Flat-free tire patent could be cash cow

Kevin Rademacher

Friday, April 30, 2004 | 10:48 a.m.

The phones have been ringing at Boulder City's once-anonymous Amerityre Corp. since the company announced progress in its endeavor to create a polyurethane automobile tire.

The flurry of attention began when Amerityre announced that its flat-proof polyurethane tires had passed independent laboratory tests indicating compliance with certain Federal Motor Vehicle Safety Standards.

"We've had calls and e-mails from around the world," said Elliott Taylor, executive vice president and general counsel for Amerityre. "Mostly, it's people wanting to know when the tires will be on the market."

The correspondence has come from chemical companies, tire companies, consumers and shareholders, Taylor said.

Those shareholders are responding positively. On April 23, the day the announcement was made, 658,404 Amerityre shares -- which trade on the OTC Bulletin Board under the symbol AMTY.OB -- were swapped, driving the price up from $10.03 to $11.95.

Shares remained well above $11 this week with volume of more than 100,000 shares a day being traded. Prior to the announcement, volume hovered around 40,000 shares a day.

There is little doubt the new test results are a key development for a company that has been working to develop the polyurethane as an alternative to rubber car tires since 1995.

The company said the laboratory performance of the new tire is the first credibility threshold the product must cross in efforts to begin commercial production. The test examines strength, endurance, high-speed performance and load rating.

Chief Executive Richard Steinke warned, however, that the federal standards will change in 2007 and additional testing will be required. He indicated, however, that the company was confident that the new standards will be met.

Amerityre has manufactured flat-free polyurethane tires for bicycles, scooters, golf carts, lawn and garden products, wheelbarrows, handtrucks and other specialty products. The company also makes specialty tires for custom applications, such as wheelchairs and thrill rides.

Those products, however, have been developed to prove the viability of the manufacturing and formulation processes behind the automobile tires, Taylor said.

"We are basically a technology company that has had to come up with products to prove our technology," he said.

The company has not been without critics in the industry who have said polyurethane is not viable for a car tire because it is too hard, too heat sensitive and too expensive.

Taylor said the recent tests discount many of those arguments. He concedes that some questions remain, including the tire's ability to hold traction on wet roads and resist flat-spotting during a sudden stop.

"We know what the concerns are," he said. "We feel the urethanes we are using meet all of those criticisms."

The final answers will shake out during tests involving manufacturers, Taylor said.

"Ultimately, we will look to see how it performs vs. rubber," he said. "That will be the benchmark."

Still, one critic said such tires will never reach the market.

"I do not know of any polyurethane tire that will withstand the rigors of an automobile tire," said William Knooihuizen, president of KIK Technologies International Inc., which also sells polyurethane tires outside of the automobile industry. "Heat is a major factor."

Knooihuizen said the stock market is the motivation for Amerityre executives.

"Let's call it what it is," he said. "This is a stock scam. This is promoting stock."

Taylor said there is plenty of motivation for Knooihuizen's accusations.

"The people that are claiming it's a stock scam are competitors," he said, adding that the polyurethane formulation Amerityre is using is different from what those on which Knooihuizen is basing his judgement.

Knooihuizen said if it is successful, he would be the "the first one to stand in line" to get a license to the technology.

Amerityre now will begin working to shore up the legal protection for its technology and manufacturing process, Taylor said. While existing patents are in place for the company's technology, he said the company will now seek new protection on the configuration that passed the recent safety test.

"Protecting that is the No. 1 chore now that we know it works," Taylor said.

Amerityre will then begin exploring manufacturing and distribution options, which include licensing agreements to one or many tire makers or selling the technology.

"Right now our goal is to best figure out ... how to get that tire to the marketplace," Taylor said.

A version of this story also appears today in In Business Las Vegas, a sister publication of the Las Vegas Sun.