UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2023

 

or

 

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                   to                 

 

Commission File Number 001-40069

 

AmpliTech Group, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

27-4566352

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

155 Plant Avenue

Hauppauge, NY 11788

(Address of principal executive offices) (Zip Code)

 

(631)-521-7831

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on

which registered

Common Stock, par value $0.001 per share

 

AMPG

 

The Nasdaq Stock Market LLC 

Warrants to Purchase Common Stock

 

AMPGW

 

The Nasdaq Stock Market LLC 

 

Indicate by check mark whether registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,  a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"  "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

Smaller reporting company

 

 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

As of August 7, 2023, the registrant had 9,639,613 shares of common stock, par value $0.001 per share, issued and outstanding.

 

 

 

     

AMPLITECH GROUP, INC.

 

QUARTERLY REPORT ON FORM 10-Q

June 30, 2023

TABLE OF CONTENTS

 

 

 

 

PAGE

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

5

 

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

35

 

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

 

40

 

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

 

40

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

 

41

 

 

 

 

 

 

 

Item 1A.

Risk Factors

 

 

41

 

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

41

 

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

 

41

 

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

 

41

 

 

 

 

 

 

 

Item 5.

Other Information

 

 

41

 

 

 

 

 

 

 

Item 6.

Exhibits

 

 

42

 

 

 

 

 

 

SIGNATURES

 

 

43

 

     

 
2

Table of Contents

 

Use of Certain Defined Terms

 

Except as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “our Company”, “the Company”, “AmpliTech”, “Specialty” or “SMW” “Spectrum” or “SSM”, “AmpliTech Group MMIC Design Center” or “AGMDC”, “AmpliTech Group True G Speed Services” or “TGSS” are the combined business of AmpliTech Group, Inc., and its consolidated subsidiary, AmpliTech, Inc., and AMPG’s divisions Specialty Microwave, Spectrum Semiconductor Materials, AmpliTech Group MMIC Design Center and AmpliTech Group True G Speed Services.

 

 
3

Table of Contents

    

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

 
4

Table of Contents

    

PART  I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

AmpliTech Group, Inc.

Condensed Consolidated Balance Sheets

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$6,199,144

 

 

$13,290,222

 

Accounts receivable

 

 

2,491,955

 

 

 

1,801,769

 

Inventories, net

 

 

6,901,581

 

 

 

6,632,121

 

Marketable securities

 

 

3,056,237

 

 

 

247,450

 

Prepaid expenses

 

 

1,024,200

 

 

 

194,635

 

Total Current Assets

 

 

19,673,117

 

 

 

22,166,197

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

2,644,890

 

 

 

2,023,687

 

Right-of-use operating lease assets

 

 

3,783,328

 

 

 

4,197,324

 

Intangible assets, net

 

 

3,059,289

 

 

 

3,134,108

 

Goodwill

 

 

4,696,883

 

 

 

4,696,883

 

Cost method investment

 

 

348,250

 

 

 

348,250

 

Security deposits

 

 

91,481

 

 

 

113,185

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$34,297,238

 

 

$36,679,634

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

2,059,977

 

 

$860,366

 

Customer deposits

 

 

247,955

 

 

 

210,848

 

Current portion of financing lease obligations

 

 

16,401

 

 

 

33,480

 

Current portion of operating lease obligations

 

 

514,905

 

 

 

586,379

 

Current portion of notes payable

 

 

117,271

 

 

 

144,358

 

Revenue earnout

 

 

-

 

 

 

2,180,826

 

Total Current Liabilities

 

 

2,956,509

 

 

 

4,016,257

 

 

 

 

 

 

 

 

 

 

Long-term Liabilities

 

 

 

 

 

 

 

 

Financing lease obligations, net of current portion

 

 

41,037

 

 

 

49,336

 

Operating lease obligations, net of current portion

 

 

3,431,544

 

 

 

3,768,932

 

Notes payable, net of current portion

 

 

36,388

 

 

 

89,597

 

Total Liabilities

 

 

6,465,478

 

 

 

7,924,122

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Series A convertible preferred stock, par value $0.001, 1,000,000 shares authorized, 0 shares issued and outstanding

 

 

-

 

 

 

-

 

Common stock, par value $0.001, 500,000,000 shares authorized, 9,639,613 and 9,634,613 shares issued and outstanding, respectively

 

 

9,640

 

 

 

9,635

 

Additional paid-in capital

 

 

36,181,131

 

 

 

36,050,161

 

Accumulated deficit

 

 

(8,359,011 )

 

 

(7,304,284 )

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity

 

 

27,831,760

 

 

 

28,755,512

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$34,297,238

 

 

$36,679,634

 

 

See accompanying notes to the condensed consolidated financial statements

 

 
5

Table of Contents

    

AmpliTech Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$4,073,231

 

 

$4,584,042

 

 

$8,185,530

 

 

 

9,683,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

2,152,022

 

 

 

2,546,323

 

 

 

4,401,540

 

 

 

5,322,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

1,921,209

 

 

 

2,037,719

 

 

 

3,783,990

 

 

 

4,361,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

1,731,414

 

 

 

2,221,785

 

 

 

3,693,326

 

 

 

4,123,095

 

Research and development

 

 

697,905

 

 

 

175,836

 

 

 

1,217,885

 

 

 

589,139

 

Total Operating Expenses

 

 

2,429,319

 

 

 

2,397,621

 

 

 

4,911,211

 

 

 

4,712,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss From Operations

 

 

(508,110 )

 

 

(359,902 )

 

 

(1,127,221 )

 

 

(350,917 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

19,056

 

 

 

-

 

 

 

37,602

 

 

 

-

 

Realized gain on investments

 

 

8,979

 

 

 

-

 

 

 

13,807

 

 

 

-

 

Interest Income (expense), net

 

 

7,314

 

 

 

(9,638 )

 

 

21,085

 

 

 

(14,998 )

Total Other Income (Expenses)

 

 

35,349

 

 

 

(9,638 )

 

 

72,494

 

 

 

(14,998 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss Before Income Taxes

 

 

(472,761 )

 

 

(369,540 )

 

 

(1,054,727 )

 

 

(365,915 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision For Income Taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$(472,761 )

 

$(369,540 )

 

$(1,054,727 )

 

$(365,915 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss Per Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$(0.05 )

 

$(0.04 )

 

$(0.11 )

 

$(0.04 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

9,638,252

 

 

 

9,589,668

 

 

 

9,636,988

 

 

 

9,585,911

 

 

See accompanying notes to the condensed consolidated financial statements

 

 
6

Table of Contents

    

AmpliTech Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

Cash Flows from Operating Activities:

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net loss

 

$(1,054,727 )

 

$(365,915 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

230,123

 

 

 

180,280

 

Amortization of right-of-use operating lease asset

 

 

279,655

 

 

 

233,930

 

Stock based compensation

 

 

130,975

 

 

 

282,273

 

Gain on termination of right-of-use operating lease

 

 

(8,461 )

 

 

-

 

Loss on disposal of property and equipment

 

 

-

 

 

 

1,606

 

Change in fair value of marketable securities

 

 

(37,602 )

 

 

-

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(690,186 )

 

 

(863,820 )

Other receivable

 

 

-

 

 

 

190,689

 

Inventories

 

 

(269,460 )

 

 

(1,510,364 )

Prepaid expenses

 

 

(829,565 )

 

 

327

 

Security deposits

 

 

21,704

 

 

 

1,187

 

Accounts payable and accrued expenses

 

 

1,199,611

 

 

 

(1,273,157 )

Operating lease obligations

 

 

(266,060 )

 

 

(167,967 )

Customer deposits

 

 

37,107

 

 

 

108,635

 

Net cash used in operating activities

 

 

(1,256,886 )

 

 

(3,182,296 )

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(776,507 )

 

 

(250,480 )

Net investment in marketable securities

 

 

(2,771,185 )

 

 

-

 

Purchase of cost method investment

 

 

-

 

 

 

(98,250 )

Net cash used in investing activities

 

 

(3,547,692 )

 

 

(348,730 )

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Repayment on financing lease liabilities

 

 

(25,378 )

 

 

(20,424 )

Repayment of notes payable

 

 

(80,296 )

 

 

(105,870 )

Payment of revenue earnout

 

 

(2,180,826 )

 

