tires with an Outer Skin" embodied in U.S.  Patent Nos.  4,943,223
and 4,855,096,  respectively.  The amendment  eliminates all royalty payments in
exchange for 15,000 shares of our restricted  common stock as a one-time payment
to the  licensees  for their  assignment  and transfer of the  technology to the
Company.  The closing  price of our common  stock as quoted on the OTC  Bulletin
Board on July 1, 2004 was $9.75 per share, for a value of $146,250.

Effective July 1, 2005, our Board of Directors authorized the issuance of 30,300
shares of restricted common stock to Richard A. Steinke, our President and Chief
Executive  Officer  as  part  of his  employment  compensation  for  the  period
beginning  July 1, 2005 and ending  June 30,  2006.  The value of the shares was
$200,000, based on the closing price of $6.60 per share.

On November 8, 2005,  we issued 7,000 shares of our  restricted  common stock to
CCG  Investor  Relations as payment for investor  relations  and media  relation
services.  The value of the shares was  $31,850,  based on the closing  price of
$4.55 per share.

On December 28, 2005, we issued 1,852 shares of our  restricted  common stock to
Steve M.  Hanni,  as partial  compensation  for his  services as Chairman of our
audit committee. The value of the shares was $10,000, based on the closing price
of $5.40 per share.

On December 28, 2005,  we issued an aggregate  of 11,112  shares  (1,852  shares
each) of our restricted  common stock to our six (6)  non-employee  directors as
annual  compensation for their services as members of our board of directors for
the period commencing  December 1, 2005 through November 30, 2006. The aggregate
value of the shares was $60,000, based on the closing price of $5.40 per share.

On January 15, 2006, 10,000 shares of our restricted common stock vested to Gary
N.  Benninger,  our  Chief  Operating  Officer,  pursuant  to the  terms  of his
employment agreement with us. The value of the shares was $53,600,  based on the
closing price of the shares on October 16, 2005, the date of grant.

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement  for  $3,870,000  in offering  proceeds.  We sold 107,500 Units of our
securities at a purchase  price of $36.00 per Unit.  Each Unit consists of eight
(8) shares of our Common  Stock,  a Class A Warrant (the "Class A Warrant")  for
the  purchase  of one  share  of  Common  Stock  at an  exercise  price of $5.00
exercisable  for a 3 year  period and a Class B Warrant  (the "Class B Warrant")
for the  purchase  of one share of Common  Stock at an  exercise  price of $5.50
exercisable  for a 5 year period.  The Warrants may also be exercised  through a
cashless  exercise based on the difference  between the market price on the date
of exercise and the exercise price.  The exercise prices of the Class A Warrants
and Class B Warrants are subject to  adjustment  in certain  events,  including,
without  limitation,   upon  our  consolidation,   merger  or  sale  of  all  or
substantially all of our assets, a reclassification  of our Common Stock, or any
stock splits or combinations with respect to the Common Stock.

Purchasers of the Units have been granted registration rights in connection with
the  private  placement.  We have  agreed  to use  our  best  efforts  to file a
registration statement with the Commission within 45 days after the Closing Date
and cause the registration  statement to be declared effective by the SEC within
120 days after the Closing  Date (if there are no comments  from the SEC) or 180
days (if comments are received from the SEC) (the "Effective  Date") in order to
register  the shares of Common Stock  underlying  the Units sold in the offering
(the "Registrable Securities") for resale and distribution by the investors (the
"Registration  Statement").  We will register approximately  1,075,000 shares of
Common  Stock which  represents  the total number of shares of Common Stock plus
the shares of Common  Stock  issuable  upon  exercise of the Class A and Class B
Warrants. The Registrable Securities shall be reserved and set aside exclusively
for the benefit of each investor.

The Class A and Class B Warrants  are subject to  redemption  by us. We have the
right to redeem  either the Class A or Class B Warrants  beginning  ninety  (90)
days  from the  Effective  Date of the  Registration  Statement,  if at any time
following the Effective Date, the average closing bid price for the Common Stock
in the over-the-counter  market is at least $5.50 per share (with respect to the
Class A Warrants) or $6.05 per share (with respect to the Class B Warrants), for
the 20  consecutive  trading  day  period  ending not more than 15 days prior to
notice of  redemption  of the Class A and Class B Warrants.  Our right to redeem
the Class A and Class B Warrants  requires us to give the holders written notice
of  redemption  of not less  than 30 days,  and is  subject  to the right of the
holders of the Class A and Class B Warrants to exercise  the same in  accordance
with the terms hereof during the redemption  period.  The  redemption  price for
each Class A and Class B Warrant is $0.10 per share.

Unless otherwise  specified above, the sales and issuances of securities  listed
above were deemed to be exempt from  registration  under the  Securities  Act by
virtue of Section  4(2) of the Act and/or  Regulation D  promulgated  thereunder
since,  among other things,  the transaction did not involve a public  offering,
the investors were accredited investors and/or qualified  institutional  buyers,
the investors had access to information  about the company and their investment,
the investors took the  securities  for  investment and not resale,  and we took
appropriate measures to restrict the transfer of the securities.

                                       52
<PAGE>
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) Exhibits.

3.1  Articles of Incorporation of the Company (Incorporated by reference to Form
     8-A12G,  filed October 28, 2002, as amended per Form 8-K filed November 17,
     2004).
3.2  Bylaws of the Company  (Incorporated  by reference  to Form  8-A12G,  filed
     October 28, 2002).
4.1  Form of Stock Certificate  (Incorporated by reference to Form 8-A12G, filed
     October 28, 2002).
5.1  Opinion of Sichenzia Ross Friedman Ference LLP. (Filed herewith).
10.1 Form of Subscription  Agreement of Amerityre  Corporation  (Incorporated by
     reference to the Current Report on Form 8-K filed on February 1, 2006).
10.2 Form of Class A Common  Stock  Purchase  Warrant of  Amerityre  Corporation
     dated as of  February 1, 2006  (Incorporated  by  reference  to the Current
     Report on Form 8-K filed on February 1, 2006).
10.3 Form of Class B Common  Stock  Purchase  Warrant of  Amerityre  Corporation
     dated as of  February 1, 2006  (Incorporated  by  reference  to the Current
     Report on Form 8-K filed on February 1, 2006).
23.1 Consent of HJ & Associates,  LLC, Independent  Registered Public Accounting
     Firm. (Filed herewith)
23.2 Consent of Sichenzia  Ross  Friedman  Ference LLP  (included in its opinion
     filed as Exhibit 5.1 to this Registration Statement).

(b) Financial Statement Schedules

Item 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to:

(1)      File,  during any  period in which  offers or sales are being  made,  a
post-effective amendment to this registration statement to:

(i)      Include any prospectus  required by Section  10(a)(3) of the Securities
Act of 1933, as amended (the "Securities Act");

(ii)     Reflect in the prospectus any facts or  events which,  individually  or
together,  represent a fundamental change in the information in the registration
statement.  Notwithstanding the foregoing, any increase or decrease in volume of
securities  offered (if the total dollar value of the  securities  offered would
not exceed that which was registered) and any deviation from the low or high end
of the  estimated  maximum  offering  range  may be  reflected  in the form of a
prospectus  filed  with  the  Commission  pursuant  to  Rule  424(b)  under  the
Securities Act if, in the aggregate,  the changes in volume and price  represent
no more than a 20% change in the maximum  aggregate  offering price set forth in
the  "Calculation  of  Registration  Fee"  table in the  effective  registration
statement, and

(iii)    Include any  additional or changed  material information on the plan of
distribution.

(2)       For  determining  liability  under  the  Securities  Act,  treat  each
post-effective  amendment  as a new  registration  statement  of the  securities
offered,  and the offering of the securities at that time to be the initial bona
fide offering.

(3)      File a post-effective  amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

(4)      For  determining  liability of the  undersigned  small business  issuer
under the  Securities  Act to any purchaser in the initial  distribution  of the
securities,  the undersigned undertakes that in a primary offering of securities
of  the  undersigned   small  business  issuer  pursuant  to  this  registration
statement,  regardless of the underwriting method used to sell the securities to
the purchaser,  if the securities are offered or sold to such purchaser by means
of any of the following  communications,  the undersigned  small business issuer
will be a seller to the  purchaser  and will be considered to offer or sell such
securities to such purchaser:

(i)      Any  preliminary  prospectus  or prospectus  of the  undersigned  small
business issuer  relating to the offering  required to be filed pursuant to Rule
424;

(ii)     Any free writing prospectus relating to  the offering prepared by or on
behalf of the  undersigned  small business  issuer or used or referred to by the
undersigned small business issuer;

(iii)    The  portion of any  other free  writing  prospectus  relating  to  the
offering  containing  material  information about the undersigned small business
issuer or its  securities  provided  by or on behalf  of the  undersigned  small
business issuer; and

(iv)     Any  other  communication  that is an offer in the offering made by the
undersigned small business issuer to the purchaser.

Insofar as indemnification  for liabilities arising under the Securities Act may
be permitted to directors,  officers and  controlling  persons of the registrant
pursuant to the foregoing  provisions,  or otherwise,  the  registrant  has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

In the event that a claim for  indemnification  against such liabilities  (other
than the payment by the  registrant of expenses  incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered,  the registrant will,
unless in the opinion of its counsel the matter has been settled by  controlling

                                       53
<PAGE>
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities Act and will be governed by the final adjudication of such issue.

Each  prospectus  filed  pursuant  to Rule  424(b)  as  part  of a  registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other than  prospectuses  filed in reliance on Rule 430A,  shall be
deemed to be part of and included in the  registration  statement as of the date
it is first used after effectiveness.  Provided, however, that no statement made
in a  registration  statement  or  prospectus  that is part of the  registration
statement or made in a document incorporated or deemed incorporated by reference
into the  registration  statement or prospectus that is part of the registration
statement  will, as to a purchaser with a time of contract of sale prior to such
first use,  supersede or modify any statement that was made in the  registration
statement or prospectus that was part of the  registration  statement or made in
any such document immediately prior to such date of first use.


                                       54
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1933, we certify that we
have  reasonable  grounds to believe  that we meet all of the  requirements  for
filing on Form S-1,  and have duly  caused  this  registration  statement  to be
signed on our behalf by the undersigned,  thereunto duly authorized, in the City
of Boulder City, State of Nevada, on March 9, 2006.

                              AMERITYRE CORPORATION

                              By /s/ Richard A. Steinke
                                 -----------------------
                                 Richard A. Steinke
                                 Chairman and Chief Executive Officer (Principal
                                 Executive Officer)

                              By /s/ Anders A. Suarez
                                 ---------------------
                                 Anders A. Suarez
                                 Chief Financial Officer (Principal Accounting
                                 Officer)

Pursuant to the  requirements of the Securities Act of 1933,  this  registration
statement has been signed by the following  persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature                                      Title                                       Date
---------                                      ------                                     ------
<S>                                              <C>                                      <C>
   /s/ Richard A. Steinke               Chief Executive Officer and                    March 9, 2006
   ----------------------               Chairman of the Board of Directors
       Richard A. Steinke               (Principal Executive Officer)

   /s/ Louis M. Haynie                   Director                                      March 9, 2006
   --------------------
       Louis M. Haynie

   /s/ Henry D. Moyle                    Director                                      March 9, 2006
   -------------------
       Henry D. Moyle

   /s/ Wesley G. Sprunk                  Director                                      March 9, 2006
   ---------------------
       Wesley G. Sprunk

   /s/ Norman H. Tregenza                Director                                      March 9, 2006
   ----------------------
      Norman H. Tregenza

   /s/ Steve M. Hanni                    Director                                      March 9, 2006
   ------------------
       Steve M. Hanni

   /s/ Kenneth C. Johnsen                Director                                      March 9, 2006
   -----------------------
       Kenneth C. Johnsen
</TABLE>
[{"type": "S-1", "sequence": "1", "filename": "march92006forms1.txt", "secsgml_size_bytes": 342925}]
{"company-data": {"conformed-name": "AMERITYRE CORP", "cik": "0000945828", "assigned-sic": "3011", "irs-number": "870535207", "state-of-incorporation": "NV", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-132305", "film-number": "06676277"}, "business-address": {"street1": "1501 INDUSTRIAL ROAD", "city": "BOULDER CITY", "state": "NV", "zip": "89005", "phone": "7022931930"}, "mail-address": {"street1": "1501 INDUSTRIAL ROAD", "city": "BOULDER CITY", "state": "NV", "zip": "89005"}, "former-company": {"former-conformed-name": "AMERICAN TIRE CORP", "date-changed": "19951117"}}
As filed with the Securities and Exchange Commission on March 9, 2006

                              Registration No. 333-

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                              AMERITYRE CORPORATION
             (Exact name of registrant as specified in its charter)

              Nevada                      3011                    87-0535207
 (State or Other Jurisdiction  (Primary Standard Industrial   (I.R.S. Employer
       of Incorporation or           Classification            Identification
         Organization)                Code Number)                 Number)

                              1501 Industrial Road
                           Boulder City, Nevada 89005
                                 (702) 294-2689
                   ------------------------------------------
       (Address, including zip code, and telephone number, including area
               code, of Registrant's principal executive offices)

                               Richard A. Steinke
                      President and Chief Executive Officer
                              AMERITYRE CORPORATION
                              1501 Industrial Road
                           Boulder City, Nevada 89005
                                 (702) 294-2689
                   ------------------------------------------
(Name, address, including zip code, and telephone number, including area
                          code, of agent for service)

                                 WITH COPIES TO:

                            Richard A. Friedman, Esq.
                              Eric A. Pinero, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                                 (212) 930-9700
                    ----------------------------------------

If any of the  securities  being  registered on this Form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [x]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number of the  earlier  effective
registration statement for the same offering. [ ] ________

If this Form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ] ________

If this form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ] ________

If delivery  of the  prospectus  is  expected  to be made  pursuant to Rule 434,
please check the following box. [ ] ________
CALCULATION OF REGISTRATION FEE

-------------------------------------------------- ------------------- ------------------ -------------------- --------------
    Title of each class of securities to be          Amount to be          Proposed        Proposed maximum     Amount of
                   registered                         registered           maximum            aggregate        registration
                                                                        offering price      offering price         fee
                                                                          per share
-------------------------------------------------- ------------------- ------------------ -------------------- --------------
Common stock, $.001 par value                           1,360,000(1)       $7.03(2)            $9,560,800.00      $1,023.01

-------------------------------------------------- ------------------- ------------------ -------------------- --------------
Common stock, $.001 par value, issuable upon              107,500(4)       $5.00(3)              $537,500.00         $57.51
exercise of Class A warrants
-------------------------------------------------- ------------------- ------------------ -------------------- --------------
Common stock, $.001 par value, issuable upon              107,500(5)       $5.50(3)              $591,250.00         $63.26
exercise of Class B warrants
-------------------------------------------------- ------------------- ------------------ -------------------- --------------

-------------------------------------------------- ------------------- ------------------ -------------------- --------------
                                           Total        1,575,000                              $10,689,550.00      $1,143.78
-------------------------------------------------- ------------------- ------------------ -------------------- --------------
(1)  Includes  (i) 860,000  shares of our common  stock  issued  pursuant to our
February  2006 private  placement,  and (ii) 500,000  shares of our common stock
issued  upon  the  exercise  of stock  options  in 2005  which  were  issued  as
compensation for consulting  services performed on our behalf, each of which may
be offered pursuant to this registration statement.

(2)  Estimated  solely for  purposes  of  calculating  the  registration  fee in
accordance with Rule 457(c) under the Securities Act of 1933,  using the average
of the high and low price as reported on the Over-The-Counter  Bulletin Board on
March 8, 2006, which was $7.03 per share.

(3)  Estimated  solely for  purposes  of  calculating  the  registration  fee in
accordance with Rule 457(g) under the Securities Act of 1933, using the exercise
price  of the  Class  A and  Class  B  warrants,  which  are  $5.00  and  $5.50,
respectively.

(4) Includes shares of our common stock underlying Class A warrants  exercisable
at $5.00 per share issued to the selling stockholders.

(5) Includes shares of our common stock underlying Class B warrants exercisable
at $5.50 per share issued to the selling stockholders.

The Registrant hereby amends this  Registration  Statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this Registration  Statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933  or  until  the  Registration  Statement  shall  become
effective  on such  date  as the  Securities  and  Exchange  Commission,  acting
pursuant to said Section 8(a), may determine.

                                       2
SUBJECT TO COMPLETION, DATED MARCH 9, 2006

PRELIMINARY PROSPECTUS

                               [GRAPHIC OMMITED]
                              AMERITYRE CORPORATION

                     Up to 1,575,000 Shares of Common Stock

This  prospectus  relates to the  resale by the  selling  stockholders  of up to
1,575,000  shares of our common  stock,  including  up to (i) 860,000  shares of
common  stock  issued  pursuant to our February  2006  private  placement,  (ii)
500,000  shares of our common stock issued upon the exercise of stock options in
2005,  (iii)  107,500  shares of common stock  issuable upon the exercise of our
Class A warrants,  and (iv)  107,500  shares of common stock  issuable  upon the
exercise of our Class B warrants.  1,075,000  shares  being  registered  in this
prospectus  relate to our  February  2006  private  placement of an aggregate of
107,500  units at a purchase  price of $36.00 per unit.  Each unit consists of 8
shares of our common stock, a Class A warrant to purchase of one share of common
stock for 3 years from the date of issuance  at an  exercise  price of $5.00 per
share, and a Class B warrant for the purchase of one share of common stock at an
exercise price of $5.50, exercisable for 5 years from the date of issuance.

The  selling  stockholders  may  sell  common  stock  from  time  to time in the
principal market on which the stock is traded at the prevailing  market price or
in  negotiated  transactions.  We will pay the  expenses  of  registering  these
shares.  We will not receive any portion of the proceeds  from the sale of these
shares.  See "Plan of  Distribution"  on page 18.  However,  we will receive the
exercise  price of the Class A and Class B warrants in the  aggregate  amount of
$537,500 and $591,250,  respectively, if such warrants are exercised and if such
warrants are exercised for cash.

Our common  stock is quoted on the  Over-The-Counter  Bulletin  Board  under the
symbol  "AMTY".  The last reported  sales price per share of our common stock as
reported by the Over-The-Counter Bulletin Board on March 8, 2006, was $7.03.

Investing in these  securities  involves  significant  risks. See "Risk Factors"
beginning on page 9.

Neither  the  Securities  and  Exchange  Commission  nor  any  state  securities
commission has approved or disapproved of these securities or determined if this
Prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.

                 The date of this prospectus is ________, 2006.

The  information  in this  Prospectus  is not complete and may be changed.  This
Prospectus is included in the Registration Statement that was filed by Amerityre
Corporation   with  the   Securities  and  Exchange   Commission.   The  selling
stockholders  may not sell these  securities  until the  registration  statement
becomes effective.  This Prospectus is not an offer to sell these securities and
is not  soliciting an offer to buy these  securities in any state where the sale
is not permitted.

                                       3
TABLE OF CONTENTS

                                                                            Page

Prospectus Summary                                                             6
Supplementary Financial Information                                            8
Risk Factors                                                                   9
Use of Proceeds                                                               14
Selling Shareholders                                                          14
Plan of Distribution                                                          18
Indemnification For Securities Act Liabilities                                20
Description of Securities                                                     20
Legal Matters                                                                 20
Experts                                                                       20
Change in Accountants                                                         21
Description of Business                                                       22
Description of Properties                                                     25
Legal Proceedings                                                             25
Market for Common Equity and Related Stockholder Matters                      25
Selected Consolidated Historical Financial Data                               27
Management's Discussion and Analysis                                          29
Quantitative and Qualitative Disclosures About Market Risk                    39
Management                                                                    39
Executive Compensation                                                        42
Security Ownership of Certain Beneficial Owners and Management                47
Certain Relationships and Related Transactions                                49
Where You Can Find More Information                                           49
Index to Consolidated Financial Statements                                    50

                                       4
IMPORTANT NOTICE TO READERS

You should rely only on the information  contained in this  prospectus.  We have
not  authorized  any other person to provide you with  different  or  additional
information.  If anyone  provides you with different or additional  information,
you should not rely on it. The selling  stockholders  are offering to sell,  and
seeking offers to buy,  shares of our common stock only in  jurisdictions  where
such offers and sales are  permitted.  The  information  in this  prospectus  is
accurate  only as of the  date on the  front  cover,  regardless  of the time of
delivery of this  prospectus or of any sale of shares of our common  stock.  Our
business,  financial  condition,  results of  operations  and prospects may have
changed since this date and may change again.

For investors  outside the United  States:  We have not done anything that would
permit this  offering or possession or  distribution  of this  prospectus in any
jurisdiction where action for that purpose is required, other than in the United
States.  You  are  required  to  inform  yourselves  about  and to  observe  any
restrictions relating to this offering and the distribution of this prospectus.

                                       5
PART I.

                               PROSPECTUS SUMMARY

The  following  summary  highlights  selected  information   contained  in  this
prospectus.  This  summary  does not  contain  all the  information  you  should
consider  before  investing  in the  securities.  Before  making  an  investment
decision,  you should read the entire prospectus carefully,  including the "risk
factors"  section,  the  financial  statements  and the  notes to the  financial
statements.

                             AMERITYRE CORPORATION

We were incorporated as a Nevada  corporation on January 30, 1995 under the name
American  Tire  Corporation  and changed our name to  Amerityre  Corporation  in
December  1999.  We own certain  proprietary  and  nonproprietary  technology to
manufacture  tires  from  polyurethane  foam  and  polyurethane   elastomer.  We
currently produce Flatfree  polyurethane  foam tires for bicycles,  wheelchairs,
lawn and garden products,  and outdoor power equipment  products.  Recently,  we
have been engaged in the development of polyurethane elastomer tires for highway
and agricultural use based on our proprietary technology and various methods and
processes  relating to the manufacturing of those tires from liquid  elastomers.
We have  produced  a limited  number  of  prototype  polyurethane  car tires and
conducted independent  laboratory testing to demonstrate that these tires comply
with existing United States safety standards for new-pneumatic tires [FMVSS 109]
and the proposed revisions to those standards,  FMVSS 139, which takes effect in
July 2007.

Pursuant to this prospectus,  we are registering  1,575,000 shares of our common
stock,  including up to (i) 860,000 shares of common stock,  (ii) 107,500 shares
of common  stock  issuable  upon the  exercise  of our Class A  warrants,  (iii)
107,500  shares  of  common  stock  issuable  upon the  exercise  of our Class B
warrants,  and (iv) 500,000  shares of our common stock issued upon the exercise
of stock options in 2005, each for resale by our selling stockholders identified
on page 14 of this  prospectus.  These  shares  may be  offered  by the  selling
stockholders through public or private transactions, at prevailing market prices
or at privately  negotiated  prices.  See "Plan of Distribution" on page 18. Our
common stock is quoted on the  Over-the-Counter  Bulletin Board under the symbol
"AMTY."

We are incorporated in the state of Nevada and our corporate offices are located
at 1501 Industrial  Road,  Boulder City, NV 89005,  and our telephone  number is
(702) 294-2689.  General  information,  financial news releases and filings with
the Securities and Exchange Commission, including annual reports on Form 10-KSB,
quarterly reports on Form 10-Q and Form 10-QSB, current reports on Form 8-K, and
all  amendments to these reports are available  free of charge on our website at
www.amerityre.com.  We are not  including the  information  contained on our web
site as part of, or incorporating it by reference into, this prospectus.
The Offering
Common stock outstanding before the offering...............    20,977,460 shares as of March 8, 2006
Common stock offered by selling stockholders...............    Up to 1,575,000  shares,  assuming  full
                                                               exercise  of  outstanding  common  stock
                                                               purchase   warrants   by   the   selling
                                                               stockholders.   This  number  represents
                                                               approximately   7.51%  of  our   current
                                                               outstanding  stock  and  includes  up to
                                                               215,000  shares of common stock issuable
                                                               pursuant   to   Class  A  and   Class  B
                                                               warrants.
Common stock to be outstanding after the offering............  Up to 21,192,460 shares
Use of proceeds..............................................  We will not  receive any  proceeds  from
                                                               the sale of the common stock  hereunder.
                                                               We will, however, receive the sale price
                                                               of any common  stock we sell for cash to
                                                               the selling  stockholders  upon exercise
                                                               of Class A and Class B  warrants  in the
                                                               aggregate   amount   of   $537,500   and

                                       6
$591,250, respectively, if such warrants
                                                               are  exercised  and if such warrants are
                                                               exercised   for   cash.   See   "Use  of
                                                               Proceeds" for a complete description.
OTCBB Symbol.................................................  AMTY
The  above  information  regarding  common  stock to be  outstanding  after  the
offering is based on 20,977,460  shares of common stock  outstanding as of March
8,  2006  and  assumes  the  subsequent  exercise  of  warrants  by our  selling
stockholders,  although  there can be no  assurances  that any warrants  will be
exercised.

FEBRUARY 2006 PRIVATE PLACEMENT

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement  for  $3,870,000  in offering  proceeds.  We sold 107,500 units of our
securities  at a purchase  price of $36.00  per unit.  Each unit  consists  of 8
shares of our common stock, $0.001 par value, a Class A warrant for the purchase
of one share of common stock at an exercise price of $5.00  exercisable  for a 3
year period, and a Class B Warrant for the purchase of one share of common stock
at an  exercise  price of $5.50  exercisable  for a 5 year  period.  The Class A
Warrants and Class B Warrants may also be exercised  through a cashless exercise
based on the difference between the market price on the date of exercise and the
exercise price. The exercise prices of the Class A Warrants and Class B Warrants
are subject to adjustment in certain events, including, without limitation, upon
our  consolidation,  merger or sale of all or substantially all of our assets, a
reclassification  of our common stock, or any stock splits or combinations  with
respect to the common stock.

Purchasers of the units have been granted registration rights in connection with
the  private  placement.  We have  agreed  to use  our  best  efforts  to file a
registration  statement  with the SEC within 45 days after the Closing  Date and
cause the registration  statement to be declared effective by the SEC within 120
days after the Closing Date (if there are no comments  from the SEC) or 180 days
(if  comments  are  received  from the SEC) (the  "Effective  Date") in order to
register  the shares of common stock  underlying  the units sold in the offering
(the "Registrable  Securities") for resale and distribution by the investors. We
are  registering  1,075,000  shares of common stock which  represents  the total
number of shares of common stock plus the shares of common stock  issuable  upon
exercise of the Class A and Class B Warrants.  The Registrable  Securities shall
be reserved and set aside exclusively for the benefit of each investor.

The Class A and Class B Warrants  are subject to  redemption  by us. We have the
right to redeem  either the Class A or Class B Warrants  beginning  90 days from
the Effective Date of the registration  statement,  if at any time following the
Effective  Date,  the  average  closing  bid price for the  common  stock in the
over-the-counter market is at least $5.50 per share (with respect to the Class A
Warrants) or $6.05 per share (with respect to the Class B Warrants),  for the 20
consecutive  trading day period  ending not more than 15 days prior to notice of
redemption of the Class A and Class B Warrants.  Our right to redeem the Class A
and  Class B  Warrants  requires  us to  give  the  holders  written  notice  of
redemption of not less than 30 days,  and is subject to the right of the holders
of the Class A and Class B Warrants to exercise the same in accordance  with the
terms hereof during the redemption period. The redemption price for each Class A
and Class B Warrant is $0.10 per share.

We claim an exemption from the  registration  requirements of the Securities Act
of 1933, as amended (the "Act"),  for the private  placement of these securities
pursuant to Section 4(2) of the Act and/or  Regulation D promulgated  thereunder
since,  among other things,  the transaction did not involve a public  offering,
the investors were accredited investors and/or qualified  institutional  buyers,
the  investors  had access to  information  about us and their  investment,  the
investors  took  the  securities  for  investment  and not  resale,  and we took
appropriate measures to restrict the transfer of the securities.

CONSULTANT STOCK OPTIONS

Furthermore,  in this  prospectus  we are  registering  an  aggregate of 500,000
shares of common  stock  issued  upon the  exercise  of  options  included  in a
marketing  and  advertising  advisory  consulting  agreement  with Focus Sales &
Marketing,  LLC,  dated August 1, 2000,  that  included  piggyback  registration
rights.  The options vested on January 31, 2001 and were exercisable  until July
31,  2005 at an exercise  price of $3.00 per share.  The options and the related
registration  rights were  transferable.  All of the options were transferred by
Focus  Sales & Marketing  in private  transactions  to the  various  individuals
listed  in the  selling  shareholders  table as  receiving  shares  through  the
exercise of options.  All of the options were  exercised by the  transferees  in
2005.

                                       7
SUPPLEMENTARY FINANCIAL INFORMATION

                  Summarized unaudited quarterly financial data
 for Fiscal 2005 and 2004 are as follows (in thousands, except per share data):

--------------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 2005                             First Quarter     Second Quarter       Third Quarter      Fourth Quarter
--------------------------------------------------------------------------------------------------------------------------------
Total Sales                                             $   340          $   304              $   487             $   551
                                                    ----------------------------------------------------------------------------

Net loss                                                $(7,156)         $  (858)             $  (989)            $(1,070)
                                                    ============================================================================

Basic loss per share                                    $ (0.38)         $ (0.05)             $ (0.05)            $ (0.05)
                                                    ============================================================================

--------------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 2004                             First Quarter     Second Quarter       Third Quarter      Fourth Quarter
--------------------------------------------------------------------------------------------------------------------------------
Total Sales                                             $   349          $   235              $   449             $   387
                                                    ----------------------------------------------------------------------------

Net loss                                                $  (780)         $(1,037)             $(1,097)            $(1,809)
                                                    ============================================================================

Basic loss per share                                    $ (0.04)         $ (0.06)             $ (0.06)            $ (0.10)
                                                    ============================================================================
8
RISK FACTORS

An  investment  in our common stock  involves a high degree of risk.  You should
consider  carefully the following  information about these risks,  together with
the other information contained or incorporated by reference in this prospectus,
before you decide to invest.  If any of the following risks actually occur,  our
business,  financial  condition or results of operations would likely suffer. In
this case,  the market  price of our common stock could  decline,  and you could
lose all or part of your investment.

                          RISKS RELATED TO OUR BUSINESS

HISTORICALLY,  WE HAVE LOST  MONEY FROM  OPERATIONS  AND OUR  FINANCIALS  DO NOT
INCLUDE  PROVISIONS  FOR ANY  CONTINGENCY,  UNEXPECTED  EXPENSES OR INCREASES IN
COSTS THAT MAY ARISE.

Since  inception we have been able to cover our  operating  losses from accounts
receivables and the sale of our securities.

Our business  operations  and plans could be adversely  affected in the event we
need additional financing and are unable to obtain such funding when needed.

It is possible that our available short-term assets and anticipated revenues may
not be sufficient to meet our operating expenses,  business expansion plans, and
capital expenditures for the next twelve months.  Insufficient funds may prevent
us from  implementing  our business  strategy or may require us to delay,  scale
back  or  eliminate  certain  opportunities  for  the  commercialization  of our
technology and products.  If we cannot generate  adequate sales of our products,
or increase our revenues  through  licensing of our  technology  or other means,
then we may be forced to cease operations.

