<PAGE> 1
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM 10-KSB
(Mark One)
  [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934 

     For the fiscal year ended       June 30, 1997
                                     -------------
  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     For the transition period from ________ to __________

            Commission File Number          33-94318-C      
                                            ---------- 
AMERICAN TIRE CORPORATION
--------------------------
(Exact name of registrant as specified in charter)

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

1643 Nevada Highway, Boulder City, Nevada                  89005     
-------------------------------------------              ----------
(Address of principal executive offices)                 (Zip Code)

Issuer's telephone number, including area code (702)  293-1930      
                                               ---------------
Securities registered pursuant to section 12(b) of the Act:

Title of each class       Name of each exchange on which registered
        None                                  N/A  
------------------        -----------------------------------------

Securities registered pursuant to section 12(g) of the Act:
                                   None                
                             ---------------
                             (Title of class)

  Check whether the Issuer (1) filed all reports required to be filed by 
section 13 or 15(d) of the Exchange Act during the past 12 months (or for such 
shorter period that the registrant was required to file such reports), and (2) 
has been subject to such filing requirements for the past 90 days.  (1)  Yes 
[X]  No [ ]  (2)  Yes [X]  No  [ ]

  Check if disclosure of delinquent filers in response to Item 405 of 
Regulation S-B is not contained in this form, and no disclosure will be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-KSB or any amendment to this Form 10-KSB.    [X]

  State issuer's revenues for its most recent fiscal year:  $69,518
                                                            -------

<PAGE> 2

  State the aggregate market value of the voting stock held by nonaffiliates 
computed by reference to the price at which the stock was sold, or the average 
bid and asked prices of such stock, as of a specified date within the past 60 
days: 

     Based on the average bid and asked prices of the common stock at November 
12 1997, of $4.625 share, the market value of shares held by nonaffiliates 
would be $7,798,897.

  As of November 13, 1997, the Registrant had 3,297,248 shares of common stock 
issued and outstanding.

                     DOCUMENTS INCORPORATED BY REFERENCE

     List hereunder the following documents if incorporated by reference and 
the part of the form 10-KSB (e.g., part I, part II, etc.) into which the 
document is incorporated:  (1) Any annual report to security holders; (2) Any 
proxy or other information statement; and (3) Any prospectus filed pursuant to 
rule 424(b) or (c) under the Securities Act of 1933:  NONE

<PAGE> 3


                                SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, as 
amended, this report has been signed below by the following persons on behalf 
of the Registrant and in the capacities and on the dates indicated:

                                        AMERICAN TIRE CORPORATION


                                        
Date: January 14, 1998                 By /S/Richard A. Steinke, C.E.O. and
                                        Director (Principal Executive Officer)
<PAGE> 4

                         INDEPENDENT AUDITORS' REPORT

BOARD OF DIRECTORS
AMERICAN TIRE CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
BOULDER CITY, NEVADA
                                        
We have audited the accompanying consoldated balance sheet of American Tire
Corporation and Subsidiary (A Development Stage Company) as of June 30, 1997 
and the related consolidated statements of operations, stockholders' equity 
and cash flows for the year then ended. These consolidated financial 
statements are the responsibility of the Company's management.  Our 
responsibility is to express an opinion on these consolidated financial 
statements based on our audit. We did not audit the financial statements of 
UTI Chemicals (Europe) Limited, a wholly-owned subsidiary, which statements 
reflect total assets of $384,184 as of June 30, 1997 and total revenues of 
$55,012 for the four months then ended. Those statements were audited by other 
auditors whose report has been furnished to us, and our opinion, insofar as it 
relates to the amounts included for UTI Chemicals (Europe) Limited, is based 
solely on the report of the other auditors.

We have conducted our audit in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the consolidated financial 
statements are free of material misstatement. An audit includes examining, on 
a test basis, evidence supporting the amounts and disclosures in the 
consolidated 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 audit and the report of other auditors provide a reasonable basis for 
our opinion.