 

-

 

Net cash used in financing activities

 

 

(2,286,500 )

 

 

(126,294 )

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(7,091,078 )

 

 

(3,657,320 )

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, Beginning of the Period

 

 

13,290,222

 

 

 

18,018,874

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, End of the Period

 

$6,199,144

 

 

$14,361,554

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Cash paid for interest expense

 

$14,432

 

 

$12,530

 

Cash paid for income taxes

 

$50

 

 

$-

 

 

 

 

 

 

 

 

 

 

Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

Common Stock issued on vesting of RSUs

 

$5

 

 

$48

 

Gain on termination of right-of-use operating lease

 

$8,461

 

 

$-

 

Equipment received for prepaid assets

 

$-

 

 

$50,644

 

Financed purchases of property and equipment

 

$-

 

 

$145,630

 

Financed agreement entered in exchange for prepaid assets

 

$-

 

 

$441,139

 

Operating lease right-of-use asset and liability initial measurement

 

$-

 

 

$3,626,985

 

Loss on disposal of property and equipment

 

$-

 

 

$1,606

 

 

See accompanying notes to the condensed consolidated financial statements

 

 
7

Table of Contents

    

AmpliTech Group, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

 

 

 

For the Three Months Ended June 30, 2023

 

 

 

 Common Stock

 

 

Additional

 

 

 

 

 

Total

 

 

 

Number of

 

 

Par

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2023

 

 

9,637,113

 

 

$9,637

 

 

$36,116,200

 

 

$(7,886,250)

 

$28,239,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

64,934

 

 

 

-

 

 

 

64,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for vesting of RSU's

 

 

2,500

 

 

 

3

 

 

 

(3)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended June 30, 2023

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(472,761)

 

 

(472,761)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2023

 

 

9,639,613

 

 

$9,640

 

 

$36,181,131

 

 

$(8,359,011)

 

$27,831,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

 

9,634,613

 

 

$9,635

 

 

$36,050,161

 

 

$(7,304,284)

 

$28,755,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

130,975

 

 

 

-

 

 

 

130,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for vesting of RSU's

 

 

5,000

 

 

 

5

 

 

 

(5)

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the six months ended June 30, 2023

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,054,727)

 

 

(1,054,727)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2023

 

 

9,639,613

 

 

$9,640

 

 

$36,181,131

 

 

$(8,359,011)

 

$27,831,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2022

 

 

 

 Common Stock

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Number of

 

 

Par

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Capital

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2022

 

 

9,582,113

 

 

$9,582

 

 

$35,696,034

 

 

$(6,623,552)

 

$29,082,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

237,327

 

 

 

-

 

 

 

237,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for vesting of RSU's

 

 

47,500

 

 

 

48

 

 

 

(48)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the three months ended June 30, 2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(369,540)

 

 

(369,540)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2022

 

 

9,629,613

 

 

$9,630

 

 

$35,933,313

 

 

$(6,993,092)

 

$28,949,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

9,582,113

 

 

$9,582

 

 

$35,651,088

 

 

$(6,627,177)

 

$29,033,493

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

-

 

 

 

-

 

 

 

282,273

 

 

 

-

 

 

 

282,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for vesting of RSU's

 

 

47,500

 

 

 

48

 

 

 

(48)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the six months ended June 30, 2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(365,915)

 

 

(365,915)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2022

 

 

9,629,613

 

 

$9,630

 

 

$35,933,313

 

 

$(6,993,092)

 

$28,949,851

 

 

See accompanying notes to the condensed consolidated financial statements

 

 
8

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

(1) Organization and Business Description

 

AmpliTech Group, Inc. (“AmpliTech” or the “Company”) was incorporated under the laws of the State of Nevada on December 30, 2010. On August 13, 2012, the Company acquired AmpliTech, Inc., by issuing 833,750 shares of the Company’s common stock to the shareholders of AmpliTech, Inc., in exchange for 100% of the outstanding shares of AmpliTech Inc. (the “Share Exchange”). After the Share Exchange, the selling shareholders owned 60,000 shares of the 889,250 shares of Company common stock outstanding, resulting in a change in control. Accordingly, the transaction was accounted for as a reverse acquisition in which AmpliTech, Inc., was deemed to be the accounting acquirer, and the operations of the Company were consolidated for accounting purposes. The capital balances have been retroactively adjusted to reflect the reverse acquisition.

 

AmpliTech designs, engineers and assembles microwave component-based low noise amplifiers (“LNA”) that meet individual customer specifications. Application of the Company’s proprietary technology results in maximum frequency gain with minimal background noise distortion as required by each customer. The Company has both domestic and international customers in such industries as aerospace, governmental, defense and commercial satellite.

 

On September 12, 2019, AmpliTech Group, Inc., acquired the assets of Specialty Microwave Corporation (“Specialty”), a privately held company based in Ronkonkoma, NY. The purchase included all inventory, orders, customers, property and equipment, and intellectual property.  The assets also included all eight team members of Specialty.

 

Specialty designs and manufactures passive microwave components and related subsystems that meet individual customer specifications for both domestic and international customers for use in satellite communication ground networks.

 

On February 17, 2021, the Company priced its underwritten public offering of 1,371,428 units at $7.00 per unit. Each unit issued in the offering consisted of one share of common stock and one warrant. Concurrently, AmpliTech effected a 1-for-20 reverse split of its outstanding common stock and uplisted to the Nasdaq Capital Market, where its common stock and warrants trade under the symbols “AMPG” and “AMPGW,” respectively.

 

In 2021, the Company opened AGMDC, a monolithic microwave integrated circuits (“MMIC”) chip design center in Texas and has started to implement several of its proprietary amplifier designs into MMIC components. MMICs are semiconductor chips used in high-frequency communications applications. MMICs are widely desired for power amplification solutions to service emerging technologies, such as phased array antennas and quantum computing. MMICs carry a smaller footprint enabling them to be incorporated into a broader array of systems while reducing costs.  AGMDC designs, develops and manufactures state-of-the-art signal processing components for satellite and 5G communications networks, defense, space and other commercial applications, allowing the Company to market its products to wider base of customers requiring high technology in smaller packages.

 

 
9

Table of Contents

    

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

     

On November 19, 2021, AmpliTech Group, Inc., entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Spectrum Semiconductor Materials Inc. (the "Seller" or “SSM”), pursuant to which AmpliTech acquired substantially all the assets of the Company (the “Acquisition”). The Acquisition was completed on December 15, 2021.

 

Spectrum Semiconductor Materials ("SSM”), located in Silicon Valley (San Jose, CA), is a global authorized distributor of integrated circuit ("IC") packaging and lids for semiconductor device assembly, prototyping, testing, and production requirements.

 

In August 2022, the AmpliTech Group True G Speed Services (“TGSS”) division was formed to provide “true G speeds” to the industry. TGSS’ main function will be to plan and configure 5G radio systems and make them Open Radio Access Network compatible. TGSS will implement AmpliTech’s low noise amplifier devices in these systems to promote greater coverage, longer range and faster speeds.

 

 
10

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

(2) Summary of Significant Accounting Policies

 

Basis of Accounting

 

The accompanying condensed consolidated financial statements have been prepared using the accrual basis of accounting.

 

The accompanying unaudited interim condensed consolidated financial statements of AmpliTech Group, Inc. (“Group” or the “Company”) have been prepared by management in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for annual audited financial statements. In the opinion of management, all adjustments of a normal recurring nature, considered necessary for a fair presentation have been included.

 

The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes related thereto for the year ended December 31, 2022, included in Form 10-K filed with the SEC filed on March 31, 2023.

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries and divisions. All intercompany accounts and transactions have been eliminated in consolidation.

 

Use of 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 the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results could differ from those estimates.

 

 
11

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

Reclassifications

 

Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. These reclassifications have no effect on previously reported results of operations.

 

Cash and Cash Equivalents 

 

The Company considers deposits that can be redeemed on demand and investments and marketable securities that have original maturities of less than three months, when purchased, to be cash equivalents. As of June 30, 2023, the Company’s cash and cash equivalents were deposited in five financial institutions.

 

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At June 30,2023 and December 31, 2022, the Company had $5,199,144 and $12,040,022 more than the FDIC insured limit, respectively.

 

Accounts Receivable

 

Trade accounts receivables are recorded at the net invoice value and are not interest bearing.

