UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): November 19, 2021
AmpliTech Group, Inc. |
(Exact Name of Registrant as Specified in its Charter) |
Nevada |
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000-54355 |
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27-4566352 |
(State of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
620 Johnson Avenue
Bohemia, NY 11716
(Address of principal executive offices)
(631)-521-7831
(Registrant’s telephone number, including area code)
_______________________________________
(Former Name or former address if changed from last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
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AMPG |
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The Nasdaq Stock Market LLC |
Warrants to Purchase Common Stock |
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AMPGW |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
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Item 1.01 Entry into a Material Definitive Agreement
On November 19, 2021, AmpliTech Group, Inc. (“AmpliTech”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Spectrum Semiconductor Materials, Inc., a California corporation (“Spectrum”), pursuant to which AmpliTech will acquire substantially all of the assets of Spectrum, a distributor of specialty semiconductor materials (the “Acquisition”).
The aggregate purchase price for the Spectrum assets is $10,250,000, subject to certain working capital and other adjustments (the “Aggregate Consideration”), of which $750,000 shall be paid by the issuance of 188,442 unregistered shares of AmpliTech’s common stock (the “Stock Proceeds”) at the closing of the Acquisition. Pursuant to the Purchase Agreement, AmpliTech will file a resale registration statement on Form S-3 registering the Stock Proceeds for resale by Spectrum within 15 days from the closing date.
The Purchase Agreement contains representations, warranties, and covenants believed to be customary for a transaction of this nature, including covenants as to indemnification for breaches of certain representations, warranties and covenants, subject to certain exclusions and caps. Further, the completion of the Acquisition is subject to release of all liens and to the satisfaction of closing conditions, including the continued employment of certain Spectrum employees.
The foregoing descriptions of the Purchase Agreement and the Acquisition do not purport to be complete and are qualified in their entirety by reference to the Purchase Agreement, a copy of which is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. |
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Description |
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Press release issued by AmpliTech Group, Inc. on November 19, 2021 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AmpliTech Group, Inc. |
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Date: November 19, 2021 |
By: |
/s/ Fawad Maqbool |
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Name: |
Fawad Maqbool |
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Title: |
President |
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EXHIBIT 2.1
RECITALS
WHEREAS, Seller is engaged in the business of distributing specialty semiconductor material (the “Business”); and
WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, the rights and obligations of Seller to the Purchased Assets and the Assumed Liabilities, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
(a) all accounts receivable held by Seller (“Accounts Receivable”);
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(i) all goodwill and the going concern value of the Purchased Assets and the Business.
Section 1.03 Assumed Liabilities.
(ii) those Liabilities of Seller set forth on Section 1.03(a)(ii) of the Disclosure Schedules.
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(a) $8,000,000, payable by Buyer on the Closing Date by wire transfer of immediately available funds (the “Closing Cash Proceeds”). Buyer shall wire $405,000.00 of the Closing Cash Proceeds to Seller’s Broker (M&A Business Advisors of Silicon Valley, “M&A-BA”) and the balance of $7,595,000 to Seller in accordance with their wire transfer instructions set forth on Section 1.04 of the Disclosure Schedules.
(b) $750,000 unregistered shares of Buyer’s common stock (the “Common Stock”), issued by Buyer in compliance with applicable Federal and state securities laws in the name of Seller, which Buyer and Seller agree is 188,442 shares (the “Stock Proceeds”). The Common Stock shall be issued to the Seller without any restrictions on Seller as to its future sale, subject only to any restrictions imposed by law, including regulations promulgated by the Securities and Exchange Commission (the “SEC”).
(c) $750,000 in cash (the “Purchase Price Adjustment Escrow Fund”), payable by Buyer on the Closing Date to the Escrow Agent by wire transfer of immediately available funds to accounts designated by the Escrow Agent, to be held for the purpose of securing the obligations of Seller in Section 1.08(a) and Section 1.08(b). If no Purchase Price adjustments are due from Seller to Buyer by March 31, 2023, all remaining funds in the Purchase Price Adjustment Escrow Fund shall be distributed to Seller.