In order to succeed  as a  company,  we must  continue  to develop  commercially
viable products and sell adequate  quantities of products at a high enough price
to generate a profit.  We may not accomplish  these  objectives.  Even if we are
successful in increasing our revenue base, a number of factors may affect future
sales of our product.  These factors include:  (i) whether  competitors  produce
alternative or superior products;  and (ii) whether the cost of implementing our
products is competitive in the marketplace.

In addition,  we are proposing to attempt to increase revenues through licensing
our  technology  and  manufacturing  rights,  and offering  contract  design and
engineering services.  If these proposals are not viable in the marketplace,  we
may not generate any revenues from these efforts.

BECAUSE WE HAVE  LIMITED  EXPERIENCE,  WE MAY BE UNABLE TO  SUCCESSFULLY  MANAGE
PLANNED  GROWTH AS WE COMPLETE  THE  TRANSITION  FROM A  TECHNOLOGY  DEVELOPMENT
COMPANY TO A LICENSING MANUFACTURING AND MARKETING COMPANY.

We have limited experience in the commercial  manufacturing and marketing arena,
limited  product sales and marketing  experience,  and limited staff and support
systems,  especially  compared to competitors in the tire industry.  Although we
have hired consultants to assist us in this transition  period,  there can be no
assurance  that we will properly  ascertain or assess any and all risks inherent
in the industry.

In addition,  our success depends, in part, on our ability to license market and
distribute our products effectively.  We have limited experience in the sale and
marketing  of our lawn and garden  products and little to no  experience  in the
marketing  and  sale of our  proposed  highway  use  products.  We have  limited
manufacturing,  marketing  and  distribution  capabilities  and we will  need to
retain  consultants  that have  contacts  in and  understand  the tire  industry
marketplace.  We may not be  successful  in entering  into new  licensing and or
marketing arrangements, whether engaging independent distributors or recruiting,
training and retaining a larger internal  marketing staff and sales force. If we
do not  meet  the  challenges  posed by our  planned  licensing,  manufacturing,
distribution and sales growth, the company may fail.

                                       9
BECAUSE OF OUR RELIANCE ON TRADE SECRETS, WE MAY BE AT RISK FOR POTENTIAL CLAIMS
OR LITIGATION RELATED TO OUR TECHNOLOGY.

In certain  cases,  where the  disclosure  of  information  required to obtain a
patent would divulge  proprietary data, we may choose not to patent parts of the
proprietary  technology and processes  which we have developed or may develop in
the future and rely on trade secrets to protect the  proprietary  technology and
processes.  The  protection of  proprietary  technology  through claims of trade
secret  status has been the  subject of  increasing  claims  and  litigation  by
various  companies  both in order to protect  proprietary  rights as well as for
competitive  reasons  even where  proprietary  claims are  unsubstantiated.  The
prosecution  of  proprietary  claims or the defense of such claims is costly and
uncertain given the  uncertainty and rapid  development of the principles of law
pertaining  to this area. We may also be subject to claims by other parties with
regard  to the  use of  technology  information  and  data  that  may be  deemed
proprietary to others.

OUR BUSINESS  DEPENDS ON THE  PROTECTION  OF OUR  INTELLECTUAL  PROPERTY AND MAY
SUFFER IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY.

We have  been  granted  several  U.S.  patents  and  have  several  U.S.  patent
applications pending relating to certain aspects of our manufacturing technology
and use of  polyurethane  to make tires.  We believe  that our ability to either
manufacture products and/or license our technology is substantially dependent on
the validity and  enforcement  of these patents and patents  pending.  We cannot
provide  assurance  that our patents will not be  invalidated,  circumvented  or
challenged,  that the rights  granted under the patents will give us competitive
advantages or that our patent applications will be granted.

PROPOSED  NEW  PRODUCTS  FOR  HIGHWAY USE MUST MEET  SAFETY  STANDARDS  PRIOR TO
MARKETING WHICH COULD DELAY ANTICIPATED REVENUES AND INCREASE EXPENSES.

Our proposed new products for highway use must meet  applicable  federal  safety
standards  through various testing  processes.  Our prototype  polyurethane  car
tires and proposed temporary spare tire are both subject to such standards.  The
testing  procedures  involve  submission  of products  to  approved  independent
testing  facilities,  a  process  that  may  entail  both  significant  time and
significant  expense.  Therefore,  the timing of new  product  placement  in the
market may be hard to determine,  additional  research,  development and testing
expenses may be incurred,  and we may not receive revenues from such products as
planned.  Such delays and potential  additional  expenses  could have a negative
impact on cash flows and business planning.

BECAUSE OUR  PROPOSED  HIGHWAY USE  PRODUCTS  ARE DERIVED  FROM NEW  TECHNOLOGY,
PRODUCT LIABILITY  INSURANCE COSTS WILL LIKELY INCREASE AND WE MAY BE EXPOSED TO
PRODUCT LIABILITY RISKS THAT COULD ADVERSELY AFFECT PROFITABILITY.

Despite prior  testing and approval of new highway use  products,  such products
may subject us to unforeseen liabilities because the technology is new and there
is no extensive  history of use.  Introduction  of such new  products  will most
likely increase product liability premiums and defense of potential claims could
increase  insurance  cost even further  which could  substantially  increase our
expenses.

SIGNIFICANT  INCREASES IN THE PRICE OF STEEL AND OTHER RAW MATERIALS USED IN OUR
PRODUCTS COULD INCREASE OUR PRODUCTION  COSTS AND DECREASE OUR PROFIT MARGINS OR
MAKE OUR PRODUCTS LESS COMPETITIVE IN THE MARKETPLACE DUE TO PRICE INCREASES.

Over  the  last  year,  we have  experienced  an  increase  in the cost of wheel
components for our tire/wheel assemblies due to the increasing cost of steel. We
have not passed the  additional  cost of the steel  wheel  components  on to our
customers,  however,  if the cost of steel wheel  components  continues  to rise
during the next  twelve  months,  we may elect to amend our  product  pricing to
reflect the increase in component costs.  Also, during the last six months we've
seen a 14%  increase in our chemical  pricing and there is no guarantee  pricing
will remain at current  levels.  Although we continually  seek reductions in raw
material  and  component  costs from our  suppliers,  and even seek  alternative
suppliers in some cases,  large price  increases may have to be passed on to our
customers and could adversely affect our sales.

                                       10
RISKS RELATED TO OUR CURRENT FINANCING ARRANGEMENT

THERE ARE A LARGE NUMBER OF SHARES AND SHARES  UNDERLYING  WARRANTS  THAT MAY BE
AVAILABLE FOR FUTURE SALE UNDER THIS PROSPECTUS AND THE SALE OF THESE SHARES MAY
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.

As of the date of this prospectus,  we had  approximately  20,977,460  shares of
common stock issued and  outstanding.  We are  registering  1,360,000  shares of
common  stock  previously  issued  to  the  selling  stockholders  and  we  have
outstanding  warrants to purchase 215,000 shares of our common stock,  which are
being  registered in this  prospectus.  All of the shares,  including all of the
shares issuable upon exercise of our warrants,  are being registered  hereunder.
Upon registration such shares may be sold without restriction. The sale of these
shares may adversely affect the market price of our common stock.

THE  ISSUANCE OF SHARES AND  EXERCISE OF WARRANTS  MAY RESULT IN DILUTION TO THE
INTERESTS OF OTHER STOCKHOLDERS.

The  issuance of shares and  exercise of warrants  may result in dilution to the
interests of other  stockholders  since the selling  stockholders may ultimately
receive and sell the full amount issuable under the warrants.

THE ISSUANCE OF SHARES AND EXERCISE OF WARRANTS COULD  ENCOURAGE  SHORT SALES BY
THIRD PARTIES,  WHICH COULD  CONTRIBUTE TO THE FUTURE DECLINE OF OUR STOCK PRICE
AND MATERIALLY DILUTE EXISTING STOCKHOLDERS' EQUITY AND VOTING RIGHTS.

The  issuance of shares and  exercise of warrants  have the  potential  to cause
downward  pressure on the price of our common stock.  This is  particularly  the
case if the shares being placed into the market  exceed the market's  ability to
absorb  the  increased  number of shares of  stock.  Such an event  could  place
further  downward  pressure on the price of our common stock,  which presents an
opportunity  to short sellers and others to contribute to the future  decline of
our stock price.  If there are significant  short sales of our stock,  the price
decline  that would  result  from this  activity  will cause the share  price to
decline  more so,  which,  in turn,  may cause long holders of the stock to sell
their shares thereby  contributing to sales of stock in the market.  If there is
an imbalance on the sell side of the market for the stock,  our stock price will
decline.

                        RISKS RELATED TO OUR COMMON STOCK

FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE.

Some of our outstanding restricted shares are eligible for resale by the holders
under Rule 144 and the sale or even the  perception  that a sale of such  shares
may occur could cause our stock price to decline.  We are unable to estimate the
amount,  timing, or nature of future sales of outstanding  restricted shares. If
we issue  additional  shares of common  stock in a  private  financing  under an
exemption from registration, then those shares will constitute restricted shares
as defined in Rule 144 under the Securities Act. The restricted  shares may only
be sold if they are registered under the Securities Act, or sold under Rule 144,
or another exemption from registration under the Securities Act.

In  addition,  we may issue stock in a registered  offering or in a  transaction
that would require registration of the underlying shares. In either case, once a
registration  was  effective,  there  could be an  increased  number  of  shares
available for sale in the public market which could reduce the market price.

Anticipated fund-raising activities include possible equity placements that will
dilute current shareholders.

WE ARE AUTHORIZED TO ISSUE UP TO 40,000,000 SHARES OF COMMON STOCK. OUR BOARD OF
DIRECTORS HAS THE AUTHORITY TO ISSUE THE AUTHORIZED  BUT UNISSUED  SHARES OF OUR
COMMON STOCK WITHOUT ACTION BY THE SHAREHOLDERS.

We have authorized  5,000,000 shares of preferred  stock.  Although no preferred
shares have been issued to date,  the board of  directors  has the  authority to

                                       11
determine  rights and privileges  respecting  voting  rights,  preferences as to
dividends and liquidation,  and conversion  rights with respect to any preferred
shares issued,  all of which  designations  may be superior to those attached to
the common  stock.  The board of directors  has the authority to issue up to the
entire amount of the authorized but unissued  shares of preferred  stock without
action by the shareholders.

Any  such  issuances,  whether  of  common  stock  or some  designated  class of
preferred shares,  will reduce the percentage  ownership and may dilute the book
value of the shares held by existing shareholders.

OUR STOCK PRICE CAN BE EXTREMELY VOLATILE.

Our common stock is traded on the OTC Bulletin Board.  There can be no assurance
that an active public  market will  continue for the common  stock,  or that the
market price for the common stock will not decline below its current price. Such
price may be influenced by many factors, including, but not limited to, investor
perception  of us and our industry and general  economic and market  conditions.
The trading price of the common stock could be subject to wide  fluctuations  in
response to  announcements  of our  business  developments  or our  competitors,
quarterly  variations  in operating  results,  and other  events or factors.  In
addition,  stock markets have  experienced  extreme  price  volatility in recent
years.  This  volatility  has had a  substantial  effect on the market prices of
companies,  at times for reasons unrelated to their operating performance.  Such
broad market fluctuations may adversely affect the price of our common stock.

WE DO NOT EXPECT TO PAY DIVIDENDS.

We have not paid dividends  since  inception on our common stock,  and we do not
contemplate  paying  dividends in the foreseeable  future on our common stock in
order to use all of our earnings,  if any, to finance  expansion of our business
plans.

                                       12
CAUTION ABOUT FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus constitute  forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 (the "Securities
Act") and Section 21E of the Securities  Exchange Act of 1934.  These statements
relate to future events or our future  financial  performance  and involve known
and unknown risks,  uncertainties  and other factors that may cause our business
or  our  industry's   actual  results,   levels  of  activity,   performance  or
achievements  to be materially  different from those expressed or implied by any
forward-looking statements.  Such statements include, in particular,  statements
about our plans, strategies,  prospects,  changes and trends in our business and
the  markets  in  which we  operate  as  described  in this  prospectus  and any
amendment or  supplement  to this  prospectus.  In some cases,  you can identify
forward-looking  statements  by  terminology  such as "may,"  "could,"  "would,"
"should,"  "expect,"  "plan,"  "anticipate,"  "intend,"  "believe,"  "estimate,"
"forecast,"  "predict," "propose,"  "potential" or "continue" or the negative of
those  terms  or  other  comparable  terminology.   These  statements  are  only
predictions.

Important  factors that could cause actual results to differ materially from our
forward-looking  statements  are set  forth in the  section  of this  prospectus
entitled  "Risk  Factors"  and in the  section  entitled  "Risk  Factors" in any
amendment or  supplement to this  prospectus.  These factors are not intended to
represent a complete list of the general or specific factors that may affect us.
It should be recognized that other factors,  including  general economic factors
and  business  strategies,  may be  significant,  now or in the future,  and the
factors  set forth in this  prospectus  may affect us to a greater  extent  than
indicated.  All forward-looking  statements attributable to us or persons acting
on our  behalf are  expressly  qualified  in their  entirety  by the  cautionary
statements set forth in this prospectus. Except as required by law, we undertake
no obligation to update any  forward-looking  statement,  whether as a result of
new information, future events or otherwise.

We caution the reader that the risk factors  contained in or  incorporated  into
this  prospectus  may not be  exhaustive.  We operate in a continually  changing
business environment,  and new risk factors emerge from time to time. Management
cannot predict these new risk factors,  nor can it assess the impact, if any, of
these new risk  factors on our  business or the extent to which any  factor,  or
combination of factors, may cause actual results to differ materially from those
projected  in  any  forward-looking  statements.  Accordingly,   forward-looking
statements should not be relied upon as a prediction of actual results.

                                       13
USE OF PROCEEDS

We will not receive any portion of the proceeds  from the sale of these  shares.
However, we will receive the exercise price of the Class A and Class B warrants,
if exercised, in the aggregate amount of $537,500 and $591,250, respectively, if
such  warrants are  exercised  and if such  warrants are  exercised for cash. We
intend to utilize such proceeds for working capital purposes.

                              SELLING SHAREHOLDERS

We are filing this registration statement to register the resale of an aggregate
of 1,575,000  shares of our common stock,  including up to (i) 860,000 shares of
common  stock  issued  pursuant to our February  2006  private  placement,  (ii)
500,000  shares of our common stock issued upon the exercise of stock options in
2005 which were issued as compensation for consulting  services performed on our
behalf (iii)  107,500  shares of common stock  issuable upon the exercise of our
Class A warrants,  and (iv)  107,500  shares of common stock  issuable  upon the
exercise of our Class B warrants.

FEBRUARY 2006 PRIVATE PLACEMENT

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement  for  $3,870,000  in offering  proceeds.  We sold 107,500 units of our
securities  at a purchase  price of $36.00  per unit.  Each unit  consists  of 8
shares of our common stock, $0.001 par value, a Class A warrant for the purchase
of one share of common stock at an exercise price of $5.00  exercisable  for a 3
year period, and a Class B Warrant for the purchase of one share of common stock
at an  exercise  price of $5.50  exercisable  for a 5 year  period.  The Class A
Warrants and Class B Warrants may also be exercised  through a cashless exercise
based on the difference between the market price on the date of exercise and the
exercise price. The exercise prices of the Class A Warrants and Class B Warrants
are subject to adjustment in certain events, including, without limitation, upon
our  consolidation,  merger or sale of all or substantially all of our assets, a
reclassification  of our common stock, or any stock splits or combinations  with
respect to the common stock.

Purchasers of the units have been granted registration rights in connection with
the  private  placement.  We have  agreed  to use  our  best  efforts  to file a
registration  statement  with the SEC within 45 days after the Closing  Date and
cause the registration  statement to be declared effective by the SEC within 120
days after the Closing Date (if there are no comments  from the SEC) or 180 days
(if  comments  are  received  from the SEC) (the  "Effective  Date") in order to
register  the shares of common stock  underlying  the units sold in the offering
(the "Registrable  Securities") for resale and distribution by the investors. We
are  registering  1,075,000  shares of common stock which  represents  the total
number of shares of common stock plus the shares of common stock  issuable  upon
exercise of the Class A and Class B Warrants.  The Registrable  Securities shall
be reserved and set aside exclusively for the benefit of each investor.

The Class A and Class B Warrants  are subject to  redemption  by us. We have the
right to redeem  either the Class A or Class B Warrants  beginning  90 days from
the Effective Date of the registration  statement,  if at any time following the
Effective  Date,  the  average  closing  bid price for the  common  stock in the
over-the-counter market is at least $5.50 per share (with respect to the Class A
Warrants) or $6.05 per share (with respect to the Class B Warrants),  for the 20
consecutive  trading day period  ending not more than 15 days prior to notice of
redemption of the Class A and Class B Warrants.  Our right to redeem the Class A
and  Class B  Warrants  requires  us to  give  the  holders  written  notice  of
redemption of not less than 30 days,  and is subject to the right of the holders
of the Class A and Class B Warrants to exercise the same in accordance  with the
terms hereof during the redemption period. The redemption price for each Class A
and Class B Warrant is $0.10 per share.

We claim an exemption from the  registration  requirements of the Securities Act
of 1933, as amended (the "Act"),  for the private  placement of these securities
pursuant to Section 4(2) of the Act and/or  Regulation D promulgated  thereunder
since,  among other things,  the transaction did not involve a public  offering,
the investors were accredited investors and/or qualified  institutional  buyers,
the  investors  had access to  information  about us and their  investment,  the
investors  took  the  securities  for  investment  and not  resale,  and we took
appropriate measures to restrict the transfer of the securities.

                                       14
CONSULTANT STOCK OPTIONS

Furthermore,  in this  prospectus  we are  registering  an  aggregate of 500,000
shares of common  stock  issued  upon the  exercise  of  options  included  in a
marketing  and  advertising  advisory  consulting  agreement  with Focus Sales &
Marketing,  LLC,  dated August 1, 2000,  that  included  piggyback  registration
rights.  The options vested on January 31, 2001 and were exercisable  until July
31,  2005 at an exercise  price of $3.00 per share.  The options and the related
registration  rights were  transferable.  All of the options were transferred by
Focus  Sales & Marketing  in private  transactions  to the  various  individuals
listed  in the  selling  shareholders  table as  receiving  shares  through  the
exercise of options.  All of the options were  exercised by the  transferees  in
2005.

Ownership Table

The  following  table sets  forth the  common  stock  ownership  of the  selling
stockholder as of March 8, 2006,  including the number of shares of common stock
issuable to the selling  shareholder  upon the exercise of warrants  held by the
selling shareholder. Other than as set forth in the following table, the selling
shareholder  has not held any  position  or  office  or had any  other  material
relationship  with us or any of our  predecessors or affiliates  within the past
three years. The selling  shareholder may sell all, some or none of their shares
in this offering. See "Plan of Distribution."

The  number  and  percentage  of  shares  beneficially  owned is  determined  in
accordance  with Rule  13d-3 of the  Securities  Exchange  Act of 1934,  and the
information is not necessarily  indicative of beneficial ownership for any other
purpose.  Under such rule,  beneficial ownership includes any shares as to which
the selling  shareholder has sole or shared voting power or investment power and
also any shares,  which the selling  shareholder has the right to acquire within
60 days. The information as to the number of shares of our common stock owned by
the  selling  security  holder  is based  upon our  books  and  records  and the
information provided by our transfer agent.

We may amend or  supplement  this  Prospectus,  from time to time, to update the
disclosures set forth in the following  table.  Because the selling  shareholder
identified  in the table may sell some or all of the shares  owned by them which
are included in this Prospectus,  and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of the shares, no
estimate  can be given as to the number of shares  available  for resale  hereby
that will be held by the selling  shareholder upon termination of this offering.
Therefore,  we have  assumed for the  purposes of the  following  table that the
selling  shareholder  will sell all of the shares  owned  beneficially  by them,
which are covered by this Prospectus.
Name of selling security            Shares of Common     Number of Shares         Percentage of       Beneficial       Percentage of
holder                              Stock Included in      Beneficially           Common Stock     Ownership After     Common Stock
                                     Prospectus (1)        Owned Before         Owned Before the         the            Owned After
                                                             Offering               Offering         Offering (2)      Offering (2)
WAJ Enterprises LLC (3)                 397,640               697,790                 3.33%            300,150              1.43%

Norman H. Tregenza IV Trust,              7,000                 7,000                  *                     0               0
dated 9/26/86, Richard R.
Keller, Trustee (4)

Richard R. Keller (5)                     7,000                14,500                  *                 7,500               *

Howard Kaneff (6)                        13,900                13,900                  *                     0               0

George Paidas (7)                         5,000                10,000                  *                 5,000               *

Neale F. Hooley (8)                      10,000                50,000                  *                40,000               *

Wesley G. Sprunk (9)                     33,890               157,442                  *               123,552               *

Marsha Crouzet (10)                      21,000                33,500                  *                12,500               *

Giant Trading, Inc. (11)                 27,780                33,280                  *                 5,500               *

                                       15
Denis D. Taggart (12)                    13,890                59,890                  *                46,000               *

The Catalyst Master Fund (13)            62,550                62,550                  *                     0               0

Fleet Maritime, Inc. (14)               117,150               117,150                  *                     0               0

Chamberlin Investments Ltd.              61,410                61,410                  *                     0               0
(15)
DCM Limited (16)                          8,750                 8,750                  *                     0               0

Farvane Limited (17)                      5,690                 5,690                  *                     0               0

HSBC Guyerzeller Trust                   44,450                44,450                  *                     0               0
Company, as Trustee of The
Green Forest Trust c/o HSBC
Guyerzeller Bank AG (18)

Joseph J. Grano, Jr. (19)               131,900             1,481,900                 7.06%           1,350,00              6.44%

Concetta B. Kristan (20)                  7,000                 7,000                  *                     0               0

Cumulus Investors, LLC (21)             138,890               138,890                  *                     0               0

John Reinke (22)                         13,900                18,400                  *                 4,500               *

Steven G. Earl (23)                      11,000                11,000                  *                     0               0

David P. and Peggy Martin (24)           10,000               116,000                  *                106,00               *

Vanguard Fiduciary Trust                 30,000                50,000                  *                20,000               *
Company, as Custodian FBO IRA
FBO Thomas P. Hollo
(25)
Whitney Small Cap Opportunity           138,890               138,890                  *                     0               0
Fund, L.P. (26)

Sheryl J. Phillips (27)                  10,070                10,070                  *                     0               0

Gilbert D. Moyle  (28)                   12,500                90,000                  *                77,500               *

Larry Clark (29)                         30,000                55,000                  *                25,000               *

George H. Tissen and Ellen M.            60,000                60,000                  *                     0               0
Tissen, JTWROS (29)

Geoffrey E. Schwan (29)                  20,000                20,000                  *                     0               0

Thomas P. Hollo and Mary                 25,000               191,000                  *               166,000               *
Elizabeth Hollo TIC (29)

Paul R. Green (29)                       86,250               245,750                 1.17%            159,500               *

Gilbert D. Moyle III (30)                12,500                58,875                  *                46,375               *
*       Less than 1%

(1)     Includes all of the shares issuable upon the exercise of the warrants.

                                       16
(2)     Assumes all securities registered will be sold.
(3)     Represents  (i) 111,112  shares of common stock  issued  pursuant to our
        February  2006 private  placement,  (ii) 258,750  shares of common stock
        issued upon the exercise of stock options in 2005 (iii) 13,889 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iv) 13,889 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities  exchange act of 1934,  Wesley  Johnson,  the
        principal of the selling  stockholder,  may be deemed a control  person,
        with voting and investment  control, of the shares owned by such entity.
        The selling stockholder has notified us that they are not broker-dealers
        and/or affiliates of broker-dealers.
(4)     Represents  (i) 5,600 shares of common stock,  (ii) 700 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 700 shares of common stock issuable upon exercise of a Class B
        common stock purchase  warrant.  In accordance with rule 13d-3 under the
        securities  exchange act of 1934,  Richard R. Keller, the Trustee of the
        selling  stockholder,  may be deemed a control  person,  with voting and
        investment  control,  of the shares  owned by such  entity.  The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(5)     Represents  (i) 5,600 shares of common stock,  (ii) 700 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 700 shares of common stock issuable upon exercise of a Class B
        common stock purchase warrant.
(6)     Represents  (i) 11,120  shares of common  stock,  (ii)  1,390  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,390 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(7)     Represents  (i) 4,000 shares of common stock,  (ii) 500 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 500 shares of common stock issuable upon exercise of a Class B
        common stock purchase warrant.
(8)     Represents (i) 8,000 shares of common stock, (ii) 1,000 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,000 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(9)     Represents  (i) 11,112  shares of common  stock  issued  pursuant to our
        February  2006  private  placement,  (ii) 20,000  shares of common stock
        issued upon the exercise of stock  options in 2005 (iii) 1,389 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant, and (iv) 1,389 shares of common stock issuable upon exercise of
        a Class B common stock purchase warrant.
(10)    Represents  (i) 16,800  shares of common  stock,  (ii)  2,100  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 2,100 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(11)    Represents  (i) 22,224  shares of common  stock,  (ii)  2,778  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 2,778 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Don  Friedland,  the
        principal of the selling  stockholder,  may be deemed a control  person,
        with voting and investment  control, of the shares owned by such entity.
        The selling stockholder has notified us that they are not broker-dealers
        and/or affiliates of broker-dealers.
(12)    Represents  (i) 11,112  shares of common  stock,  (ii)  1,389  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,389 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(13)    Represents  (i) 50,040  shares of common  stock,  (ii)  6,255  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 6,255 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(14)    Represents  (i) 93,720  shares of common  stock,  (ii) 11,715  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 11,715 shares of common stock issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(15)    Represents  (i) 49,128  shares of common  stock,  (ii)  6,141  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 6,141 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(16)    Represents  (i) 7,000 shares of common stock,  (ii) 875 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 875 shares of common stock issuable upon exercise of a Class B
        common stock purchase  warrant.  In accordance with rule 13d-3 under the
        securities exchange act of 1934, Catalyst Investment Management Company,
        LLC, is a registered  investment  advisor and is responsible  for making
        the investment decisions of the selling stockholder,  and therefore, may
        be deemed a control person,  with voting and investment  control, of the
        shares owned by such  entity.  The selling  stockholder  has notified us
        that they are not broker-dealers and/or affiliates of broker-dealers.

                                       17
(17)    Represents  (i) 4,552 shares of common stock,  (ii) 569 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 569 shares of common stock issuable upon exercise of a Class B
        common stock purchase  warrant.  In accordance with rule 13d-3 under the
        securities exchange act of 1934, Catalyst Investment Management Company,
        LLC, is a registered  investment  advisor and is responsible  for making
        the investment decisions of the selling stockholder,  and therefore, may
        be deemed a control person,  with voting and investment  control, of the
        shares owned by such  entity.  The selling  stockholder  has notified us
        that they are not broker-dealers and/or affiliates of broker-dealers.
(18)    Represents  (i) 35,560  shares of common  stock,  (ii)  4,445  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 4,445 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the  securities  exchange act of 1934,  Catalyst  Investment
        Management  Company,  LLC,  is a  registered  investment  advisor and is
        responsible   for  making  the  investment   decisions  of  the  selling
        stockholder,  and therefore, may be deemed a control person, with voting
        and investment  control, of the shares owned by such entity. The selling
        stockholder  has  notified  us that they are not  broker-dealers  and/or
        affiliates of broker-dealers.
(19)    Represents  (i) 105,520  shares of common  stock,  (ii) 13,190 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 13,190 shares of common stock issuable upon exercise
        of a Class B common stock purchase warrant.
(20)    Represents  (i) 5,600 shares of common stock,  (ii) 700 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 700 shares of common stock issuable upon exercise of a Class B
        common stock purchase warrant.
(21)    Represents  (i) 111,112  shares of common  stock,  (ii) 13,889 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 13,889 shares of common stock issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities exchange act of 1934, Nader C. Kazeminy,  the
        controlling  principal  of the  selling  stockholder,  may be  deemed  a
        control person,  with voting and investment control, of the shares owned
        by such entity.  The selling  stockholder  has notified us that they are
        not broker-dealers and/or affiliates of broker-dealers.
(22)    Represents  (i) 11,120  shares of common  stock,  (ii)  1,390  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,390 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(23)    Represents (i) 8,800 shares of common stock, (ii) 1,100 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,100 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(24)    Represents (i) 8,000 shares of common stock, (ii) 1,000 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,000 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(25)    Represents  (i) 24,000  shares of common  stock,  (ii)  3,000  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 3,000 shares of common stock  issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities  exchange act of 1934,  Thomas P. Hollo,  the
        beneficiary of the selling stockholder,  may be deemed a control person,
        with voting and investment  control, of the shares owned by such entity.
        The selling stockholder has notified us that they are not broker-dealers
        and/or affiliates of broker-dealers.
(26)    Represents  (i) 111,112  shares of common  stock,  (ii) 13,889 shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 13,889 shares of common stock issuable upon exercise
        of a Class B common stock  purchase  warrant.  In  accordance  with rule
        13d-3 under the securities  exchange act of 1934,  Whitney Small Cap GP,
        LLC,  the general  partner of the selling  stockholder,  may be deemed a
        control person,  with voting and investment control, of the shares owned
        by such entity.  The selling  stockholder  has notified us that they are
        not broker-dealers and/or affiliates of broker-dealers.
(27)    Represents (i) 8,056 shares of common stock, (ii) 1,007 shares of common
        stock issuable upon exercise of a Class A common stock purchase warrant,
        and (iii) 1,007 shares of common stock issuable upon exercise of a Class
        B common stock purchase warrant.
(28)    Represents  (i) 10,000  shares of common  stock,  (ii)  1,250  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 2,500 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.
(29)    Represents  shares of common  stock  issued  upon the  exercise of stock
        options in 2005.
(30)    Represents  (i) 10,000  shares of common  stock,  (ii)  1,250  shares of
        common stock  issuable upon exercise of a Class A common stock  purchase
        warrant,  and (iii) 1,250 shares of common stock  issuable upon exercise
        of a Class B common stock purchase warrant.

                              PLAN OF DISTRIBUTION

Each Selling  Shareholder (the " Selling  Shareholders ") of the common stock ("
Common Stock ") of Amerityre Corporation, a Nevada corporation (the " Company ")
and any of their pledgees,  assignees and successors-in-interest  may, from time
to time,  sell any or all of their shares of Common Stock on the Trading  Market
or any other stock exchange,  market or trading facility on which the shares are
traded or in private  transactions.  These  sales may be at fixed or  negotiated
prices. A Selling  Shareholder may use any one or more of the following  methods
when selling shares:

                                       18
o    ordinary   brokerage   transactions  and  transactions  in  which  the
          broker-dealer solicits purchasers;

     o    block  trades  in which the  broker-dealer  will  attempt  to sell the
          shares as agent but may  position and resell a portion of the block as
          principal to facilitate the transaction;

     o    purchases  by  a   broker-dealer   as  principal  and  resale  by  the
          broker-dealer for its account;

     o    an  exchange   distribution  in  accordance  with  the  rules  of  the
          applicable exchange;

     o    privately negotiated transactions;

     o    settlement  of  short  sales  entered  into  after  the  date  of this
          prospectus;

     o    broker-dealers  may  agree  with the  Selling  Shareholders  to sell a
          specified number of such shares at a stipulated price per share;

     o    a combination of any such methods of sale;

     o    through  the  writing  or  settlement  of  options  or  other  hedging
          transactions, whether through an options exchange or otherwise; or

     o    any other method permitted pursuant to applicable law.