 

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the status of accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change in the future.  An allowance of $0 has been recorded at June 30, 2023 and December 31, 2022, respectively.

 

Marketable Securities

 

The Company’s investments in marketable securities are classified based on the nature of the securities and their availability for use in current operations. The Company’s marketable securities are stated at fair value with all realized and unrealized gains and losses on investments in marketable equity securities recognized in other income, net. The realized and unrealized gains and losses on marketable securities are determined using specific identification method.

 

Inventories

 

Inventories, which consists primarily of raw materials, work in progress and finished goods, are stated at the lower of cost (first-in, first-out basis) or market (net realizable value).

 

 
12

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

Inventory quantities and related values are analyzed at the end of each fiscal quarter to determine those items that are slow moving and obsolete. An inventory reserve is recorded for those items determined to be slow moving with a corresponding charge to cost of good

determined to be slow moving with a corresponding charge to cost of goods sold. Inventory items that are determined obsolete are written off currently with a corresponding charge to cost of goods sold.

 

As of June 30, 2023, and December 31, 2022, the reserve for inventory obsolescence was $1,128,000, respectively.

 

Property and Equipment

 

Property and equipment are recorded at cost. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.

 

Property and equipment are depreciated as follows:

 

Description

Useful Life

Method

Office equipment

3 to 7 years

Straight-line

Machinery/shop equipment

7 to 10 years

Straight-line

Computer equipment/software

1 to 7 years

Straight-line

Vehicles

5 years

Straight-line

Leasehold improvements

7 years

Straight-line

    

Long-lived assets

 

The Company reviews its property and equipment and right-of-use (“ROU”) assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The test for impairment is required to be performed by management upon triggering events. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flow expected to be generated by the asset. If such assets are impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. There were no indicators of impairment during the six months ended June 30, 2023.

 

 
13

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

   

Intangible assets

 

The Company periodically evaluates the reasonableness of the useful lives of these assets. These assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques.  There were no indicators of impairment during the six months ended June 30, 2023.

 

Goodwill

 

We follow the acquisition method of accounting to record the assets and liabilities of acquired businesses at their estimated fair value at the date of acquisition. We initially record goodwill for the amount the consideration transferred exceeds the acquisition-date fair value of net identifiable assets acquired.

 

We test goodwill for impairment at a level within the Company referred to as the reporting unit, which is our business segment level or one level below the business segment. We test our goodwill for impairment annually on December 31, or under certain circumstances more frequently, such as when events or circumstances indicate there may be impairment. Such events or circumstances may include a significant deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators, competition, reorganizations of our business or the disposal of all or a portion of a reporting unit.

 

To test goodwill for impairment, we may perform both qualitative and quantitative assessments. If we elect to perform a qualitative assessment for a certain reporting unit, we evaluate events and circumstances impacting the reporting unit to determine the probability that goodwill is impaired. If we perform a quantitative assessment for a certain reporting unit, we calculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value. We estimate fair values of our reporting units based on projected cash flows, and sales and/or earnings multiples applied to the latest twelve months’ sales and earnings of our reporting units. Projected cash flows are based on our best estimate of future sales, operating costs and balance sheet metrics reflecting our view of the financial and market conditions of the underlying business; and the resulting cash flows are discounted using an appropriate discount rate that reflects the risk in the forecasted cash flows.

 

If we determine it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, we measure any loss from an impairment by comparing the fair value of each reporting unit to its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired, and an impairment loss is recognized in an amount equal to that excess. There were no indicators of impairment during the six months ended June 30, 2023.

 

 
14

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

Investment Policy-Cost Method

 

Investments consist of non-controlling equity investments in privately held companies. The Company elected the measurement alternative for these investments without readily determinable fair values and for which the Company does not control or could exercise considerable influence over operating and financial policies. These investments are accounted for under the cost method of accounting. Under the cost method of accounting, the non-marketable equity securities are carried at cost less any impairment, adjusted for observable price changes of similar investments of the same issuer. Fair value is not estimated for these investments if there are no identified events or changes in circumstances that may influence the fair value of the investment. Under this method, the Company’s share of the earnings or losses of such investee companies is not included in the consolidated balance sheet or consolidated statements of operations. The Company held $348,250 of investments without readily determinable fair values at June 30, 2023 (see Note 9). These investments are included in other assets on the condensed consolidated balance sheets. There were no indicators of impairment during the six months ended June 30, 2023.

 

Leases

 

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the lease term. The Company has elected not to separate lease and non-lease components for all property leases for the purpose of calculating ROU assets and lease liabilities. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis considering such factors as lease term and economic environment risks.

 

Revenue Recognition

 

We sell our products through a combination of a direct sales force in the United States and independent sales representatives in international markets. Revenue is recognized when a customer obtains control of promised goods based on the consideration we expect to receive in exchange for these goods. This core principle is achieved through the following steps:

 

 
15

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

Identify the contract with the customer. A contract with a customer exists when (i) we enter an enforceable contract with a customer that defines each party’s rights regarding the goods to be transferred and identifies the payment terms related to these goods, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We do not have significant costs to obtain contracts with customers. For commissions on product sales, we have elected the practical expedient to expense the costs as incurred.

 

Identify the performance obligations in the contract. Our contracts with customers do not include multiple performance obligations to be completed over a period.

 

Our performance obligations relate to delivering single-use products to a customer, subject to the shipping terms of the contract. Limited warranties are provided, under which we typically accept returns and provide either replacement parts or refunds.

 

We do not have significant returns. We do not typically offer extended warranty or service plans.

 

Determine the transaction price. Payment by the customer is due under customary fixed payment terms, and we evaluate if collectability is reasonably assured. None of our contracts as of June 30, 2023, contained a significant financing component. Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, rebates, discounts, and other adjustments. The estimates of variable consideration are based on historical payment experience, historical and projected sales data, and current contract terms. Variable consideration is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.

 

Allocate the transaction price to performance obligations in the contract. We typically do not have multiple performance obligations in our contracts with customers. As such, we generally recognize revenue upon transfer of the product to the customer's control at contractually stated pricing.

 

Recognize revenue when or as we satisfy a performance obligation. We generally satisfy performance obligations at a point in time upon either shipment or delivery of goods, in accordance with the terms of each contract with the customer. We do not have significant service revenue.

 

 
16

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

   

Cost of Sales

 

We include product costs such material, direct labor, overhead costs, production-related depreciation expense, outside labor and production supplies in cost of sales.

 

Shipping and Handling

 

Shipping and handling charges are generally incurred at the customer’s expense. However, when billed to our customers, shipping and handling charges are included in net sales for the applicable period, and the corresponding shipping and handling expense is reported in cost of sales.

 

Research and Development

 

Research and development expenditures are charged to operations as incurred. The major components of research and development costs include consultants, outside service, and supplies. 

 

Research and development costs for the six months ended June 30, 2023, and 2022, were $1,127,885 and $589,139, respectively.

 

Income Taxes

 

The Company’s deferred tax assets and liabilities for the expected future tax consequences of events have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of certain assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At June 30, 2023, the Company had no material unrecognized tax benefits.

 

 
17

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

Earnings (Loss) Per Share

 

Basic earnings (loss) per share (“EPS”) are determined by dividing the net earnings by the weighted-average number of shares of common shares outstanding during the period. Diluted EPS is determined by dividing net earnings by the weighted average number of common shares used in the basic EPS calculation plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding under the treasury stock method.

 

The computation of weighted average shares outstanding and the basic and diluted earnings per share consisted of the following:

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$(472,761 )

 

$(369,540 )

 

$(1,054,727 )

 

$(365,915 )

Basic weighted average shares outstanding

 

 

9,638,252

 

 

 

9,589,668

 

 

 

9,636,988

 

 

 

9,585,911

 

Basic and Diluted loss per share

 

$(0.05 )

 

$(0.04 )

 

$(0.11 )

 

$(0.04 )

 

As of June 30, 2023, and 2022, there were 4,242,442 and 3,911,942, respectively, potentially dilutive shares that need to be considered as common share equivalents. As a result of the net loss for the three and six months ended June 30,2023 and 2022, the potentially dilutive shares that need to be considered as common share equivalents are anti-dilutive.