(d) $750,000 in cash (the “Indemnification Escrow Fund”), payable by Buyer on the Closing Date to the Escrow Agent by wire transfer of immediately available funds to accounts designated by the Escrow Agent, to be held for the purpose of securing the indemnification obligations of Seller set forth in ARTICLE VI and the obligations of Seller in Section 1.08(a) and Section 1.08(b). Except for claims which remain unresolved by March 31, 2023, all remaining funds in the Indemnification Escrow Fund shall be distributed to Seller.
(e) As used in this Agreement, “Escrow” or “Escrow Agent” shall mean Business & Escrow Service Center in San Jose, c/o Pam Dillon as the escrow officer. Any funds required to be held by a neutral third party in this Agreement, specifically including but not limited to the Purchase Price Adjustment Escrow Fund and the Indemnification Escrow Fund shall be deposited to the Escrow Agent.
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Section 1.08 Purchase Price Adjustments.
(a) Within sixty (60) days after the Closing Date, Buyer shall prepare and deliver to Seller a statement setting forth its calculation of Closing Working Capital of the Business, which statement shall be substantially in the form of Section 1.08(a) of the Disclosure Schedules (the “Closing Working Capital Statement”). The “Working Capital Adjustment” shall be an amount equal to the Closing Working Capital minus $3,296,427. If the Working Capital Adjustment is a positive number, Buyer shall pay to Seller an amount equal to the Working Capital Adjustment. If the Working Capital Adjustment is a negative number, Seller shall pay to Buyer an amount equal to the Working Capital Adjustment. The following definitions shall be used to calculate the Closing Working Capital Statement:
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“Closing Working Capital” means: (a) Accounts Receivable (b) plus Inventory, less (c) Accounts Payable and less (d) Sales Commissions, determined as of the open of business on the Closing Date.
“Accounts Receivables” means all accounts receivables held by Seller less accounts receivable older than ninety (90) days from billing.
“Inventory” means all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts, and other inventories that consist of a quality and quantity usable and salable in the ordinary course of business consistent with past practice.
“Accounts Payable” means all trade accounts owed by Seller.
“Sales Commissions” means all compensation owed to all salespeople other than their base wages or salary, and excluding vacation or paid-time-off accruals.
(b) Within forty (40) days after December 31, 2022, Buyer shall prepare and deliver to Seller a statement setting forth its calculation of Two Year Net Revenues of the Business, which statement shall be substantially in the form of Section 1.08(b) of the Disclosure Schedules (the “Revenues Statement”). The “Revenues Adjustment” shall be an amount equal to (i) 25% of (ii) Two Year Net Revenues minus $20,000,000. If the Revenues Adjustment is a positive number, Buyer shall pay to Seller an amount equal to the Revenues Adjustment. If the Revenues Adjustment is a negative number, Seller shall pay to Buyer an amount equal to the Revenues Adjustment. The following definitions shall be used to calculate the Revenues Statement:
“Two Year Net Revenues” means the combined Net Revenues for the years ended December 31, 2021 and December 31, 2022.
“Net Revenues” means Gross Sales less Returns and Allowances.
“Gross Sales” means the grand total of all sale transactions reported in a period, without any deductions, and excluding any tax credits.
“Returns and Allowances” means the Sale Price of goods returned by customers (with “Sale Price” referring to the purchase price paid by such customers), as well as discounts provided to customers to retain defective goods.
If Buyer or any of its divisions, subsidiaries, and affiliates (collectively, “Buyer’s Entities”) shall sell Integrated Circuit Packages through December 31, 2022, there shall be a rebuttable presumption that such sales have reduced the Revenues Adjustment and all such sales shall be added back to the Two Year Net Revenues for the purpose of calculating the Revenues Adjustment. “Integrated Circuit Packages” means circuit packages (i) used in the final stage of semiconductor device fabrication, in which the die of semiconductor material is encapsulated in a supporting case or package that prevents physical damage and corrosion and/or (ii) that includes lids which may complete the encapsulation process.