In our opinion, based on our audit and the report of other auditors, the 
consolidated financial statements referred to above present fairly, in all 
material respects, the consolidated financial position of American Tire 
Corporation and Subsidiary (A Development Stage Company) as of June 30, 1997, 
and the results of their operations and their cash flows for the year then 
ended, in conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming 
the Company will continue as a going concern.  As described in Note 7 to the 
consolidated financial statements, the Company has incurred significant losses 
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 7.  The consolidated financial 
statements do not include any adjustments that might result from the outcome 
of this uncertainty.

/S/ Jones, Jensen & Company
November 8, 1997

<PAGE> 5

INDEPENDENT AUDITOR'S REPORT

To the Shareholders and Board of Directors
American Tire Corporation

We have audited the statements of operations, shareholders' equity, and cash 
flows of American Tire Corporation for the year ended June 30, 1996. 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 audit.

We conducted our audit in accordance with generally accepted auditing 
standards.  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 results of its operations and its cash flows of 
American Tire Corporation for the year ended June 30, 1996, in conformity with 
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the company 
will continue as a going concern.  As described in Note 7 to the financial 
statements, the Company's ability to bring its product to market are dependent 
on its successful obtainment of capital to fund its activities.

In the event the Company is unsuccessful in obtaining sufficient capital, 
there is substantial doubt about the Company's ability to continue as a going 
concern.  The financial statements do not include any adjustments that might 
result from the outcome of this uncertainty.


/S/ SALTZ, SHAMIS & GOLDFARB, INC.

Akron, Ohio
October 9, 1996



<PAGE> 6

                   AMERICAN TIRE CORPORATION AND SUBSIDIARY
                        (A Development Stage Company)
                         CONSOLIDATED BALANCE SHEET                   

                                    ASSETS
                                    ------
                                                            June 30,
                                                              1997
                                                          ------------

CURRENT ASSETS
 
 Cash and cash equivalents                                $    501,449
 Accounts receivable                                            73,922
 Accounts receivable - related party (Note 3)                    2,237
 Inventory (Note 1)                                            303,704
 Prepaid expenses                                               91,320
                                                          ------------
     Total Current Assets                                      972,632
                                                          ------------
PROPERTY AND EQUIPMENT (Note 1)

 Land                                                           59,000
 Building and improvements                                     278,501
 Equipment and vehicles                                        660,793
 Furniture and fixtures                                         32,808
 Less - accumulated depreciation                              (150,627)
                                                          ------------
     Total Property and Equipment                              880,475
                                                          ------------
OTHER ASSETS
 
 Patents (Note 1)                                               24,822
 Deposits                                                        4,414
 Goodwill (Note 1)                                           1,694,111
                                                          ------------
     Total Other Assets                                      1,723,347
                                                          ------------

TOTAL ASSETS                                              $  3,576,454
                                                          ============

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

<PAGE> 7
       
                   AMERICAN TIRE CORPORATION AND SUBSIDIARY
                        (A DEVELOPMENT STAGE COMPANY)
                    Consolidated Balance Sheet (Continued)

                     LIABILITIES AND STOCKHOLDERS' EQUITY
                     ------------------------------------
                                                            June 30,
                                                              1997
                                                          ------------

CURRENT LIABILITIES
 
 Accounts payable                                         $     69,077
 Accounts payable - related parties (Note 3)                   150,000
 Accrued expenses                                               16,032
 Line of credit (Note 6)                                        55,380
                                                          ------------
     Total Current Liabilities                                 290,489
                                                          ------------

TOTAL LIABILITIES                                              290,489
                                                          ------------

COMMITMENTS AND CONTINGENCIES (Note 4)

STOCKHOLDERS' EQUITY

 Preferred stock: 5,000,000 shares authorized
  of $0.001 par value, 0 shares issued and outstanding            -
 Common stock: 25,000,000 shares authorized 
  Of $0.001 par value, 4,561,748 shares issued
  and outstanding                                                4,562
 Additional paid-in capital                                  5,582,811
 Stock subscription receivable (Note 2)                        (50,000)
 Currency translation adjustment                                 2,984
 Deficit accumulated during the development stage           (2,254,392)
                                                          ------------
     Total Stockholders' Equity                              3,285,965
                                                          ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $  3,576,454
                                                          ============