The  Selling  Stockholders  may  also  sell  shares  under  Rule 144  under  the
Securities  Act of 1933,  as amended  (the "  Securities  Act "), if  available,
rather than under this prospectus.

Broker-dealers  engaged  by the  Selling  Shareholders  may  arrange  for  other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Shareholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated.  Each  Selling  Shareholder  does not expect these  commissions  and
discounts  relating  to its sales of shares to exceed what is  customary  in the
types of transactions involved.

In  connection  with the sale of our  common  stock or  interests  therein,  the
Selling  Shareholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
common stock in the course of hedging the  positions  they  assume.  The Selling
Shareholders  may also sell shares of our common  stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the common
stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Shareholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

The Selling  Shareholders and any  broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters"  within the meaning of the
Securities Act in connection  with such sales.  In such event,  any  commissions
received  by such  broker-dealers  or agents and any profit on the resale of the
shares  purchased  by them  may be  deemed  to be  underwriting  commissions  or
discounts  under the Securities  Act. Each Selling  Shareholder has informed the
Company  that it does not have  any  agreement  or  understanding,  directly  or
indirectly, with any person to distribute the Common Stock.

The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to indemnify
certain  Selling  Shareholders  against  certain  losses,  claims,  damages  and
liabilities, including liabilities under the Securities Act.

Because  Selling  Shareholders  may be deemed to be  "underwriters"  within  the
meaning of the Securities  Act, they will be subject to the prospectus  delivery
requirements of the Securities Act. In addition,  any securities covered by this
prospectus  which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather  than  under  this  prospectus.  Each  Selling
Stockholder  has  advised  us that they have not  entered  into any  agreements,

                                       19
understandings or arrangements  with any underwriter or broker-dealer  regarding
the sale of the resale shares.  There is no underwriter or  coordinating  broker
acting in connection  with the proposed sale of the resale shares by the Selling
Shareholders.

We agreed to keep this prospectus effective until the earlier of (i) the date on
which the shares may be resold by the Selling  Shareholders without registration
and without regard to any volume  limitations by reason of Rule 144(e) under the
Securities  Act or any other  rule of  similar  effect or (ii) all of the shares
have been sold pursuant to the  prospectus or Rule 144 under the  Securities Act
or any other rule of similar effect. The resale shares will be sold only through
registered or licensed  brokers or dealers if required  under  applicable  state
securities  laws. In addition,  in certain states,  the resale shares may not be
sold unless they have been  registered or qualified  for sale in the  applicable
state or an exemption  from the  registration  or  qualification  requirement is
available and is complied with.

Under  applicable  rules and  regulations  under the  Exchange  Act,  any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement of the  distribution.  In addition,  the
Selling  Shareholders  will be subject to applicable  provisions of the Exchange
Act and the rules and regulations thereunder,  including Regulation M, which may
limit the timing of  purchases  and sales of shares of our  common  stock by the
Selling Shareholders or any other person. We will make copies of this prospectus
available  to the Selling  Shareholders  and have  informed  them of the need to
deliver a copy of this  prospectus to each  purchaser at or prior to the time of
the sale.

                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our Articles of Incorporation  provide to the fullest extent permitted by Nevada
law,  our  directors  or officers  shall not be  personally  liable to us or our
shareholders  for damages for breach of such  director's or officer's  fiduciary
duty. The effect of this provision of our Articles of Incorporation, as amended,
is to eliminate our right and our shareholders (through shareholders' derivative
suits on behalf of our company) to recover damages against a director or officer
for breach of the  fiduciary  duty of care as a director  or officer  (including
breaches resulting from negligent or grossly negligent  behavior),  except under
certain  situations  defined by  statute.  We believe  that the  indemnification
provisions  in our  Articles of  Incorporation,  as amended,  are  necessary  to
attract and retain qualified persons as directors and officers.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred or paid by a director,  officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed  in the  Securities  Act and will be  governed by the final
adjudication of such issue.

                   DESCRIPTION OF SECURITIES TO BE REGISTERED

Common  Stock.  As of March 8, 2006,  we had  40,000,000  shares of common stock
authorized  and  there  were  20,977,460  shares  of  common  stock  issued  and
outstanding,  held of record by approximately 550 registered  stockholders.  Our
common stock is traded on the  Over-the-Counter  Bulletin Board under the symbol
"AMTY."  Each  holder of common  stock is entitled to one vote per share held of
record on all matters  submitted  to a vote of the  stockholders.  All shares of
common stock are entitled to participate in any  distributions or dividends that
may be declared by the board of directors,  subject to any preferential dividend
rights of  outstanding  shares of  preferred  stock.  Subject to prior rights of
creditors,  all  shares  of  common  stock  are  entitled,  in the  event of our
liquidation,   dissolution  or  winding  up,  to  participate   ratably  in  the
distribution  of all  our  remaining  assets,  after  distribution  in  full  of
preferential  amounts,  if any, to be distributed to holders of preferred stock.
There are no sinking fund provisions  applicable to the common stock. Our common
stock has no preemptive or conversion rights or other  subscription  rights. All
of the shares of common stock offered under this  prospectus  will, when issued,
be fully paid and non-assessable.

                                  LEGAL MATTERS

Sichenzia  Ross Friedman  Ference LLP, New York,  New York will issue an opinion
with respect to the validity of the shares of common stock being offered hereby.

                                     EXPERTS

The consolidated  financial  statements of Amerityre  Corporation as of June 30,
2005,  2004 and 2003  included  in this  Prospectus  have  been so  included  in
reliance on the report of HJ & Associates,  LLC  independent  registered  public

                                       20
accounting  firm, given on the authority of said firm as experts in auditing and
accounting.

                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements  with our certified public accountants with respect
to accounting practices or procedures or financial disclosure.

                                       21
DESCRIPTION OF BUSINESS

General
-------

We were incorporated as a Nevada  corporation on January 30, 1995 under the name
American  Tire  Corporation  and changed our name to  Amerityre  Corporation  in
December  1999.  We own certain  proprietary  and  nonproprietary  technology to
manufacture tires from polyurethane foam and polyurethane elastomer.

Polyurethane Foam Tire Technology
---------------------------------

We  currently  produce  Flatfree(TM)   polyurethane  foam  tires  for  bicycles,
wheelchairs, lawn and garden products, and outdoor power equipment products (the
"Products").

Polyurethane Elastomer Passenger Car Tire Technology
----------------------------------------------------

We are engaged in the  development of  polyurethane  elastomer tires for highway
and agricultural use based on our proprietary technology and various methods and
processes  relating to the manufacturing of those tires from liquid  elastomers.
The  polyurethane  elastomer  material is identified  by us as  Elastothane(TM).
Elastothane (TM) and the technology to produce tires using  Elastothane(TM)  are
significant  to us because we believe that  combined  they result in a tire that
can be produced quickly and less  expensively than traditional  rubber pneumatic
tires, while meeting or exceeding the performance of those tires.

We have  produced  a limited  number  of  prototype  polyurethane  car tires and
conducted independent  laboratory testing to demonstrate that these tires comply
with existing federal safety standards for new-pneumatic  tires,  FMVSS 109, and
the proposed revisions to those standards, FMVSS 139, which takes effect in July
2007.  Compliance  with FMVSS 109 and  subsequently,  FMVSS 139, is necessary to
commercially  market  pneumatic  car tires within the United  States.  FMVSS 139
retains  many of the test  components  of FMVSS 109,  with the  following  major
changes:

(1)  Endurance  and Low  Inflation  Pressure  Test.  Test remains 34 hours,  but
extends  the final load step from 22 hours to 24 hours.  Load  percentages  have
been reduced from 90/100/110% to 85/90/100%.  In addition,  at the end of the 34
hours of endurance testing,  the tire will be run under-inflated  (20psi) at 120
km/h (75 mph) for 90 minutes;

(2) Speed  test.  Test  remains  a total of 90  minutes  with a 2 hour  warm-up;
however, speeds for each 30 minute segment have been increased from 75/80/85 mph
to 140/150/160 km/h [87/93/99 mph], respectively; and

(3)  Aging  effects  performance  test.  Implementation  of  the  aging  effects
performance  test has been  deferred  until the NHTSA has  completed  additional
research and issues a new proposal.

In addition to inventing  polyurethane  elastomer  passenger car tires,  we have
invented the manufacturing equipment necessary to produce these tires in limited
quantities.  We have filed several  applications  for method and process patents
with  respect  to  various  aspects  of  this  technology.   We  have  completed
fabrication  of  prototype  manufacturing  equipment  to mold  the  polyurethane
elastomer  tires  and  we  are   fabricating   certain   additional   pieces  of
manufacturing  equipment  that  are  necessary  to  assemble  the  reinforcement
materials   (i.e.,   beads,   belts  and  plies)  utilized  in  connection  with
manufacturing  the  tire.  This  work  is  continuing  and  we  expect  to  make
improvements to the method,  process and equipment as needed so that these tires
can be produced in commercial qualities.

During the quarter we announced  that we had entered into a Product  Development
Agreement with Genmar Holdings, Inc., Minneapolis, Minnesota, one of the world's
largest  manufacturers  of recreational  boats, to design and develop  prototype
polyurethane  "run-flat"  boat  trailer  tires based on our  passenger  car tire
technology.  We estimated the time frame for completing the development  project
to be  approximately  six  months  (May  2006).  If the  development  project is
successfully  completed,  and evaluation and testing by Genmar is  satisfactory,
the parties  will move to an agreement  that will allow  Genmar to  commercially
manufacture "run-flat" boat trailer tires.

                                       22
Non-pneumatic Temporary/Spare Tire Technology
---------------------------------------------

We also are developing a temporary/spare tire out of polyurethane elastomer. Our
initial  project,  a 'zero'  pressure  non-pneumatic  temporary/spare  tire, was
developed for prospective use as a temporary/spare  tire for passenger vehicles.
These tires do not contain air and do not require  inflation.  In April 2005, we
announced that prototype non-pneumatic temporary/spare tire had passed FMVSS 129
testing.  FMVSS 129, is the applicable  safety  standard for new,  non-pneumatic
tires that must be met before the tires can be offered commercially.  We believe
that this is a major breakthrough in tire technology because, to the best of our
knowledge,  no  other  company  has  developed  a  non-pneumatic  tire  that has
successfully  met  FMVSS  129  standard.  We  have  initiated  discussions  with
automobile  manufacturers  about making these tires available to their customers
as original equipment  temporary/spare  tires. In addition,  we continue testing
prototype   designs  of  the  non-pneumatic   temporary/spare   tire  for  other
vehicles/applications.

Polyurethane Retread Material
------------------------------

During the quarter we began development of a compound and manufacturing  process
for retreading medium commercial truck tires with a polyurethane elastomer tread
compound. We believe our retreading process has broad application for the medium
commercial  truck tire market.  The tire  retreading  process being developed by
Amerityre  involves applying the polyurethane  tread compound to the rubber tire
casing  in such a way that  the  tread  "seamlessly  locks"  to the tire  casing
without pressure or  re-vulcanization.  We have conducted a series of pull tests
at an independent  laboratory to test the adhesion of our polyurethane elastomer
tread  compound to rubber tire casings.  The results of the test have  indicated
that our compounds meet acceptable industry requirements. We are continuing with
the development of the process for applying the polyurethane  tread materials to
the rubber tire casings.

In addition to laboratory  testing,  we have been conducting  field tests of the
polyurethane  elastomer  retreads  on a number  of truck  tires  that are  being
evaluated by a mining  company.  We are continuing to test these tires to better
assess their performance characteristics in such a high duty application.

Competition
------------

Currently,  we know of a few  companies  that  utilize a  manufacturing  process
similar to ours to produce tires from polyurethane  foam (i.e.,  Green Tire, UK;
Alshin Tire, USA; KIK Technology International,  Inc., USA; Woo Tire, China; and
Krypton-India,  India). In addition to manufacturers of polyurethane foam tires,
as a potential OEM supplier, we compete directly with firms that manufacture and
market  conventional  low-duty  pneumatic  and  semi-pneumatic  tires  made from
rubber. Our technology  differs from existing  polyurethane foam tire technology
in at least two ways,  including:  (1) the formulation of the polyurethane;  and
(2) the manner in which the polyurethane is distributed throughout the mold.

The underlying basis of our foam tire technology and processes make our Products
the only polyurethane based Flatfree[TM] tires that utilize a foam consisting of
millions of closed cells containing compressed air. Therefore, our Products have
an equivalent "pneumatic ride-quality" without going flat when punctured.

Tires that our Products  compete against are  essentially a commodity.  The not-
for-highway  use tire  industry has  historically  been highly  competitive  and
several of our competitors have financial resources which  substantially  exceed
ours. In addition,  many  competitors are large companies (i.e.,  Kenda,  Japan;
Chengshin  Rubber,  China; and Carlisle Tire, USA) that have  established  brand
name recognition, have established distribution networks for their products, and
have developed consumer loyalty to such products.

We know of no other  companies that have  technology  capable of formulating and
producing  polyurethane elastomer compounds suitable for passenger car tire use,
in particular,  pneumatic and/or  non-pneumatic  passenger car tires that comply
with U.S. Federal Motor Vehicle Safety Standards for those tires.

Manufacturing, Supplies, and Quality Control
--------------------------------------------

Substantially   all  of  our  Products   produced  with  polyurethane  foam  are
manufactured   utilizing  single  and/or  multiple  head,   centrifugal  molding
machines.  These  machines  produce  Products  by  pouring a  proprietary  based
polyurethane  formula  into a mold,  which then  spreads out in the mold through
centrifugal  force.  The molding  process  occurs  when the liquid  polyurethane
formula  (made up of isocyanide  and polyol) is combined  with a catalyst.  This

                                       23
combination  causes a chemical reaction that results in the cross linking of the
chemicals,  which  thereafter  become  solid.  The mold  then  moves to the next
station where the Product is removed and the process is repeated.

Our  chemicals are available  from  multiple  suppliers.  We believe that we can
obtain sufficient  quantities of raw materials without  significant  problems or
delays.

Although we have one customer  that  accounted  for  approximately  12% of total
sales  during the fiscal year ended June 30,  2005,  we don't  believe  that our
business operations are dependent on that customer.

All of our Products are inspected following the manufacturing  process and prior
to shipment to ensure  quality.  Any Product  considered by our quality  control
personnel to be defective is disposed of through  traditional  refuse collection
services or can be ground into  pellets,  which can be melted and reused to make
other products and reduce waste of raw materials.

Patents
--------

Our technology is proprietary.  Set forth in the schedule below are patents that
have been issued or for which a patent  application  is pending  with respect to
our technology.

Description of Patents                          U.S. Patent No.    Issued Date
----------------------                          ---------------   -------------
Method for Making Polyurethane Tires
 with an Outer Skin                                 4,855,096       8/08/1989
Apparatus for Making Foam Products                  4,943,223       7/24/1990
Apparatus and Method for Manufacturing
 an Item From Polyurethane Foam and the Like        5,906,836       5/25/1999
Improved Method for Making Tires and the Like       6,165,397      12/26/2000
Non-Pnuematic Tire and Rim Combination              6,431,235       8/13/2002
Run Flat Tire with Elastomeric Inner Support        6,679,306       1/20/2004
Elastomeric Tire with Arch Shaped Shoulders         6,971,426      12/06/2005
Tire Core Package for Use in Manufacturing a Tire
  with Belts, Plies and Beads and Process of Tire
  Manufacture                                       6,974,519      12/13/2005

Description of Patents Pending                            Action    Status
------------------------------                            ------    ------
Method for Manufacturing a Tire with Belts, Plies and
 Beads Utilizing a Precured Elastomer and Cold Rolling    Filed     Pending
Air No-Air Elastomeric Tire                               Filed     Pending
Method for Manufacturing an Air No-Air Tire with
 Belts and Beads                                          Filed     Pending
Improved Method and Apparatus for Forming a Core of
 Plies, Belts and Beads and for Positioning the Core
 in a Mold for Forming an Elastomeric Tire                Filed     Pending
Improved Method and Apparatus for Suspending a Core of
 Plies, Belts and Beads and for Positioning the Core in
 a Mold for Forming and Elastomeric Tire                  Filed     Pending
Method and Apparatus for Forming an
 Elastomeric Tire                                         Filed     Pending
Method and Apparatus for Forming a Wheel
 from a Urethane Material
Run Flat Tire Insert System                               Filed     Pending

Trademarks
-----------

We have used various  trademarks  in  association  with  marketing our Products,

                                       24
including the names Arcus(R), Flatfree(TM), Amerityre(R) , Elastothane(TM), Tire
Technology for the 21st Century(TM).

Regulation and Environmental Compliance
----------------------------------------

We  know  of no  particular  federal  or  state  regulations  applicable  to our
manufacturing  processes.  We are subject to various local,  state,  and federal
laws and regulations including,  without limitation,  regulations promulgated by
federal and state  environmental and health agencies,  the federal  Occupational
Safety and Health  Administration,  and laws  pertaining  to hiring,  treatment,
safety, and discharge of employees.  Our manufacturing operations must also meet
federal,  state, and local regulatory  standards in the areas of labor,  safety,
and health.  We believe  that we operate in  compliance  with such  regulations,
including  laws relating to the handling and use of materials that may be deemed
to be hazardous materials.

Employees
----------

As of March 8, 2006 we had 26 full-time employees,  including 15 salaried and 11
hourly  employees.  We may  hire  temporary  labor  for  manufacturing  needs as
required.  None of our employees are  represented  by a labor union.  We believe
that we will be able to hire a sufficient  quantity of qualified laborers in the
local area to meet our  employment  needs.  Our  manufacturing  process does not
require special  training,  other than orientation to our production  techniques
and specific  equipment.  None of our employees is  represented  by a collective
bargaining agreement. We consider our relations with our employees to be good.

                             DESCRIPTION OF PROPERTY

In October 2002, we leased our executive and manufacturing facilities located at
1501 Industrial Road,  Boulder City,  Nevada.  The property consists of a 49,200
square foot building,  which includes  approximately 5,500 square feet of office
space, situated on approximately 4.15 acres. The term of the lease is five years
expiring  October 14, 2007,  subject to our right to purchase the property.  The
base rent is $16,000 per month for the first year, with annual increases of $500
per  month  during  the term of the  lease.  We  believe  the  facility  will be
sufficient to handle our office and production  needs for the next few years. It
is our opinion that we maintain adequate  insurance  coverage for loss or damage
to our leased facilities under our existing insurance policy.

                                LEGAL PROCEEDINGS

We are not presently subject to any material legal proceedings other than as set
forth below:

In November 2005, Continental Automotive Licensing Corp.  ("Petitioner") filed a
Petition for Cancellation #92045199 ("Petition") in the United States Patent and
Trademark  Office (the  "Trademark  Office")  against  Richard A.  Steinke,  our
Chairman,  President and Chief Executive Officer.  Petitioner alleges that it is
being,  has  been,  and  will  be  damaged  by the  continued  existence  of the
Amerityre(R)  trademark  and has  asked  the  Trademark  Office  to  cancel  the
registration.  This registered trademark (Registration No. 2,401,989) was issued
November 7, 2000 by the Trademark  Office to Mr.  Steinke and assigned by him to
us in June 2001.  We believe that the Petition is without merit and we expect to
vigorously defend our use of the trademark.

          MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common  stock is currently  traded on the  Over-the-Counter  Bulletin  Board
under the  symbol  "AMTY."  The  following  table  sets  forth  for the  periods
indicated  the high and low sale prices of our common  stock.  Prices  represent
inter-dealer  quotations  without  adjustment for retail  markups,  markdowns or
commissions and may not represent actual transactions.

                                       25
HIGH             LOW
                                               ---------------   -------------
YEAR ENDED JUNE 30, 2004

First Quarter                                  $          5.38   $       3.45
Second Quarter                                            6.42           3.90
Third Quarter                                            12.74           6.69
Fourth Quarter                                           11.95           8.20

YEAR ENDED JUNE 30, 2005

First Quarter                                  $          9.75   $       6.45
Second Quarter                                            8.06           6.00
Third Quarter                                             7.85           4.95
Fourth Quarter                                            7.45           4.80

YEAR ENDED JUNE 30, 2006
First Quarter                                  $          7.45   $       5.25
Second Quarter                                            6.50           4.15

As of March 8,  2006,  there  were  approximately  550  holders of record of our
common stock and 20,977,460 shares of common stock outstanding.

We have never declared or paid cash dividends on our capital stock. We currently
expect to retain our future  earnings for use in the  operation and expansion of
our business and do not anticipate  paying any cash dividends in the foreseeable
future.  Any future  determination  to pay  dividends  on our common  stock will
depend  upon  our  results  of  operations,   financial  condition  and  capital
requirements,  applicable  restrictions  under any  credit  facilities  or other
contractual  arrangements and such other factors deemed relevant by our Board of
Directors.

                                       26
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

You  should  read  the  following  selected   consolidated   financial  data  in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations"  and our  consolidated  financial  statements and the
related notes appearing elsewhere in this prospectus.

The  consolidated  statements  of  operations  data for the years ended June 30,
2003,  2004 and 2005, and the  consolidated  balance sheet data at June 30, 2004
and  2005,  are  derived  from our  audited  consolidated  financial  statements
appearing  elsewhere  in  this  prospectus.   The  consolidated   statements  of
operations  data for the years  ended June 30, 2001 and June 30,  2002,  and the
consolidated  balance sheet data at June 30, 2001 and 2002, are derived from our
audited  consolidated  financial  statements  that  are  not  included  in  this
prospectus.  The  consolidated  statements of operations data for the six months
ended  December  31, 2004 and 2005 and the  consolidated  balance  sheet data at
December  31,  2005  are  derived  from  our  unaudited  consolidated  financial
statements  included in this prospectus.  The unaudited  consolidated  financial
statements  include,  in  the  opinion  of  management,   all  adjustments  that
management  considers  necessary  for the  fair  presentation  of the  financial
information  set  forth in those  statements.  The  historical  results  are not
necessarily indicative of the results to be expected in any future period.

Because the following is only a financial  summary,  it does not contain all the
financial  information  that may be  important  to you.  Therefore,  you  should
carefully read all the information in this  prospectus,  including the financial
statements from which this information was derived and their  explanatory  notes
and Management's Discussion and Analysis, before making an investment decision.
Year Ended June 30,                           Six Months
                                                ----------------------------------------------------------      Ended-December 31,
                                                                                                              ---------------------
                                                 2001         2002         2003         2004         2005      2004          2005
                                                -------     --------     --------     --------     -------   --------      --------
                                                               (in thousands, except per share data)
                                                                                                                     (unaudited)
Consolidated Statements of Operations Data:
Net sales                                       $   116   $     506    $   1,040    $   1,419    $   1,681   $   643      $     738
Cost sales                                          126         525          976        1,114        1,233       462            613

Gross profit (deficit)                              (10)        (19)          64          305          448       181            125

Consulting                                        1,315       1,505          340          371           77         0             99
Advisory group expense (2)                            0           0            0            0        6,134     6,134              0
Payroll and payroll taxes                           755         819        1,084        2,345        1,905       846          1,010
Depreciation and amortization                       175         223          299          296          386       195            181
Research and development (1)                          0           0           29          572          881       409            388
Selling, general and administrative               2,370       1,211        1,421        1,462        1,188       632            699

Total  expenses                                   4,616       3,758        3,173        5,046       10,571     8,216          2,377

Loss from operations                             (4,626)     (3,777)      (3,109)      (4,741)     (10,123)   (8,035)        (2,252)
Other income                                         62          31           17           20           50        21             26

Net loss                                        $(4,564)  $  (3,746)   $  (3,092)   $  (4,721)   $ (10,073)  $(8,014)     $  (2,226)

Basic loss per share                            $  (.38)  $    (.27)   $    (.21)   $    (.26)   $    (.53)  $  (.43)     $    (.11)
Weighted average number of shares outstanding    12,106      13,662       14,797       17,847       18,932    18,697         19,877
(1)  Research  and  development  expenses  were not broken out of  Selling,
     general and administrative expenses until 2003.

     (2)  During the period  ended  September  30,  2004,  we issued  options to
     acquire an  aggregate  of  3,000,000  shares of our common stock to certain
     non-employees  in connection  with an advisory  agreement.  We recognized a
     total of  $6,134,000  in  expense  associated  with the  issuance  of these

                                       27
options and  deferred  $1,000,000  as stock  offering  costs until  related
     funding was  received.  We estimated the fair value of the stock options at
     the grant date by using the Black-Scholes option pricing model.
At June 30,                            At
                                                    ---------------------------------------------------------     December-31,
                                                                                                                      2005
                                                                                                               ----------------
                                                      2001      2002        2003       2004         2005
                                                    --------  ---------  ----------  ----------  ----------
                                                                                  (in thousands)
Consolidated Balance Sheet Data:                                                                          (unaudited)
Cash and cash equivalents                           $    530  $     774  $    2,491  $    1,591  $    2,122    $          2,578
Total current assets                                $    965  $   1,341  $    3,137  $    2,415  $    3,081    $          3,704
Total assets                                        $  1,856  $   2,045  $    4,584  $    4,061  $    4,627    $          5,265
Total liabilities (3)                               $    356  $     115  $       95  $       59  $       85    $          1,216
Total stockholders' equity                          $  1,500  $   1,930  $    4,488  $    4,002  $    4,542    $          4,049
(3) All liabilities are current  liabilities;  we do not have any long-term
     liabilities.

                                       28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

This discussion and analysis  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"
as well as those discussed elsewhere in this Prospectus.  The historical results
set forth in this  discussion  and analysis 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 Prospectus.

Overview

We were incorporated as a Nevada  corporation on January 30, 1995 under the name
American  Tire  Corporation  and changed our name to  Amerityre  Corporation  in
December  1999.  We own certain  proprietary  and  nonproprietary  technology to
manufacture tires from polyurethane foam and polyurethane elastomer.

Polyurethane Foam Tire Technology
----------------------------------

We  currently  produce  Flatfree(TM)   polyurethane  foam  tires  for  bicycles,
wheelchairs, lawn and garden products, and outdoor power equipment products (the
"Products").

Polyurethane Elastomer Passenger Car Tire Technology
-----------------------------------------------------

We are engaged in the  development of  polyurethane  elastomer tires for highway
and agricultural use based on our proprietary technology and various methods and
processes  relating to the manufacturing of those tires from liquid  elastomers.
The  polyurethane  elastomer  material is identified  by us as  Elastothane(TM).
Elastothane (TM) and the technology to produce tires using  Elastothane(TM)  are
significant  to us because we believe that  combined  they result in a tire that
can be produced quickly and less  expensively than traditional  rubber pneumatic
tires, while meeting or exceeding the performance of those tires.

We have  produced  a limited  number  of  prototype  polyurethane  car tires and
conducted independent  laboratory testing to demonstrate that these tires comply
with existing federal safety standards for new-pneumatic  tires,  FMVSS 109, and
the proposed revisions to those standards, FMVSS 139, which takes effect in July
2007.  Compliance  with FMVSS 109 and  subsequently,  FMVSS 139, is necessary to
commercially  market  pneumatic  car tires within the United  States.  FMVSS 139
retains  many of the test  components  of FMVSS 109,  with the  following  major
changes:

(1)  Endurance  and Low  Inflation  Pressure  Test.  Test remains 34 hours,  but
extends  the final load step from 22 hours to 24 hours.  Load  percentages  have
been reduced from 90/100/110% to 85/90/100%.  In addition,  at the end of the 34
hours of endurance testing,  the tire will be run under-inflated  (20psi) at 120
km/h (75 mph) for 90 minutes;

(2) Speed  test.  Test  remains  a total of 90  minutes  with a 2 hour  warm-up;
however, speeds for each 30 minute segment have been increased from 75/80/85 mph
to 140/150/160 km/h [87/93/99 mph], respectively; and

(3)  Aging  effects  performance  test.  Implementation  of  the  aging  effects
performance  test has been  deferred  until the NHTSA has  completed  additional
research and issues a new proposal.

In addition to inventing  polyurethane  elastomer  passenger car tires,  we have
invented the manufacturing equipment necessary to produce these tires in limited
quantities.  We have filed several  applications  for method and process patents
with  respect  to  various  aspects  of  this  technology.   We  have  completed
fabrication  of  prototype  manufacturing  equipment  to mold  the  polyurethane
elastomer  tires  and  we  are   fabricating   certain   additional   pieces  of
manufacturing  equipment  that  are  necessary  to  assemble  the  reinforcement
materials   (i.e.,   beads,   belts  and  plies)  utilized  in  connection  with
manufacturing  the  tire.  This  work  is  continuing  and  we  expect  to  make
improvements to the method,  process and equipment as needed so that these tires
can be produced in commercial qualities.

                                       29
During the quarter  ended  December 31, 2005,  we announced  that we had entered
into a Product Development  Agreement with Genmar Holdings,  Inc.,  Minneapolis,
Minnesota,  one of the world's largest  manufacturers of recreational  boats, to
design and develop prototype polyurethane "run-flat" boat trailer tires based on
our passenger car tire  technology.  We estimated the time frame for  completing
the  development  project to be  approximately  six months  (May  2006).  If the
development  project is  successfully  completed,  and evaluation and testing by
Genmar is  satisfactory,  the parties will move to an agreement  that will allow
Genmar to commercially manufacture "run-flat" boat trailer tires.

Non-pneumatic Temporary/Spare Tire Technology
----------------------------------------------

We also are developing a temporary/spare tire out of polyurethane elastomer. Our
initial  project,  a  zero  pressure  non-pneumatic  temporary/spare  tire,  was
developed for prospective use as a temporary/spare  tire for passenger vehicles.
These tires do not contain air and do not require  inflation.  In April 2005, we
announced that prototype non-pneumatic temporary/spare tire had passed FMVSS 129
testing.  FMVSS 129, is the applicable  safety  standard for new,  non-pneumatic
tires that must be met before the tires can be offered commercially.  We believe
that this is a major breakthrough in tire technology because, to the best of our
knowledge,  no  other  company  has  developed  a  non-pneumatic  tire  that has
successfully  met  FMVSS  129  standard.  We  have  initiated  discussions  with
automobile  manufacturers  about making these tires available to their customers
as original equipment  temporary/spare  tires. In addition,  we continue testing
prototype   designs  of  the  non-pneumatic   temporary/spare   tire  for  other
vehicles/applications.

Polyurethane Retread Material
------------------------------

During the quarter we began development of a compound and manufacturing  process
for retreading medium commercial truck tires with a polyurethane elastomer tread
compound. We believe our retreading process has broad application for the medium
commercial  truck tire market.  The tire  retreading  process being developed by
Amerityre  involves applying the polyurethane  tread compound to the rubber tire
casing  in such a way that  the  tread  "seamlessly  locks"  to the tire  casing
without pressure or  re-vulcanization.  We have conducted a series of pull tests
at an independent  laboratory to test the adhesion of our polyurethane elastomer
tread  compound to rubber tire casings.  The results of the test have  indicated
that our compounds meet acceptable industry requirements. We are continuing with
the development of the process for applying the polyurethane  tread materials to
the rubber tire casings.