 

 
18

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

Fair Value Measurements

 

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  The fair value hierarchy is defined in the following three categories:

 

Level 1: Unadjusted quoted prices that are available in active markets for identical assets or liabilities at the measurement date.

 

Level 2: Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly.

 

Level 3: Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment.

 

Cash and cash equivalents, receivables, inventories, prepaid expenses, accounts payable, accrued expenses, and customer deposits approximate fair value, due to their short-term nature. The carrying value of notes payable and short and long-term debt also approximates fair value since these instruments bear market rates of interest.

 

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to long-lived assets, intangible assets, and goodwill, which are remeasured when the derived fair value is below carrying value in the consolidated balance sheets.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employees required service period, which is generally the vesting period.

 

 
19

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

   

Concentration of Credit Risk

 

Financial instruments that potentially subject the company to concentration of credit risk consist primarily of cash and accounts receivable.

 

The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Therefore, management does not believe significant credit risks exist at June 30, 2023.

  

Recent Accounting Pronouncements

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. As a smaller reporting company, the guidance is effective for our fiscal years beginning after December 15, 2022. The Company has adopted this pronouncement which did not have a material impact on our results of operation, financial position or cash flow.

  

(3) Revenues

 

The following table presents sales disaggregated based on geographic regions and for the three and six months ended:

 

 

 

Three Months

 

 

Three Months

 

 

 

Ending

 

 

Ending

 

AmpliTech Inc.

 

June 30,

2023

 

 

June 30,

2022

 

Domestic

 

$1,445,063

 

 

$1,178,784

 

International

 

 

317,514

 

 

 

257,510

 

Total revenue

 

$1,762,577

 

 

$1,436,294

 

 

 

 

 

 

 

 

 

 

Spectrum

 

 

 

 

 

 

 

 

Domestic

 

$1,497,917

 

 

$1,640,753

 

International

 

 

812,737

 

 

 

1,506,995

 

Total revenue

 

$2,310,654

 

 

$3,147,748

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$4,073,231

 

 

$4,584,042

 

 

 
20

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

 

 

 

Six Months

 

 

Six Months

 

 

 

Ending

 

 

Ending

 

AmpliTech Inc.

 

June 30,

2023

 

 

June 30,

2022

 

Domestic

 

$2,468,059

 

 

$2,147,293

 

International

 

 

516,717

 

 

 

357,156

 

Total revenue

 

$2,984,776

 

 

$2,504,449

 

 

 

 

 

 

 

 

 

 

Spectrum

 

 

 

 

 

 

 

 

Domestic

 

$3,373,860

 

 

$3,236,379

 

International

 

 

1,826,894

 

 

 

3,942,734

 

Total revenue

 

$5,200,754

 

 

$7,179,113

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$8,185,530

 

 

$9,683,562

 

 

(4) Segment Reporting

 

ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments.

 

The following table presents summary information by segment for the three months ended June 30, 2023: 

 

 

 

AmpliTech Inc.

 

 

Spectrum

 

 

Corporate

 

 

Total

 

Revenues

 

$1,762,577

 

 

$2,310,654

 

 

 

-

 

 

$4,073,231

 

Cost of goods sold

 

 

927,953

 

 

 

1,224,069

 

 

 

-

 

 

 

2,152,022

 

Net income (loss)

 

 

(792,308 )

 

 

473,005

 

 

 

(153,458 )

 

 

(472,761 )

Total assets

 

 

13,156,526

 

 

 

17,256,592

 

 

 

3,884,120

 

 

 

34,297,238

 

Depreciation and amortization

 

 

83,408

 

 

 

32,270

 

 

 

-

 

 

 

115,678

 

Interest income (expense), net

 

 

10,476

 

 

 

134

 

 

 

(3,296 )

 

 

7,314

 

 

 
21

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

The following table presents summary information by segment for the six months ended June 30, 2023:  

 

 

 

 

AmpliTech Inc.

 

 

Spectrum

 

 

Corporate

 

 

Total

 

Revenues

 

$2,984,776

 

 

$5,200,754

 

 

 

-

 

 

$8,185,530

 

Cost of goods sold

 

 

1,641,882

 

 

 

2,759,658

 

 

 

-

 

 

 

4,401,540

 

Net income (loss)

 

 

(1,801,840 )

 

 

1,193,859

 

 

 

(446,746 )

 

 

(1,054,727 )

Total assets

 

 

13,156,526

 

 

 

17,256,592

 

 

 

3,884,120

 

 

 

34,297,238

 

Depreciation and amortization

 

 

165,583

 

 

 

64,540

 

 

 

-

 

 

 

230,123

 

Interest income (expense), net

 

 

27,415

 

 

 

59

 

 

 

(6,389 )

 

 

21,085

 

 

(5) Marketable Securities

 

The following table is a summary of marketable securities at June 30, 2023:

 

 

 

Adjusted

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair

Value

 

Level 1 (1)

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$966

 

 

 

-

 

 

 

-

 

 

$966

 

Marketable equitable securities

 

 

3,018,635

 

 

 

37,789

 

 

 

(187 )

 

 

3,056,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total marketable securities

 

$3,019,601

 

 

 

37,789

 

 

 

(187 )

 

$3,057,203

 

 

Cash and cash equivalents in our marketable securities account at June 30, 2023 was $966

 

(1)    Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.

 

When evaluating an investment for impairment, the Company reviews factors including the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, changes in market interest rates and whether it is more likely than not the Company will be required to sell the investment before recovery of the investment’s cost basis.  As of June 30, 2023, the Company does not consider any of its investments to be impaired.

 

 
22

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

(6) Inventories

 

The inventory consists of the following at June 30, 2023, and December 31, 2022:

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Raw materials

 

$1,034,721

 

 

$872,184

 

Work-in progress

 

 

193,508

 

 

 

229,771

 

Finished goods

 

 

6,801,352

 

 

 

6,658,166

 

Subtotal

 

$8,029,581

 

 

$7,760,121

 

Less: Reserve for obsolescence

 

 

(1,128,000 )

 

 

(1,128,000 )

 

 

 

 

 

 

 

 

 

Total inventories

 

$6,901,581

 

 

$6,632,121

 

  

(7) Property and Equipment

 

Property and equipment consisted of the following at June 30, 2023 and December 31, 2022:

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Lab equipment

 

$3,207,051

 

 

$2,455,045

 

Manufacturing equipment

 

 

129,745

 

 

 

129,745

 

Automobiles

 

 

7,335

 

 

 

7,335

 

Computer equipment and software

 

 

206,955

 

 

 

210,240

 

Leasehold improvements

 

 

84,172

 

 

 

78,042

 

Furniture and fixtures

 

 

170,643

 

 

 

148,987

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

3,805,901

 

 

 

3,029,394

 

Less: Accumulated depreciation

 

 

(1,161,011 )

 

 

(1,005,707 )

 

 

 

 

 

 

 

 

 

Total property and equipment, net

 

$2,644,890

 

 

$2,023,687

 

                                                                  

Depreciation expense for the three months ended June 30, 2023 and 2022, was $78,212 and $57,613, respectively, of which $58,526 and $41,396, respectively were included in cost of goods sold.

 

 
23

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

Depreciation expense for the six months ended June 30, 2023 and 2022, was $155,304 and $105,461 respectively, of which $116,420 and $80,781 respectively were included in cost of goods sold.

 

Property and equipment purchased in the amount of $234,036 under financing leases is included in the totals above.

  

(8) Goodwill and Intangible Assets

 

Goodwill

 

Goodwill is related to the acquisition of Spectrum Semiconductor Materials Inc. on December 15, 2021. Goodwill is primarily related to expected improvements and technology performance and functionality, as well sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition. Goodwill is generally not amortizable for tax purposes and is not amortizable for financial statement purposes. As of June 30, 2023 and December 31, 2022, the carrying value of goodwill was $4,698,883, respectively.

 

Other Intangible Assets

 

Intangible assets with an estimated useful life of fifteen and twenty years consisted of the following at June 30, 2023:

 

 

 

Gross Carrying

 

 

Accumulated

 

 

 

 

Weighted

 

 

 

Amount

 

 

Amortization

 

 

Net

 

 

Average Life

 

Trade name

 

$584,517

 

 

$-

 

 

$584,517

 

 

Indefinite

 

Customer relationships

 

 

2,591,491

 

 

 

267,989

 

 

 

2,323,502

 

 

 

17.32

 

Intellectual property

 

 

202,771

 

 

 

51,501

 

 

 

151,270

 

 

 

11.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total intangible assets, net

 

$3,378,779

 

 

$319,490

 

 

$3,059,289

 

 

 

 

 

 

Amortization expense for the three months ended June 30, 2023 and 2022, was $37,466, respectively.