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

<PAGE> 8
<TABLE>
<CAPTION>          AMERICAN TIRE CORPORATION AND SUBSIDIARY
                        (A Development Stage Company)
                     Consolidated Statements of Operations
                                                                                        From
                                                                                    Inception on
                                                                                    January 30,
                                                              For the Years Ended   1995 Through
                                                                June 30,              June 30, 
                                                          1997           1996           1997
                                                     ------------   ------------    ------------
<S>                                                <C>            <C>             <C>
NET SALES                                            $     69,518   $       -       $     69,518
                                                     ------------   ------------    ------------

COST OF SALES                                              47,882           -             47,882
                                                     ------------   ------------    ------------
EXPENSES 
 Consulting                                               292,414         43,261         484,792
 Payroll and payroll taxes                                521,773        222,757         774,347
 Depreciation and amortization                            189,563         37,994         228,862
 Bad debt expense                                          21,112           -             21,112 
 Selling, general and administrative                      457,439        246,418         772,758
                                                     ------------   ------------    ------------

    Total Expenses                                      1,482,301        550,430       2,281,871
                                                     ------------   ------------    ------------
INCOME (LOSS) BEFORE OTHER INCOME EXPENSES             (1,460,665)      (550,430)     (2,260,235)
                                                     ------------   ------------    ------------
OTHER INCOME (EXPENSES)
 Other income                                              56,096           -             56,096
 Interest income                                           17,649          8,161          29,421
 Interest expense                                         (19,090)       (53,821)        (76,012)
 Loss on disposition of assets                             (3,662)          -             (3,662)
                                                     ------------   ------------    ------------
                                                           50,993        (45,660)          5,843
                                                     ------------   ------------    ------------
NET (LOSS)                                           $ (1,409,672)  $   (596,090)   $ (2,254,392)
                                                     ============   ============    ============

NET (LOSS) PER SHARE                                 $      (0.33)  $      (0.16)
                                                     ============   ============

WEIGHTED AVERAGE SHARES OUTSTANDING                     4,246,888      3,840,642
                                                     ============   ============

</TABLE>

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

<PAGE> 9
<TABLE>
<CAPTION>         AMERICAN TIRE CORPORATION AND SUBSIDIARY 
                        (A Development Stage Company)
               Consolidated Statements of Stockholders' Equity

                                                                                         Deficit
                                                                                        Accumulated
                                                 Additional  Currency       Stock       During the
                              Common Stock        Paid-in   Translation  Subscription   Development 
                            Shares      Amount    Capital    Adjustment   Receivable       Stage
                          ----------  ---------  ---------  -----------  ------------  -------------
<S>                      <C>        <C>        <C>        <C>          <C>           <C>

BALANCE, January 30, 1995
 (Inception)                    -     $    -     $     -     $     -     $       -     $       -

Common stock issued for 
 cash during February 
 1995 at $0.001 per share  2,510,000      2,510        -           -             -             -

Common stock issued for
 services rendered in
 February 1995 at $0.10
 per share                   300,000        300      29,700        -             -             -

Common stock issued for
 services rendered during
 April 1995 at $1.00 per
 share                       100,000        100      99,900        -             -             -

Common stock issued for
 notes receivable valued
 at $1.00 per share          170,000        170     169,830        -         (170,000)         -

Repayment of stock
 subscriptions receivable
 with cash or services
 rendered                       -          -           -           -           76,100          -

Common stock issued for 
 cash at $1.00 per share     720,000        720     719,280        -             -             -   

Stock offering costs            -          -        (78,271)       -             -             -

Net loss for the period
 ended June 30, 1995            -          -           -           -             -         (248,630)
                          ----------  ---------  ----------  ----------  ------------  ------------ 
Balance, June 30, 1995     3,800,000      3,800     940,439        -          (93,900)     (248,630)

Common stock issued for
 cash at $6.00 per share      40,642         41     243,811        -             -             -

Stock offering costs            -          -         (1,600)       -             -             -
                        