In addition to laboratory  testing,  we have been conducting  field tests of the
polyurethane  elastomer  retreads  on a number  of truck  tires  that are  being
evaluated by a mining  company.  We are continuing to test these tires to better
assess their performance characteristics in such a high duty application.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations
are based on our  financial  statements,  which have been prepared in accordance
with  U.S.  generally  accepted  accounting   principles,   or  U.S.  GAAP.  The
preparation of these financial  statements in accordance with U.S. GAAP requires
us to utilize  accounting  policies and make certain  estimates and  assumptions
that affect the reported  amounts of assets and  liabilities,  the disclosure of
contingencies  as of the  date of the  financial  statements  and  the  reported
amounts of revenues  and expense  during a fiscal  period.  The  Securities  and
Exchange  Commission  considers  an  accounting  policy to be  critical if it is
important to a company's financial  condition and results of operations,  and if
it requires  significant judgment and estimates on the part of management in its
application.   Although  we  believe  that  our   judgments  and  estimates  are
appropriate and correct, actual results may differ from those estimates.

We believe the following to be our critical accounting policies because they are
important to the portrayal of our financial  condition and results of operations
and they require critical management  judgments and estimates about matters that
are  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.

Revenue Recognition
--------------------

Revenue is recognized when the sales amount is determined,  shipment of goods to
the customer  has occurred and  collection  is  reasonably  assured.  Product is
shipped FOB origination.

                                       30
Patents and Trademarks
-----------------------

Patent and  trademark  costs have been  capitalized  at June 30,  2005  totaling
$407,642.  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 being
amortized.   Amortization   will  begin  once  the  patents  have  been  issued.
Amortization  expense  for the years  ended June 30,  2005 and June 30, 2004 was
$30,847 and $1,309,  respectively.  The Company evaluates the  recoverability of
intangibles and reviews the  amortization  period on a continual basis utilizing
the  guidance  of SFAS 142,  "Goodwill  and Other  Intangible  Assets."  Several
factors  are  used to  evaluate  intangibles,  including,  but not  limited  to,
management's  plans  for  future   operations,   recent  operating  results  and
projected, undiscounted cash flows.

Inventory
----------

Inventory  is stated at the lower of cost  (computed  on a  first-in,  first-out
basis) or market. The inventory  consists of chemicals,  finished goods produced
in the Company's plant and products purchased for resale.

Equity Securities
------------------

Equity  securities  issued for services  rendered have been accounted for at the
fair market value of the securities on the date of authorization.

Stock Options
--------------

As permitted by FASB Statement 148  "Accounting  for Stock Based  Compensation -
Transition and  Disclosure"  (SFAS No. 148), the Company  elected to measure and
record  compensation  cost relative to employee stock option costs in accordance
with  Accounting  Principles  Board ("APB")  Opinion 25,  "Accounting  for Stock
Issued to Employees," and related  interpretations and make proforma disclosures
of net income  and  earnings  per share as if the fair  value  method of valuing
stock  options had been  applied.  Under APB opinion  25,  compensation  cost is
recognized for stock options  granted to employees when the option price is less
that the market price of the underlying common stock on the date of grant.

Valuation of Options and Warrants
----------------------------------

The valuation of options and warrants granted to unrelated  parties for services
are  measured  as of the  earlier  of (1) the  date at  which a  commitment  for
performance by the counterparty to earn the equity instrument is reached, or (2)
the  date  the   counterparty's   performance  is  complete.   Pursuant  to  the
requirements  of EITF  96-18,  the  options  and  warrants  will  continue to be
revalued in  situations  where they are granted  prior to the  completion of the
performance.

Recent Accounting Pronouncements

During  the year ended  June 30,  2005,  we  adopted  the  following  accounting
pronouncements:

On December 16, 2004 the FASB issued SFAS No. 123(R), Share-Based Payment, which
is an amendment to SFAS No. 123, Accounting for Stock-Based  Compensation.  This
new  standard  eliminates  the ability to account for  share-based  compensation
transactions   using  Accounting   Principles  Board  ("APB")  Opinion  No.  25,
Accounting  for  Stock  Issued  to  Employees,   and  generally   requires  such
transactions  to be  accounted  for  using  a  fair-value-based  method  and the
resulting  cost  recognized  in our financial  statements.  This new standard is
effective  for awards that are  granted,  modified or settled in cash in interim
and annual periods beginning after June 15, 2005. In addition, this new standard
will apply to unvested  options  granted  prior to the  effective  date. We will
adopt this new standard effective for the first fiscal quarter of 2006, and have
not yet determined what impact this standard will have on our financial position
or results of operations.

In November 2004, the FASB issued SFAS No. 151,  Inventory  Costs - an amendment
of ARB No. 43,  Chapter 4. This  Statement  amends the  guidance  in ARB No. 43,
Chapter 4, "Inventory  Pricing," to clarify the accounting for abnormal  amounts
of  idle  facility  expense,   freight,  handling  costs,  and  wasted  material

                                       31
(spoilage).  Paragraph  5 of ARB 43,  Chapter 4,  previously  stated that ". . .
under  some  circumstances,  items  such as  idle  facility  expense,  excessive
spoilage,  double freight, and rehandling costs may be so abnormal as to require
treatment as current period  charges.  . ." This  Statement  requires that those
items be recognized as  current-period  charges  regardless of whether they meet
the  criterion of "so  abnormal."  In addition,  this  Statement  requires  that
allocation of fixed production  overheads to the costs of conversion be based on
the normal  capacity of the production  facilities.  This statement is effective
for inventory  costs incurred during fiscal years beginning after June 15, 2005.
Management  does not  believe  the  adoption  of this  Statement  will  have any
immediate material impact on us.

In December  2004,  the FASB issued  SFAS No.  152,  Accounting  for Real Estate
Time-sharing  Transactions,  which amends FASB statement No. 66,  Accounting for
Sales of Real Estate,  to  reference  the  financial  accounting  and  reporting
guidance  for real estate  time-sharing  transactions  that is provided in AICPA
Statement  of Position  (SOP)  04-2,  Accounting  for Real  Estate  Time-Sharing
Transactions.  This statement also amends FASB Statement No. 67,  Accounting for
Costs and Initial Rental  Operations of Real Estate Projects,  to state that the
guidance  for (a)  incidental  operations  and (b) costs  incurred  to sell real
estate  projects does not apply to real estate  time-sharing  transactions.  The
accounting  for those  operations  and costs is subject to the  guidance  in SOP
04-2.  This  Statement is effective  for financial  statements  for fiscal years
beginning  after  June  15,  2005.  Management  believes  the  adoption  of this
Statement will have no impact on our financial statements.

In December 2004, the FASB issued SFAS No.153,  Exchange of Nonmonetary  Assets.
This Statement addresses the measurement of exchanges of nonmonetary assets. The
guidance in APB Opinion No. 29,  Accounting  for  Nonmonetary  Transactions,  is
based on the principle that  exchanges of nonmonetary  assets should be measured
based on the fair value of the assets  exchanged.  The guidance in that Opinion,
however,  included certain  exceptions to that principle.  This Statement amends
Opinion 29 to  eliminate  the  exception  for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial  substance if the future cash flows of the entity are expected to
change  significantly  as a result of the exchange.  This Statement is effective
for financial statements for fiscal years beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges  incurred during fiscal
years beginning after the date of this statement is issued.  Management believes
the adoption of this Statement will have no impact on our financial statements.

The implementation of the provisions of these pronouncements are not expected to
have a significant effect on our consolidated financial statement presentation.

Results of Operations - Three and Six Months Ended December 31, 2005 and 2004

Net Sales

For the three month period ended December 31, 2005 we had net sales of $302,255,
a slight  decrease  from net sales of  $303,801,  for the same period last year.
However,  for the six month period ended  December 31, 2005, we had net sales of
$738,224,  a 15% increase over net sales of $643,573 for the  comparable  period
last year. The increase in net sales for the six-month  period in 2005 over 2004
was due primarily to further  expansion of our Products sales among retail chain
customers and distributors.

Cost of Goods Sold

Our cost of sales  for the  three  month  period  ended  December  31,  2005 was
$258,439,  or 86% of sales as compared to $215,891, or 71% of sales for the same
period last year,  resulting in a gross profit of $43,816, or 14% as compared to
a gross  profit of $87,910 or 29% for the prior year  period.  Our cost of sales
for the six month period ended  December 31, 2005 was $612,781,  or 83% of sales
as compared to $462,678, or 72%, resulting in a gross profit of $125,443, or 17%
of sales  compared  to a gross  profit of  $180,895,  or 28% for the prior  year
period.  The reduction in our gross profit as compared to the prior year periods
is a result of a  revaluation  of our  standard  costs after taking into account
increases  in base  chemicals  and steel wheel  component  costs for  tire/wheel
assemblies.  To offset these  increases in material costs, we have increased the
sales price of our Products effective January 1, 2006 in an attempt to recapture
the decrease in gross margin we have experienced.

Corporate  Expense.  For three and six month  periods  ended  December 31, 2005,
total  operating   expenses  were   $1,210,803  and  $2,377,275,   respectively,

                                       32
consisting  primarily of consulting expense of $99,498 and $99,498,  payroll and
payroll  taxes of $519,060 and  $1,009,407,  depreciation  and  amortization  of
$91,873 and $181,129,  research and development  costs of $151,825 and $388,208,
and  selling,  general and  administrative  expenses of $348,336  and  $698,822,
respectively.

For the three and six month periods  ended  December 31, 2004,  total  operating
expenses were $953,124 and  $8,216,157,  respectively,  consisting  primarily of
payroll  and  payroll   taxes  of  $428,908  and  $846,470,   depreciation   and
amortization of $102,607 and $194,953,  research and development of $110,798 and
$409,166, selling, general and administrative expenses of $310,620 and $630,795,
respectively,  and,  in the six month  period,  an  expense  of  $6,134,000  for
advisory  group  services  associated  with the grant of  options  to acquire an
aggregate of 3,000,000  shares of our common  stock to  third-party  consultants
during  the  period.   The  value  of  the  options  was  calculated  using  the
Black-Scholes option pricing model.

During the six month period ended December 31, 2004, we recognized an expense of
$6,134,000 for advisory group services  associated  with the grant of options to
acquire an  aggregate of  3,000,000  shares of our common  stock to  third-party
consultants during the period. The value of the options was calculated using the
Black-Scholes  option pricing  model.  Our selling,  general and  administrative
expenses since that time have not included deferred stock offering costs,  which
at December 31, 2005 aggregated  $1,083,278.  This amount has been recorded as a
reduction  in  stockholders'  equity due to its  association  with the  proposed
offering of our securities.  In February 2006, we closed a private  placement of
our  securities  for gross  offering  proceeds of $3.87  million,  therefore the
deferred offering costs will be expensed in the subsequent period.

Excluding  the effect of the  one-time  $6,134,000  expense for  advisory  group
services  associated  with the grant of options for the 2004 periods as detailed
above, our corporate  expenses for the six month period ended December 31, 2005,
when compared to our corporate  expenses for the six month period ended December
31, 2004, increased approximately $295,000 due to annual increases in salary and
payroll,  increased  sales,  marketing  and media  relations  expenses,  and the
payment of outside  consulting fees for specialty  services.  We anticipate that
our monthly  operating  expenses for the next six months will remain  consistent
with the average  monthly  expenses of the first six  months,  at  approximately
$400,000 per month.

Interest  Expense.  We had no  interest  expense  during the three and six month
periods ended December 31, 2005 and 2004, respectively.

Other Income.  For the three and six month  periods ended  December 31, 2005, we
had  other  income of  $7,658  and  $26,014,  respectively,  earned  on  account
receivables and temporary investments of cash not immediately needed in ordinary
daily business.  For the three and six month periods ended December 31, 2004, we
had  other  income of  $7,407  and  $21,176,  respectively,  earned  on  account
receivables and temporary investments of cash not immediately needed in ordinary
daily business.

We experienced  net losses of $1,159,329 and $2,225,818,  respectively,  for the
three and six month periods ended  December 31, 2005,  compared to net losses of
$857,807 and $8,014,086 for the same periods in 2004. The basic losses per share
for the current  periods were $0.06 and $0.11,  respectively,  compared to basic
losses per share of $0.05 and $0.43 for prior year periods.

Liquidity and Capital Resources

During the three and six month periods ended  December 31, 2005, we financed our
operations through collecting  accounts  receivable and issuing common stock for
cash paid in  connection  with the  exercise of  outstanding  stock  options and
prepayment of certain salaries.

At  December  31,  2005,  we  had  current  assets  of  $3,704,381  and  current
liabilities  of  $1,215,751,  for a working  capital  surplus of  $2,488,630,  a
decrease of $507,890  over the working  capital  surplus of $2,996,520 we had at
June 30, 2005. We had cash and cash  equivalents  of $2,577,694 and net accounts
receivable of $75,617 at December 31, 2005 compared to cash and cash equivalents
of  $2,122,320  and net accounts  receivable  of $168,838 at June 30, 2005.  Our
increase in cash and  equivalents at December 31, 2005, is  attributable  to the
exercise of outstanding options during the period. Our cash and cash equivalents
include  $836,820 of cash received as part of an ongoing private offering of our
securities during the period. The subscription amounts were recorded at December

                                       33
31,  2005,  as a  current  liability  under the line  item  "stock  subscription
deposits."  Subsequent to December 31, 2005, we completed the stock offering. As
a result of completing the offering the "stock subscription  deposits" liability
will be reduced to $0 for the period ending March 31, 2006.

At December 31, 2005,  we had net property and  equipment of  $1,125,751,  after
deduction of accumulated  depreciation of $2,027,326.  At December 31, 2005, our
property and equipment  consisted  mainly of leasehold  improvements,  $120,767;
molds and models,  $353,591;  equipment,  $2,324,730;  furniture  and  fixtures,
$73,652; and software, $280,337.

Net  cash  used by our  operating  activities  for the six  month  period  ended
December 31, 2005 was $1,686,062,  compared to $1,211,739 for the same period in
2004.  Our  operations  for the six month  period  ended  December 31, 2005 were
funded primarily by cash and cash  equivalents,  accounts  receivables,  and the
issuance of common stock for services and salaries.  Our  operations for the six
month period ended December 31, 2004 were funded primarily the same way.

Net cash used by investing  activities  for the six month period ended  December
31,  2005 was  $105,384,  including  payments  for patents  and  trademarks  and
purchase of property and equipment, compared to $93,609 in the prior year period
for similar purposes.

Cash provided by financing  activities  for the six month period ended  December
31, 2005  totaled  $2,246,820  comprised  of  $836,820 in proceeds  from a stock
subscription  deposits and additional  cash proceeds from the issuance of common
stock for the  exercise of  outstanding  options.  Cash  provided  by  financing
activities  for the prior year period  totaled  $880,000  in  proceeds  from the
issuance of common stock.

To  supplement  our cash needs  during the 2006 fiscal year we have (1) obtained
approximately $1,400,000 in funding through the exercise of outstanding options;
(2)  issued  common  stock  in  lieu of cash  as  compensation  for  employment,
development,  and other professional  services;  and (3) raised $3.87 million in
working  capital  through the  private  offering  of our  securities.  We do not
anticipate  needing any additional  working  capital  through the balance of the
2006 fiscal year to implement our operating plan.

Off-Balance Sheet Arrangements
-------------------------------

We currently have no off balance sheet arrangements.

Impact of Inflation
-------------------

We do not anticipate  that inflation will have a material  impact on our current
operations.

Seasonality
------------

Because the significant  portion of our current  customers  reside in the United
States,  we anticipate  that sales of certain of our lawn and garden Products to
those  customers  located in  Northern  portion of the  United  States  could be
reduced as a result of fall and winter climate and weather conditions.

Results of Operations--Years Ended June 30, 2005 and 2004

Net Sales

Since  inception we have focused on the  development of our technology and for a
number of years we were  considered a development  stage  company.  The past two
fiscal years we had limited revenues from the sale of our services and products.
For the fiscal year ended June 30, 2005 we had net sales of  $1,681,091,  an 18%
increase over net sales of $1,419,124,  the previous year. This increase was due
primarily  further  expansion of our Products sales among retail chain customers
and original equipment manufacturers.

Cost of Goods Sold

Our cost of sales for the year ended  June 30,  2005 was  $1,233,181,  or 73% of
sales as compared to  $1,114,230,  or 78.5% of sales for the year ended June 30,
2004,  resulting  in a gross  margin of  $447,910  or 27% as compared to a gross

                                       34
margin of $304,894 or 21% for the  respective  periods.  The  improvement in our
gross  margin for the current  year as compared to the prior year is a result of
manufacturing  efficiencies such as (a) increasing the size of chemical batches,
(b) dedicating  production shifts to manufacturing single products (i.e., longer
production  runs), and (c) reducing labor costs by implementing line automation.
We believe that our gross  margin can  continue to improve as our sales  efforts
generate  additional product orders in such quantities to take further advantage
of the  manufacturing  efficiencies.  We believe we  currently  have  sufficient
manufacturing  equipment  and  employees  to  merit a  substantial  increase  in
production  without  incurring a  proportionately  equivalent  increase in labor
costs.

We have  experienced  an  increase  in the  cost  of  wheel  components  for our
tire/wheel  assemblies due to the increasing  cost of steel.  We have not passed
the increases on to our customers and have elected to seek alternative suppliers
for components that are priced more competitively. However, if the cost of steel
wheel components continues to rise, we may elect to amend our product pricing to
reflect the increase in component  costs.  Also,  during the last six months our
chemical  pricing  increased  approximately  14%  and  we  expect  to  see  some
additional upward pressure on chemical pricing during the next fiscal year.

Corporate  Expense.   For  fiscal  year  2005,  total  operating  expenses  were
$10,571,052,  consisting of consulting expenses of $77,000,  payroll and payroll
taxes of $1,905,177,  depreciation  and  amortization of $385,726,  research and
development costs of $880,748,  bad debt expense of $14,087,  loss on impairment
of  assets  of  $18,054,   selling,   general  and  administrative  expenses  of
$1,156,260,  and an expense of $6,134,000 for advisory group services associated
with the grant of options to acquire an  aggregate  of  3,000,000  shares of our
common stock to third-party consultants. The value of the options was calculated
using the  Black-Scholes  option pricing model and was expended during the three
month period ended  September 30, 2004,  as reported in our quarterly  report on
Form 10QSB for that period.

For fiscal year 2004, total operating  expenses were  $5,045,895,  consisting of
consulting  expenses  of  $370,666,  payroll and  payroll  taxes of  $2,345,082,
depreciation  and  amortization of $296,232,  research and  development  cost of
$572,002,  bad debt  expense of $3,713 and selling,  general and  administrative
expenses of $1,458,200.

Our  corporate  expenses  increased  from  $5,045,895  in  fiscal  year  2004 to
$10,571,052  in fiscal year 2005,  for two main reasons:  (1) the $6,134,000 for
advisory group services  associated  with the grant of options and (2) increases
in research  and  development  expenses  attributed  to the  development  of our
polyurethane  elastomer car tire technology.  However,  for fiscal year 2005, we
had reductions in consulting expenses of $293,666;  payroll and payroll taxes of
$439,905, and selling, general and administrative expenses of $301,940.

For fiscal year 2006 we are estimating that our total operating expenses will be
approximately $5,000,000.

Interest Expense. We had no interest expense during fiscal years 2005 and 2004.

Other Income.  For fiscal year 2005, we had other income of $50,134,  consisting
of  interest  income of $35,181  (earned on account  receivables  and  temporary
investments  of cash not  immediately  needed in ordinary  daily  business)  and
miscellaneous  income of $14,953.  For fiscal year 2004,  we had other income of
$19,746, consisting of interest income of $17,234 (earned on account receivables
and  temporary  investments  of cash not  immediately  needed in ordinary  daily
business) and miscellaneous income of $2,512.

We  experienced  a net loss of  $10,073,008  for the year ended  June 30,  2005,
compared to a net loss of $4,721,255 for the year ended June 30, 2004. The basic
loss per share for fiscal year 2005 was $0.53  compared to $0.26 for fiscal year
2004, based on the weighted  average number of shares  outstanding of 18,931,779
and 17,846,910 for the respective periods.

Results of Operations--Years Ended June 30, 2004 and 2003

Net Sales

For a substantial portion of our operating history we focused on the development
of our technology and have been a development stage company. During this time we
had limited  revenues  from the sale of or Products.  In October  2001, we began
selling our Products to bicycle  shops,  hardware  stores and tire stores in the
United   States   through  the  use  of  a  few   independent   regional   sales
representatives traveling throughout their respective regions. In April 2003, we

                                       35
began to implement  changes to our sales and  marketing  plan based on a product
sector  approach.  This change helped us to increase our sales,  so that our net
sales for the year ended June 30, 2004 were $1,419,124,  a 36% increase over net
sales for the year ended June 30, 2003 of $1,040,246.

Cost of Goods Sold

Our cost of sales for the year ended June 30, 2004 was  $1,114,230,  or 78.5% of
sales as  compared  to  $976,132,  or 93.8% of sales for the year ended June 30,
2003,  resulting  in a gross  margin of $304,894 or 21.5% as compared to a gross
margin of $64,114 or 6.2% for the respective periods.  The increase in our gross
margin for the year ended June 30,  2004,  is a direct  result of  incorporating
revisions  to our  methods,  processes  and costs in order to  achieve  increase
manufacturing  efficiencies.  We are continuing to effect these revisions and we
believe  that,  for the fiscal year ending June 30, 2005,  our direct costs as a
percent of sales  will  continue  to be  reduced as our volume of Product  sales
exceeds  the fixed  costs of minimum  Product  production  (i.e.,  labor and raw
material costs,  etc.).  We believe we currently have  sufficient  manufacturing
equipment and employees to merit a  substantial  increase in production  without
incurring a proportionately  equivalent increase in labor costs. In addition, we
continue  to seek  reductions  in raw  material  and  component  costs  from our
principal suppliers.

During the year ended June 30, 2004, we  experienced  an increase in the cost of
wheel  components  for our tire/wheel  assemblies due to the increasing  cost of
steel.  We did not pass the  increases on to our  customers  and elected to seek
alternative  suppliers  for  components  that were  priced  more  competitively.
However,  if the cost of steel wheel components  continues to rise during fiscal
year 2005, we may elect to amend our product  pricing to reflect the increase in
component  costs.  During the reporting  period,  our chemical  pricing remained
relatively  constant.  We know of no other  predictable  events or uncertainties
that may be reasonably  expected to have a material  negative  impact on the net
sales revenues or income from our operations  other than a the  continuation  of
the sluggish U.S. economy that has occurred over the past several months and the
reduced consumer spending resulting therefrom.

Corporate  Expense.   For  fiscal  year  2004,  total  operating  expenses  were
$5,045,895,  consisting of consulting expenses of $370,666,  payroll and payroll
taxes of $2,345,082,  depreciation  and  amortization of $296,232,  research and
development  cost of $572,002,  bad debt expense of $3,713 and selling,  general
and administrative  expenses of $1,458,200,  resulting in a loss from operations
of $4,741,001.  For fiscal year 2003, total operating  expenses were $3,173,149,
consisting mainly of consulting expenses of $339,934,  payroll and payroll taxes
of  $1,083,910,   depreciation  and  amortization  of  $298,625,   research  and
development  costs of $28,607,  bad debt expense of $51,  loss on  impairment of
assets  of  $67,982  and  selling,   general  and  administrative   expenses  of
$1,354,040, resulting in a loss from operations of $3,109,035.

Our  corporate  expenses  increased  from  $3,173,149  in  fiscal  year  2003 to
$5,045,895 in fiscal year 2004, in large part to the following  reasons:  (1) An
increase in outside product and marketing consulting fees as a result of issuing
common  stock  for  services  valued  at  current  market  value in lieu of cash
payments;  (2) An increase in executive and employee compensation as a result of
issuing common stock for services valued at current market value in lieu of cash
payments;  and (3) An increase in research and  development  expenses,  in large
part attributed to the specific  endeavor to develop our polyurethane  elastomer
car tire technology. In connection with the foregoing,  during fiscal year 2004,
we issued  equity  instruments  for  services in lieu of cash with an  aggregate
value of $2,176,692.

For  fiscal  year  2005  we  are  estimating  that  our  selling,   general  and
administrative  expenses will remain relatively  constant with the approximately
$5,000,000 expended in fiscal year 2004.

Interest Expense. We had no interest expense during fiscal years 2004 and 2003.

Other Income.  For fiscal year 2004, we had other income of $19,746,  consisting
of  interest  income of $17,234  (earned on account  receivables  and  temporary
investments  of cash not  immediately  needed in ordinary  daily  business)  and
miscellaneous  income of $2,512.  In fiscal  year 2003,  we had other  income of
$17,063,  consisting  of interest  income of $16,397  and $666 of  miscellaneous
income.

We  experienced  a net loss of  $4,721,255  for the year  ended  June 30,  2004,
compared  with a net loss of  $3,091,972  for the year ended June 30, 2003.  The
basic loss per share for  fiscal  year 2004 was $0.26 as  compared  to $0.21 for
fiscal year 2003, based on the weighted average number of shares  outstanding of
17,846,910 and 14,796,744 for the respective periods.

                                       36
Liquidity and Capital Resources

During the fiscal year ended June 30, 2005, we financed our  operations  through
collecting  accounts  receivable  and issuing  common  stock for:  cash (paid in
connection  with the  exercise of  outstanding  stock  options);  prepayment  of
certain  salaries;  and payment of  professional  services.  For the fiscal year
ended June 30, 2004, we financed our operations in the same manner.

At June 30, 2005, we had current assets of $3,081,348 and current liabilities of
$84,828,  for a working capital  surplus of $2,996,520,  an increase of $640,389
over the working  capital  surplus of $2,356,131 we had at June 30, 2004. We had
cash and cash equivalents of $2,122,320 and net accounts  receivable of $168,838
at June 30, 2005 compared to cash and cash  equivalents  of  $1,591,289  and net
accounts  receivable  of $167,002  at June 30,  2004.  Our  increase in cash and
equivalents  at June 30, 2005, is  attributable  to the exercise of  outstanding
options during the year.

Net  cash  used  by our  operating  activities  for the  fiscal  year  2005  was
$2,618,898,  compared to $2,197,583 for the fiscal year 2004. Our operations for
fiscal year 2005 were funded  primarily by cash and cash  equivalents,  accounts
receivables,  and the  issuance of common  stock for  services  and salary.  Our
operations for fiscal 2004 were funded primarily the same way.

At June 30,  2005,  we had net  property  and  equipment  of  $1,141,315,  after
deduction of accumulated  depreciation  of $1,858,950.  At June 30, 2004, we had
net  property and  equipment  of  $1,445,993,  after  deduction  of  accumulated
depreciation  of  $1,567,187.  At June 30,  2005,  our  property  and  equipment
consisted mainly of leasehold improvements, $120,767; mold and models, $343,031;
equipment,  $2,280,888; furniture and fixtures, $70,678; and software, $184,901,
compared  to  leasehold  improvements,  $163,896;  molds and  models,  $315,282;
equipment,  $2,253,217;  furniture and fixtures, $70,033; vehicles, $25,851; and
software, $184,901, at June 30, 2004.

Our  financial  statements  are prepared  using  generally  accepted  accounting
principles  applicable to a going concern which  contemplates the realization of
assets and liquidation of liabilities in the normal course of business.  We have
historically incurred significant losses which have resulted in a total retained
deficit of $36,463,835 at June 30, 2005 which raises substantial doubt about our
ability to continue as a going concern.  Our financial statements do not include
any  adjustments  relating to the  recoverability  and  classification  of asset
carrying  amounts or the amount and  classification  of  liabilities  that might
result from the outcome of this uncertainty.

We have taken certain steps to maintain our operating and financial requirements
in an effort to enable us to  continue as a going  concern  until such time that
revenues are  sufficient to cover  expenses,  including:  (1) evaluating (A) our
cost of goods and equipment  utilization and  requirements of our  manufacturing
operations,  and (B) our sales and marketing plan on a product sector basis; (2)
continued  revisions  to our  methods,  processes  and costs in order to achieve
necessary  manufacturing  efficiencies (i.e., line automation,  reduced material
costs,  reduced  product  waste,  etc.);  and (3) seeking  reduced  material and
component costs from suppliers.

In addition,  to expanding revenue  opportunities during the fiscal year we have
commenced a program of (1) licensing  manufacturing  and distribution  rights to
certain of our polyurethane tire products to third-party  manufacturers based on
such factors as geographical locations and boundaries; (2) selling manufacturing
equipment to third-party  manufacturers  to manufacture  products  utilizing our
manufacturing equipment and processes;  (3) selling our proprietary polyurethane
chemical  systems to third-party  manufacturers  that utilize our  manufacturing
equipment  and  processes;  and (4)  offering  contract  design and  engineering
services to the tire and auto industries.

To  supplement  our cash needs  during the 2006 fiscal year we have (1) obtained
approximately $1,500,000 in funding through the exercise of outstanding options;
and (2)  expect  to  issued  common  stock in lieu of cash as  compensation  for
employment, development, and other professional services.

The combination of our accounts  receivables  and our cash and cash  equivalents
are expected to meet the balance of our operational needs during the 2006 fiscal
year. We are  currently  evaluating  funding  strategies to help outset any cash
shortfalls that may occur after during the 2006 fiscal year.

We  anticipate  that  during  the 2006  fiscal  year we will need  approximately
$4,000,000 to implement our plan and to meet our working capital requirements.

                                       37
Our  ability to  continue as a going  concern is  dependent  upon our ability to
successfully   accomplish  the  plan  described  above,  and  eventually  attain
profitable operations.

The accompanying  financial statements do not include any adjustments that might
be necessary should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements
-------------------------------

We currently have no off balance sheet arrangements.

Impact of Inflation
--------------------

We do not anticipate that inflation will have a material impact on our current
operations.

Seasonality
------------

Because the significant  portion of our current  customers  reside in the United
States,  we anticipate  that sales of certain of our lawn and garden Products to
those  customers  located in  Northern  portion of the  United  States  could be
reduced as a result of fall and winter climate and weather conditions.

                                       38
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to changes in  prevailing  market  interest  rates  affecting the
return on our  investments  but do not consider  this  interest rate market risk
exposure to be material to our financial condition or results of operations.  We
invest  primarily in United States Treasury  instruments  with short-term  (less
than one year) maturities. The carrying amount of these investments approximates
fair value due to the short-term  maturities.  Under our current policies, we do
not use derivative financial  instruments,  derivative commodity  instruments or
other financial  instruments to manage our exposure to changes in interest rates
or commodity prices.

