# AmpliTech Group, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [AmpliTech Group, Inc.](/companies/ampg.md) (CIK 1518461)
- Form: 10-Q
- Filed: 2024-11-14
- Accepted by EDGAR: Nov 14, 2024, 21:30 ET
- Period: 2024-09-30
- Accession: 0001493152-24-045943
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1518461/000149315224045943/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1518461/000149315224045943/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $2.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $7.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $1.5m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $4.4m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | $1.3m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | $3.3m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $572.4k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $1.3m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-07-01 to 2024-09-30 | $1.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2024-01-01 to 2024-09-30 | $6.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$1.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$4.1m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$1.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$7.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.12 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.76 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.12 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.76 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 10,003,556 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 9,813,200 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$4.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $26.4k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $1.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $12.6m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $27.5m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $2.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $7.2m | us-gaap:Liabilities |
| Long-term debt | at 2024-09-30 | $1.1m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2024-09-30 | $20.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 16,587 characters.

*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 the Company’s divisions Specialty Microwave, Spectrum Semiconductor Materials, AmpliTech Group MMIC Design Center (“AGMDC”) and AmpliTech Group True G Speed Services (‘AGTGSS”).

AmpliTech, Inc. 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, we formed our AGTGSS division to enable “true G speeds” to the industry. AGTGSS’ main function will be to plan and configure 5G radio systems and make them O-RAN compliant. AGTGSS 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.

### Loss on Investment of Digital Assets

During the three months ended March 31, 2024, the Company made several transactions in digital currency in the total amount of approximately $3.25 million. The Company believes that it was fraudulently induced to hold its digital currency with a custodian whom the Company believed to be valid, but no longer exists. The Company is taking steps in an attempt to seek recovery of the funds including discussions with local, federal, and international law enforcement agencies and private consultants and is currently conducting a review of its processes and procedures related to this investment. At the present time, the Company is not aware of, and does not expect any additional losses arising out or relating to the above-described investment. In addition, the Company does not believe that the Company’s systems, records, or other assets were otherwise affected or compromised in connection with these investments.

As a result of the fraudulent digital currency transactions noted above, the Company was a victim of a cyber phishing scam that defrauded the Company. During the nine months ended September 30, 2024, the Company recorded a complete loss from the investment in digital assets of $3,248,911. As of September 30, 2024, the remaining balance of digital assets was $0.

### 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 September 30, 2024 and September 30, 2023

#### Revenues

Sales decreased from $3,387,169 for the three months ended September 30, 2023, to $2,834,512 for the three months ended September 30, 2024, a decrease of $552,657 or approximately 16.32%. Sales in the amplifier and related passive microwave components and subsystems division decreased by $819,124, or 51.81%, while Spectrum sales increased by $266,467, or 14.75%. Overall, this decline is attributable to a decrease in sales from both domestic and international customers because of global economic uncertainty. The global recession and adverse market conditions are affecting our business in terms of lost revenue.

#### Cost of Goods Sold and Gross Profit

Cost of goods sold decreased from $1,904,388 for the three months ended September 30, 2023, to $1,486,583 for the three months ended September 30, 2024, a decrease of $417,805 or 21.94%. Overall, this decrease is directly related to the decline in sales. As a result, gross profit was $1,347,929 for the three months ended September 30, 2024, compared to $1,482,781 for the three months ended September 30, 2023, a decrease of $134,852, or 9.10%. Overall, the Company maintained a healthy gross profit margin as a percentage of sales of 47.55% as compared to 43.78% for the three months ended September 30, 2023, an increase of 3.78%, amid inflationary pressures.

#### Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased to $1,864,245 for the three months ended September 30, 2024, from $1,984,452 for the three months ended September 30, 2023, a decrease of $120,207 or approximately 6.06%, as a result in the decrease in salaries, office expense and IR/PR, offset against the increase in legal and accounting expenses.

#### Research and Development Expenses

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

Research and development costs for the three months ended September 30, 2024, and 2023, were $572,422 and $425,573 respectively, an increase of $146,849, or 34.51%, resulting from an increase in rent, moving expenses and software licensing.

#### Loss From Operations

As a result of the above, the Company reported a loss from operations of $1,088,738 and $927,244 for the three months ended September 30, 2024, and 2023, respectively, an increase of $161,494 or 17.42%.

#### Other Income (Expenses)

The Company recorded interest expense, net of $100,945 and $750 for the three months ended September 30, 2024, and 2023, respectively, an increase of $100,195 because of the debt financing obtained during the quarter.