Repayment of stock
 subscriptions receivable
 by providing services          -          -           -           -            8,900          -

Net loss for the year
 ended June 30, 1996            -          -           -           -             -         (596,090)
                          ----------  ---------  ---------- -----------  ------------  ------------ 
Balance, June 30, 1996     3,840,642  $   3,841  $1,182,650 $      -     $    (85,000) $   (844,720)
                          ----------  ---------  ---------- -----------  ------------  ------------
 
</TABLE>

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

<PAGE> 10
<TABLE>
<CAPTION>         AMERICAN TIRE CORPORATION AND SUBSIDIARY 
                        (A Development Stage Company)
         Consolidated Statements of Stockholders' Equity (Continued)

                                                                                         Deficit
                                                                                        Accumulated
                                                 Additional  Currency       Stock       During the
                              Common Stock        Paid-in   Translation  Subscription   Development 
                            Shares      Amount    Capital    Adjustment   Receivable       Stage
                          ----------  ---------  ---------  -----------  ------------  -------------
<S>                      <C>        <C>        <C>        <C>          <C>           <C>

Balance, June 30, 1996     3,840,642  $   3,841  $1,182,650 $      -     $    (85,000) $   (844,720)

Cancellation of common
 stock                       (34,977)       (35)   (209,827)       -             -             -

Common stock issued for
 cash at $6.00 per share
 pursuant to public
 offering                    344,083        344   2,064,154        -             -             -

Stock offering costs            -          -       (307,509)       -             -             -

Common stock issued in lieu
 of debt at $6.00 per share
 during November 1996         27,000         27     161,973        -             -             -

Common stock issued for
 cash at $6.00 per share
 during January 1997         155,000        155     929,845        -             -             -

Common stock issued to
 acquire UTI Chemicals
 (Europe) Limited at $7.75
 per share                   200,000        200   1,549,800        -             -             -

Common stock issued for 
 services rendered at
 $6.125 per share during
 February 1997                15,000         15      91,860        -             -             -

Common stock issued for
 services rendered at 
 $7.99 per share during
 June 1997                    15,000         15     119,865        -             -             -

Repayment of stock
 subscriptions receivable
 by providing services          -          -           -           -           40,000          -

Interest accrual on stock
 subscription receivable        -          -           -           -           (5,000)         -

Currency translation
 adjustment                     -          -           -          2,984          -             -

Net loss for the year  
 ended June 30, 1997            -          -           -           -             -       (1,409,672)
                          ----------  ---------  ----------  ----------  ------------  ------------ 
Balance, June 30, 1997     4,561,748  $   4,562  $5,582,811  $    2,984  $    (50,000) $ (2,254,392)
                          ==========  =========  ==========  ==========  ============  ============
 
</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.
<PAGE> 11
<TABLE>
<CAPTION>          AMERICAN TIRE CORPORATION AND SUBSIDIARY
                        (A Development Stage Company)
                     Consolidated Statements of Cash Flows
                                                                                        From
                                                                                    Inception on
                                                                                    January 30,
                                                         For the Years Ended        1995 Through
                                                                June 30,              June 30, 
                                                          1997           1996           1997
                                                     ------------   ------------    ------------
<S>                                                <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net (Loss)                                           $ (1,409,672)  $   (596,090)   $ (2,254,392)
 Adjustments to Reconcile Net (Loss) to
  Net Cash (Used) by Operating Activities:
    Depreciation and amortization                         189,563         37,994         228,862
    Loss on disposition of assets                           3,662           -              3,662
    Common stock issued for services                      211,755           -            340,755
    Services provided in lieu of cash payment
     on subscriptions receivable                           40,000          8,900          75,000
    Common stock issued in lieu of debt                   162,000           -            162,000
  Changes in Assets and Liabilities:
     (Increase) decrease in accounts receivable           (43,399)       (18,348)        (66,166)
     (Increase) decrease in inventory                    (172,419)      (131,285)       (303,704)
     (Increase) decrease in prepaid expenses              (58,413)        (4,794)        (91,320)
     (Increase) decrease in other assets                  192,921        107,455          93,693
     Increase (decrease) in accounts payable and
      accrued expenses                                   (129,401)        72,443         (25,891)
                                                     ------------   ------------    ------------
  Net Cash (Used) by Operating Activities              (1,013,403)      (523,725)     (1,837,501)