                  MANAGEMENT--DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers

     The following sets forth certain information  regarding our directors as of
     March 8, 2006:

Name of Nominee*        Age   Principal Occupation
----------------       -----  ---------------------
Richard A. Steinke      63    Chief Executive Officer, President and Chairman of
                              our Board of Directors

Elliott N. Taylor       47    Executive  Vice  President,  General  Counsel  and
                              Chief Administrative Officer

James G. Moore, Jr.     57    Vice President of Operations and Engineering

Gary N. Benninger       64    Executive  Vice  President  and  Chief   Operating
                              Officer

Anders A. Suarez        40    Chief Financial Officer

David K. Griffiths      68    Secretary and Treasurer

Louis M. Haynie         78    Director

Henry D. Moyle          75    Director

Wesley G. Sprunk        68    Director

Norman H. Tregenza      68    Director

Steve M. Hanni          37    Director

Kenneth C. Johnsen      47    Director

Richard  A.  Steinke  is our  founder  and  currently  serves as our  President,
Chairman and Chief  Executive  Officer.  From January 1992 to December  1994, he
served as  Chairman  and  C.E.O.  of Alanco  Environmental  Resources,  Inc.,  a
manufacturer of environmental/pollution control equipment, Salt Lake City, Utah.
From  June  1985  to  December  1991,  he was the  Chairman  and  C.E.O.  of UTI
Chemicals,  Inc., a developer and manufacturer of urethane  chemicals,  El Toro,
California.  He received a B.A. in  Political  Science  and  Economics  from the
University of Arizona, Tucson, Arizona, in 1967.

Elliott N. Taylor became  Executive Vice  President and General  Counsel in June
2002.  Prior to  joining  us,  he was the  principal  attorney  for  Taylor  and
Associates,  Inc., a law firm in Salt Lake City, Utah, specializing in corporate
and  securities  law since May 1993.  From August 1991 to March 1993, he was the
general  counsel and chief financial  officer for Carbon Fiber  Products,  Inc.,
Ogden,  Utah, a manufacturer of composite  products for the golf industry.  From
November  1987 to July 1991,  he was an  associate  attorney  at Kruse,  Landa &
Maycock,  a law firm in Salt  Lake  City,  Utah.  He  received  a J.D.  from the
University  of Tulsa,  Tulsa,  Oklahoma in 1986 and a B.S. in Political  Science
from Utah State University, Logan, Utah in 1982.

                                       39
James G. Moore,  Jr. joined us in August 1997. Prior to his employment by us, he
worked at The Goodyear Tire & Rubber Company,  in Akron, Ohio, where he had over
25 years of experience as a master tire carver, which included five years at the
Goodyear apprentice school for tire tread pattern carving and mold carving.

Dr. Gary N. Benninger  became our Chief  Operating  Officer in October 2005. Dr.
Benninger  served as Director  of  Technology  Development  from 1999 to 2005 by
Magna  International,  Inc., a $20+billion  diversified auto parts supplier.  In
this  capacity,   Dr.   Benninger  was   responsible  for  identifying  key  new
technologies  as well as managing  the  design,  engineering  and  manufacturing
launch of target  products.  During 1998 and 1999,  Dr.  Benninger was the Chief
Operating  Officer of the North  American  Operations  of Becker  Group,  a $1.5
billion privately held automotive  interior systems  supplier.  Prior to joining
Becker,  he was the Executive Vice President of Engineering and R&D at Magna and
also  served  as  Division   General  Manager  and  Vice  President  of  Product
Development. He has also worked for Ford Motor Company as an engineering manager
and the  National  Aeronautics  and Space  Administration  (NASA) as a  research
scientist. Dr. Benninger received his B.S. (1964), M.S. (1965), and Ph.D. (1970)
degrees  all in  physics  at the  West  Virginia  University,  Morgantown,  West
Virginia.

Anders Suarez was appointed our chief financial  officer in July 2004.  Prior to
his appointment he worked as our Financial Systems  Administrator  since October
2003.  Prior to joining us, from 1999 to 2003,  Mr.  Suarez  worked as a project
manager/senior  consultant  for ePartners,  Inc.,  Phoenix,  Arizona,  a leading
provider of Microsoft-based  business solutions for middle market companies.  He
received his B.S. in Finance from the University of Arizona,  Tucson, Arizona in
1995,  and  his  M.B.A.  from   Thunderbird-The   American  Graduate  School  of
International Management, Glendale, Arizona in 1996.

David K. Griffiths has been our Secretary/Treasurer  since December 2000 and was
our principal  accounting  officer from February 1995 to June 2004. From 1960 to
1995,  he  was  self-employed  as an  accountant/consultant  for  various  small
businesses.  He  offers  the  Company  45 years  experience  in  accounting  and
accounting related systems.  He received a B.S. in Accounting from Arizona State
University, Tempe, Arizona in 1959.

Louis M. Haynie has been a member of our Board of Directors since July 1997. Mr.
Haynie's past board services include,  Research  Medical,  Inc., Salt Lake City,
Utah, the University of Utah Regents Advisory Board, Redwood Land Co., Salt Lake
City,  Utah,  and MIS  Corporation,  Franklin,  Tennessee.  Mr. Haynie has a law
degree from the  University of Utah and has been in the private  practice of law
since 1951.

Henry D. Moyle has been a member of our Board of  Directors  since  March  1999.
Since  1992,  he has been  President  and C.E.O.  of Silver  Lake  Company,  and
formerly President and C.E.O. of Brighton Properties, Inc. From 1970 to 1983, he
was President and C.E.O. of Research Industries Corporation.  He received a B.A.
from Stanford in 1957, and a J.D. degree from the University of Utah in 1959. He
is the owner of Sunset Canyon Ranch,  raising cattle and racehorses,  and serves
on the Board of Directors of Silver Lake Company and Sunset Medical Corporation.

Wesley G. Sprunk, joined our board in January 2003. Mr. Sprunk owns and operates
Saf-Tee Siping & Grooving,  a tire siping  equipment  manufacturing  company and
Tire Service Equipment Mfg. Co., Inc., a manufacturer and marketer of automotive
wheel  service  equipment  and  recycling  equipment,  both  located in Phoenix,
Arizona.

Norman  H.  Tregenza,  joined  our  board  in  April  2003 and has over 40 years
experience in corporate finance,  including 12 years as an investment officer in
the securities  division of TIAA-CREF,  New York City. Mr.  Tregenza co- founded
Tempo  Enterprises,  Inc.  in  1976  to  act  as a  common  carrier  for  Turner
Communication's  Superstation's  signal to the RCA  satellite.  Tempo obtained a
listing  on  the  American  Stock  Exchange  in  1986.   Before  being  sold  to
Telecommunications,  Inc. (TCI) in 1988, Tempo owned several cable TV companies,
radio   stations  and  its  own  satellite  TV  network   while   supplying  the
Superstation's  signal to  approximately  50 million homes.  TCI was acquired by
AT&T in 2000. Mr. Tregenza received a B.A. from St. Lawrence University, Canton,
NY, in 1959, and a MBA from NYU in 1963.

Steve M. Hanni is currently a partner in the accounting firm of Stayner, Bates &
Jensen,  PC in Salt Lake City,  Utah. He was formerly an audit partner with HJ &
Associates,  LLC from 1997 to 2001.  Since  November  2002,  he also serves on a
part-time basis as Chief Financial  Officer for Emergency  Filtration  Products,
Inc.,  Las Vegas,  a public  company that produces masks and filters for medical
devices  that  are  designed  to  reduce  the  possibility  of  transmission  of
contagious diseases, and distributes a blood clotting device for surgery, trauma
and burn wound management.  Emergency Filtration Products, Inc. is traded on the

                                       40
NASDAQ OTCBB under the symbol "EMFP". Mr. Hanni received his BA from Weber State
University in 1993 and an MA in Accounting from Weber State  University in 1994.
He has worked extensively with small public companies in numerous industries.

Kenneth C.  Johnsen,  currently  serves as a member of the Board of Directors of
Joy Global,  Inc.,  Milwaukee,  Wisconsin (NASDAQ:  JOYG), a worldwide leader in
manufacturing,  servicing and distributing equipment for surface and underground
mining. From April 2001 to June 2005, Mr. Johnsen was a Director,  President and
Chief Executive Officer of Geneva Steel, Vineyard, Utah. Mr. Johnsen also served
in various other capacities at Geneva Steel, including Executive Vice President,
Secretary  and General  Counsel for the period  between  October  1991 and April
2001. Prior to joining Geneva, Mr. Johnsen was an attorney with Parr,  Waddoups,
Brown,  Gee & Loveless in Salt Lake City,  Utah from 1986 to 1991.  Mr.  Johnsen
earned a B.A. in Finance from Utah State University (1982), and a J.D. from Yale
Law School in 1985.

Audit Committee

Our Audit Committee includes directors Wesley Sprunk,  Norman Tregenza and Steve
Hanni  (appointed  September  2005 to the Board of Directors  and  designated as
chairman of the Audit  Committee).  Our Board of Directors has  determined  that
Steve Hanni is an "audit  committee  financial  expert" as defined under new SEC
regulations, who is independent of management. The tasks and responsibilities of
the Audit  Committee  include  (i) the  review  and  discussion  of the  audited
financial  statements  with  management,  (ii)  discussing  with the independent
auditors  the matters  required to be  discussed  by the  Statement  of Auditing
Standards No. 61, as may be modified or  supplemented,  and (iii) receiving from
auditors  disclosure  regarding  the  auditors'   Independence  Standards  Board
Standard  No.  1, as may be  modified  or  supplemented.  Members  of the  audit
committee met 4 times during the fiscal year ended June 30, 2005.

Executive Committee

Our Executive Committee consists of Richard A. Steinke, Louis M. Haynie, Kenneth
Johnsen and Henry D. Moyle,  Jr. The  Executive  Committee's  purpose is to: (1)
review and make recommendations regarding our short-term and long-term operating
plan; and (2) review management's plans regarding product  development,  product
pricing  structure,  product market segments and product marketing  strategy and
make recommendations regarding changes and/or modifications thereto.

The Executive Committee meets on an ad hoc basis from time to time as determined
by Mr. Steinke,  who serves as chairman of the Executive  Committee,  until such
time as the Executive  Committee is disbanded or until their successors are duly
elected and shall  qualify.  Members of the  executive  committee met four times
during the fiscal year ended June 30, 2005.

Compensation Committee

Our Compensation  Committee includes Louis M. Haynie,  Steve Hanni and Wesley G.
Sprunk. The Compensation Committee meets as necessary but at least once annually
to review executive compensation and make recommendations regarding compensation
to the full board. The  Compensation  Committee met twice during the fiscal year
ended June 30, 2005.

Nominating Committee

Our Nominating Committee includes Henry D. Moyle , Kenneth Johnsen and Norman H.
Tregenza. The Nominating Committee meets as necessary but at least once annually
to consider  and  recommend  potential  nominees for  directorships  to the full
board.   The  Nominating   Committee   charter  is  posted  on  our  website  at
www.amerityre.com.  Pursuant  to the  charter,  the  Nominating  Committee  will
consider candidates for directorships proposed by any shareholder although there
is no formal procedure for making such proposals.

Meetings of our Board of Directors

Our Board of Directors held ten meetings  during the 2005 fiscal year (including
those meetings conducted by telephone conferencing).

                                       41
Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and
10%  stockholders  (collectively,  "Reporting  Persons")  to file  with  the SEC
initial  reports of  ownership  and changes in  ownership  of our Common  Stock.
Reporting  Persons are required by SEC  regulations to furnish us with copies of
all Section  16(a)  reports  they file.  To our  knowledge,  based solely on our
review of the copies of such reports  received or written  representations  from
certain Reporting  Persons that no other reports were required,  we believe that
during our fiscal year ended June 30, 2005,  all Reporting  Persons timely filed
all such reports.

Code of Ethics

We have adopted a Code of Business  Conduct  that applies to all our  directors,
officers and  employees.  A copy of the code of ethics will be provided  free of
charge  upon  written  request  to our  Secretary  at the  address  shown on the
coverage page of this report and is  accessible,  free of charge at our Internet
website,  http://www.amerityre.com.  If we grant waivers from or make amendments
to this  code of  ethics  that are  required  to be  disclosed  pursuant  to the
Securities Exchange Act of 1934 or applicable listing requirements, we will make
those disclosures on our website within four business days following the date of
such  waiver or  amendment.  Our  website and the  information  contained  in or
connected to our website are not part of this report.

Compensation to Executive Officers

The following table shows the  compensation  received for the fiscal years ended
June 30, 2005, 2004, 2003 and 2002 by (1) the individual who served as our Chief
Executive Officer and (2) the four other most highly compensated individuals who
served as one of our executive  officers  during the fiscal years ended June 30,
2005, 2004, 2003 and 2002 (the "Named Executive Officers").
Summary Compensation Table
                                                            Long Term Compensation
                                                            ----------------------
                     Annual Compensation                    Awards       Payouts
                                              Other         Restricted
Name and                                      Annual        Stock       Options  LTIP     All other
Principal Position Year   Salary    Bonus($)  Compensation  Awards      /SARs    Payout  Compensation
------------------ ---- ---------  ---------  ------------  ---------  --------  -------  ------------
Richard A. Steinke 2005  $598,000     -0-     $    -0-       $-0-        $-0-     $-0-     $  48,750
CEO, Pres. and     2004  $474,500     -0-     $  492,000     $-0-        $-0-     $-0-     $   -0-
Chairman           2003  $424,000     -0-     $    -0-       $-0-        $-0-     $-0-     $   -0-
                   2002  $400,000     -0-     $   30,000      -0-         -0-      -0-         -0-

Elliott N. Taylor, 2005  $180,000     -0-     $    -0-       $-0-        $-0-     $-0-     $   -0-
Executive V.P.     2004   120,000     -0-     $   81,999     $-0-        $-0-     $-0-     $   -0-
                   2003   120,000     -0-          -0-       $-0-        $-0-     $-0-     $   -0-
                   2002     5,000     -0-          -0-        -0-         -0-      -0-         -0-
In July 2004,  our board  authorized the issuance of 65,000 shares of restricted
common stock to Richard  Steinke as  employment  compensation  from July 1, 2004
through June 30, 2005. The value of the shares was $598,000,  based on $9.20 per
share,  the  closing  price  of the  common  stock  on  the  date  of the  board
resolution.

In July 2004,  we issued 5,000 shares of our  restricted  common stock as a one-
time payment to the Richard Steinke,  in exchange for an assignment and transfer
of certain  patents to the  Company.  The shares  were valued at $9.75 per share
based on the  closing  price of our common  stock as quoted on the OTC  Bulletin
Board  July  1,  2004.  The  expense  associated  with  the  acquisition  of the
technology will be amortized over the remaining life of the applicable  patents.
Due to Mr.  Steinke's  relationship to the Company,  the  transaction  cannot be
considered to have been negotiated at arm's length.

Pursuant to a resolution of our board of directors in December 2001,  Richard A.
Steinke was issued  100,000  shares of  restricted  common stock in lieu of cash
compensation for services  through  December 31, 2001 and an additional  100,000
shares of restricted common stock as prepaid compensation through June 30, 2002.
The  aggregate  value of the 200,000  shares was  $400,000  based on the closing

                                       42
price of our common stock on the date of the board resolution. In November 2002,
the board  authorized the issuance of 200,000 shares of restricted  common stock
to Mr.  Steinke as  employment  compensation  from July 1, 2002 through June 30,
2003.  The  aggregate  value of the 200,000  shares was  $424,000,  based on the
closing price of our common stock on the date of the board resolution.

In  October  2003,  our board  authorized  the  issuance  of  125,000  shares of
restricted  common stock to Mr. Steinke as employment  compensation from July 1,
2003 through June 30, 2004.  The value of the shares was $472,500,  based on the
closing  price of the common stock on the date of the board  resolution.  In May
2004,  the board  approved the issuance of 60,000  shares of common stock to Mr.
Steinke as additional  compensation for service provided during the fiscal year.
The value of the shares was  $492,000,  based on the closing price of our common
stock on the date of the board resolution.

During the year ended June 30, 2004, Elliott N. Taylor received a base salary of
$120,000.  In addition,  the board  approved  the  issuance of 10,000  shares of
common stock to Mr.  Taylor as  additional  compensation  for services  provided
during  the fiscal  year.  The value of the  shares  was  $81,999,  based on the
closing price of our common stock on the date of the board resolution.

Employment Benefits

We provided health and medical  insurance to our executive  officers  similar to
that which is made available to all full time  employees,  and we reimbursed our
executive officers for reasonable  out-of-pocket expenses incurred in connection
with our business.

As a condition to  employment,  our management and key personnel are required to
sign a  non-disclosure  and  non-competition  agreement.  Under the terms of the
agreement,  employees  are not able to provide  services or  information  deemed
confidential  by us to any other company or person which  directly or indirectly
competes with us in the tire industry or an industry which we intended to enter.
There is no time limitation on the non-disclosure  aspect of the agreement.  The
non-competition  clause  is for a period  of two  years  and  prevents  a former
employee or  consultant  from acting as an employee,  consultant or in any other
capacity for a  competitor.  Additionally,  all  employees  are  required,  as a
condition of their employment,  to enter into a non-disclosure agreement related
to any information or process deemed confidential by us.

Option/SAR Grants in Fiscal Year Ended June 30, 2005

The following  table  summarizes  stock option grants during fiscal year 2005 to
our Chief Executive Officer and our other Named Executive Officers.

                     OPTION/SAR GRANTS DURING LAST FISCAL YEAR
                                     Individual Grants
                     -----------------------------------------------------
                     Number of     % of Total
                     Securities    Options/SARs
                     Underlying    Granted to      Exercise or
                     Options/SARs  Employees       Base Price   Expiration
Name                 Granted       in Fiscal Year  ($/Share)    Date
-------------------  ------------  --------------  -----------  ----------
       (a)               (b)            (c)            (d)         (e)

Elliott N. Taylor      25,000           24          $6.40       12/15/09

Aggregated  Option/SAR  Exercises in Last Fiscal Year and Fiscal Year-End Option
Values

The following table sets forth certain information with respect to stock options
exercised by our Chief Executive Officer and our other Named Executive  Officers
during the fiscal year ended June 30, 2005.

                                       43
Number of
                                                   Securities    Value of
                                                   Underlying    Unexercised
                                                   Unexercised   In-the-Money
                                                   Options/SARs  Options/SARs
                     Shares                        at FY-End(#)  at FY-End($)
                     Acquired       Value          Exercisable/  Exercisable/
Name                 on Exercise(#) Realized($)    Unexercisable Unexerciable
-------------------  -------------  -------------  ------------  ------------
       N/A               N/A           N/A             N/A            N/A

Pension Table
-------------
Not Applicable.

Other Compensation
------------------
None.

Compensation of Directors

In December  2004, we issued options to acquire an aggregate of 80,000 shares of
our common stock to  non-employee  directors for annual  service on our Board of
Directors  pursuant to our 2004  Non-Employee  Directors'  Stock Incentive Plan.
These options  vested on June 15, 2005,  are  exercisable at $6.40 per share and
expire on December 15, 2007.

In addition to the above compensation,  as compensation for serving on the audit
committee,   in  September   2005,  the  Board  of  Directors   approved  annual
compensation  for the  chairman  of the  Audit  Committee  of  $25,000,  payable
quarterly in cash or stock.

Employment Contracts and Change in Control Arrangements

Effective  October  2005,  we have written  employment  agreements  with Richard
Steinke,  Elliott Taylor, Gary Benninger,  Anders Suarez, James Moore, and David
Griffiths, as follows:
Schedule of Employment Agreement and Key Terms for Executive Officers
----------------------- ------- -------- -------------- --------------- ------------ -------------------------------
                                                             Additional    Adjusted
                                 Base       ($) Value       ($) Value      Annual
Name Executive                  Annual         Cash           Stock        Salary           Stock Award and/or
Officer/Title           Term    Salary      Compensation   Compensation    FY 2006            Option Grants
----------------------- ------- -------- -------------- --------------- ------------ -------------------------------
Richard A. Steinke,      7/05     $500K       $300,000       *$200,000     $500,000   * 30,303 shares valued at
Pres and CEO             thru                                                         $6.60/sh and 300,000 options
                         6/08                                                         at $6.60/sh; 5 year term;
                                                                                      options vest 1/3 annually
Gary N. Benninger       10/05     $250K       $250,000        *$53,600     $303,600
Chief Operating          thru                                                         * 10,000 shares valued at
Officer                 10/06                                                         $5.36/sh vesting 1/15/06; and
                                                                                      150,000 options at $5.36/sh;
                                                                                      5 yr term; options vest 1/3
                                                                                      annually
Elliott N. Taylor,       7/05     $250K       $250,000               -     $250,000
ExecVP/Gen'l Counsel     thru                                                         150,000 options at $6.60/sh;
                         7/08                                                         5 yr term; options vest 1/3
                                                                                      annually
Anders A. Suarez,        7/05     $125K       $125,000               -     $125,000
Chief Financial          thru
Officer                  7/08                                                         75,000 options at $6.60/sh; 5
                                                                                      yr term; vest 1/3 annually

James G. Moore, Jr.,     7/05     $125K       $125,000               -     $125,000
VP -  Engineering &      thru                                                         75,000 options at $6.60/sh; 5
Manufacturing            6/08                                                         yr term; vest 1/3 annually

David K. Griffiths       7/05      $72K        $72,000               -      $72,000
Secretary/Treasurer      thru                                                         25,000 options at $6.60/sh; 5
                         6/06                                                         year term; 100% vesting at 6/30/06
----------------------- ------- -------- -------------- --------------- ------------ -------------------------------
In the event of either termination for cause or due to a change of control,  the
above employees are entitled to salary,  earned bonus  compensation and benefits
for the lesser of the balance of the respective  employment  agreement or twelve
(12) months.

Other  than the  above,  there are no change of  control  arrangements  with any
person.

Benefit Plans

2002 Plan and 2005 Plan Summary
--------------------------------

Both the 2002 Plan and the 2005 Plan (the "Award  Plans") are intended to reward
employees  and other  individuals  who  contribute to our success and to provide
them  with a stake in the  enterprise  as  shareholders.  Consistent  with  this
belief, the award of stock options has been and will continue to be an important
element of our compensation program.

We intend to use the Award Plans to (a) attract competent  directors,  executive
personnel,  and other  employees,  (b) aid in the  retention  of the services of
existing  directors,   executive  personnel,  and  employees,  and  (c)  provide
incentives to all of such personnel to devote the utmost effort and skill to our
advancement  by  permitting   them  to  participate  in  ownership  and  thereby
permitting them to share in increases in the value which they help produce.

The  Award  FPlans  are   administered  by  our   Compensation   Committee  (the
"Committee")  appointed  from  time to time by our  board of  directors.  Awards
granted under the Award Plan may be incentive stock options  ("ISOs") as defined
in the Internal  Revenue Code of 1986,  as amended  (the  "Code"),  appreciation
rights,  options  which do not qualify as ISOs,  or stock bonus awards which are
awarded to our employees,  including officers and directors, who, in the opinion
of the board or the Committee, have contributed,  or are expected to contribute,
materially  to our  success.  In  addition,  at the  discretion  of our Board of
Directors or the Committee, options or bonus stock may be granted to individuals
who are not employees but contribute to our success.

The exercise  price of options  granted under the Award Plans (as  determined by
our Board of Directors), may be based on the fair market value of the underlying
common  stock at the time of grant and, in the case of ISOs may not be less than

                                       44
100% of the fair market  value of such  capital  stock on the date the option is
granted (110% of the fair market value in the case of 10% stockholders).

Options granted under the Award Plans shall expire no later than ten years after
the date of grant (five years in the case of ISOs granted to 10%  stockholders).
The  option  price  may be paid by cash or,  at the  discretion  of our Board of
Directors or Committee, by delivery of a promissory note or shares of our Common
Stock  already  owned by the optionee  (valued at their fair market value at the
date of exercise), or a combination thereof.

All of our employees,  officers, and directors are eligible to participate under
the Award Plans.  A maximum of 2,000,000  shares are  available  for grant under
each Award Plan. The  identification of individuals  entitled to receive awards,
the terms of the awards,  and the number of shares subject to individual awards,
are  determined  by our  Board of  Directors  or the  Committee,  in their  sole
discretion  provided,  however,  that in no event may the aggregate  fair market
value of shares for which an ISO is first  exercisable  in any calendar  year by
any eligible employee exceed $100,000.

The aggregate number of shares with respect to which options or stock awards may
be  granted  under the  Award  Plans,  the  number  of  shares  covered  by each
outstanding  option,  and the purchase price per share shall be adjusted for any
increase  or  decrease  in  the  number  of  issued  shares   resulting  from  a
recapitalization,  reorganization,  merger,  consolidation,  exchange of shares,
stock  dividend,  stock split,  reverse  stock split,  or other  subdivision  or
consolidation of shares.

Our Board of  Directors  or the  Committee  may from time to time alter,  amend,
suspend,  or discontinue  the Award Plans with respect to any shares as to which
options or stock awards have not been granted.  However,  no such  alteration or
amendment  (unless  approved by our  stockholders)  shall (a)  increase  (except
adjustment  for an event of  dilution)  the  maximum  number of shares for which
options  or stock  awards  may be granted  under the Award  Plans  either in the
aggregate or to any eligible  employee:  (b) reduce  (except  adjustment  for an
event of dilution) the minimum option prices which may be established  under the
Award  Plans;  (c)  extend the period or periods  during  which  options  may be
granted or exercised;  (d) materially  modify the requirements as to eligibility
for  participation  in the Award Plans;  (e) change the  provisions  relating to
events of dilution;  or (f)  materially  increase  the benefits  accruing to the
eligible participants under the Award Plans.

If a participant  to whom an option is granted  exercises such option by payment
of the exercise  price in whole or in part with  previously  owned  shares,  the
optionee will not realize  income with respect to the number of shares  received
on exercise  which equals the number of shares  delivered by the  optionee.  The
optionee's  basis for the delivered  shares will carry over to the option shares
received.  With regard to the number of  non-qualified  option  shares  received
which exceeds the number of shares delivered, the optionee will realize ordinary
income at the time of exercise; and the optionee's tax basis in these additional
option shares will equal the amount of ordinary  income realized plus the amount
of any cash paid.

Recipients  of ISOs will not be required to recognize  income at the time of the
grant of the  options or at the time of  exercise  of the options as long as the
stock  received  on exercise is held for at least two years from the date of the
grant of the ISOs or one year from the date of exercise (although the difference
between the fair market  value of the stock and the  exercise  price paid at the
time of  exercise  must be  taken  into  account  for  alternative  minimum  tax
purposes). If the stock received upon exercise of an ISO is disposed of prior to
the expiration of either of such time periods,  the optionee will be required to
recognize  as ordinary  income the amount by which the fair market  value of the
stock received at the time of exercise exceeds the exercise price of the ISOs.

Under the Award Plans, stock appreciation  rights ("SARs") can be granted at the
time an option is granted with respect to all or a portion of the shares subject
to the  related  option.  SARs can only be  exercised  to the extent the related
option is exercisable and cannot be exercised for the six-month period following
the date of grant,  except in the event of death or  disability of the optionee.
The exercise of any portion of either the related option or the tandem SARs will
cause a corresponding reduction in the number of shares remaining subject to the
option or the tandem SARs thus maintaining a balance between outstanding options
and SARs.  SARs  permit the holder to receive an amount (in cash,  shares,  or a
combination  of cash and shares,  as determined by our Board of Directors at the
time of grant) equal to the number of SARs exercised multiplied by the excess of
the fair market value of the shares on the exercise date over the exercise price
of the related options.

Under the terms of the Award Plans,  our board of directors or the Committee may
also grant stock awards which may, at the  discretion  of our Board of Directors
or Committee,  be subject to forfeiture under certain conditions.  Recipients of
stock  awards  will  realize  ordinary  income  at the time of the  lapse of any
forfeiture  provisions  equal to the fair  market  value of the shares  less any
amount paid in  connection  with the  issuance  (our Board of  Directors  or the
Committee  can require  the  payment of par value at the time of the grant).  We

                                       45
will  realize a  corresponding  compensation  deduction.  The holder will have a
basis in the shares  acquired  equal to any  amount  paid on  exercise  plus the
amount of any ordinary income  recognized by the holder.  On sale of the shares,
the holder will have a capital gain or loss equal to the sale proceeds minus his
or her basis in the shares.

2004 Non-Employee Directors' Stock Incentive Plan
--------------------------------------------------

The 2004  Plan  was  established  to  attract,  motivate  and  retain  qualified
non-employee  Directors.  The 2004  Plan will  provide a means for  non-employee
Directors to increase their equity ownership  consistent with our guidelines for
stock ownership by non-employee Directors.  The 2004 Plan has not been submitted
to our shareholders for approval.

The date of grant to eligible directors is December 15th of each year during the
life of the 2004 Plan and for any  supplemental  grant,  on a date determined by
the Board of  Directors.  An eligible  director is any person who on the date of
grant is a member of the Board of Directors.

A total of 1,200,000  shares of common stock may be awarded under the 2004 Plan.
If any shares  subject to any award  granted  thereunder  are  forfeited or such
award  otherwise  terminates  without  the  issuance  of such shares or of other
consideration  in lieu of such shares,  the shares subject to such award, to the
extent of such  termination  or  forfeiture,  shall again be available for grant
under the 2004 Plan during the term of the Plan.

The 2004 Plan has a duration of five (5) years  commencing on December 15, 2004.
Awards of Stock Options and of Restricted Stock under this Plan shall be made at
the discretion of the Board of Directors,  subject to a maximum individual award
of up to 10,000 Stock  Options or up to 10,000 shares of  Restricted  Stock,  or
some  combination  aggregating  no more  than  10,000  total  in any  one  year.
Determination of such awards, if any, shall be made annually by the entire board
of  directors,  with the  exercise  price of Stock  Options  or the value of the
Restricted  Stock to be determined as of December 1st. The term of Stock Options
shall be three years from the date of grant.  Under no  circumstances  shall any
option vest in less than six months from the date of grant.

In the event of a reorganization, recapitalization, stock split, stock dividend,
combination  of  shares,  merger,  consolidation  or  any  other  change  in our
corporate  structure  affecting  common  stock,  or a  sale  by us of  all  or a
substantial part of its assets, or any distribution to stockholders other than a
cash dividend,  our Board of Directors will make  appropriate  adjustment in the
number  and kind of  shares  authorized  by the  Plan,  and any  adjustments  to
outstanding  awards as it deems  appropriate.  However,  no fractional shares of
common stock will be issued pursuant to any such adjustment, and the fair market
value of any fractional  shares  resulting from adjustments will be paid in cash
to the awardee.

All options  and  restricted  stock  granted to an awardee  shall  automatically
terminate and be null and void as of the date an eligible  director's service on
the Board of Directors  terminates if the directorship is terminated as a result
of any act of (a) fraud or intentional  misrepresentation,  or (b) embezzlement,
misappropriation, or conversion of assets or opportunities of our company.

Equity Compensation Plan Information

The following  table sets forth  information as of the end of June 30, 2005 with
respect to compensation  plans under which our equity  securities are authorized
for issuance.
Number of Securities to              Weighted-Average
                               be Issued upon                  Exercise Price of              Number of Securities
                           Exercise of Outstanding                 Outstanding                Remaining Available
                             Options, Restricted               Options, Restricted            for Future Issuance
                               Stock Units and                   Stock Units and                  Under Equity
                             Performance Units                 Performance Units               Compensation Plans
Plan Category (1)                  A (4)                               B                               C
------------------        -------------------------          ---------------------           ----------------------
Equity compensation                    395,000               $             5.04                            209,191
   plans approved by
   security holders

                                       46
Equity compensation
   plans not approved
   by security
   holders (1) (2) (3)              3,550,000                $             6.59                          1,020,000
                          -------------------------          ---------------------           ----------------------

Total                               3,945,000                $             6.31                          1,229,191
                          -------------------------          ---------------------           ----------------------
(1)     Includes options to acquire up to 470,000 shares at an exercise price of
        $3.00 per share that expire July 31,  2005,  owned  beneficially  and of
        record by Focus Sales and Marketing,  L.L.C.  and issued as compensation
        in association with product marketing services.