 

Amortization expense for the six months ended June 30, 2023 and 2022, was $74,819, respectively.

 

 
24

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

Annual amortization of intangible assets are as follows:                     

 

2023 - remaining

 

 

75,157

 

2024

 

 

149,976

 

2025

 

 

149,976

 

2026

 

 

149,976

 

2027

 

 

149,976

 

Thereafter

 

 

1,799,711

 

 

 

$2,474,772

 

   

(9) Cost Method Investment

 

On June 10, 2021, the Company entered into a membership interest purchase agreement with SN2N, LLC, for an aggregate purchase price of $350,000, to be paid in four tranches. Each tranche represents a 5% membership interest, and in aggregate a 20% membership interest. On June 15, 2022, an amendment to the membership interest purchase agreement was made to reflect a 19.9% membership interest. In light of this amendment, the Company overpaid by $1,750 for the membership interest and was subsequently reimbursed. As of June 30, 2023, the Company has made an investment of $348,250 for a 19.9% membership interest.

 

 
25

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

(10) Leases

 

The following was included in our balance sheet as of June 30, 2023:

 

 

 

June 30,

 

Operating leases

 

2023

 

Assets                            

 

 

 

ROU operating lease assets                      

 

$3,783,328

 

 

 

 

 

 

Liabilities

 

 

 

 

Current portion of operating lease obligations                  

 

$514,905

 

Operating lease obligations, net of current portion

 

$3,431,544

 

Total operating lease liabilities

 

$3,946,449

 

Financing leases

 

 

 

 

Assets

 

 

 

 

Property and equipment

 

$234,036

 

Accumulated depreciation                                                     

 

 

(132,771 )

Property and equipment, net                                

 

$101,265

 

 

 

 

 

 

Liabilities

 

 

 

 

Current portion of financing lease obligations                    

 

$16,401

 

Financing lease obligations, net of current portion

 

$41,037

 

Total financing lease liabilities

 

$57,438

 

 

 
26

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

The weighted average remaining lease term and weighted average discount rate at June 30, 2023 were as follows:

 

Weighted average remaining lease term (years)

 

June 30,

2023

 

Operating leases

 

 

9.61

 

Financing leases

 

 

3.45

 

Weighted average discount rate

 

 

 

 

Operating leases

 

 

4.46%

Financing leases

 

 

4.73%

 

Financing Lease

 

The Company entered into several 60-month lease agreements to finance certain laboratory and office equipment.  As such, the Company has accounted for these transactions as a financing lease. 

 

The following table reconciles future minimum financing lease payments to the discounted lease liability as of June 30, 2023:

 

2023 - remaining

 

$9,373

 

2024

 

 

18,751

 

2025

 

 

18,186

 

2026

 

 

11,976

 

2027

 

 

3,992

 

Total lease payments

 

 

62,278

 

Less imputed interest

 

 

(4,840 )

Total lease obligations

 

 

57,438

 

Less current obligations

 

 

(16,401 )

Long-term lease obligations

 

$41,037

 

 

Operating Leases

 

On December 4, 2015, the Company entered into a new operating lease agreement to rent office space in Bohemia, NY. This five-year agreement commenced February 1, 2016, with an annual rent of $50,000 and 3.75% increases in each successive lease year. On January 13, 2021, a lease rider was annexed to the original lease whereby the lease term will be extended on a month-by-month basis, commencing on February 1, 2021. The lease was terminated in April 2022.

 

 
27

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

      

On September 12, 2019, the Company entered into a new operating lease agreement to rent office space in Ronkonkoma, NY. This five- year agreement commenced on September 12, 2019, with an annual rent of $90,000 and 3% increase in each successive lease year beginning in 2021. The Company has an option to buy the property during the first two years of the lease for $1,200,000 and then at fair market value for the remainder of the lease term. This option has expired and was not exercised. On April 13, 2023, this lease was terminated subject to the terms of a Surrender Agreement between the Company and landlord. As a result, a gain on termination of right-of-use operating lease was recognized of $8,461.

 

On November 27, 2019, the Company entered a 39-month agreement to lease an automobile with a monthly payment of $420. This lease was paid in full as of March 31, 2023.

 

On December 15, 2021, the Company assumed the SSM lease agreement for office and warehouse space in San Jose, CA, with the same terms and conditions. Effective February 1, 2020, the lease term will expire on January 31, 2025, with a base rent of $24,234 for the first 12 months and increase by approximately 3% every year.

 

On October 15, 2021, the Company entered a new lease for a 20,000 square foot facility at 155 Plant Avenue, Hauppauge, New York, for a term of seven years and two months. The yearly base rent of $346,242 shall increase at a rate of 2.75% per year to begin on the first anniversary lease commencement date and each year thereafter. The first two months of basic rent shall be abated following the commencement lease date. In the event the landlord decides to sell the property, the Company shall have the right of first offer to purchase subject property. Upon lease execution, the Company paid two months of base rent as a security deposit and one month’s rent totaling $86,560. The Company moved into the new manufacturing and headquarters facility April 1, 2022.

 

The following table reconciles future minimum operating lease payments to the discounted lease liability as of June 30, 2023:

  

2023 - remaining

 

$336,444

 

2024

 

 

689,103

 

2025                                                                                                       

 

 

400,321

 

2026

 

 

383,347

 

2027

 

 

393,889

 

Thereafter

 

 

2,718,181

 

Total lease payments

 

 

4,921,285

 

Less imputed interest

 

 

(974,836 )

Total lease obligations

 

 

3,946,449

 

Less current obligations

 

 

(514,905 )

Long-term lease obligations

 

$3,431,544

 

 

 
28

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

(11) Notes Payable

 

Promissory Note:

 

On September 12, 2019, AmpliTech Group, Inc., acquired Specialty, a privately held company based in Ronkonkoma, NY.  The purchase included all inventory, orders, customers, property and equipment, and all intellectual property. The assets also included all eight team members of Specialty.  The total consideration paid was $1,143,633, consisting of $668,633 in cash and a $475,000 promissory note with an interest rate of 6%.  Beginning November 1, 2019, payment of principal and interest shall be due payable in fifty-nine (59) monthly payments of $9,213 with a final payment of $9,203 due October 1, 2024. As of June 30, 2023, the balance of this promissory

note was $132,710. Principal payments of $50,304 along with interest expense of $5,234 were paid during the six months ended June 30, 2023.  

 

Loan Payable:

 

On September 12, 2019, the Company was approved for a $250,000 equipment leasing facility which was subsequently increased to $500,000. The Company has borrowed against the leasing facility as follows:

 

 

·

On May 14, 2020, the Company borrowed $27,494 to be paid over a three-year term with monthly payments of $815 at an interest rate of 4.268%. The balance as of June 30, 2023, was $0. Principal payments of $3,230 and interest expense of $30 were paid for the six months ended June 30, 2023. This loan was paid in full in April 2023.

 

 

 

 

·

On June 10, 2020, the Company borrowed $41,015 to be paid over a three-year term with monthly payments of $1,216 at an interest rate of 4.278%. The balance as of June 30, 2023, was $0. Principal payments of $6,012 and interest expense of $68 were paid for the six months ended June 30, 2023. This loan was paid in full in May 2023.

 

As of March 14, 2023, the Company closed the equipment line of credit of $500,000. All UCC filings on the Company assets have been released as well as the Company’s president’s personal guarantee.

  

In January 2022, the Company purchased machinery for $91,795, applying a deposit of $9,180 and financing the balance of $82,616 over 24 payments at an interest rate of 1.90%. The balance as of June 30, 2023, was $20,949. Principal payments of $20,751 and interest expense of $314 were paid for the six months ended June 30, 2023.