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(c) Unless Seller notifies Buyer in writing (the “Dispute Notice”) within twenty (20) business days after receipt of the Closing Working Capital Statement or Revenues Statement, as the case may be, that Seller disagrees with the information set forth therein, such information shall be conclusive and binding on Buyer and Seller. The Dispute Notice shall include reasonable details of the disagreement and the reasons therefor. In the event Seller provides Buyer with a Dispute Notice, neither Buyer nor Seller shall be required to pay the other party any sums with respect to the adjustments pending resolution of such dispute. Buyer and Seller shall attempt to resolve their differences within twenty (20) business days after Buyer’s receipt of the Dispute Notice. Any disputes not resolved by Buyer and Seller within such 20-day period will be resolved by an accounting firm with a staff consisting of five (5) individuals mutually agreed upon by Buyer and Seller (the “Arbitrator Accounting Firm”). The Arbitrator Accounting Firm is not limited to the data presented by the parties, but may seek additional data to help formulate its decisions. The Arbitrator Accounting Firm’s determination of the Closing Working Capital or Two Year Net Revenues, as the case may be, shall be conclusive and binding upon the parties. The fees and expenses of the Arbitrator Accounting Firm in acting under this Section 1.08(c) shall be borne by the party that the Arbitrator Accounting Firm determines to be least correct (in net dollar terms) in its determination of the Closing Working Capital or Two Year Net Revenues, as the case may be.
(d) Except as otherwise provided herein, any payment of the Working Capital Adjustment or Revenues Adjustment shall (A) be due (i) within five (5) business days of acceptance of the applicable Closing Working Capital Statement or Revenues Statement or (ii) if there are Disputed Amounts, then within five (5) business days of the resolution described in Section 1.08(c) above; and (B) be paid by wire transfer of immediately available funds to such account as is directed by Buyer or Seller, as the case may be. Any payment of the Working Capital Adjustment or Revenues Adjustment owed by Seller to Buyer shall be paid by the Escrow Agent pursuant to the terms of this Agreement: (iii) from the Purchase Price Adjustment Escrow Fund, and (iv) to the extent the amount of the Working Capital Adjustment exceeds the amount available in the Purchase Price Adjustment Escrow Fund, from the Indemnification Escrow Fund.
(e) Notwithstanding anything herein to the contrary, Seller shall have the right to audit monthly sales reports of Buyer (or Buyer’s affiliates) through December 31, 2022. Seller shall pay all auditing costs if the previous month’s audit confirms Gross Sales are within one percent (1%) of Gross Sales presented. If Gross Sales are found by the Seller’s audit, as approved by the Arbitrator Accounting Firm, to be off by more than 1%, Buyer shall pay for the next month’s audit, as applicable.
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Section 1.09 Registration Statement.
(a) Within fifteen (15) days from the Closing Date, the Buyer shall file a registration statement on Form S-3 (the “Registration Statement”) with the SEC registering the Stock Proceeds for resale by the Seller.
(b) The Buyer shall use its reasonable best efforts to cause the Registration Statement to be declared effective by the SEC as soon as practicable (the “Registration Statement Effective Date”) and to remain effective until the earlier to occur of (i) such time as all of the Stock Proceeds have been sold and (ii) such time as all of the Stock Proceeds could be sold under Rule 144 of the Securities Act of 1933 (the “Securities Act”). Buyer shall ensure the availability of a prospectus meeting the requirements of the Securities Act and shall take any and all other actions reasonably necessary in order to ensure the ability of the holders of the Stock Proceeds to effect a resale of the Stock Proceeds. To the extent permitted by law, Seller declares that it is an accredited investor and hereby waives the requirement of Buyer to provide such a prospectus.