Due to market fluctuations, the Company recorded an unrealized gain on investments of $4,098 and a realized gain on investments of $36,187 for the three months ended September 30, 2023.

#### Net Loss

The Company reported a net loss of $1,189,683 and $887,709 for the three months ended September 30, 2024 and 2023, an increase of $301,974, or 34.02%.

### For the Nine Months Ended September 30, 2024 and September 30, 2023

#### Revenues

Sales decreased from $11,572,699 for the nine months ended September 30, 2023, to $7,655,285 for the nine months ended September 30, 2024, a decrease of $3,917,414 or approximately 33.85%. Sales in the amplifier and related passive microwave components and subsystems division decreased by $2,000,769, or 43.82%. Spectrum sales decreased by $1,916,645, or 27.35%. This decrease in sales is attributable to the decrease in global demand and recessionary market dynamics affecting most of our customers across all divisions and product lines.

#### Cost of Goods Sold and Gross Profit

Cost of Goods Sold decreased from $6,305,928 for the nine months ended September 30, 2023, to $4,367,639 for the nine months ended September 30, 2024, a decrease of $1,938,289 or 30.74%. Overall, this decrease is directly related to the decline in sales. As a result, gross profit was $3,287,646 for the nine months ended September 30, 2024, compared to $5,266,771 for the nine months ended September 30, 2023, a decrease of $1,979,125 or 37.58%. Overall, gross profit as a percentage of sales decreased from 45.51% to 42.95%, or 2.56%.

#### Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $6,063,047 for the nine months ended September 30, 2024, from $5,677,778 for the nine months ended September 30, 2023, an increase of $385,269 or approximately 6.79%. This increase represents primarily an increase in legal, consulting and accounting fees, offset against the decrease in trade show expenses, employee benefits and IR/PR.

#### 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 nine months ended September 30, 2024, and 2023, were $1,309,299 and $1,643,458, respectively, a decrease of $344,159 or 20.33%, resulting from a decrease in consulting/foundry expenses as the major MMIC development efforts have been completed offset against an increase in rent, moving expenses and software licensing.

#### Loss From Operations

As a result of the above, the Company reported a loss from operations of $4,084,700 and $2,054,465 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $2,030,235, or 98.82%.

#### Other Income (Expenses)

The Company recorded net interest expense of $113,472 and net interest income of $20,335 for the nine months ended September 30, 2024 and 2023, an increase of $133,807, or 658.01%. Interest expense increased as a result of the debt financing obtained during the quarter.

Due to market fluctuations, the Company recorded a realized gain on investments of $25,965 and $49,994 for the nine months ended September 30, 2024 and 2023, respectively. In addition, the Company recorded an unrealized gain on investments of $41,700 for the nine months ended September 30, 2023.

As a result of the fraudulent digital currency transactions noted above, during the nine months ended September 30, 2024, the Company recorded an impairment loss of $3,248,911 related to digital assets.

#### Net Loss

The Company reported a net loss of $7,421,118 and $1,942,436 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $5,478,682, or 282.05%.

### Cash Flow

#### Operating Activities

The net cash used in operating activities for the nine months ended September 30, 2024, was $4,128,869 resulting primarily from the net loss and operating changes in accounts receivable, inventories, prepaid expenses, accounts payable and accrued expenses, customer deposits and operating lease obligations.

The net cash used in operating activities for the nine months ended September 30, 2023 was $1,766,090 resulting primarily from the net loss and operating changes in accounts receivable, inventories, prepaid expenses, accounts payable and accrued expenses, operating lease liability and customer deposits

#### Investing Activities

The net cash used in investing activities for the nine months ended September 30, 2024, was $3,275,342 of which $26,431 related to the purchase of equipment and $3,248,911 related to investment in marketable securities.

The net cash used in investing activities for the nine months ended September 30, 2023, was $3,739,714 of which $931,692 related to the purchase of equipment and $2,808,022 for the net purchases of marketable securities.

#### Financing Activities

The net cash from financing activities for the nine months ended September 30, 2024, was $1,754,735, resulting primarily from the net proceeds received from the issuance of common stock and notes payable, offset with the repayments of notes payable and financing lease liabilities.

The net cash used in financing activities for the nine months ended September 30, 2023, was $2,326,712, resulting primarily from the repayments of notes payable, financing lease liabilities, and the revenue earnout.