 

 
29

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

Future principal payments over the term of the notes payable as of June 30, 2023, are as follows:

 

 

 

Payments

 

2023 - remaining

 

$

64,062

 

2024

 

 

89,597

 

Total remaining payments                                                        

 

$

153,659

 

 

(12) Stockholders’ Equity

 

The total number of shares of stock this Corporation is authorized to issue shall be five hundred one million (501,000,000) shares, par value $0.001 per share. Our authorized capital stock consists of 500,000,000 shares of common stock and 1,000,000 shares of blank check preferred stock.

 

Preferred Stock

 

On July 10, 2013, the Board of Directors of the Company approved a certificate of amendment to the articles of incorporation and changed the authorized capital stock of the Company to include and authorize 500,000 shares of Preferred Stock, par value $0.001 per share. On October 7, 2020, the Board of Directors of the Company approved a certificate of amendment to the articles of incorporation and changed the total number of authorized shares of Preferred Stock to be 1,000,000 shares, $0.001 per share.

 

On October 7, 2020, our Board of Directors and our stockholders approved a resolution to amend and restate the certificate of designation of preferences, rights and limitations of Series A Convertible Preferred Stock to restate that there are 401,000 shares of the Company’s blank check Preferred Stock designated as Series A Convertible Preferred Stock. The amended and restated certificate clarifies that the Series A Convertible Preferred Stock convert at a rate of five shares of the Company’s common stock for every share of Series A Convertible Preferred Stock, and also restates that the Series A Convertible Preferred Stock shall be entitled to vote on all matters submitted to shareholders of the Company for each share of Series A Convertible Preferred Stock owned on the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, on the date such vote is taken or any written consent of shareholders is solicited. The number of votes entitled to be cast by the holders of the Series A Convertible Preferred Stock equals that number of votes that, together with votes otherwise entitled to be cast by the holders of the Series A Convertible Preferred Stock at a meeting, whether by virtue of stock ownership, proxies, voting trust agreements or otherwise, entitle the holders to exercise 51% of all votes entitled to be cast to approve any action which Nevada law provides may or must be approved by vote or consent of the holders of common stock entitled to vote.

 

 
30

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

Common Stock:

 

The Company originally authorized 50,000,000 shares of common stock with a par value of $0.001. Effective May 20, 2014, the Company increased its authorized shares of common stock from 50,000,000 to 500,000,000.

 

On February 17, 2021, the Company priced its underwritten public offering of 1,371,428 units at $7.00 per unit. Each unit issued in the offering consisted of one share of common stock and one warrant. Concurrently, AmpliTech effected a 1-for-20 reverse split of its outstanding common stock and uplisted to the Nasdaq Capital Market, where its common stock and warrants trade under the symbols “AMPG” and “AMPGW,” respectively.

 

2020 Equity Incentive Plan:

 

In October 2020, the Board of Directors and shareholders adopted the Company's 2020 Equity Incentive Plan (the "2020 Plan"), effective as of December 14, 2020. Under the 2020 Plan, the Company reserved 1,250,000 shares of common stock to grant shares of the Company's common stock to employees and individuals who perform services for the Company. The purpose of the 2020 Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide incentives to individuals who perform services for the Company, and to promote the success of the Company's business. The 2020 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, and other stock or cash awards as the Board of Directors may determine.

 

Stock Options:

 

On February 27, 2023, the Company granted one employee ten-year stock options to purchase 2,000 shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over five years commencing on May 27, 2023, with an exercise price of $2.59 per share. The Company has calculated these options estimated fair market value at $4,800 using the Black-Scholes model, with the following assumptions: expected term of 7.46 years, stock price of $2.59, exercise price of $2.59, volatility of 126.8%, risk-free rate of 4.08%, and no forfeiture rate.

 

On May 1, 2023, the Company granted one employee ten-year stock options to purchase 5,000 shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over five years commencing on August 1, 2023, with an exercise price of $3.19 per share. The Company has calculated these options estimated fair market value at $14,800 using the Black-Scholes model, with the following assumptions: expected term of 7.51 years, stock price of $3.19, exercise price of $3.19, volatility of 126.0%, risk-free rate of 3.62%, and no forfeiture rate.

 

 
31

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

On June 5, 2023, the Company granted one employee ten-year stock options to purchase 2,000 shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over three years commencing on September 5, 2023, with an exercise price of $2.40 per share. The Company has calculated these options estimated fair market value at $4,200 using the Black-Scholes model, with the following assumptions: expected term of 5.50 years, stock price of $2.40, exercise price of $2.40, volatility of 127.3%, risk-free rate of 3.82%, and no forfeiture rate.

 

On June 12, 2023, the Company granted one employee ten-year stock options to purchase 3,000 shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over three years commencing on September 12, 2023, with an exercise price of $2.49 per share. The Company has calculated these options estimated fair market value at $6,600 using the Black-Scholes model, with the following assumptions: expected term of 5.50 years, stock price of $2.49, exercise price of $2.49, volatility of 127.0%, risk-free rate of 3.89%, and no forfeiture rate.

 

Below is a table summarizing the changes in stock options outstanding for the six months ended June 30, 2023:

 

 

 

 

 

 

Weighted

 Average

 

 

 

Number of

Options

 

 

Exercise

Price ($)

 

Outstanding at December 31, 2022

 

 

916,000

 

 

$2.49

 

Granted

 

 

12,000

 

 

$2.78

 

Exercised

 

 

-

 

 

 

-

 

Expired

 

 

-

 

 

 

-

 

Outstanding at June 30, 2023

 

 

928,000

 

 

$2.49

 

Exercisable at June 30, 2023

 

 

412,526

 

 

$3.10

 

 

As of June 30, 2023, all outstanding stock options were issued according to the Company's 2020 Plan, and there remain 247,000 shares of common stock available for future issuance under the 2020 Plan. 

 

Stock-based compensation expense related to stock options of $60,063 and $121,287 was recorded for the three and six months ended June 30, 2023. As of June 30, 2023, the remaining unrecognized compensation cost related to non-vested stock options is $894,603 and is expected to be recognized over 5.09 years. The outstanding stock options have a weighted average remaining contractual life of 4.20 years and a total intrinsic value of $267,890.

 

 
32

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

  

Warrants:

 

On February 17, 2021, the Company priced its underwritten public offering of 1,371,428 units at $7.00 per unit. Each unit issued in the offering consisted of one share of common stock and one warrant. Concurrently, AmpliTech effected a 1-for-20 reverse split of its outstanding common stock and uplisted to the Nasdaq Capital Market, where its common stock and warrants trade under the symbols “AMPG” and “AMPGW,” respectively.

 

Maxim Group LLC acted as sole book-running manager for the offering and partially exercised its overallotment option to purchase 205,714 warrants at the public offering price. The warrants expire ten years from the date of issuance.

 

Effective April 16, 2021, the Company entered into definitive agreements with certain institutional investors to sell 2,715,000 shares of common stock in a registered direct offering priced at the market under NASDAQ rules.  Concurrently, the Company agreed to issue to the investors, in a private placement, warrants to purchase an aggregate of 1,900,500 shares of common stock at an exercise price of $8.48 per share with a five-year term.

 

On July 20, 2021, in connection with a product development agreement with an unrelated party, the Company issued warrants to purchase 30,000 shares of common stock. The warrants vest in one year from issuance, with an exercise price of $5.00 per share.  The Company has calculated these warrants estimated fair market value at $88,803 using the Black-Scholes model, with the following assumptions: expected term 3.0 years, stock price $3.80, exercise price $5.00, volatility 149.8%, risk-free rate 0.37%, and no forfeiture rate.

 

Below is a table summarizing the changes in warrants outstanding for the six months ended June 30, 2023:

 

 

 

 

 

 

Weighted

Average

 

 

 

Number of

Warrants

 

 

Exercise

Price ($)

 

Outstanding at December 31, 2022

 

 

3,296,942

 

 

$7.83

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Expired

 

 

-

 

 

 

-

 

Outstanding at June 30, 2023

 

 

3,296,942

 

 

$7.83

 

Exercisable at June 30, 2023

 

 

3,296,942

 

 

$7.83

 

 

 
33

Table of Contents

 

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

For The Six Months Ended June 30, 2023, and 2022

 

The outstanding warrants have a weighted average remaining contractual life of 2.74 years and a total intrinsic value of $0.

 

Restricted Stock Units:

 

On May 20, 2022, 30,000 restricted stock units at an exercise price of $1.96 were issued to a board advisor.  Vesting will occur in equal quarterly installments of 2,500 shares beginning on May 20, 2022.  As of June 30, 2023, 12,500 RSU’s have vested.