Section 2.01 Closing. Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place remotely by exchange of documents and signatures (or their electronic counterparts), at 10:00 a.m. Eastern time, on the first business day after: i) all of the conditions to Closing set forth in Article VII are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), and ii) November 23, 2021, or iii) at such other time, date or place as Seller and Buyer may mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as the “Closing Date.” If Closing has not occurred by December 31, 2021, and if the Closing was not materially delayed due to the actions or inactions of Seller, then Seller may elect to terminate this Agreement and be relieved of all obligations thereon (except for provisions related to confidentiality).
Section 2.02 Closing Deliverables.
(a) At the Closing, Seller shall deliver to Buyer the following:
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(vii) non-competition agreements with each of the persons set forth on Schedule 2.02(a)(vii) to the Disclosure Schedules, in form and substance satisfactory to Buyer, duly executed by each of these persons;
(viii) audited financial statements for the fiscal years December 31, 2019 and 2020 and unaudited financial statements for the six months ended June 30, 2021 (collectively, the “Financial Statements”);
(x) a transition services agreement with Robert Larson, in form and substance satisfactory to Buyer, providing for eight hours of services per week for a period of eight weeks following the Closing Date;
(xi) with respect to each real estate lease, an Assignment and Assumption of Lease in form and substance satisfactory to Buyer (each, an “Assignment and Assumption of Lease”) and duly executed by Seller;
(xii) confirmation from Seller’s secured lender in form and substance satisfactory to Buyer confirming all amounts have been paid in full and that such lender has released all liens and UCC termination statements indicating the same; and
(xiii) such other customary instruments of transfer or assumption, filings, or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to the transactions contemplated by this Agreement. If Buyer believes any such other customary instruments are required, the form of each shall be provided by Buyer to Seller at least 5 days before Closing.
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(b) At the Closing, Buyer shall deliver to Seller the following:
(i) the Closing Cash Proceeds;
(ii) the Assignment and Assumption Agreement duly executed by Buyer;
(iii) the Escrow Agreement duly executed by Buyer;
(iv) the Employment Agreements duly executed by Buyer;
(vi) the Stock Proceeds.
(c) At the Closing, Buyer shall deliver to the Escrow Agent:
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ARTICLE III
Representations and warranties of seller
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Section 3.07 Title to Purchased Assets. Seller has good and valid title to all of the Purchased Assets, free and clear of Encumbrances except as set forth on Section to the Disclosure Schedules.
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Section 3.11 Material Customers and Suppliers.
Section 3.12 Legal Proceedings; Governmental Orders.
Section 3.14 Taxes. Except as disclosed in Schedule 3.14, all Taxes due and owing by Seller have been, or will be, timely paid. No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of Seller. All Tax Returns with respect to the Business required to be filed by Seller for any tax periods prior to Closing have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete, and correct in all respects. The term “Taxes” means all federal, state, local, foreign, and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, property (real or personal), customs, duties, or other taxes, fees, assessments, or charges of any kind whatsoever, together with any interest, additions, or penalties with respect thereto. For the avoidance of doubt, this language above applies to Spectrum’s operations that are unrelated to this sale of Purchased Assets. As to the Purchased Assets, Buyer shall pay any sales and use taxes on all taxable assets such as furniture, fixtures, and equipment.
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Section 3.17 Investment Representations. Seller is acquiring the Stock Proceeds for its own account and not with a view to the distribution thereof in contravention of the Securities Act. In proceeding with the transactions contemplated hereby, Seller is not relying upon any representation or warranty of Buyer, or any of their officers, directors, employees, agents or representatives thereof, except the representations and warranties set forth herein and the statements contained in Buyer’s filings with the SEC. Seller has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of acquiring the Stock Proceeds and understands the risks of, and other considerations relating to, its acquisition of the shares of Common Stock.
Section 3.18 Intellectual Property. The Seller has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with the Business and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). The Seller has not received a notice (written or otherwise) that any of the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. The Seller has not received a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any person or entity, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Seller, all such Intellectual Property Rights are enforceable and there is no existing infringement by another person or entity of any of the Intellectual Property Rights. The Seller has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Seller has no knowledge of any facts that would preclude it from having valid license rights or clear title to the Intellectual Property Rights. The Seller has no knowledge that it lacks or will be unable to obtain any rights or licenses to use all Intellectual Property Rights that are necessary to conduct its business. Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business, (b) the value of the Purchased Assets, or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis)
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Section 3.19 Shareholders. Seller’s only shareholders are Larson 1992 Family Trust, Garfield Living Trust dated May 7, 1985, Steven Ochoa and Anne Griffin.