CASH FLOWS FROM INVESTING ACTIVITIES:

 Purchase of equipment                                   (469,392)      (140,505)       (992,048)
 Purchase of investments                                 (400,000)          -           (400,000)
                                                     ------------   ------------    ------------
  Net Cash (Used) in Investing Activities            $   (869,392)  $   (140,505)   $ (1,392,048)
                                                     ------------   ------------    ------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.
<PAGE> 12
<TABLE>
<CAPTION>          AMERICAN TIRE CORPORATION AND SUBSIDIARY
                        (A Development Stage Company)
              Consolidated Statements of Cash Flows (Continued) 
                                                                                        From
                                                                                    Inception on
                                                                                    January 30,
                                                         For the Years Ended        1995 Through
                                                                June 30,              June 30, 
                                                          1997           1996           1997
                                                     ------------   ------------    ------------
<S>                                                <C>            <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from notes payable                         $       -      $    463,000    $    852,838
 Payment made on notes payable                           (244,458)      (104,000)       (536,458)
 Common stock issued for cash                           2,624,235        216,968       3,414,618
                                                     ------------   ------------    ------------
     Net Cash Provided by Financing Activities          2,379,777        575,968       3,730,998
                                                     ------------   ------------    ------------

NET INCREASE (DECREASE) IN CASH                           496,982        (88,262)        501,449

CASH AND CASH EQUIVALENTS AT BEGINNING
 OF YEAR                                                    4,467         92,729            -
                                                     ------------   ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR             $    501,449   $      4,467    $    501,449
                                                     ============   ============    ============

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

  CASH PAID FOR:
     Interest                                        $     19,090   $     26,654    $     47,572
     Income taxes                                    $       -      $       -       $       -

NON-CASH FINANCING ACTIVITIES

 Common stock issued for services rendered           $    211,755   $       -       $    340,755
 Common stock issued in lieu of debt                 $    162,000   $       -       $    162,000
 Common stock issued for acquisition of subsidiary   $  1,550,000   $       -       $  1,550,000

</TABLE>

In April 1995, the Company issued 170,000 shares of common stock at $1.00 per 
share in exchange for notes receivable.  During the period ended June 30, 
1995, services were provided valued at $26,100, which were offset against the 
notes receivable.  During the years ended June 30, 1997 and 1996, an 
additional $40,000 and $8,900, respectively, of services were provided, which 
were offset against the notes receivable.

The accompanying notes are an integral part of these consolidated financial 
statements.
<PAGE> 13
                       AMERICAN TIRE CORPORATION AND SUBSIDIARY
                            (A DEVELOPMENT STAGE COMPANY)
                    Notes to the Consolidated Financial Statements
                                  June 30, 1997

NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization

The consolidated financial statements include those of American Tire 
Corporation (ATC) and its wholly-owned subsidiary, UTI Chemicals (Europe) 
Limited (UTI).  Collectively, they are referred to herein as "the Company".

ATC was incorporated under the laws of the State of Nevada on January 30, 
1995.  The Company organized to take advantage of existing proprietary and 
non-
proprietary technology available for the manufacturing of specialty tires.  
ATC has had limited operations since its organization and is a "development 
stage" company.  The Company intends to engage in the manufacturing, 
marketing, distribution, and sale of airless specialty tires and tire-wheel 
assemblies and currently is manufacturing airless tires in limited quantities 
at its manufacturing facility located in Ravenna, Ohio.

On February 28, 1997, ATC purchased UTI for $1,950,000 by issuing 200,000 
shares of its common stock plus $400,000 in cash in exchange for 100% of the 
issued and outstanding stock of UTI.  The purchase of UTI resulted in the 
creation of goodwill of $1,694,111 at June 30, 1997.