(2)     Includes 3,000,000 Options to certain non-employees at an exercise price
        of $7.00 per share.  The closing  price for our common stock on the date
        the Option grants were authorized was $6.95 per share.  The Options vest
        immediately,  but are exercisable only as follows:  (a) one-third of the
        total  Options are  exercisable  on the earlier of September 13, 2006 or
        the first day after the closing price of our common stock has equaled or
        exceeded a price equal to 150% of the exercise  price for 20 consecutive
        trading days; (b) one- third of the total Options are exercisable on the
        earlier of September  13, 2006 or the first day after the closing  price
        has equaled or  exceeded a price equal to 175% of the closing  price for
        20 consecutive  trading days; and (c) one-third of the total Options are
        exercisable  on the earlier of September 13, 2006 or the first day after
        the  closing  price has equaled or exceeded a price equal to 200% of the
        closing price for 20 consecutive trading days.

(3)     Includes  options to acquire an aggregate of 80,000 shares of our common
        stock to  non-employee  directors  for  annual  service  on our Board of
        Directors  pursuant to our 2004 Non-Employee  Directors' Stock Incentive
        Plan.  These options vested on June 15, 2005,  are  exercisable at $6.40
        per share and expire on December 15, 2007.

(4)     This table does not give effect to the 2005 Stock  Option and Award Plan
        for the  issuance  of up to  2,000,000  options  and/or  shares that was
        approved by our board of directors in July 2005 and by the  shareholders
        in December  2005. A total of 625,000  shares have been issued under the
        2005 Plan.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain  information  known to us with respect to
the  beneficial  ownership  of our common stock as of March 8, 2006 by: (1) each
person  known  by us to be a  beneficial  owner of five  percent  or more of our
common stock,  (2) each of our  directors,  (3) each of our  executive  officers
named in the  Summary  Compensation  Table set forth  herein and (4) all current
directors and executive officers as a group.

                                             Number of      Percent of Total
Name and Address                             Shares(1)    Shares Outstanding (1)
------------------                        -------------  -----------------------

Richard A. Steinke (2)                      1,425,000           6.49%

Elliott N. Taylor  (5)                        360,860           1.72%

Gary N. Benninger                              10,000             *

Anders A. Suarez  (6)                          69,400             *

James G. Moore, Jr. (7)                        45,535             *

David K. Griffiths                             73,594             *

                                       47
Louis M. Haynie (8)                           449,252           2.14%

Henry D. Moyle (9)                            727,252           3.47%

Wesley G. Sprunk (10)                         157,442             *

Norman H. Tregenza (11)                       341,552           1.63%

Steve Hanni                                     3,704             *

Kenneth C. Johnsen                              6,852             *

All current directors and executive
officers as a group (12 persons)            4,007,345          22.51%

Centuion Holdings, LLC
375 Park Avenue, Suite 2008
New York, NY 10152 (3)                       1,300,00           6.49%

Joseph J. Grano, Jr.                        1,481,900           7.06%

 *   Less than one percent.

     Beneficial ownership is determined in accordance with the rules of the SEC.
     In determining the number of shares beneficially owned by a person, options
     or warrants to purchase common stock held by that person that are currently
     exercisable,  or become exercisable within 60 days following March 8, 2006,
     are deemed outstanding; however, such shares are not deemed outstanding for
     purposes of computing  the  percentage  ownership of any other  person.  We
     believe  that all of the  persons  named in this table have sole voting and
     investment  power  with  respect  to all  shares of common  stock  shown as
     beneficially  owned by them,  subject  to  community  property  laws  where
     applicable and except as indicated in the other footnotes to this table.

     As of March 8, 2006,  20,977,460  shares of common  stock  were  issued and
     outstanding.

(1)  All shares  owned  directly are owned  beneficially  and of record and such
     shareholder  has sole voting,  investment,  and dispositive  power,  unless
     otherwise noted.

(2)  Includes 455,000 shares owned  beneficially and of record by Gemini Funding
     Services  Profit  Sharing  Account,  of which  Richard  A.  Steinke  is the
     principal  beneficiary and 800,000 shares owned  beneficially and of record
     by S102 Irrevocable Trust, for which Richard A. Steinke is the trustee.

(3)  Represents  options to acquire  1,300,000  shares at an  exercise  price of
     $7.00 per share that expire September 12, 2009.

(4)  Includes  options to acquire up to 200,000  shares at an exercise  price of
     $4.00 per share that expire June 10, 2007, and 25,000 shares at an exercise
     price of $6.40 per share that  expire  December  15,  2009.  Also  includes
     25,000  shares per power of attorney;  20,692  shares as custodian  for Mr.
     Taylor's minor children; and 80,918 shares as trustee for family trusts.

(5)  Includes  options to acquire up to 30,000  shares at an  exercise  price of
     $3.80 per share that expire  September  30, 2006,  and 25,000  shares at an
     exercise price of $6.40 per share that expire December 15, 2009.

(6)  Includes  options to acquire up to 25,000  shares at an  exercise  price of
     $6.40 per share that expire December 15, 2009.

(7)  Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that expire  December 15, 2007.  Also includes 2,000 shares
     owned  beneficially  and of  record  by Gae B.  Haynie,  spouse of Louis M.
     Haynie, of which Mr. Haynie may be deemed to have beneficial ownership.

(8)  Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that expire  December 15, 2007. Also includes 55,000 shares

                                       48
owned  beneficially  and of record by Vickie L.  Moyle,  spouse of Henry D.
     Moyle, and 11,000 shares owned beneficially and of record by a minor child,
     all of which Mr. Moyle may be deemed to have beneficial ownership.

(9)  Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that expire  December 15, 2007,  warrants to acquire  1,389
     shares at an exercise  price of $5 per share that expire  January 31, 2009,
     and  warrants to acquire  1,389  shares at an  exercise  price of $5.50 per
     share that expire January 31, 2011.

(10) Includes  options to acquire up to 20,000  shares at an  exercise  price of
     $6.40 per share that  expire  December  15,  2007,  warrants to acquire 700
     shares at an exercise  price of $5 per share that expire  January 31, 2009,
     and warrants to acquire 700 shares at an exercise  price of $5.50 per share
     that expire January 31, 2011.  Also includes  13,000 shares held in an IRA,
     of which Mr.  Tregenza is a  beneficiary;  40,000  shares held of record by
     Norman H.  Tregenza IV Trust,  dated  9/26/86,  Richard R. Keller  trustee;
     56,650  per  power of  attorney  for  Norman  A.  Tregenza,  the son of Mr.
     Tregenza;  20,000  shares held in an IRA, of which Alyce B.  Tregenza,  the
     spouse  of Mr.  Tregenza  is the  beneficiary;  5,000  shares  per power of
     attorney  for Alyce B.  Tregenza;  45,650  shares per power of attorney for
     Suzanne C. Moore, the daughter of Mr. Tregenza.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On October 29, 1999,  we entered into an exclusive  license  agreement  with our
President,  Richard A.  Steinke,  and two unrelated  parties to license  certain
intellectual  property  rights known as "Apparatus for Making Foam Products" and
"Method for Making  Polyurethane  Tires with an Outer  Skin"  embodied in United
States Patent No.'s 4,943,223 and 4,855,096, respectively. The agreement gave us
an exclusive license to use, sell,  license, or otherwise exploit the technology
worldwide  in exchange  for a royalty of $0.25 of the net selling  price for all
units  produced  utilizing the  technology.  The  agreement  required us to meet
certain minimum production/royalty requirements.  However, in October 2002, this
agreement  was  amended to  eliminate  the  provision  requiring  us to maintain
minimum sales or royalties and restricting the royalty  provision to those units
produced and sold having a final production  weight in excess of two (2) pounds.
Effective  July 1, 2004,  the  Agreement  was amended to  eliminate  the royalty
altogether  in exchange for 15,000  shares of the  Company's  restricted  common
stock as a one-time  payment to the licensees for their  assignment and transfer
of the technology to the Company.  The closing price of the Corporation's common
stock as quoted on the OTC  Bulletin  Board on July 1, 2004 was $9.75 per share,
for a value of $146,250.  The expense  associated  with the  acquisition  of the
technology will be amortized over the remaining life of the applicable  patents.
Due to our  President's  relationship  with us, the  agreement  and the  related
amendments cannot be considered to have been negotiated at arm's length.

In June 2002, we entered into an agreement with Taylor and Associates, Inc., our
SEC  counsel  ("Taylor  and  Associates"),  whereby,  in  consideration  for our
employment  of Elliott  Taylor as our  Executive  Vice  President,  we agreed to
compensate Taylor and Associates for the potential  financial detriment it might
incur as the result of Mr.  Taylor's  employment  by us. Mr. Taylor had been the
principal  attorney for Taylor and Associates  since 1993. We have agreed to pay
Taylor and Associates $2,750 per month for a period of 24 months,  commencing on
June 30, 2002 and continuing through May 31, 2004. At June 30, 2004, all amounts
due under this arrangement were paid in full.

                       WHERE YOU CAN FIND MORE INFORMATION

We file  annual,  quarterly  and current  reports,  proxy  statements  and other
documents  with the  Securities  and Exchange  Commission  under the  Securities
Exchange  Act of  1934.  You may read  and  copy  any of  those  reports,  proxy
statements or other documents at the public reference  facilities  maintained by
the  Commission  at 100 F Street  NE,  Washington,  DC  20549.  Please  call the
Commission at  1-800-SEC-0330  for further  information on its public  reference
facilities.  These  filings are also  available  to the public  from  commercial
document retrieval services and at the Commission's Web site at www.sec.gov.

This prospectus constitutes a part of a registration statement on Form S-1 filed
by us with the Commission  under the Securities  Act. This  prospectus  does not
contain all the  information  that is contained in the  registration  statement,
some of which we are  allowed  to omit  under the rules and  regulations  of the
Commission.  We refer to the  registration  statement and to the exhibits  filed

                                       49
with  the  registration  statement  for  further  information  with  respect  to
Amerityre Corporation.  Copies of the registration statement and the exhibits to
the registration  statement are on file at the offices of the Commission and may
be obtained upon payment of the prescribed fee or may be examined without charge
at the public reference facilities of the Commission described above. Statements
contained  in  this  prospectus  concerning  the  provisions  of  documents  are
summaries  of the  material  provisions  of those  documents,  and each of those
statements  is  qualified  in its  entirety  by  reference  to the  copy  of the
applicable  document filed with the  Commission.  Since this  prospectus may not
contain all of the information  that you may find  important,  you should review
the full text of these documents.

                                       50
INDEX TO FINANCIAL STATEMENTS

                            OF AMERITYRE CORPORATION

                                                                    Page

Unaudited Financial Statements of Amerityre Corporation
For The Three and Six Months Ended December 31, 2005 and 2004       F-1

Notes to the Unaudited Financial Statements of Amerityre
Corporation For The Three and Six Months Ended December 31, 2005
and 2004                                                            F-6

Audited Financial Statements of Amerityre Corporation
For the Years Ended June 30, 2005, 2004 and 2003                    F-11

Notes to the Audited Financial Statements of Amerityre
Corporation For the Years Ended June 30, 2005, 2004 and 2003        F-20

                                       50
AMERITYRE CORPORATION
                                 Balance Sheets
December 31, 2005           June 30, 2005
                                                                        ------------------        ------------------
                                                                            (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                $ 2,577,694               $ 2,122,320
      Accounts receivable - net                                                     75,617                   168,838
      Inventory                                                                    567,387                   646,798
      Prepaid expenses and other current assets                                    106,151                    62,489
      Special projects in progress                                                       -                       752
      Deferred stock offering expenses                                              83,278                    80,151
      Deposit on equipment                                                         294,254                         -
                                                                        ------------------        ------------------

          Total Current Assets                                                   3,704,381                 3,081,348
                                                                        ------------------        ------------------

PROPERTY AND EQUIPMENT

      Leasehold improvements                                                       120,767                   120,767
      Molds and models                                                             353,591                   343,031
      Equipment                                                                  2,324,730                 2,280,888
      Furniture and fixtures                                                        73,652                    70,678
      Software                                                                     280,337                   184,901
      Less - Accumulated depreciation                                           (2,027,326)               (1,858,950)
                                                                        ------------------        ------------------

          Total Property and Equipment                                           1,125,751                 1,141,315
                                                                        ------------------        ------------------

OTHER ASSETS

      Patents and trademarks - net                                                 398,830                   368,011
      Deposits                                                                      36,000                    36,000
                                                                        ------------------        ------------------

          Total Other Assets                                                       434,830                   404,011
                                                                        ------------------        ------------------

TOTAL ASSETS                                                                   $ 5,264,962               $ 4,626,674
                                                                        ==================        ==================

The accompanying notes are an integral part of these unaudited financial statements.
F-1
AMERITYRE CORPORATION
                           Balance Sheets (Continued)
December 31, 2005        June 30, 2005
                                                                                (Unaudited)
                                                                             ------------------       --------------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable                                                       $         246,372        $      49,904
      Accrued expenses                                                                  32,559               27,424
      Stock subscription deposits                                                      836,820                    -
      Deferred revenue - special projects                                              100,000                7,500
                                                                             ------------------       --------------

         Total Current Liabilities                                                   1,215,751               84,828
                                                                             ------------------       --------------

TOTAL LIABILITIES                                                                    1,215,751               84,828
                                                                             ------------------       --------------

STOCKHOLDERS' EQUITY

      Preferred stock: 5,000,000 shares authorized
        of $0.001 par value, -0- shares issued and
        Outstanding                                                                          -                    -
      Common Stock: 40,000,000 shares authorized of
        $0.001 par value, 20,065,480 and 19,505,216
        shares issued and outstanding, respectively                                     20,065               19,505
      Additional paid-in capital                                                    43,882,966           41,986,176
      Expenses prepaid with common stock                                              (100,000)                   -
      Deferred stock offering cost                                                  (1,000,000)          (1,000,000)

      Deferred consulting and directors compensation                                   (64,167)                   -
      Retained deficit                                                             (38,689,653)         (36,463,835)
                                                                             ------------------       --------------

         Total Stockholders' Equity                                                  4,049,211            4,541,846
                                                                             ------------------       --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $       5,264,962        $   4,626,674
                                                                             ==================       ==============

The accompanying notes are an integral part of these unaudited financial statements.
F-2
AMERITYRE CORPORATION
                            Statements of Operations
                                   (Unaudited)
For the Three Months Ended               For the Six Months Ended
                                                               December 31,                            December 31,
                                                           2005               2004                  2005               2004
                                                        -----------        -----------           -----------       -----------
NET SALES                                               $   302,255        $   303,801           $   738,224       $   643,573

COST OF SALES                                               258,439            215,891               612,781           462,678
                                                        -----------        -----------           -----------       -----------

GROSS PROFIT                                                 43,816             87,910               125,443           180,895
                                                        -----------        -----------           -----------       -----------
EXPENSES

      Consulting                                             99,498                  -                99,498                 -
      Advisory group expense                                      -                  -                     -         6,134,000
      Payroll and payroll taxes                             519,060            428,908             1,009,407           846,470
      Depreciation and amortization                          91,873            102,607               181,129           194,953
      Research & development                                151,825            110,798               388,208           409,166
      Bad debt expense                                          211                191                   211               773
      Selling, general & administrative                     348,336            310,620               698,822           630,795
                                                        -----------        -----------           -----------       -----------

        Total Expenses                                    1,210,803            953,124             2,377,275         8,216,157
                                                        -----------        -----------           -----------       -----------

LOSS FROM OPERATIONS                                     (1,166,987)          (865,214)           (2,251,832)       (8,035,262)
                                                        -----------        -----------           -----------       -----------
OTHER INCOME

      Interest income                                         7,649              5,702                24,953            13,628
      Other income                                                9              1,705                 1,061             7,548
                                                        -----------        -----------           -----------       -----------
        Total Other Income                                    7,658              7,407                26,014            21,176
                                                        -----------        -----------           -----------       -----------

NET LOSS                                                $(1,159,329)       $  (857,807)          $(2,225,818)      $(8,014,086)
                                                        ===========        ===========           ===========       ===========

BASIC LOSS PER SHARE                                    $     (0.06)       $     (0.05)          $     (0.11)      $     (0.43)
                                                        ===========        ===========           ===========       ===========

WEIGHTED AVG NUMBER OF SHARES                            20,038,287         18,731,168            19,877,047        18,696,978
                                                        ===========        ===========           ===========       ===========

The accompanying notes are an integral part of these unaudited financial statements.
F-3
AMERITYRE CORPORATION
                            Statements of Cash Flows
                                   (Unaudited)
Six Months Ended       Six Months Ended
                                                                                 December 31,          December 31,
                                                                                    2005                  2004
                                                                               ---------------       ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                  $      (2,225,818)     $    (8,014,086)
     Adjustments to reconcile net loss to
        net cash used by operating activities:
           Depreciation & amortization expense                                          181,129               194,953
           Common stock issued for services rendered                                    126,350                     -
           Amortization of expense prepaid with common stock                            105,834               472,053
           Options issued for advisory group services                                         -             6,134,000
     Changes in operating assets and liabilities:
           Decrease in accounts receivable                                               93,221                89,184
           Increase in prepaid expenses                                                 (43,662)              (35,895)
           Increase in other assets                                                    (296,629)                 (600)
           Decrease (increase) in inventory                                              79,411               (87,087)
           Increase in accounts payable and accrued expenses                            294,103                35,739
                                                                               ----------------       ---------------

              Net Cash Used by Operating Activities                                  (1,686,061)           (1,211,739)
                                                                               ----------------       ---------------
CASH FLOWS FROM INVESTING ACTIVITIES

     Cash paid for patents and trademarks                                               (43,572)              (60,897)
     Purchase of property and equipment                                                 (61,813)              (32,712)
                                                                               ----------------       ---------------

              Net Cash Used by Investing Activities                                    (105,385)              (93,609)
                                                                               ----------------       ---------------
CASH FLOWS FROM FINANCING ACTIVITIES

     Proceeds from stock subscription                                                   836,820                     -
     Proceeds from issuance of common stock                                           1,410,000               880,000
                                                                               ----------------       ---------------

              Net Cash Provided by Financing Activities                               2,246,820               880,000
                                                                               ----------------       ---------------
NET INCREASE (DECREASE) IN CASH

     AND CASH EQUIVALENTS                                                               455,374              (425,348)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                      2,122,320             1,591,289
                                                                                  -------------         -------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        $   2,577,694         $   1,165,941
                                                                                  =============         =============

The accompanying notes are an integral part of these unaudited financial statements.
F-4
AMERITYRE CORPORATION
                      Statements of Cash Flows (Continued)
                                   (Unaudited)
Six Months Ended      Six Months Ended
                                                                              December 31,          December 31,
                                                                                  2005                   2004
                                                                          ----------------      ----------------
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
                 Cash paid for interest                                   $              -      $              -
                 Cash paid for income taxes                               $              -      $              -

NON-CASH OPERATING ACTIVITIES
                 Common stock issued for services rendered                $        126,350      $              -
                 Common stock issued for prepaid services                 $        270,000      $        598,000

NON-CASH INVESTING/ FINANCING ACTIVITIES
                 Common stock issued for property & equipment             $         91,000      $              -
                 Options issued for advisory group service receivable     $              -      $      6,134,000

The accompanying notes are an integral part of these unaudited financial statements.
F-5
AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

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.  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.  Although  we believe  the
disclosures and  information  presented are adequate to make the information not
misleading, it is suggested that these interim condensed financial statements be
read in conjunction with our most recent audited financial  statements and notes
thereto  included in our June 30, 2005 Annual  Report on Form 10-KSB.  Operating
results  for the  six  months  ended  December  31,  2005  are  not  necessarily
indicative  of the  results  that may be expected  for the  current  fiscal year
ending June 30, 2006.

NOTE 2 - STOCK OPTIONS

During the period  ended  December  31,  2005,  we issued  options to acquire an
aggregate  of  625,000  shares  of our  common  stock to  certain  employees  in
connection with their  employment  (the  "Employment  Options").  The Employment
Options vest annually over a period of one to three years based on the employees
continued  employment  by the  Company.  The exercise  price for the  Employment
Options is $6.60 per share.  The 625,000  options  issued to the employees  were
issued at or above the market price of our common stock on the date of issue and
are accounted for under APB 25,  "Accounting for Stock Issued to Employees".  As
such, no compensation  expense was  recognized.  Had  compensation  cost for the
issuance of the options been determined  based on fair market value at the grant
dates  consistent  with the method of FASB Statement 123,  "Accounting for Stock
Based  Compensation,"  there  would have been no change to our net loss and loss
per share, as noted with the pro forma amounts indicated below:
For the Three Months Ended             For the Six Months Ended
                                                        December 31,                         December 31,
                                                        ------------                         ------------
                                                      2005               2004               2005              2004
                                                      ----               ----               ----              ----
Net (loss) as reported                           $ (1,159,329)      $   (857,807)     $ (2,225,818)     $ (8,014,086)
Pro forma                                        $ (1,159,329)      $ (1,384,857)     $ (2,225,818)     $ (8,544,086)

Basic (loss) per share as reported               $      (0.06)      $      (0.05)     $      (0.11)     $      (0.43)
Pro forma                                        $      (0.06)      $      (0.07)     $      (0.11)     $      (0.46)
[The balance of this page intentionally left blank]

                                      F-6
AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 2 - STOCK OPTIONS, Continued

A summary  of the  status  of the  Company's  outstanding  stock  options  as of
December 31, 2005 and June 30, 2005 and changes during the periods then ended is
presented below:
December 31, 2005                         June 30, 2005
                                        -----------------                         -------------
                                                          Weighted Average                         Weighted Average
                                        Shares            Exercise Price          Shares           Exercise Price
                                        ----------------- ----------------      -----------        ----------------
Outstanding beginning of period         3,945,000           $ 6.31                1,922,000          $   3.66
Granted                                   625,000           $ 6.60                3,185,000          $   6.97
Expired/Cancelled                         (60,000)          $(6.70)                (195,252)         $  (0.18)
Exercised                                (470,000)          $(3.00)                (966,748)         $  (4.14)
                                        ---------                               -----------
Outstanding end of period               4,040,000           $ 6.74                3,945,000          $   6.31
                                        =========                               ===========
Exercisable                               415,000           $ 5.05                  945,000          $   4.14
                                        =========                               ===========

                  Outstanding                                                   Exercisable
                  -----------                                                   -----------
                                         Weighted
Range of          Number Outstanding at  Average             Weighted           Number              Weighted
Exercise          Dec 31,                Remaining           Average            Exercisable at      Average
Prices            2005                   Contractual Life    Exercise Price     Dec 31, 2005        Exercise Price
--------          ---------------------  ----------------    --------------     --------------      --------------
$3.80             30,000                 0.75                $3.80              30,000              $3.80
4.00              200,000                1.44                $4.00              200,000             $4.00
6.40              185,000                3.09                $6.40              185,000             $6.40
6.60              625,000                6.46                $6.60                    -                 -
7.00              3,000,000              3.70                $7.00                    -                 -
                  ---------                                                     -------
$3.80-$7.00       4,040,000              3.97                $6.74              415,000             $5.05
                  =========                                                     =======
NOTE 3 - STOCK ISSUANCES

During  the  quarter,  we  issued  5,000  shares of  common  stock  for  outside
consulting  services valued at $26,250,  based on a price of $5.25 per share and
15,000 shares of common stock for outside consulting services valued at $68,250,
based on a price of $4.55 per  share.  We also  issued  20,000  shares of common
stock for software development services valued and capitalized at $91,000, based
on a price of $4.55 per share.  These  shares were  issued  pursuant to our 2002
Stock Option and Award Plan.

During the quarter,  we issued 7,000 shares of our restricted common stock to an
investor  and media  relations  firm as payment for  services.  The value of the
shares was $31,850, based on the closing price of $4.55 per share.

                                      F-7
AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 3 - STOCK ISSUANCES (continued)

During the quarter, we issued 1,852 shares of our restricted common stock to the
Chairman of our audit  committee  as partial  compensation  for his  services as
Chairman.  The value of the shares was  $10,000,  based on the closing  price of
$5.40 per share.

During the quarter,  we issued an aggregate of 11,112 shares (1,852 shares each)
of our restricted  common stock to our six (6) non-employee  directors as annual
compensation  for their  services as members of our board of  directors  for the
period  commencing  December 1, 2005 through  November 30, 2006.  The  aggregate
value of the shares was $60,000, based on the closing price of $5.40 per share.

All of our  securities  issued  in the  foregoing  transactions  were  issued in
reliance on the exemption from registration and prospectus delivery requirements
of the Act set forth in Section 3(b) and/or  Section 4(2) of the  Securities Act
and the regulations promulgated thereunder.

NOTE 4 - INVENTORY

Inventory  is stated at the lower of cost  (computed  on a  first-in,  first-out
basis) or market. The inventory  consists of chemicals,  finished goods produced
in the Company's plant and products purchased for resale.

                       December 31, 2005    June 30, 2005
                          (Unaudited)
                       -----------------    -------------
Raw Materials                   $142,866         $122,834
Work in Progress                       -                -
Finished Goods                   424,521          523,964
                                 -------          -------
Total Inventory                 $567,387         $646,798
                                ========         ========

NOTE 5 - SIGNIFICANT EVENTS

1. Employment of Chief Operating Officer
----------------------------------------

Effective  October 16, 2005,  the Company  hired Gary N.  Benninger as our Chief
Operating Officer.  Dr. Benninger's  employment contract with the Company is for
an initial term of one year  beginning  October 16, 2005, at an annual salary of
$250,000,  renewable by mutual agreement.  The contract also includes provisions
for the payment of a bonus share award of 10,000 shares of the Company's  common
stock  vesting  January 15,  2006,  and a grant of options  for the  purchase of
150,000  shares  of the  Company's  common  stock,  subject  to  annual  vesting
provisions  (50,000 options on June 30th  2006-2008).  The bonus share award and
the options are being issued under the terms of the Company's  2005 Stock Option
and Award  Plan.  Both the bonus  share award and the vesting of the options are
subject to continuing employment with the Company.

2. Settlement of Legal Proceeding
---------------------------------

Effective  October 20, 2005, we entered into a settlement and release  agreement
with the defendant in case number A505333,  8th Judicial  District Court for the
State of Nevada, Amerityre Corporation vs. Prototype Engineering,  Inc., an Ohio
corporation ("Prototype"), and Frederick F. Vannan, Jr. ("Vannan").

                                      F-8
AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 6 - SUBSEQUENT EVENTS

A. Stock Issuances

On January  3,  2006,  we issued  53,100  shares of our common  stock to various
employees  as  compensation  pursuant  to our 2002 Stock  Option and Award Plan,
valued at $239,481, or $4.51 share.

On January 15, 2006, 10,000 shares of our restricted common stock vested to Gary
N.  Benninger,  our  Chief  Operating  Officer,  pursuant  to the  terms  of his
employment  agreement  with the  Company.  The value of the shares was  $53,600,
based on the closing price of the shares on October 16, 2005, the date of grant.
With  respect to the  issuance of the shares on vesting,  the Company  claims an
exemption from the  registration  requirements of the Securities Act of 1933, as
amended pursuant to Section 4(2) of said Act.

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement for $3,870,000 in offering proceeds. The Company sold 107,500 Units of
the  Company's  securities  at a purchase  price of $36.00  per Unit.  Each Unit
consists of eight (8) shares of the Company's  Common  Stock,  a Class A Warrant
(the "Class A  Warrant")  for the  purchase  of one share of Common  Stock at an
exercise  price of $5.00  exercisable  for a 3 year period and a Class B Warrant
(the "Class B  Warrant")  for the  purchase  of one share of Common  Stock at an
exercise price of $5.50  exercisable for a 5 year period.  The Warrants may also
be exercised  through a cashless  exercise based on the  difference  between the
market price on the date of exercise and the exercise price. The exercise prices
of the Class A  Warrants  and Class B Warrants  are  subject  to  adjustment  in
certain events, including, without limitation, upon the Company's consolidation,
merger or sale of all or substantially all of its assets, a reclassification  of
the Company's Common Stock, or any stock splits or combinations  with respect to
the Common Stock.

Purchasers of the Units have been granted registration rights in connection with
the  private  placement.  The  Company  shall  use its  best  efforts  to file a
registration statement with the Commission within 45 days after the Closing Date
and cause the registration  statement to be declared effective by the SEC within
120 days after the Closing  Date (if there are no comments  from the SEC) or 180
days (if comments are received from the SEC) (the "Effective  Date") in order to
register  the shares of Common Stock  underlying  the Units sold in the offering
(the "Registrable Securities") for resale and distribution by the investors (the
"Registration  Statement").  The Company will register  approximately  1,075,000
shares of Common  Stock which  represents  the total  number of shares of Common
Stock plus the shares of Common Stock  issuable upon exercise of the Class A and
Class B Warrants.  The  Registrable  Securities  shall be reserved and set aside
exclusively for the benefit of each investor.

The Class A and Class B Warrants are subject to redemption  by the Company.  The
Company has the right to redeem either the Class A or Class B Warrants beginning
ninety (90) days from the Effective Date of the  Registration  Statement,  if at
any time  following the Effective  Date,  the average  closing bid price for the
Common  Stock in the  over-the-counter  market is at least $5.50 per share (with
respect to the Class A Warrants) or $6.05 per share (with respect to the Class B
Warrants),  for the 20  consecutive  trading day period  ending not more than 15
days  prior to notice of  redemption  of the Class A and Class B  Warrants.  The
Company's right to redeem the Class A and Class B Warrants  requires the Company
to give the holders  written  notice of redemption of not less than 30 days, and
is  subject to the right of the  holders of the Class A and Class B Warrants  to
exercise  the same in  accordance  with the terms hereof  during the  redemption
period.  The redemption  price for each Class A and Class B Warrant is $0.10 per
share.

                                      F-9
AMERITYRE CORPORATION
                   Notes to the Unaudited Financial Statements
                       December 31, 2005 and June 30, 2005

NOTE 6 - SUBSEQUENT EVENTS (Continued)

With respect to the sale of the Units  described  above,  the Company  claims an
exemption from the  registration  requirements of the Securities Act of 1933, as
amended,  pursuant to Section  4(2) of the  Securities  Act and/or  Regulation D
promulgated  thereunder since,  among other things,  (1) the transaction did not
involve a public  offering,  (2) the investors were accredited  investors and/or
qualified  institutional  buyers,  (3) the investors  had access to  information
about the Company and their  investment,  (4) the investors  took the securities
for  investment  and not resale,  (5) the Company took  appropriate  measures to
restrict the transfer of the  securities,  and (6) no  commissions  were paid in
connection with the placement and/or sale of the securities.