As of September 30, 2024, we had cash and cash equivalents of $1,076,537 working capital of $10,072,061 and an accumulated deficit of $17,190,841.

As of December 31, 2023, we had cash and cash equivalents of $6,726,013, working capital of $15,649,254, and an accumulated deficit of $9,769,723.

### Operating Capital and Capital Expenditure Requirements

As of September 30, 2024, we had an accumulated deficit of $17.2 million. We expect to generate operating losses and negative operating cash flows for the remainder of the year and into early next quarter of 2025, although we anticipate that our operating losses to be reduced by revenue from new products that were developed earlier this year. As of September 30, 2024, we maintain cash and cash equivalents of $1.1 million. Based on our existing cash and cash equivalents, our working capital, our current and forecasted level of operations, and our forecasted cash flows, we believe that we will be able to meet our obligations and repay our liabilities arising from normal business operations when they come due and to provide for our capital requirements for the next 12 months. We are actively seeking dilutive or non-dilutive capital to support our growth.

### 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 nine-month period ended September 30, 2024, 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, 2023.

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.

### Off Balance Sheet Transactions

None.

## Controls and procedures

As filed, 2,463 characters.

### 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 September 30, 2024, 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. Please refer to the Form 10-Q for the quarter ended March 31, 2024 filed with the SEC on May 28, 2024 and our Form 10-Q for the quarter ended June 30, 2024 filed with the SEC on August 14, 2024.

We will continue to enhance corporate oversight over process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, and accountability to enable remediation of our material weaknesses. We believe that our remediation plan will be sufficient to rectify the identified material weaknesses and strengthen our internal control over financial reporting. As we continue to evaluate, and work to improve, our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.

## Risk factors

As filed, 3,564 characters.

In addition to risk factors set forth below, you should carefully consider the risks set forth in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Form 10-Q for the quarter ended March 31, 2024 and the quarter ended June 30, 2024, before making an investment decision. You should read the section captioned “Cautionary Statement Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.

As of September 30, 2024, we had an accumulated deficit of $17.2 million. We expect to generate operating losses and negative operating cash flows for the remainder of the year and into early next quarter of 2025, although we anticipate that our operating losses to be reduced by revenue from new products that were developed earlier this year. As of September 30, 2024, we maintain cash and cash equivalents of $1.1 million. Based on our existing cash and cash equivalents, our working capital, our current and forecasted level of operations, and our forecasted cash flows, we believe that we will be able to meet our obligations and repay our liabilities arising from normal business operations when they come due and to provide for our capital requirements for the next 12 months. We are actively seeking dilutive or non-dilutive capital to support our growth.

The listing of our common stock on the Nasdaq Capital Market is contingent on our compliance with the Nasdaq Capital Market’s conditions for continued listing. On September 27, 2024, the Company received a notice (the “Notice”) from The NASDAQ Stock Market LLC indicating that the Company is not in compliance with the minimum bid price requirement of $1.00 per share under the Nasdaq Listing Rules (the “Listing Rules”). Based on the closing bid price of the Company’s listed securities for the last 30 consecutive business days from August 15, 2024 to September 26, 2024, the Company no longer meets the minimum bid price requirement set forth in Listing Rules 5550(a)(2). The Notice is only a notification of deficiency and has no current effect on the listing or trading of the Company’s securities on The Nasdaq Capital Market. The Notice states that under the Listing Rules 5810(c)(3)(A), the Company is provided with a compliance period of 180 calendar days, or until March 26, 2025, to regain compliance under the Listing Rules. To regain compliance under the Listing Rules, the Company’s common stock must be at least $1.00 for a minimum of ten consecutive business days. In the event the Company does not regain compliance by March 26, 2025, the Company may be eligible for additional time to regain compliance or may face delisting.

On July 23, 2024, the Company entered into a business loan and security agreement with Altbanq, in the amount of $1,300,000, with an origination fee of $26,000 and an original issue discount of $403,000. The loan is payable within 76 weeks through 38 bi-weekly payments of $44,816 and bears an annual interest rate of 21.2% with prepayment options. The loan is secured by the Company’s assets through an UCC filing. The balance as of September 30, 2024 was $1,139,429, net of the debt discount. Principal payments of $224,080 and $89,509 of interest expense were paid for the nine-month ended September 30, 2024. In the event the Company is unable to repay or defaults, Albanq will have a right to exercise its rights to the collateral as a secured party.

Filed Nov 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-045943. Last ingested by Listed: Oct 24, 2026, 15:13 ET. No prices; not investment advice.