UTI Chemicals (Europe) Limited (UTI) was incorporated under the laws of 
England and Wales on October 8, 1990 for the purpose of promoting and 
developing products within the chemical industry.  Since 1990, UTI has been a 
distributor of urethane bicycle, wheelchair and other specialty tires in the 
United Kingdom and Europe.  UTI distributes urethane tires under the 
registered trade name "Urathon" in approximately 540 retail outlets in 
England, Scotland and Wales.  UTI also sells product in France, Denmark, 
Austria, the Netherlands and Germany through independent distributors.

b.  Accounting Method

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

c.  Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with maturities 
of three months or less at the time of acquisition.

d.  Net (Loss) Per Share

The computations of net (loss) per share of common stock are based on the 
weighted average number of shares outstanding.

<PAGE> 14

                     AMERICAN TIRE CORPORATION AND SUBSIDIARY
                          (A Development Stage Company)
                  Notes to the Consolidated Financial Statements
                                 June 30, 1997

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

e.  Principles of Consolidation

The June 30, 1997 consolidated financial statements include those of American 
Tire Corporation and its wholly-owned subsidiary, UTI Chemicals (Europe) 
Limited.  All significant intercompany accounts and transactions have been 
eliminated.

For the Company's foreign subsidiary (UTI), the functional currency has been 
determined to be the local currency.  Accordingly, assets and liabilities are 
translated at year-end exchange rates, and operating statement items are 
translated at average exchange rates prevailing during the year.  The 
resultant cumulative translation adjustments to the assets and liabilities are 
recorded as a separate component of stockholders' equity.  Exchange 
adjustments resulting from foreign currency transactions are included in the 
determination of net income (loss).  Such amounts are immaterial for all years 
presented.

In accordance with Statement of Financial Accounting Standards No. 95 
"Statement of Cash Flows," cash flows from the Company's foreign subsidiary 
are calculated based upon the local currencies.  As a result, amounts related 
to assets and liabilities reported on the consolidated statements of cash 
flows will not necessarily agree with changes in the corresponding balance 
sheets.

f.  Estimates

The preparation of financial statements in conformity with generally accepted 
accounting principles requires managements 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.

g.  Provision for Taxes

As of June 30, 1997, the Company has net operating loss carry forwards of 
approximately $2,250,000 which will expire in 2012.  No tax benefit has been 
reported in the consolidated financial statements because the potential tax 
benefits of the loss carry forwards are offset by a valuation allowance of the 
same amount.

h.  Inventory

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

<PAGE> 15

                      AMERICAN TIRE CORPORATION AND SUBSIDIARY
                           (A Development Stage Company)
                   Notes to the Consolidated Financial Statements
                                   June 30, 1997

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

i.  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:

                  Building and improvements     40 years
                  Equipment and vehicles        5 to 7 years
                  Furniture and fixtures        7 years

Depreciation expenses for the years ended June 30, 1997 and 1996 was $68,555 
and $37,994, respectively.

j.  Revenue Recognition

Revenue is recognized upon shipment of goods to the customer.

k.  Concentrations of Risk

Foreign Currency Translation
----------------------------

Since UTI is a foreign company whose financial statements must be translated 
into U.S. Dollars to conform with the requirements of the Securities and 
Exchange Commission, major changes in the currency exchange rate between Pound 
Sterling and U.S. Dollars may have a significant impact on operations of the 
Company.  Although the Company does not anticipate the currency exchange rate 
to be significantly different over the 12 months, no such assurances can be 
given.

Accounts Receivable
-------------------

Credit losses, if any, have been provided for in the consolidated financial 
statements and are based on managements' 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, or significant 
risks in the normal course of its business.

l.  Goodwill

Goodwill consists of the excess of the purchase price of fair value of net 
assets of the purchased subsidiary and is amortized on the straight-line 
method over a 5 year period.

The Company periodically reviews goodwill for impairment by comparing undiscount
ed projected income over the remaining amortization period to the unamortized 
balance of goodwill. No impairments have been recorded.  Amortization expense 
on the goodwill for the year ended June 30, 1997 was $121,008.