 

Below is a table summarizing the changes in restricted stock units outstanding for the six months ended June 30, 2023:

 

 

 

 

 

 

Weighted

Average

 

 

 

Number of

RSU’s

 

 

Exercise

Price ($)

 

Outstanding at December 31, 2022

 

 

22,500

 

 

$1.96

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

(5,000)

 

$1.96

 

Expired

 

 

-

 

 

 

-

 

Outstanding at June 30, 2023

 

 

17,500

 

 

$1.96

 

Exercisable at June 30, 2023

 

 

-

 

 

 

-

 

 

Stock-based compensation expense related to restricted stock units of $4,871 and $9,688 was recorded for the three and six months ended June 30, 2023. As of June 30, 2023, the remaining unrecognized compensation cost related to non-vested restricted stock units is $32,169. The outstanding restricted stock units have a weighted average remaining contractual life of 1.65 years and a total intrinsic value of $40,425.

 

 
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Table of Contents

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contain forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

 

Business Overview

 

AmpliTech Group Inc. (“AMPG,” “AmpliTech” or the “Company”), incorporated in 2010 in the state of Nevada, is the parent company of its subsidiary, AmpliTech, Inc., and AMPG’s divisions Specialty Microwave, Spectrum Semiconductor Materials, AmpliTech Group MMIC Design Center (“AGMDC”) and AmpliTech Group True G Speed Services (‘TGSS”).

 

AmpliTech designs, engineers, and assembles microwave component-based low noise amplifiers (“LNA”) that meet individual customer specifications. Application of the Company’s proprietary technology results in maximum frequency gain with minimal background noise distortion as required by each customer. The Company has both domestic and international customers in such industries as aerospace, governmental, defense, and commercial satellite.

 

Specialty designs and manufactures passive microwave components and related subsystems that meet individual customer specifications for both domestic and international customers for use in satellite communication ground networks.

 

AGMDC designs, develops and manufactures state-of-the-art signal processing components for satellite and 5G communications networks, defense, space and other commercial applications, allowing the Company to market its products to wider base of customers requiring high technology in smaller packages.

 

Spectrum Semiconductor Materials ("SSM”), located in Silicon Valley (San Jose, CA), is a global authorized distributor of integrated circuit ("IC") packaging and lids for semiconductor device assembly, prototyping, testing, and production requirements.

 

In August 2022, the AmpliTech Group True G Speed Services (“TGSS”) division was formed to enable “true G speeds” to the industry.  TGSS’ main function will be to plan and configure 5G radio systems and make them O-RAN compliant.  TGSS will implement AmpliTech’s low noise amplifier devices in these systems to promote greater coverage, longer range and faster speeds.

 

Our mission is to patent our proprietary IP and trade secrets that were used in small volume niche markets and expand our capabilities through strategic partnerships, joint ventures, mergers/acquisitions with key industry leaders in the 5G/6G, quantum computing, and cybersecurity markets. We believe this will enable us to scale up our products and revenue by developing full systems and subsystems with our unique technology as a core component, which we expect will position us as a global leader in these rapidly emerging technology sectors and addresses large volume markets as well, such as cellphone handsets, laptops, server networks, and many other applications that improve everyday quality of life.

 

The Company’s research and development initiative to expand its product line of low noise amplifiers to include its new 5G and wireless infrastructure products and MMIC designs is progressing significantly. Our combined engineering and manufacturing resources are expected to complement the development of new subsystems for satellite, wireless, and 5G infrastructure, as well as advanced military and commercial markets.

 

 
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Corporate Information

 

Our principal executive offices are located at 155 Plant Avenue, Hauppauge, NY 11788. Our telephone number is (631) 521-7831. Our corporate website is www.amplitechinc.com. The information on our website is not a part of, or incorporated in, this prospectus.

 

Results of Operations

 

For the Three Months Ended June 30, 2023 and June 30, 2022

 

Revenues

 

Sales decreased from $4,584,042 for the three months ended June 30, 2022, to $4,073,231 for the three months ended June 30, 2023, a decrease of $510,811 or approximately 11.14%. Sales in the amplifier and related passive microwave components and subsystems division increased by $326,283, or 22.72%, resulting primarily from an increase in telecommunication applications. Spectrum sales decreased by $837,094, or 26.59%, a decline attributable to a decrease in sales from international customers. The effect COVID placed on the supply chain in 2021 and 2022 triggered higher demand for our integrated circuit (IC) products. With COVID restrictions and worldwide supply chain concerns easing, the demand for IC packaging has decreased, specifically in the international markets.

 

Cost of Goods Sold and Gross Profit

 

Cost of Goods Sold decreased from $2,546,323 for the three months ended June 30, 2022, to $2,152,022 for the three months ended June 30, 2023, a decrease of $394,301 or 15.49%. Overall, this decrease is directly related to the decline in Spectrum sales, while AmpliTech did experience an increase in material and direct labor costs.  As a result, gross profit was $1,921,209 for the three months ended June 30, 2023, compared to $2,037,719 for the three months ended June 30, 2022, a decrease of $116,510, or 5.72%. Overall, gross profit as a percentage of sales increased to 47.17% from 44.45%, with AmpliTech reporting a gross profit margin of 47.35% while Spectrum’s gross profit margin was 47.02%.  This increase is attributable to fulfilling large sales orders with higher gross margins.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses decreased to $1,731,414 for the three months ended June 30, 2023, from $2,221,785 for the first three months ended June 30, 2022, a decrease of $490,371 or approximately 22.07%. Parent company expenses such as stock compensation, legal and moving expenses have decreased by approximately $260,000. Spectrum’s salaries/sales commissions also decreased by approximately $100,000.

 

Research and Development Expenses

 

Research and development expenditures are charged to operations as incurred. The major components of research and development costs include consultants, outside service, and supplies.

 

Research and development costs for the three months ended June 30, 2023, and 2022, were $697,905 and $175,836, respectively, and increased by $522,069, or 296.91%, as the AGMDC division is in the process of completing its MMIC design releases.  In addition, research and development costs were incurred for cryogenic amplifiers for quantum computing.

 

 
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Loss From Operations

 

As a result of the above, the Company reported a loss from operations of $508,110 and $359,902 for the three months ended June 30, 2023 and 2022, respectively.

 

Other Income (Expenses)

 

The Company recorded net interest income of $7,314 and interest expense of $9,638 for the three months ended June 30, 2023, and 2022.

 

Due to market fluctuations, the Company recorded an unrealized gain on investments of $19,056 and a realized gain on investments of $8,979 for the three months ended June 30, 2023. 

 

Net Income (Loss)

 

The Company reported a net loss of $472,761 and $369,540 for the three months ended June 30, 2023 and 2022, respectively.

 

For the Six Months Ended June 30, 2023 and June 30, 2022

 

Revenues

 

Sales decreased from $9,683,562 for the six months ended June 30, 2022, to $8,185,530 for the six months ended June 30, 2023, a decrease of $1,498,032 or approximately 15.47%. Sales in the amplifier and related passive microwave components and subsystems division increased by $480,327, or 19.18%, resulting primarily from an increase in telecommunication applications. Spectrum sales decreased by $1,978,359, or 27.56%, a decline primarily attributable to a decrease in sales from international customers. The effect COVID placed on the supply chain in 2021 and 2022 triggered higher demand for our integrated circuit (IC) products. With COVID restrictions and worldwide supply chain concerns easing, the demand for IC packaging has decreased.

 

Cost of Goods Sold and Gross Profit

 

Cost of Goods Sold decreased from $5,322,245 for the six months ended June 30, 2022, to $4,401,540 for the six months ended June 30, 2023, a decrease of $920,705 or 17.30%. Overall, this decrease is directly related to the decline in Spectrum sales, while AmpliTech did experience an increase in material and direct labor costs.  As a result, gross profit was $3,783,990 for the six months ended June 30, 2023, compared to $4,361,317 for the six months ended June 30, 2022, a decrease of $577,327, or 13.24%. Overall, gross profit as a percentage of sales increased from 45.04% to 46.23%.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses decreased to $3,693,326 for the six months ended June 30, 2023, from $4,123,095 for the six months ended June 30, 2022, a decrease of $429,769 or approximately 10.42%.  Expenses such as rent, utilities, D&O insurance, IR/PR, business development and employee benefits increased which was offset with a decrease in legal, stock compensation and sales salaries/commissions.