B. Deferred Stock Issuance Costs

During the three six month period ended  December 31,  2004,  we  recognized  an
expense of $6,134,000 for advisory group services  associated  with the grant of
options to acquire  an  aggregate  of  3,000,000  shares of our common  stock to
third-party  consultants  during  the  period.  The  value  of the  options  was
calculated using the  Black-Scholes  option pricing model. Our selling,  general
and  administrative  expenses  since that time have not included  deferred stock
offering costs,  which at December 31, 2005 aggregated  $1,083,278.  This amount
has been recorded as a reduction in stockholders'  equity due to its association
with the proposed  offering of our  securities.  In February  2006,  we closed a
private  placement  of our  securities  for  gross  offering  proceeds  of $3.87
million,  therefore  the  deferred  offering  costs  will  be  expensed  in  the
subsequent period.

                                      F-10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Amerityre Corporation
Boulder City, Nevada

We have audited the  accompanying  balance sheets of Amerityre  Corporation (the
"Company")  as of  June  30,  2005  and  2004  and  the  related  statements  of
operations,  stockholders'  equity and cash  flows for the years  ended June 30,
2005, 2004, and 2003. These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Amerityre  Corporation as of
June 30, 2005 and 2004, and the results of its operations and its cash flows for
the years ended June 30, 2005, 2004, and 2003 in conformity with U.S.  generally
accepted accounting principles.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 5 to the  financial
statements,  the Company has incurred significant losses from operations,  which
have resulted in an accumulated  deficit,  raising  substantial  doubt about its
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also described in Note 5 to the financial statements.  The financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

HJ & Associates, LLC
Salt Lake City, Utah
September 1, 2005 with respect to June 30, 2005 and 2004 and September 24, 2004
with respect to June 30, 2003

                                      F-11
AMERITYRE CORPORATION
                                 Balance Sheets

ASSETS
------
                                                                                           June 30,
                                                                           ---------------------------------------
                                                                                    2005               2004
                                                                           -------------------  ------------------
CURRENT ASSETS

   Cash and cash equivalents                                               $         2,122,320  $        1,591,289
   Accounts receivable - net of zero allowance                                         168,838             167,002
   Inventory (Note 1)                                                                  646,798             557,516
   Prepaid expenses                                                                     62,489              99,007
   Special projects in progress                                                            752                   -
   Deferred stock offering expenses                                                     80,151                   -
                                                                           -------------------  ------------------

    Total Current Assets                                                             3,081,348           2,414,814
                                                                           -------------------  ------------------

PROPERTY AND EQUIPMENT (Note 1)

   Leasehold improvements                                                              120,767             163,896
   Molds and models                                                                    343,031             315,282
   Equipment                                                                         2,280,888           2,253,217
   Furniture and fixtures                                                               70,678              70,033
   Vehicles                                                                                  -              25,851
   Software                                                                            184,901             184,901
   Less: Accumulated depreciation                                                   (1,858,950)         (1,567,187)
                                                                           -------------------  ------------------

    Total Property and Equipment                                                     1,141,315           1,445,993
                                                                           -------------------  ------------------

OTHER ASSETS

   Patents and trademarks - net (Note 1)                                               368,011             156,792
   Deposits                                                                             36,000              43,180
                                                                           -------------------  ------------------

    Total Other Assets                                                                 404,011             199,972
                                                                           -------------------  ------------------

     TOTAL ASSETS                                                          $         4,626,674  $        4,060,779
                                                                           ===================  ==================

   The accompanying notes are an integral part of these financial statements.
F-12
AMERITYRE CORPORATION
                           Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                           June 30,
                                                                           ---------------------------------------
                                                                                    2005               2004
                                                                           -------------------  ------------------
CURRENT LIABILITIES

   Accounts payable                                                        $            49,904  $           42,866
   Accrued expenses                                                                     27,424              15,817
   Deferred revenue - special projects                                                   7,500                   -
                                                                           -------------------  ------------------

    Total Current Liabilities                                                           84,828              58,683
                                                                           -------------------  ------------------

     Total Liabilities                                                                  84,828              58,683
                                                                           -------------------  ------------------

COMMITMENTS AND CONTINGENCIES (Note 2)

STOCKHOLDERS' EQUITY

   Preferred stock: 5,000,000 shares authorized of
    $0.001 par value, -0- shares issued and outstanding                                      -                   -
   Common stock: 40,000,000 shares authorized of
    $0.001 par value, 19,505,216 shares issued and
    outstanding                                                                         19,505              18,429
   Additional paid-in capital                                                       41,986,176          30,594,482
   Deferred Stock Offering - Cost                                                   (1,000,000)           (219,988)
   Retained Deficit                                                                (36,463,835)        (26,390,827)
                                                                           -------------------  ------------------

    Total Stockholders' Equity                                                       4,541,846           4,002,096
                                                                           -------------------  ------------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $         4,626,674  $        4,060,779
                                                                           ===================  ==================

   The accompanying notes are an integral part of these financial statements.
F-13
AMERITYRE CORPORATION
                            Statements of Operations
For the Years Ended
                                                                                June 30,
                                                      ------------------------------------------------------------
                                                              2005                 2004                2003
                                                      --------------------  ------------------  ------------------
NET SALES                                             $          1,681,091  $        1,419,124  $        1,040,246

COST OF SALES                                                    1,233,181           1,114,230             976,132
                                                      --------------------  ------------------  ------------------

GROSS PROFIT                                                       447,910             304,894              64,114
                                                      --------------------  ------------------  ------------------

EXPENSES

   Consulting                                                       77,000             370,666             339,934
   Advisory group expense                                        6,134,000                   -                   -
   Payroll and payroll taxes                                     1,905,177           2,345,082           1,083,910
   Depreciation and amortization                                   385,726             296,232             298,625
   Research and development                                        880,748             572,002              28,607
   Bad debt expense                                                 14,087               3,713                  51
   Loss on sale and impairment of assets                            18,054                   -              67,982
   Selling, general and administrative                           1,156,260           1,458,200           1,354,040
                                                      --------------------  ------------------  ------------------

    Total Expenses                                              10,571,052           5,045,895           3,173,149
                                                      --------------------  ------------------  ------------------

LOSS FROM OPERATIONS                                           (10,123,142)         (4,741,001)         (3,109,035)
                                                      --------------------  ------------------  ------------------

OTHER INCOME

   Interest income                                                  35,181              17,234              16,397
   Miscellaneous income                                             14,953               2,512                 666
                                                      --------------------  ------------------  ------------------

    Total Other Income                                              50,134              19,746              17,063
                                                      --------------------  ------------------  ------------------

NET LOSS                                              $        (10,073,008) $       (4,721,255) $       (3,091,972)
                                                      ====================  ==================  ==================

BASIC LOSS PER SHARE                                  $              (0.53) $            (0.26) $            (0.21)
                                                      ====================  ==================  ==================

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                                             18,931,779          17,846,910          14,796,744
                                                      ====================  ==================  ==================

   The accompanying notes are an integral part of these financial statements.
F-14
AMERITYRE CORPORATION
                       Statements of Stockholders' Equity
Expenses
                                                                                          Prepaid       Deferred
                                 Common Stock            Additional        Stock           with        Consulting/
                         ----------------------------      Paid-in     Subscription       Common          Stock      Accumulated
                            Shares          Amount         Capital      Receivable         Stock        Offering        Deficit
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------
Balance, June 30, 2002      14,187,731  $      14,188  $   21,310,261  $    (562,721) $    (150,750) $     (103,433) $ (18,577,600)

Common stock issued for
 cash at $1.50 per share     2,170,000          2,170       3,252,830              -              -               -              -

Common stock issued for
 cash at $2.00 per share       604,675            605       1,208,745              -              -               -              -

Cancellation of common
 stock issued for stock
 subscription receivable       (45,000)           (45)        (87,705)        87,750              -               -              -

Common stock issued to
 CEO for compensation          200,000            200         423,800              -       (212,000)              -              -

Common stock issued for
 exercise of options            20,000             20          39,980              -              -               -              -

Common stock issued for
 cash-less exercise of
 option                         10,462             10          23,562              -              -               -              -

Common stock issued for
 services and prepaid
 services                      182,500            183         360,493              -       (336,300)              -              -

Common stock issued for
 stock offering costs           50,000             50          99,950              -              -               -              -

Stock offering costs                 -              -        (220,954)             -              -               -              -

Common stock issued for
 stock subscription deposit      4,500              4           8,996              -              -               -              -

Issuance of options for
 services                            -              -           2,906              -              -               -              -

Amortization of expenses
 prepaid with common stock           -              -               -              -        480,950               -              -

Additional interest recorded
 on subscription receivable
 and subscription receivable
 related party                       -              -          15,547        (21,686)             -               -              -

Receipt of cash for subscription
 receivable and interest on
 subscriptions receivable            -              -               -        448,068              -               -              -

Receipt of services and debt
 relief for subscriptions
 receivable                          -              -               -         31,957              -               -              -

Valuation adjustment and
 amortization of deferred
 consulting                          -              -          55,500              -              -         (15,188)             -
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance forward             17,384,868  $      17,385  $   26,493,911  $     (16,632) $    (218,100) $     (118,621) $ (18,577,600)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

   The accompanying notes are an integral part of these financial statements.
F-15
AMERITYRE CORPORATION
                 Statements of Stockholders' Equity (Continued)
Expenses
                                                                                          Prepaid       Deferred
                                 Common Stock            Additional        Stock           with        Consulting/
                         ----------------------------      Paid-in     Subscription       Common          Stock      Accumulated
                            Shares          Amount         Capital      Receivable         Stock        Offering        Deficit
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------
Balance forward             17,384,868  $      17,385  $   26,493,911  $     (16,632) $    (218,100) $     (118,621) $ (18,577,600)

Net loss for the year
 ended June 30, 2003                 -              -               -              -              -               -     (3,091,972)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance, June 30, 2003      17,384,868         17,385      26,493,911        (16,632)      (218,100)       (118,621)   (21,669,572)

Receipt of Subscriptions
 Receivable                          -              -               -         16,632              -               -              -

Common stock issued for
 services and prepaid
 services at $3.78 per
 share                         240,000            240         906,960              -       (732,375)              -              -

Common stock issued for
 services at $6.10 per
 share                          40,000             40         243,960              -       (244,000)              -              -

Common stock issued for
 cash exercise of options
 at $2.00 per share            130,000            130         259,870              -              -               -              -

Common stock issued for
 cash exercise of options
 at $3.00 per share            500,000            500       1,499,500              -              -               -              -

Common stock issued for
 services rendered at
 $5.48 per share                 2,000              2          10,958              -              -               -              -

Common stock issued for
 cash exercise of options
 at $4.00 per share              4,000              4          15,996              -              -               -              -

Common stock issued to
 employees per stock award
 plan at $6.69 per share         3,900              4          26,087              -              -               -              -

Common stock issued for
 services at $6.69 per share    20,000             20         133,780              -       (133,800)              -              -

Common stock issued to
 employee per stock award
 plan at $9.10 per share           500              -           4,550              -              -               -              -

Common stock issued to
 employees per stock award
 plan at $8.20 per share       103,900            104         851,876              -              -               -              -

Valuation adjustment and
amortization of deferred
consulting                           -              -         147,034              -              -         118,621              -

Amortization of expenses prepaid
 with common stock                   -              -               -              -      1,108,287               -              -
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance forward             18,429,168  $      18,429  $   30,594,482  $           -  $    (219,988) $            -  $ (21,669,572)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

   The accompanying notes are an integral part of these financial statements.
F-16
AMERITYRE CORPORATION
                 Statements of Stockholders' Equity (Continued)
Expenses
                                                                                          Prepaid       Deferred
                                 Common Stock            Additional        Stock           with        Consulting/
                         ----------------------------      Paid-in     Subscription       Common          Stock      Accumulated
                            Shares          Amount         Capital      Receivable         Stock        Offering        Deficit
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------
Balance forward             18,429,168  $      18,429  $   30,594,482  $           -  $    (219,988) $            -  $ (21,669,572)

Net loss for the year
ended June 30, 2004                  -              -               -              -              -               -     (4,721,255)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance, June 30, 2004      18,429,168         18,429      30,594,482              -       (219,988)              -    (26,390,827)

Common stock issued to
 CEO for compensation           65,000             65         597,935              -              -               -              -

Common stock issued for
 cash exercise of options
 at $2.00 per share             20,000             20          39,980              -              -               -              -

Common stock issued for
 cash exercise of options
 at $3.00 per share             30,000             30          89,970              -              -               -              -

Common stock issued for
 cash exercise of options
 at $4.00 per share            796,000            796       3,183,204              -              -               -              -

Common stock issued for
 patents                        15,000             15         146,235              -              -               -              -

Common stock issued for
 cash-less exercise of
 option                        120,748            121            (121)             -              -               -              -

Common stock issued for
 services and prepaid
 services                       29,300             29         200,491              -              -               -              -

Options granted for
 services and stock
 offering cost                       -              -       7,134,000              -              -      (1,000,000)             -

Amortization of prepaid
 expenses                            -              -               -              -        219,988               -              -

Net loss for the year
 ended June 30, 2005                 -              -               -              -              -               -    (10,073,008)
                         -------------  -------------  --------------  -------------  -------------  --------------  -------------

Balance, June 30, 2005      19,505,216  $      19,505  $   41,986,176  $           -  $           -  $   (1,000,000) $ (36,463,835)
                         =============  =============  ==============  =============  =============  ==============  =============

   The accompanying notes are an integral part of these financial statements.
F-17
AMERITYRE CORPORATION
                            Statements of Cash Flows

                                                                           For the Years Ended
                                                                                June 30,
                                                           -----------------------------------------------------
                                                                 2005               2004              2003
                                                           ----------------  -----------------  ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                                   $    (10,073,008) $      (4,721,255) $     (3,091,972)
Adjustments to reconcile net loss to net
 cash used by operating activities:
   Depreciation and amortization                                    385,726            296,232           298,625
   Bad debt expense                                                  14,087              3,713                51
   Loss on sale and impairment of assets                             18,054                  -            67,982
   Common stock issued for services                                 798,520          2,176,692           759,351
   Stock subscription receivable paid through
    services                                                              -                  -             9,880
   Re-valuation of deferred consulting                                    -            265,656            40,312
   Options issued for advisory group services                     6,134,000                  -                 -
`   Amortization of expenses prepaid with
    with common stock                                               219,988                  -                 -
Changes in assets and liabilities:
   (Increase) in accounts receivable                                (15,923)           (42,234)          (25,537)
   (Increase) in inventory                                          (89,282)           (92,532)          (97,444)
   Decrease (increase) in prepaid expenses                           36,518            (46,340)          (24,825)
   (Increase) in other assets                                       (73,723)                 -           (36,000)
   Increase (decrease) in accounts payable and
    accrued expenses                                                 26,145            (37,515)          (11,192)
                                                           ----------------  -----------------  ----------------

    Net Cash Used by Operating Activities                        (2,618,898)        (2,197,583)       (2,110,769)
                                                           ----------------  -----------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Cash paid for patents and trademarks                             (97,226)           (57,847)          (20,560)
   Proceeds from sale of fixed assets                                 8,800                  -                 -
   Cash paid for fixed assets                                       (75,645)          (436,517)         (984,267)
                                                           ----------------  -----------------  ----------------

    Net Cash Used by Investing Activities                          (164,071)          (494,364)       (1,004,827)
                                                           ----------------  -----------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds from stock subscription deposit                               -                  -            25,000
   Receipt of subscriptions receivable                                    -             16,632           448,459
   Cash paid for stock offering costs                                     -                  -          (120,954)
   Common stock issued for cash                                   3,314,000          1,776,000         4,479,350
                                                           ----------------  -----------------  ----------------

    Net Cash Provided by Financing Activities              $      3,314,000  $       1,792,632  $      4,831,855
                                                           ----------------  -----------------  ----------------

   The accompanying notes are an integral part of these financial statements.
F-18
AMERITYRE CORPORATION
                      Statements of Cash Flows (Continued)
For the Years Ended
                                                                                  June 30,
                                                           -----------------------------------------------------
                                                                 2005               2004              2003
                                                           ----------------  -----------------  ----------------
NET  INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                                   531,031           (899,315)        1,716,259

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF YEAR                                                1,591,289          2,490,604           774,345
                                                           ----------------  -----------------  ----------------

CASH AND CASH EQUIVALENTS AT
 END OF YEAR                                               $      2,122,320  $       1,591,289  $      2,490,604
                                                           ================  =================  ================

SUPPLEMENTAL SCHEDULE OF CASH
 FLOW ACTIVITIES

CASH PAID FOR:

   Interest                                                $              -  $               -  $              -
   Income taxes                                            $              -  $               -  $              -

NON_CASH OPERATING ACTIVITIES

   Common stock issued for services rendered               $        798,520  $       2,176,692  $        759,351
   Common stock issued for subscription
    receivable                                             $              -  $               -  $         99,500
   Interest on related party subscription
    receivable                                             $              -  $               -  $         15,547

NON-CASH FINANCING ACTIVITIES

   Options issued for advisory group service               $      6,134,000  $               -  $              -

   The accompanying notes are an integral part of these financial statements.
F-19
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a.   Organization

          Amerityre Corporation, (the "Company") was incorporated under the laws
          of the State of Nevada on January 30,  1995,  under the name  American
          Tire  Corporation.  The Company was  organized  to take  advantage  of
          existing proprietary and non-proprietary  technology available for the
          manufacturing   of  specialty   tires.  The  Company  engages  in  the
          manufacturing,   marketing,   distribution  and  sales  of  "flatfree"
          specialty   tires  and   tire-wheel   assemblies   and   currently  is
          manufacturing  these tires at its  manufacturing  facility  located in
          Boulder City, Nevada. During the year ended June 30, 2001, the name of
          the Company was changed to Amerityre Corporation.

          b.  Accounting Method

          The  Company's  financial  statements  are prepared  using the accrual
          method of accounting. The Company has elected a June 30 year-end.

          c.  Basic Loss Per Share

          The  computation  of basic loss per share of common  stock is based on
          the weighted average number of shares outstanding during the period.

                                                    For the Years Ended
                                                         June 30,
                                    -------------------------------------------
                                      2005            2004           2003
                                    --------------  -------------  ------------

         Loss (numerator)           $  (10,073,008) $  (4,721,255) $ (3,091,972)
         Shares (denominator)           18,931,779     17,846,910    14,796,744
         Per share amount           $        (0.53) $       (0.26) $      (0.21)

          The  Company's  outstanding  stock options have been excluded from the
          basic net loss per share calculation.  The Company excluded 3,945,000,
          1,922,000,  and 2,446,000 common stock equivalents for the years ended
          June  30,  2005,  2004,  and  2003   respectively   because  they  are
          antidilutive.

          d.  Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses during the reporting period.  Actual results could differ
          from those estimates.

                                      F-20
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          e.  Income Taxes

          Deferred taxes are provided on a liability method whereby deferred tax
          assets  are  recognized  for  deductible  temporary   differences  and
          operating  loss  and  tax  credit   carryforwards   and  deferred  tax
          liabilities   are  recognized  for  taxable   temporary   differences.
          Temporary differences are the differences between the reported amounts
          of assets and liabilities and their tax bases. Deferred tax assets are
          reduced by a valuation  allowance  when, in the opinion of management,
          it is more  likely that not that some  portion or all of the  deferred
          tax assets will not be realized.  Deferred tax assets and  liabilities
          are  adjusted  for the effects of changes in tax laws and rates on the
          date of  enactment.  Net deferred tax assets  consist of the following
          components as of June 30, 2005, 2004, and 2003:

                                        2005           2004          2003
                                      --------------  ------------  -----------

          Deferred tax assets:
             NOL Carryover            $    8,154,000  $  6,224,303  $ 5,585,000
          Deferred tax liabilities:
             Valuation allowance          (8,154,000)   (6,224,303)  (5,585,000)
                                      --------------  ------------  -----------

          Net deferred tax asset      $            -  $          -  $         -
                                      ==============  ============  ===========

          The  income  tax  provision  differs  from the  amount of  income  tax
          determined by applying the U.S.  federal and state income tax rates of
          39% to pretax income from  continuing  operations  for the years ended
          June 30, 2005, 2004, and 2003 due to the following:
2005                 2004                2003
                                             --------------------  ------------------  -----------------
Book income                        $         (3,928,473) $       (1,841,328) $      (1,205,900)
          Meals & entertainment                             1,854                 650                904
          Officer issuance                                      -               9,750                  -
          Other  397,218                                   (2,884)                  -
          Depreciation and amortization                    53,773                   -                  -
          Stock for services/options
           expense                                              -             848,909            363,730
          Advisory group option                         2,392,260                   -                  -
          Valuation allowance                           1,083,368             984,903            841,266
                                             --------------------  ------------------  -----------------

                                             $                  -  $                -  $               -
                                             ====================  ==================  =================
At June 30, 2005, the Company had net operating loss  carryforwards of
          approximately  $20,800,000  that may be offset  against future taxable
          income  from the year  2005  through  2025.  No tax  benefit  has been
          reported in the June 30, 2005 financial statements since the potential
          tax benefit is offset by a valuation allowance of the same amount. Due
          to the change in ownership  provisions  of the Tax Reform Act of 1986,
          net  operating  loss  carryforwards  for Federal  income tax reporting
          purposes  are  subject  to  annual  limitations.  Should a  change  in
          ownership occur, net operating loss carryforwards may be limited as to
          use in future years.

                                      F-21
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          Continued)

          f.  Inventory

          Inventory  is  stated at the lower of cost  (computed  on a  first-in,
          first-out  basis) or market.  The  inventory  consists  of  chemicals,
          finished goods produced in the Company's plant and products  purchased
          for resale.

                                                          June 30,
                                           -------------------------------------
                                                   2005               2004
                                           ------------------  -----------------

           Raw materials                   $          122,834  $         109,820
           Work in progress                                 -                  -
           Finished goods                             523,964            447,696
                                           ------------------  -----------------

             Total Inventory               $          646,798  $         557,516
                                           ==================  =================

          During the years  ended June 30,  2005,  2004,  and 2003,  the Company
          recorded  inventory  impairment  expense of $-0-,  $-0-,  and $39,596,
          respectively.

          g.  Property and Equipment

          Property  and  equipment  are stated at cost.  Expenditures  for small
          tools,  ordinary  maintenance and repairs are charged to operations as
          incurred.   Major   additions  and   improvements   are   capitalized.
          Depreciation is computed using the straight-line method over estimated
          useful lives as follows:

             Leasehold improvements             5 years, or over lease term
             Equipment                                         5 to 7 years
             Furniture and fixtures                                 7 years
             Automobiles                                            5 years
             Software                                               3 years

          Depreciation expense for the years ended June 30, 2005, 2004, and 2003
          was $354,879 and $294,923, and $297,037, respectively.

          h.  Revenue Recognition

          Revenue is recognized when the sales amount is determined, shipment of
          goods to the  customer  has  occurred  and  collection  is  reasonably
          assured. Product is shipped FOB origination.

                                      F-22
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          i.  Patents and Trademarks

          Patent and  trademark  costs have been  capitalized  at June 30,  2005
          totaling  $407,642.  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 being amortized.  Amortization will begin once
          the patents have been issued. Amortization expense for the years ended
          June 30, 2005,  June 30, 2004, and June 30, 2003 was $30,847,  $1,309,
          and $1,588, respectively.  The Company evaluates the recoverability of
          intangibles and reviews the  amortization  period on a continual basis
          utilizing  the guidance of SFAS 142,  "Goodwill  and Other  Intangible
          Assets." Several factors are used to evaluate intangibles,  including,
          but not limited to,  management's plans for future operations,  recent
          operating results and projected, undiscounted cash flows.

          j.  Advertising

          The Company follows the policy of charging the costs of advertising to
          expense as incurred.  Advertising expense for the years ended June 30,
          2005, 2004, and 2003 was $160,860, $45,055, and $36,320, respectively.

          k.  Newly Adopted Accounting Pronouncements

          During the year ended June 30, 2005, the Company adopted the following
          accounting pronouncements:

          On December  16, 2004 the FASB  issued  SFAS No.  123(R),  Share-Based
          Payment,  which  is an  amendment  to SFAS  No.  123,  Accounting  for
          Stock-Based Compensation.  This new standard eliminates the ability to
          account for share-based  compensation  transactions  using  Accounting
          Principles  Board ("APB") Opinion No. 25,  Accounting for Stock Issued
          to Employees, and generally requires such transactions to be accounted
          for using a fair-value-based  method and the resulting cost recognized
          in our financial statements. This new standard is effective for awards
          that are  granted,  modified  or settled in cash in interim and annual
          periods beginning after June 15, 2005. In addition,  this new standard
          will apply to unvested options granted prior to the effective date. We
          will adopt this new standard effective for the first fiscal quarter of
          2006, and have not yet determined  what impact this standard will have
          on our financial position or results of operations.

                                      F-24
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          k. Newly Adopted Accounting Pronouncements (continued)

          In November 2004, the FASB issued SFAS No. 151,  Inventory  Costs - an
          amendment of ARB No. 43, Chapter 4. This Statement amends the guidance
          in ARB  No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify  the
          accounting  for abnormal  amounts of idle facility  expense,  freight,
          handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43,
          Chapter 4,  previously  stated  that ". . . under some  circumstances,
          items  such as  idle  facility  expense,  excessive  spoilage,  double
          freight,  and  rehandling  costs  may  be so  abnormal  as to  require
          treatment as current period charges. . ." This Statement requires that
          those items be  recognized  as  current-period  charges  regardless of
          whether they meet the criterion of "so  abnormal."  In addition,  this
          Statement  requires that allocation of fixed  production  overheads to
          the  costs  of  conversion  be  based on the  normal  capacity  of the
          production facilities. This statement is effective for inventory costs
          incurred during fiscal years beginning after June 15, 2005. Management
          does  not  believe  the  adoption  of this  Statement  will  have  any
          immediate material impact on the Company.

          In December  2004,  the FASB issued SFAS No. 152,  Accounting for Real
          Estate Time-sharing Transactions,  which amends FASB statement No. 66,
          Accounting  for  Sales of Real  Estate,  to  reference  the  financial
          accounting  and  reporting  guidance  for  real  estate   time-sharing
          transactions  that is provided in AICPA  Statement  of Position  (SOP)
          04-2,  Accounting  for Real  Estate  Time-Sharing  Transactions.  This
          statement also amends FASB Statement No. 67,  Accounting for Costs and
          Initial Rental  Operations of Real Estate Projects,  to state that the
          guidance for (a) incidental  operations and (b) costs incurred to sell
          real  estate  projects  does  not  apply to real  estate  time-sharing
          transactions. The accounting for those operations and costs is subject
          to the guidance in SOP 04-2. This Statement is effective for financial
          statements for fiscal years beginning after June 15, 2005.  Management
          believes  the  adoption of this  Statement  will have no impact on the
          financial statements of the Company.

          In December 2004, the FASB issued SFAS No.153, Exchange of Nonmonetary
          Assets.  This  Statement  addresses  the  measurement  of exchanges of
          nonmonetary assets. The guidance in APB Opinion No. 29, Accounting for
          Nonmonetary Transactions,  is based on the principle that exchanges of
          nonmonetary  assets should be measured  based on the fair value of the
          assets  exchanged.  The guidance in that  Opinion,  however,  included
          certain exceptions to that principle. This Statement amends Opinion 29
          to  eliminate  the  exception  for  nonmonetary  exchanges  of similar
          productive  assets  and  replaces  it  with a  general  exception  for
          exchanges of nonmonetary assets that do not have commercial substance.
          A  nonmonetary  exchange has  commercial  substance if the future cash
          flows of the entity are expected to change  significantly  as a result
          of the exchange.  This Statement is effective for financial statements
          for fiscal years beginning after June 15, 2005. Earlier application is
          permitted for nonmonetary asset exchanges incurred during fiscal years
          beginning  after  the date of this  statement  is  issued.  Management
          believes  the  adoption of this  Statement  will have no impact on the
          financial statements of the Company.

                                      F-25
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          k. Newly Adopted Accounting Pronouncements (continued)

          The  implementation of the provisions of these  pronouncements are not
          expected to have a significant  effect on the  Company's  consolidated
          financial statement presentation.

          l. Equity Securities

          Equity securities issued for services rendered have been accounted for
          at  the  fair  market  value  of  the   securities   on  the  date  of
          authorization.

          m. Concentrations of Risk

          The Company  maintains  several accounts with financial  institutions.
          The accounts are insured by the Federal Deposit Insurance  Corporation
          up  to  $100,000.   The  Company's  balances  exceed  that  amount  by
          $1,808,640 at June 30, 2005.

          Credit  losses,  if  any,  have  been  provided  for in the  financial
          statements and are based on management's  expectations.  The Company's
          accounts receivable are subject to potential  concentrations of credit
          risk.  The Company  does not believe that it is subject to any unusual
          risks, or significant risks in the normal course of its business.

          The Company has one customer who  accounted  for 12% of the  Company's
          sales for the year ended June 30, 2005.

          n.  Stock Options

          As  permitted  by FASB  Statement  148  "Accounting  for  Stock  Based
          Compensation - Transition and Disclosure"  (SFAS No. 148), the Company
          elected to measure and record  compensation  cost relative to employee
          stock option costs in  accordance  with  Accounting  Principles  Board
          ("APB")  Opinion 25,  "Accounting  for Stock Issued to Employees," and
          related  interpretations  and make proforma  disclosures of net income
          and earnings  per share as if the fair value  method of valuing  stock
          options had been applied.  Under APB opinion 25,  compensation cost is
          recognized  for stock  options  granted to  employees  when the option
          price is less that the market price of the underlying  common stock on
          the date of grant.

          o.  Valuation of Options and Warrants

          The valuation of options and warrants granted to unrelated parties for
          services  are  measured  as of the  earlier of (1) the date at which a
          commitment  for  performance  by the  counterparty  to earn the equity
          instrument is reached, or (2) the date the counterparty's  performance
          is complete.  Pursuant to the  requirements of EITF 96-18, the options
          and warrants will continue to be revalued in situations where they are
          granted  prior  to  the  completion  of  the  performance.

                                      F-26
AMERITYRE CORPORATION
                       Notes to the Financial Statements
                         June 30, 2005, 2004, and 2003

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          p.  Cash and Cash Equivalents

          The Company considers all highly liquid investments with a maturity of
          three months or less when purchased to be cash equivalents.