<PAGE> 15

                      AMERICAN TIRE CORPORATION AND SUBSIDIARY
                           (A Development Stage Company)
                   Notes to the Consolidated Financial Statements
                                   June 30, 1997

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

m.  Patents

Patents and related technology have been capitalized at June 30, 1997.  The 
patents are still pending, thus, no amortization of the costs has been 
recorded for the year ended June 30,1997.

NOTE 2- STOCK SUBSCRIPTION RECEIVABLE

In April 1995, the Company entered into subscription agreements for three of 
its officers to acquire an aggregate of 170,000 shares of common stock at a 
purchase price of $1.00 per share, in exchange for promissory notes bearing 
interest at 8% per annum, principal and interest payable in April, 1998.  The 
officers provided accounting and consulting services valued at $26,100 which 
have been charged to operations during the period ended June 30, 1995, and 
offset against the amount owed under the promissory notes.  The promissory 
notes were amended to become due no later than six months form the close of 
the Company's initial public offering.

During the year ended June 30, 1996, an officer provided $8,900 of accounting 
services, which was offset against the amounts owed under the promissory note, 
and another officer paid $50,000 toward his note receivable.  During the year 
ended June 30, 1997, additional services were provided valued at $40,000 which 
were offset against the amount owed under the promissory note.  At June 30, 
1997, $50,000 was owed under these notes including $5,000 of accrued interest, 
which has been presented as a reduction of stockholders' equity.

NOTE 3- RELATED PARTY TRANSACTIONS

In August 1995, the Company entered into employment agreements with two of its 
officers.  These agreements are for 36 months at a monthly compensation of 
$10,000 each.  At June 30, 1997, $100,000 was owed to the two officers for 
unpaid wages. In addition, $50,000 was due to another officer at June 30, 1997 
for services rendered to the Company from February 1, 1997 to June 30, 1997.

In October 1995, the Company entered into a Technology License Agreement with 
a related party providing for a royalty of $0.25 to be paid for each tire sold 
by the Company utilizing the "airless tire technology" as defined by the 
agreement.

As of June 30, 1997, $2,237 was owed to the Company by certain employees and 
related entities.

NOTE 4- COMMITMENTS AND CONTINGENCIES

On January 31, 1997, the Company entered into a management agreement with a 
corporation to manage the day-to-day operations of UTI, the Company's wholly-
owned subsidiary.  The Company issued 15,000 shares of its common stock as 
full consideration for the management services.  The agreement expires on 
January 31, 1998.

<PAGE> 16
                     AMERICAN TIRE CORPORATION AND SUBSIDIARY
                          (A Development Stage Company)
                  Notes to the Consolidated Financial Statements
                                  June 30, 1997

NOTE 4- COMMITMENTS AND CONTINGENCIES (Continued)

On June 5, 1995, the Company entered into a Technology License Agreement with 
a related party. The agreement provides the Company the exclusive license to 
use, sell and license the technology for manufacturing a wheel-tire assembly 
known as the "Dynamic Steerable Spring."  The agreement specified that a 
royalty of either $1 per unit sold directly by the Company or eight percent of 
any royalty the Company should receive from any third party licensee to be 
paid quarterly.  The agreement was superceded subsequent to June 30, 1997 
(Note 9).

NOTE 5- STOCK TRANSACTIONS

Pursuant to a recission offer and agreement, the Company repurchased and 
canceled 34,977 shares of its outstanding common stock at $6.00 per share 
during the year ended June 30, 1997.

During the year ended June 30, 1997, the Company completed a public offering 
of 344,083 shares of common stock at $6.00 per share for total proceeds of 
$2,064,498.  The Company also completed a private placement during February 
1997 of 155,000 shares at $6.00 per share for total proceeds of $930,000.

During the year ended June 30, 1997, the Company issued 27,000 shares of 
common stock valued at $162,000 in lieu of outstanding debt.  The Company also 
issued 15,000 shares of common stock valued at $119,880 pursuant to a 
management agreement (Note 4) and 15,000 shares for services rendered valued 
at $91,875 (Note 8).