 

 
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Research and Development Expenses

 

Research and development expenditures are charged to operations as incurred. The major components of research and development costs include consultants, outside service, and supplies.

 

Research and development costs for the six months ended June 30, 2023, and 2022, were $1,217,885 and $589,139, respectively, an increase of $628,746, or 106.72%, as the AGMDC division is in the process of completing its MMIC design releases. In addition, research and development costs were incurred for cryogenic amplifiers for quantum computing.

 

Loss From Operations

 

As a result of the above, the Company reported a loss from operations of $1,127,221 and $350,917 for the six months ended June 30, 2023 and 2022, respectively.

 

Other Income (Expenses)

 

The Company recorded net interest income of $21,085 and interest expense of $14,998 for the six months ended June 30, 2023, and 2022.

 

Due to market fluctuations, the Company recorded an unrealized gain on investments of $37,602 and a realized gain on investments of $13,807 for the six months ended June 30, 2023. 

 

Net Income (Loss)

 

The Company reported a net loss of $1,054,727 and $365,915 for the six months ended June 30, 2023

and 2022, respectively.

 

Liquidity and Capital Resources

 

Operating Activities

 

The net cash used in operating activities for the six months ended June 30, 2023 was $1,256,886 resulting primarily from the net loss and operating changes in accounts receivable, inventories, prepaid expenses, accounts payable and accrued expenses and operating lease liability.

 

The net cash used in operating activities for the six months ended June 30, 2022 was $3,182,296 resulting primarily from the net loss and operating changes in accounts receivable, inventories, accounts payable and accrued expenses and operating lease liability.

 

Investing Activities

 

The net cash used in investing activities for the six months ended June 30, 2023, was $3,547,692 of which $776,507 related to the purchase of equipment and $2,771,185 for the net purchases of marketable securities.

 

The net cash used in investing activities for the six months ended June 30, 2022 was $348,730, of which $250,480 related to the purchase of equipment and $98,250 for our investment in SN2N.

 

 
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Table of Contents

 

Financing Activities

 

The net cash used in financing activities for the six months ended June 30, 2023, was $2,286,500, resulting primarily from the repayments of notes payable, financing lease liabilities, and the revenue earnout.

 

The net cash used in financing activities for the six months ended June 30, 2022 was $126,294, a result primarily from the repayments of notes payable and finance lease.

 

 As of June 30, 2023, we had cash and cash equivalents of $6,199,144, working capital of $16,716,608, and an accumulated deficit of $8,359,011.

 

As of December 31, 2022, we had cash and cash equivalents of $13,290,222, working capital of $18,149,940, and an accumulated deficit of $7,304,284.

 

We intend to continue to finance our internal growth with cash on hand, cash provided from operations, borrowings, debt or equity offerings, or some combination thereof. We believe that our cash provided from operations and cash on hand will provide enough working capital to fund our operations for the next twelve months.

 

Critical Accounting Policies, Estimates and Assumptions

 

The SEC defines critical accounting policies as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and those that require significant judgment and estimates.

 

The discussion and analysis of our financial condition and results of operations is based upon financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates, including the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes there have been no significant changes during the six month period ended June 30, 2023, to the items disclosed as critical accounting policies in management’s discussion and analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

 

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

 

 
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Table of Contents

 

Off Balance Sheet Transactions

 

None.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

 

Based on that evaluation, as of June 30, 2023, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes that have affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the period covered by this report. 

 

 
40

Table of Contents

    

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

To the best of our knowledge, there are no pending legal proceedings to which we are a party or of which any of our property is the subject.

 

Item 1A. Risk Factors.

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable

 

Item 5. Other Information.

 

None.

 

 
41

Table of Contents

 

Item 6. Exhibits.

 

(a) Exhibits

 

Exhibit No.

 

Description

31.1 

 

Rule 13a-14(a)/ 15d-14(a) Certification of Principal Executive Officer

31.2

 

Rule 13a-14(a)/ 15d-14(a) Certification of Principal Financial Officer

32.1

 

Section 1350 Certification of Principal Executive Officer

32.2

 

Section 1350 Certification of Principal Financial Officer

101. INS

 

XBRL Instance Document

101. SCH

 

XBRL Taxonomy Extension Schema Document

101. CAL

 

XBRL Taxonomy Extension Calculation Link base Document

101. DEF

 

XBRL Taxonomy Extension Definition Link base Document

101. LAB

 

XBRL Taxonomy Extension Label Link base Document

101. PRE

 

XBRL Taxonomy Extension Presentation Link base Document

 

 
42

Table of Contents

    

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

AmpliTech Group, Inc.

 

 

 

 

 

Date: August 14, 2023

By:

/s/ Fawad Maqbool

 

 

 

Fawad Maqbool

 

 

 

President and Chief Executive Officer

(Principal Executive Officer) 

 

 

Date: August 14, 2023

By:

/s/ Louisa Sanfratello

 

 

 

Louisa Sanfratello

Chief Financial Officer

(Principal Financial and Accounting Officer) 

 

 

 
43

     

nullnullnullnullv3.23.2
Cover - shares
6 Months Ended
Jun. 30, 2023
Aug. 07, 2023
Document Information Line Items    
Entity Registrant Name AmpliTech Group, Inc.  
Entity Central Index Key 0001518461  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Current Reporting Status Yes  
Document Period End Date Jun. 30, 2023  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2023  
Entity Common Stock Shares Outstanding   9,639,613
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 001-40069  
Entity Incorporation State Country Code NV  
Entity Tax Identification Number 27-4566352  
Entity Interactive Data Current Yes  
Entity Address Address Line 1 155 Plant Avenue  
Entity Address City Or Town Hauppauge  
Entity Address State Or Province NY  
Entity Address Postal Zip Code 11788  
City Area Code 631  
Local Phone Number 521-7831  
Common Stock [Member]    
Document Information Line Items    
Security 12b Title Common Stock, par value $0.001 per share  
Trading Symbol AMPG  
Security Exchange Name NASDAQ  
Warrants to Purchase Common Stock [Member]    
Document Information Line Items    
Security 12b Title Warrants to Purchase Common Stock  
Trading Symbol AMPGW  
Security Exchange Name NASDAQ  
v3.23.2
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2023
Dec. 31, 2022
Current Assets    
Cash and cash equivalents $ 6,199,144 $ 13,290,222
Accounts receivable 2,491,955 1,801,769
Inventories, net 6,901,581 6,632,121
Marketable securities 3,056,237 247,450
Prepaid expenses 1,024,200 194,635
Total Current Assets 19,673,117 22,166,197
Property and equipment, net 2,644,890 2,023,687
Right-of-use operating lease assets 3,783,328 4,197,324
Intangible assets, net 3,059,289 3,134,108
Goodwill 4,696,883 4,696,883
Cost method investment 348,250 348,250
Security deposits 91,481 113,185
Total Assets 34,297,238 36,679,634
Current Liabilities    
Accounts payable and accrued expenses 2,059,977 860,366
Customer deposits 247,955 210,848
Current portion of financing lease obligations 16,401 33,480
Current portion of operating lease obligations 514,905 586,379
Current portion of notes payable 117,271 144,358
Revenue earnout 0 2,180,826
Total Current Liabilities 2,956,509 4,016,257
Long-term Liabilities    
Financing lease obligations, net of current portion 41,037 49,336
Operating lease obligations, net of current portion 3,431,544 3,768,932
Notes payable, net of current portion 36,388 89,597
Total Liabilities 6,465,478 7,924,122
Commitments and Contingencies 0 0
Stockholders' Equity    
Series A convertible preferred stock, par value $0.001, 1,000,000 shares authorized, 0 shares issued and outstanding 0 0
Common stock, par value $0.001, 500,000,000 shares authorized, 9,639,613 and 9,634,613 shares issued and outstanding, respectively 9,640 9,635
Additional paid-in capital 36,181,131 36,050,161
Accumulated deficit (8,359,011) (7,304,284)
Total Stockholders' Equity 27,831,760 28,755,512
Total Liabilities and Stockholders' Equity $ 34,297,238 $ 36,679,634