NOTE 2 -  COMMITMENTS AND CONTINGENCIES

          In October 2002, we entered into a five-year lease for a 49,200 square
          foot  executive/manufacturing  facility in Boulder City,  Nevada.  The
          agreement  required a security  deposit of $18,000  and  monthly  rent
          payments of $16,000 for the first twelve months with annual increases.
          At June 30, 2005,  the monthly rent was $17,500.  Future minimum lease
          payments under this non-cancelable operating lease is as follows:

                            2006                     $         208,000
                            2007                               214,000
                            2008                                54,000
                                                     -----------------

                                                     $         476,000
                                                     =================

          On June 13, 2005, we filed case number A505333 in the Eighth  Judicial
          District Court for the State of Nevada against Prototype  Engineering,
          Inc., an Ohio corporation ("Prototype"),  and Frederick F. Vannan, Jr.
          ("Vannan").  Our causes of action  includes  allegations of alter ego,
          misrepresentation/fraud, extortion, declaratory relief, defamation and
          attorney's  fees.  We have  alleged  that  Vannan and  Prototype,  are
          seeking to extort  additional  remuneration  from the Company and have
          made  misrepresentations  regarding  the  existence of an alleged oral
          contract for additional  remuneration  (500,000 to 1,000,000 shares of
          the Company's common stock).  We are seeking a judgment  declaring the
          parties rights relative to a written  contract between the parties and
          a judgment  declaring that Prototype and Vannan have no right or claim
          to any additional remuneration.  We have disputed the existence of any
          such oral contract for additional  remuneration.  Prototype and Vannan
          removed  the matter to the U.S.  District  Court for the  District  of
          Nevada  [CV-S-05-0823-HDM-LRL]  and have  alleged  counter-claims  for
          breach of contract,  breach of contractual  covenant of good faith and
          fair dealing,  unjust enrichment,  and intentional  misrepresentation.
          Our  responsive  pleading  was to file a Motion  to  Remand  or in the
          alternative  to Dismiss all of the  counterclaims.  This motion is now
          pending the court's ruling. We are strongly pursing the litigation and
          we believe a favorable  outcome is highly likely. A favorable  outcome
          for the Company would include a declaratory  judgment  declaring  that
          Prototype and Vannan are not entitled to any further  remuneration and
          may  also  include  attorneys  fees  and  cost  for  the  Company.  An
          unfavorable  outcome for the Company could include a judgment  against
          the Company in an unspecified amount which may be determined at trial.

                                      F-27
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 3 -      STOCK TRANSACTIONS

          During the year ended June 30, 2005,  the Company  issued an aggregate
          of 1,076,048 shares of common stock as follows:

               a.   20,000 shares of common stock for cash of $40,000,  or $2.00
                    per share,  in connection  with the exercise of  outstanding
                    stock options;

               b.   15,000 shares of common stock to acquire  outright three (3)
                    patents  that had  previously  been  assigned to the Company
                    increase  for  periodic  royalty  payments.  The shares were
                    valued at $146,250, or $9.75 per share. Of the above shares,
                    5,000 shares were issued to our CEO;

               c.   65,000  shares  of  common  stock  for  services  valued  at
                    $598,000, or $9.20 per share, to our CEO as compensation for
                    services through June 30, 2005;

               d.   10,000  shares of common stock  valued at $77,000,  or $7.70
                    per share for services to an outside consultant;

               e.   19,300  shares of our common  stock for  services  valued at
                    $123,520 or $6.40 per share,  in connection with an employee
                    stock  award.  The stock was valued at $6.40 per share,  the
                    closing price on the date of grant;

               f.   120,748  shares of common stock to  employees in  connection
                    with the cashless exercise of outstanding stock options;

               g.   30,000 shares of common stock for cash of $90,000,  or $3.00
                    per share,  in connection  with the exercise of  outstanding
                    stock options; and

               h.   796,000  shares of common stock for cash of  $3,184,000,  or
                    $4.00  per  share,   in  connection  with  the  exercise  of
                    outstanding stock options.

NOTE 4 -  STOCK OPTIONS

          During the period  ended  September  30,  2004,  we issued  options to
          acquire  an  aggregate  of  3,000,000  shares of our  common  stock to
          certain  non-employees in connection with an advisory  agreement.  The
          options vested  immediately and the exercise price is $7.00 per share.
          We  recognized a total of $6,134,000  in expense  associated  with the
          issuance of these options and deferred  $1,000,000  as stock  offering
          costs until related  funding is received.  We estimated the fair value
          of the  stock  options  at the grant  date by using the  Black-Scholes
          option pricing model based on the following assumptions:

                    Risk free interest rate                2.49%
                    Expected Life                        2 years
                    Expected volatility                   59.83%
                    Dividend Yield                          0.0%

                                      F-28
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 4 -  STOCK OPTIONS (Continued)

          In December 2004, we issued options to acquire an aggregate of 105,000
          shares of our common stock to certain  employees  under our 2002 Stock
          Option and Award Plan. The options are exercisable at $6.40 per share,
          the closing price on the date of grant, vested immediately, and expire
          on December 15, 2009. At June 30, 2005, we had issued 1,920,000 shares
          of our common  stock  under our 2002 Stock  Option and Award Plan as a
          result of option  exercises and stock awards.  Exercise prices for the
          outstanding  options  range from $3.80 to $6.70 per share and exercise
          terms  range  from one to five  years.  At June 30,  2005,  there were
          209,191 shares available to grant  additional  options or stock awards
          under the Plan.

          In December  2004, we issued options to acquire an aggregate of 80,000
          shares  of our  common  stock to  non-employee  directors  for  annual
          service on our board of  directors  pursuant to our 2004  Non-Employee
          Directors' Stock Incentive Plan. These option vested on June 15, 2005,
          are  exercisable  at $6.40 per share and expire on December  15, 2007.
          There are  1,920,000  shares  available  for the  grant of  additional
          options or stock awards under this plan.

          A summary of the status of the Company's  outstanding stock options as
          of June 30,  2005,  2004,  and 2003 and changes  during the years then
          ended is presented below:
2005                    2004                     2003
                             ------------------------ ----------------------- -------------------------
                                         Weighted                 Weighted                 Weighted
                                          Average                  Average                 Average
                                         Exercise                 Exercise                 Exercise
                               Shares      Price        Shares      Price       Shares      Price
                            ------------ ---------  ------------  --------  -------------- ----------
Outstanding,
      beginning of year        1,922,000 $    3.66     2,466,000  $   3.42       2,616,000    $  3.42
     Granted                   3,185,000      6.97        90,000      5.73         260,461       2.01
     Expired/Cancelled          (195,252)    (0.18)            -         -        (380,000)      2.92
     Exercised                  (966,748)    (4.14)     (634,000)     2.80         (30,461)      2.09
                            ------------ ---------  ------------  --------  --------------    -------

     Outstanding end
      of year                  3,945,000 $    6.31     1,922,000  $   3.66       2,466,000    $  3.42
                            ============ =========  ============  ========  ==============    =======

     Exercisable                 945,000  $   4.14     1,922,000  $   3.66       2,466,000    $  3.42
                            ============  ========  ============  ========  ==============    =======
F-29
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                          June 30, 2005, 2004, and 2003

NOTE 4 -      STOCK OPTIONS (Continued)
Outstanding                           Exercisable
                        --------------------------------------------  ----------------------------
                                          Weighted
                           Number          Average       Weighted        Number        Weighted
           Range of      Outstanding     Remaining        Average      Exercisable      Average
           Exercise      at June 30,   Contractual       Exercise       at June 30,    Exercise
            Prices          2005            Life           Price          2005            Price
        --------------  -------------  -------------   -------------  -------------  -------------
$         3.00        470,000           0.08   $        0.36        470,000  $        1.49
                  3.80         30,000           1.25            0.03         30,000           0.12
                  4.00        200,000           1.95            0.20        200,000           0.85
                  6.40        185,000           3.60            0.30        185,000           1.25
                  6.70         60,000           0.50            0.10         60,000           0.43
                  7.00      3,000,000           4.21            5.32              -              -
        --------------  -------------  -------------   -------------  -------------  -------------

        $    3.00-7.00      3,945,000           3.49   $        6.31        945,000  $        4.14
        ==============  =============  =============   =============  =============  =============
Other than the 3,000,000  options issued to  non-employees,  all other
          options  issued  during the fiscal year were issued to  employees  and
          were  accounted  for under  APB 25,  "Accounting  for Stock  Issued to
          Employees."  All of these  options were issued  either at or above the
          market price of the Company's common stock on the date of issue and no
          compensation  expense was recognized.  Had  compensation  cost for the
          issuance of the options been determined based on the fair value at the
          grant  dates  consistent  with  the  method  of  FASB  Statement  148,
          "Accounting for Stock Based Compensation - Transition and Disclosure,"
          the Company's net loss and loss per share would have been increased to
          the pro forma amounts indicated below:
For the Years Ended
                                                             June 30,
                                             ----------------------------------------------
                                                 2005            2004            2003
                                             --------------  ---------------  -------------
Net (loss) as reported            $  (10,073,008) $    (4,721,255) $  (3,091,972)
           Pro forma                            (10,741,958)      (4,941,080)    (3,293,264)
           Basic (loss) per share
            as reported                      $        (0.53) $         (0.26) $       (0.21)
           Pro forma                                  (0.56)           (0.28)         (0.22)
NOTE 5 -   GOING CONCERN

          Our  financial   statements  are  prepared  using  generally  accepted
          accounting principles applicable to a going concern which contemplates
          the realization of assets and liquidation of liabilities in the normal
          course of business.  We have historically  incurred significant losses
          which have resulted in a total retained deficit of $36,463,835 at June
          30, 2005 which raises  substantial doubt about our ability to continue
          as a going  concern.  The  accompanying  financial  statements  do not
          include   any   adjustments   relating  to  the   recoverability   and
          classification   of  asset   carrying   amounts   or  the  amount  and
          classification  of  liabilities  that might result from the outcome of
          this uncertainty.

                                      F-30
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                             June 30, 2005 and 2004

NOTE 5 -  GOING CONCERN (Continued)

          We have taken  certain  steps to maintain our  operating and financial
          requirements  in an effort to enable us to continue as a going concern
          until  such time  that  revenues  are  sufficient  to cover  expenses,
          including:  (1)  evaluating  (A)  our  cost  of  goods  and  equipment
          utilization and requirements of our manufacturing operations,  and (B)
          our  sales  and  marketing  plan  on  a  product  sector  basis;   (2)
          incorporating  revisions to our methods,  processes and costs in order
          to  achieve   necessary   manufacturing   efficiencies   (i.e.,   line
          automation,  reduced material costs, reduced product waste, etc.); and
          (3) seeking reduced material and component costs from suppliers.

          In addition, to expanding revenue opportunities during the fiscal year
          we  have  commenced  a  program  of (1)  licensing  manufacturing  and
          distribution  rights to certain of our  polyurethane  tire products to
          third-party  manufacturers  based  on  such  factors  as  geographical
          locations  and  boundaries;  (2) selling  manufacturing  equipment  to
          third-party   manufacturers  to  manufacture  products  utilizing  our
          manufacturing  equipment and  processes;  (3) selling our  proprietary
          polyurethane  chemical  systems  to  third-party   manufacturers  that
          utilize our  manufacturing  equipment and processes;  and (4) offering
          contract  design  and  engineering  services  to  the  tire  and  auto
          industries.

          To  supplement  our cash needs during the 2006 fiscal year we have (1)
          obtained  approximately  $1,500,000 in funding through the exercise of
          outstanding  options; and (2) expect to issued common stock in lieu of
          cash  as   compensation   for  employment,   development,   and  other
          professional services.

          The  combination  of our  accounts  receivables  and our cash and cash
          equivalents are expected to meet the balance of our operational  needs
          during the 2006  fiscal  year.  We are  currently  evaluating  funding
          strategies  to help  offset any cash  shortfalls  that may occur after
          during the 2006 fiscal year.

          We  anticipate   that  during  the  2006  fiscal  year  we  will  need
          approximately $4,000,000 to implement our plan and to meet our working
          capital requirements.

          Our  ability to  continue  as a going  concern is  dependent  upon our
          ability to  successfully  accomplish  the plan  described  above,  and
          eventually attain profitable operations.

          The accompanying  financial  statements do not include any adjustments
          that might be  necessary  should we be unable to  continue  as a going
          concern.

NOTE 6 -  SUBSEQUENT EVENTS

          Subsequent  to June 30,  2005,  we have issued  470,000  shares of our
          common stock for cash of $1,410,000,  in connection  with the exercise
          of 470,000 outstanding stock options at $3.00 per share.

                                      F-31
AMERITYRE CORPORATION
                        Notes to the Financial Statements
                             June 30, 2005 and 2004

NOTE 6 -  SUBSEQUENT EVENTS (Continued)

          Effective July 1, 2005, our Board of Directors authorized the issuance
          of 30,300 shares of restricted common stock to Richard A. Steinke, the
          Company's  President  and  Chief  Executive  Officer  as  part  of his
          employment  compensation  for the  period  beginning  July 1, 2005 and
          ending June 30, 2006.  The value of the shares was $200,000,  based on
          the closing price of $6.60 per share.

          On July 1, 2005,  our Board of  Directors  authorized  the issuance of
          options to acquire up to 625,000 shares of our common stock to various
          employees.  The options vest over the term of their employment up to 3
          years  from the date of grant and are  exercisable  for a 5 year term.
          The exercise  price for the initial  option grants is $6.60 per share,
          the closing  price for our common stock on June 30, 2005.  The options
          were  granted  under the terms of the 2005 Stock Option and Award Plan
          (the "2005 Plan") and  2,000,000  shares of our common stock have been
          set aside for stock  option  grants  and stock  awards  under the 2005
          Plan.

          In August 2005, we entered into a Memorandum of Understanding  ("MOU")
          with Ace Products,  LLC, a Delaware limited liability company ("ACE"),
          outlining the general scope and proposed  terms of a transaction  with
          ACE that is currently still under negotiation. Details of scope, terms
          and conditions are all subject to the execution of final agreements by
          and between the parties (the "Definitive  Agreements") and the closing
          of the contemplated  transaction,  anticipated to take place not later
          than  September  16,  2005 (the  "Closing"),  unless an  extension  is
          mutually agreed to by the parties.

          The Definitive  Agreements are expected to include provisions for: (i)
          the  use  of  certain  manufacturing   equipment;   (ii)  the  use  of
          manufacturing  methods  and  processes,  tire  designs  and  molds and
          models; (iii) the use of chemicals and chemical concentrates; and (iv)
          the use of our  trademarks  on products  that  utilize  the  Company's
          technology.  The  Definitive  Agreements  are expected to consist of a
          License  Agreement  and  various  ancillary  agreements  that  will be
          integral  to the  License  Agreement,  including  agreements  for  the
          purchase  of  certain  manufacturing   equipment  and  finished  goods
          inventory, the continuing supply of chemicals and other items.

          The MOU is  non-binding,  however,  it reflects  the  parties'  stated
          intentions to enter into  Definitive  Agreements  and  consummate  the
          transaction.  However, in the event that the Definitive Agreements are
          not executed and the  transaction  is not  completed by September  16,
          2005,  the  parties  agree that the MOU shall  effectively  supersede,
          replace  and cancel  all  previous  agreements  between  the  parties,
          including without limitation the Joint Market, Product Development and
          Supply  Agreement  entered into September 13, 2004, by and between ACE
          Products,  Inc., a Tennessee  corporation,  and the  Company,  and the
          Standstill  Agreement  dated May 18,  2005 by an  between  ACE and the
          Company,  except that all obligations  relating to confidentiality and
          non-disclosure shall remain in full force and effect.

                                      F-32
TABLE OF CONTENTS

                                                                            Page

Prospectus Summary                                                             6
Supplementary Financial Information                                            8
Risk Factors                                                                   9
Use of Proceeds                                                               14
Selling Shareholders                                                          14
Plan of Distribution                                                          18
Indemnification For Securities Act Liabilities                                20
Description of Securities                                                     20
Legal Matters                                                                 20
Experts                                                                       20
Change in Accountants                                                         21
Description of Business                                                       22
Description of Properties                                                     25
Legal Proceedings                                                             25
Market for Common Equity and Related Stockholder Matters                      25
Selected Consolidated Historical Financial Data                               27
Management's Discussion and Analysis                                          29
Quantitative and Qualitative Disclosures About Market Risk                    39
Management                                                                    39
Executive Compensation                                                        42
Security Ownership of Certain Beneficial
   Owners and Management                                                      47
Certain Relationships and Related Transactions                                49
Where You Can Find More Information                                           49
Index to Consolidated Financial Statements                                    50

                                1,575,000 SHARES
                                     OF OUR
                                  COMMON STOCK

                               [GRAPHIC OMITTED]

                              AMERITYRE CORPORATION

                                   PROSPECTUS

                                  March 9, 2006
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The  following  table sets forth the estimated  costs and  expenses,  other than
underwriting  discounts  and  commissions,  if any,  all of which are payable by
Amerityre  Corporation  (the  "Registrant"),  in connection with the sale of the
common stock being offered by the selling shareholders.

SEC registration fee                          $1,143.78
Legal fees and expenses                       $50,000*
Accounting fees and expenses                  $3,000*
Printing expenses                             $4,000*
Miscellaneous                                 $4,000*

Total                                         $62,143.78*

*Estimated.

Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our Articles of Incorporation  provide to the fullest extent permitted by Nevada
law,  our  directors  or officers  shall not be  personally  liable to us or our
shareholders  for damages for breach of such  director's or officer's  fiduciary
duty. The effect of this provision of our Articles of Incorporation, as amended,
is to eliminate our right and our shareholders (through shareholders' derivative
suits on behalf of our company) to recover damages against a director or officer
for breach of the  fiduciary  duty of care as a director  or officer  (including
breaches resulting from negligent or grossly negligent  behavior),  except under
certain  situations  defined by  statute.  We believe  that the  indemnification
provisions  in its  Articles of  Incorporation,  as amended,  are  necessary  to
attract and retain qualified persons as directors and officers.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred or paid by a director,  officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as  expressed  in the  Securities  Act and will be  governed by the final
adjudication of such issue.

Item 15. RECENT SALES OF UNREGISTERED SECURITIES

During the three month period ended March 31, 2003, we issued  339,515 shares of
its restricted common stock for cash of $679,030 and 12,500 shares restricted of
our common stock for a subscription deposit of $25,000, or $2.00 per share.

During the three month period ended March 31, 2003,  we issued  12,500 shares of
our restricted common stock to an unrelated consultant for services.  The shares
were valued at the market price on the date of issue, or $1.95 per share.

In October 2003,  pursuant to a resolution of our Board of Directors,  we issued
125,000  shares of  restricted  common stock  valued at  $472,500,  or $3.78 per
share,  in lieu of cash  compensation  to  Richard  A.  Steinke,  our CEO.  This
issuance was made as a payment of  employment  compensation  for the period from
July 1, 2003 through June 30, 2004.

In October 2003,  pursuant to a resolution of our Board of Directors,  we issued
100,000 shares of our restricted  common stock valued at $378,000,  or $3.78 per
share, to a third-party consultant for professional services associated with our
endeavor to develop polyurethane elastomer tires.

In  November  2003,  pursuant  to a  resolution  of our Board of  Directors,  we
authorized  the  issuance to  non-employee  directors  of an aggregate of 40,000
shares of  restricted  common stock valued at $244,000,  or $6.10 per share,  in
lieu of cash compensation and reimbursement of out-of-pocket expenses associated
with attending our board meetings through November 30, 2004.

In January 2004, we issued  500,000  shares of our  restricted  common stock for
cash of $1,500,000, in connection with the exercise of outstanding stock options
at $3.00 per share.

                                       51
In January 2004, pursuant to a resolution of our Board of Directors,  we granted
several  employees  stock  options to purchase an aggregate of 60,000  shares of
common stock at an exercise  price of $6.70 per share.  The stock options expire
on December 31, 2005.

Effective July 1, 2004, our Board of Directors authorized the issuance of 65,000
shares of restricted common stock to Richard A. Steinke, our President and Chief
Executive Office as employment  compensation  from July 1, 2004 through June 30,
2005. The value of the shares was $598,000,  based on the closing price of $9.20
per share on the date of the board resolution.

Effective  July 1, 2004, we amended the  exclusive  license  agreement  with our
President and two unrelated  parties to license  certain  intellectual  property
rights  known as  "Apparatus  for Making Foam  Products"  and "Method for Making
Polyurethane  Tires with an Outer Skin" embodied in U.S.  Patent Nos.  4,943,223
and 4,855,096,  respectively.  The amendment  eliminates all royalty payments in
exchange for 15,000 shares of our restricted  common stock as a one-time payment
to the  licensees  for their  assignment  and transfer of the  technology to the
Company.  The closing  price of our common  stock as quoted on the OTC  Bulletin
Board on July 1, 2004 was $9.75 per share, for a value of $146,250.

Effective July 1, 2005, our Board of Directors authorized the issuance of 30,300
shares of restricted common stock to Richard A. Steinke, our President and Chief
Executive  Officer  as  part  of his  employment  compensation  for  the  period
beginning  July 1, 2005 and ending  June 30,  2006.  The value of the shares was
$200,000, based on the closing price of $6.60 per share.

On November 8, 2005,  we issued 7,000 shares of our  restricted  common stock to
CCG  Investor  Relations as payment for investor  relations  and media  relation
services.  The value of the shares was  $31,850,  based on the closing  price of
$4.55 per share.

On December 28, 2005, we issued 1,852 shares of our  restricted  common stock to
Steve M.  Hanni,  as partial  compensation  for his  services as Chairman of our
audit committee. The value of the shares was $10,000, based on the closing price
of $5.40 per share.

On December 28, 2005,  we issued an aggregate  of 11,112  shares  (1,852  shares
each) of our restricted  common stock to our six (6)  non-employee  directors as
annual  compensation for their services as members of our board of directors for
the period commencing  December 1, 2005 through November 30, 2006. The aggregate
value of the shares was $60,000, based on the closing price of $5.40 per share.

On January 15, 2006, 10,000 shares of our restricted common stock vested to Gary
N.  Benninger,  our  Chief  Operating  Officer,  pursuant  to the  terms  of his
employment agreement with us. The value of the shares was $53,600,  based on the
closing price of the shares on October 16, 2005, the date of grant.

Effective  February  1,  2006  (the  "Closing  Date"),  we  completed  a private
placement  for  $3,870,000  in offering  proceeds.  We sold 107,500 Units of our
securities at a purchase  price of $36.00 per Unit.  Each Unit consists of eight
(8) shares of our Common  Stock,  a Class A Warrant (the "Class A Warrant")  for
the  purchase  of one  share  of  Common  Stock  at an  exercise  price of $5.00
exercisable  for a 3 year  period and a Class B Warrant  (the "Class B Warrant")
for the  purchase  of one share of Common  Stock at an  exercise  price of $5.50
exercisable  for a 5 year period.  The Warrants may also be exercised  through a
cashless  exercise based on the difference  between the market price on the date
of exercise and the exercise price.  The exercise prices of the Class A Warrants
and Class B Warrants are subject to  adjustment  in certain  events,  including,
without  limitation,   upon  our  consolidation,   merger  or  sale  of  all  or
substantially all of our assets, a reclassification  of our Common Stock, or any
stock splits or combinations with respect to the Common Stock.

Purchasers of the Units have been granted registration rights in connection with
the  private  placement.  We have  agreed  to use  our  best  efforts  to file a
registration statement with the Commission within 45 days after the Closing Date
and cause the registration  statement to be declared effective by the SEC within
120 days after the Closing  Date (if there are no comments  from the SEC) or 180
days (if comments are received from the SEC) (the "Effective  Date") in order to
register  the shares of Common Stock  underlying  the Units sold in the offering
(the "Registrable Securities") for resale and distribution by the investors (the
"Registration  Statement").  We will register approximately  1,075,000 shares of
Common  Stock which  represents  the total number of shares of Common Stock plus
the shares of Common  Stock  issuable  upon  exercise of the Class A and Class B
Warrants. The Registrable Securities shall be reserved and set aside exclusively
for the benefit of each investor.

The Class A and Class B Warrants  are subject to  redemption  by us. We have the
right to redeem  either the Class A or Class B Warrants  beginning  ninety  (90)
days  from the  Effective  Date of the  Registration  Statement,  if at any time
following the Effective Date, the average closing bid price for the Common Stock
in the over-the-counter  market is at least $5.50 per share (with respect to the
Class A Warrants) or $6.05 per share (with respect to the Class B Warrants), for
the 20  consecutive  trading  day  period  ending not more than 15 days prior to
notice of  redemption  of the Class A and Class B Warrants.  Our right to redeem
the Class A and Class B Warrants  requires us to give the holders written notice
of  redemption  of not less  than 30 days,  and is  subject  to the right of the
holders of the Class A and Class B Warrants to exercise  the same in  accordance
with the terms hereof during the redemption  period.  The  redemption  price for
each Class A and Class B Warrant is $0.10 per share.

Unless otherwise  specified above, the sales and issuances of securities  listed
above were deemed to be exempt from  registration  under the  Securities  Act by
virtue of Section  4(2) of the Act and/or  Regulation D  promulgated  thereunder
since,  among other things,  the transaction did not involve a public  offering,
the investors were accredited investors and/or qualified  institutional  buyers,
the investors had access to information  about the company and their investment,
the investors took the  securities  for  investment and not resale,  and we took
appropriate measures to restrict the transfer of the securities.

                                       52
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) Exhibits.

3.1  Articles of Incorporation of the Company (Incorporated by reference to Form
     8-A12G,  filed October 28, 2002, as amended per Form 8-K filed November 17,
     2004).
3.2  Bylaws of the Company  (Incorporated  by reference  to Form  8-A12G,  filed
     October 28, 2002).
4.1  Form of Stock Certificate  (Incorporated by reference to Form 8-A12G, filed
     October 28, 2002).
5.1  Opinion of Sichenzia Ross Friedman Ference LLP. (Filed herewith).
10.1 Form of Subscription  Agreement of Amerityre  Corporation  (Incorporated by
     reference to the Current Report on Form 8-K filed on February 1, 2006).
10.2 Form of Class A Common  Stock  Purchase  Warrant of  Amerityre  Corporation
     dated as of  February 1, 2006  (Incorporated  by  reference  to the Current
     Report on Form 8-K filed on February 1, 2006).
10.3 Form of Class B Common  Stock  Purchase  Warrant of  Amerityre  Corporation
     dated as of  February 1, 2006  (Incorporated  by  reference  to the Current
     Report on Form 8-K filed on February 1, 2006).
23.1 Consent of HJ & Associates,  LLC, Independent  Registered Public Accounting
     Firm. (Filed herewith)
23.2 Consent of Sichenzia  Ross  Friedman  Ference LLP  (included in its opinion
     filed as Exhibit 5.1 to this Registration Statement).

(b) Financial Statement Schedules

Item 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to:

(1)      File,  during any  period in which  offers or sales are being  made,  a
post-effective amendment to this registration statement to:

(i)      Include any prospectus  required by Section  10(a)(3) of the Securities
Act of 1933, as amended (the "Securities Act");

(ii)     Reflect in the prospectus any facts or  events which,  individually  or
together,  represent a fundamental change in the information in the registration
statement.  Notwithstanding the foregoing, any increase or decrease in volume of
securities  offered (if the total dollar value of the  securities  offered would
not exceed that which was registered) and any deviation from the low or high end
of the  estimated  maximum  offering  range  may be  reflected  in the form of a
prospectus  filed  with  the  Commission  pursuant  to  Rule  424(b)  under  the
Securities Act if, in the aggregate,  the changes in volume and price  represent
no more than a 20% change in the maximum  aggregate  offering price set forth in
the  "Calculation  of  Registration  Fee"  table in the  effective  registration
statement, and

(iii)    Include any  additional or changed  material information on the plan of
distribution.

(2)       For  determining  liability  under  the  Securities  Act,  treat  each
post-effective  amendment  as a new  registration  statement  of the  securities
offered,  and the offering of the securities at that time to be the initial bona
fide offering.

(3)      File a post-effective  amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

(4)      For  determining  liability of the  undersigned  small business  issuer
under the  Securities  Act to any purchaser in the initial  distribution  of the
securities,  the undersigned undertakes that in a primary offering of securities
of  the  undersigned   small  business  issuer  pursuant  to  this  registration
statement,  regardless of the underwriting method used to sell the securities to
the purchaser,  if the securities are offered or sold to such purchaser by means
of any of the following  communications,  the undersigned  small business issuer
will be a seller to the  purchaser  and will be considered to offer or sell such
securities to such purchaser:

(i)      Any  preliminary  prospectus  or prospectus  of the  undersigned  small
business issuer  relating to the offering  required to be filed pursuant to Rule
424;

(ii)     Any free writing prospectus relating to  the offering prepared by or on
behalf of the  undersigned  small business  issuer or used or referred to by the
undersigned small business issuer;

(iii)    The  portion of any  other free  writing  prospectus  relating  to  the
offering  containing  material  information about the undersigned small business
issuer or its  securities  provided  by or on behalf  of the  undersigned  small
business issuer; and

(iv)     Any  other  communication  that is an offer in the offering made by the
undersigned small business issuer to the purchaser.

Insofar as indemnification  for liabilities arising under the Securities Act may
be permitted to directors,  officers and  controlling  persons of the registrant
pursuant to the foregoing  provisions,  or otherwise,  the  registrant  has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.

In the event that a claim for  indemnification  against such liabilities  (other
than the payment by the  registrant of expenses  incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered,  the registrant will,
unless in the opinion of its counsel the matter has been settled by  controlling

                                       53
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities Act and will be governed by the final adjudication of such issue.

Each  prospectus  filed  pursuant  to Rule  424(b)  as  part  of a  registration
statement relating to an offering, other than registration statements relying on
Rule 430B or other than  prospectuses  filed in reliance on Rule 430A,  shall be
deemed to be part of and included in the  registration  statement as of the date
it is first used after effectiveness.  Provided, however, that no statement made
in a  registration  statement  or  prospectus  that is part of the  registration
statement or made in a document incorporated or deemed incorporated by reference
into the  registration  statement or prospectus that is part of the registration
statement  will, as to a purchaser with a time of contract of sale prior to such
first use,  supersede or modify any statement that was made in the  registration
statement or prospectus that was part of the  registration  statement or made in
any such document immediately prior to such date of first use.

                                       54
SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1933, we certify that we
have  reasonable  grounds to believe  that we meet all of the  requirements  for
filing on Form S-1,  and have duly  caused  this  registration  statement  to be
signed on our behalf by the undersigned,  thereunto duly authorized, in the City
of Boulder City, State of Nevada, on March 9, 2006.

                              AMERITYRE CORPORATION

                              By /s/ Richard A. Steinke
                                 -----------------------
                                 Richard A. Steinke
                                 Chairman and Chief Executive Officer (Principal
                                 Executive Officer)

                              By /s/ Anders A. Suarez
                                 ---------------------
                                 Anders A. Suarez
                                 Chief Financial Officer (Principal Accounting
                                 Officer)

Pursuant to the  requirements of the Securities Act of 1933,  this  registration
statement has been signed by the following  persons in the capacities and on the
dates indicated:
Signature                                      Title                                       Date
---------                                      ------                                     ------
/s/ Richard A. Steinke               Chief Executive Officer and                    March 9, 2006
   ----------------------               Chairman of the Board of Directors
       Richard A. Steinke               (Principal Executive Officer)

   /s/ Louis M. Haynie                   Director                                      March 9, 2006
   --------------------
       Louis M. Haynie

   /s/ Henry D. Moyle                    Director                                      March 9, 2006
   -------------------
       Henry D. Moyle

   /s/ Wesley G. Sprunk                  Director                                      March 9, 2006
   ---------------------
       Wesley G. Sprunk

   /s/ Norman H. Tregenza                Director                                      March 9, 2006
   ----------------------
      Norman H. Tregenza

   /s/ Steve M. Hanni                    Director                                      March 9, 2006
   ------------------
       Steve M. Hanni

   /s/ Kenneth C. Johnsen                Director                                      March 9, 2006
   -----------------------
       Kenneth C. Johnsen