NOTE 6 - LINE OF CREDIT

The Company has a line of credit with a bank with a maximum of $41,605.  The 
loan is secured and accrues interest at a variable rate of approximately 12% 
per annum.  The balance outstanding on the line of credit at June 30, 1997 was 
$55,380.

NOTE 7- GOING CONCERN

     The Company's consolidated 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.  The Company has historically incurred significant 
losses which have resulted in an accumulated deficit of $2,254,392 at June 30, 
1997 which raises substantial doubt about the Company's ability to continue as 
a going concern.  The accompanying consolidated 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.  It is the intent of 
management to create additional selling avenues through the development and 
sales of its patented tires and to rely upon additional equity financing if 
required to sustain operations.

<PAGE> 17
                       AMERICAN TIRE CORPORATION AND SUBSIDIARY
                            (A Development Stage Company)
                    Notes to the Consolidated Financial Statements
                                    June 30, 1997

NOTE 8- STOCK OPTIONS OUTSTANDING
     
     The Company's Board of Directors has authorized a Non-Qualified Stock 
Option Plan that allows for the Company to issue options to purchase up to 
35,000 shares of the Company's common stock that may be issued to consultants 
or others that provide professional services to the Company.  The stock 
options have been valued at fair market value according to FAS 123, 
"Accounting for Stock-Based Compensation.") Stock option activity for the year 
ended June 30, 1997 consisted of the following:

                                 Number of         Weighted Average
                                 Shares            Price per Share
                                 ---------         ----------------
Outstanding at June 30, 1996          -            $  -
Granted during the year             35,000           3.80
Exercised during the year          (15,000)         (1.73)
                                 ---------         ------
Outstanding at June 30, 1997        20,000         $ 2.07
                                 =========         ======

The 20,000 stock options outstanding at June 30, 1997 are summarized as 
follows:

Date               Number of     Exercise    Expiration
Issued             Options       Price       Date
------             ---------     --------    ----------
May 31, 1997       14,500        $2.00       May 31, 1999
June 9, 1997        5,500        $2.25       June 9, 1999

NOTE 9- SUBSEQUENT EVENTS

     Subsequent to June 30,1997, the following events occurred.

     1.  The Company entered into an Agreement of Settlement and Mutual 
Release on August 19, 1997 with two former officers and an other employee of 
the Company.  As part of the settlement agreements, the Company has agreed to 
pay a total of $360,000 for accrued wages and the purchase and cancellation of 
1,270,000 shares of the Company's outstanding common stock. $160,000 was paid 
on the date of the agreement and the remaining $200,000 is to be paid in 
twenty equal consecutive monthly payments.

     2.  On August 19, 1997, in connection with the Agreement of Settlement 
and Mutual Release, the Company entered into a new Technology License 
Agreement relating to the "Dynamic Steerable Spring" with a former officer of 
the Company to replace the original agreement (Note 4). The terms of the 
Agreement were amended to reduce the royalty payment from $1.00 per unit sold 
to $0.50 per unit sold.  In addition, the Technology License Agreement 
relating to the "non-pneumatic tire technology" was amended to reduce the 
royalty payment from $0.25 per unit sold to $0.125 per unit sold. All royalty 
payments are to be paid quarterly.

<PAGE> 18
                       AMERICAN TIRE CORPORATION AND SUBSIDIARY
                            (A Development Stage Company)
                    Notes to the Consolidated Financial Statements
                                    June 30, 1997

     3.  The Company entered into a Development Agreement on September 30, 
1997, whereby an unrelated company shall provide the tire technology relating 
to shape and tread pattern and performance evaluation personnel and the 
Company shall provide the Urethane technology and personnel.  If the result of 
the testing is positive and the parties hereto are interested in the joint 
commercialization of urethane tires, then the parties shall enter into a 
separate agreement covering said commercialization.


NOTE 9 - SUBSEQUENT EVENTS (Continued)

     4.  5,500 common stock options were exercised on August 1, 1997 at $2.25 
per share.

     5.  The stock subscription receivable of $50,000 was received by the 
Company during August 1997.