Section 3.20 No Other Warranties or Representations. Other than the express representations and warranties above, and subject to the Purchase Price Adjustment for Net Working Capital and for Two Year Net Revenues, all of the Purchased Assets are sold “AS IS, WHERE IS” without any additional warranties, expressed or implied. Seller expressly disclaims any guarantee of success or profitability with regard to Buyer’s ownership of the Purchased Assets and the business activities therein. Buyer understands that the purchase and operation of any business involves risk, including but not limited to the potential effects of COVID-19 and related governmental actions, and general market conditions that are outside of the control of Buyer or Seller.
ARTICLE IV
Representations and warranties of buyer
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Section 4.05 Skills and Ability. Buyer has the skills and ability to operate the Business and the Purchased Assets without any transitional assistance from Seller.
Section 5.01 Confidentiality. From and after the Closing, Seller shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective directors, officers, employees, consultants, counsel, accountants, and other agents (“Representatives”) to hold, in confidence any and all information, whether written or oral, concerning the Business, except to the extent that Seller can show that such information: (a) is generally available to and known by the public through no fault of Seller, any of its Affiliates, or their respective Representatives; or (b) is lawfully acquired by Seller, any of its Affiliates, or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual, or fiduciary obligation. If Seller or any of its Affiliates or their respective Representatives are compelled to disclose any information by Governmental Order or Law, Seller shall promptly notify Buyer in writing and shall disclose only that portion of such information which is legally required to be disclosed. Seller shall use reasonable best efforts to obtain as promptly as possible an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Nothing herein shall prohibit M&A-BA from promoting its representation of Seller in a successful sale after Closing, so long as the terms of the Agreement are not disclosed.
Section 5.02 Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall (i) conduct the Business in the ordinary course of business consistent with past practice; and (ii) use reasonable best efforts to maintain and preserve intact its current Business organization, operations and franchise and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing Date, Seller shall:
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(b) pay the debts, Taxes and other obligations of the Business when due;
(g) perform all of its obligations under all Assigned Contracts;
(h) maintain the Books and Records in accordance with past practice;
Section 5.03 Access to Information. From the date hereof until the Closing, Seller shall (a) afford Buyer and its Representatives full and free access to and the right to inspect all of the Real Property, properties, assets, premises, Books and Records, Contracts and other documents and data related to the Business; (b) furnish Buyer and its Representatives with such financial, operating and other data and information related to the Business as Buyer or any of its Representatives may reasonably request; and (c) instruct the Representatives of Seller to cooperate with Buyer in its investigation of the Business. Any investigation pursuant to this Section 5.03 shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business or any other businesses of Seller. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement
Section 5.04 No Solicitation of other Bids.
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Section 5.05 Notice of Certain Events.
(a) From the date hereof until the Closing, Seller shall promptly notify Buyer in writing of:
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Section 5.06 Employees and Employee Benefits.
(a) Commencing on the Closing Date, Seller may terminate all employees not listed in Section 2.02(a)(vi) of the Disclosure Schedules, and, Buyer shall offer employment, on an “at will” basis, to the employees named in Section 2.02(a)(vi) of the Disclosure Schedules.
(b) Seller shall be solely responsible, and Buyer shall have no obligations whatsoever for, any compensation or other amounts payable to any current or former employee, officer, director, independent contractor or consultant of the Business, including, without limitation, hourly pay, commissions, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period relating to the service with Seller at any time on or prior to the Closing Date and Seller shall pay all such amounts to all entitled persons on or prior to the Closing Date other than the sales commissions set forth on Section 1.03(a)(ii) of the Disclosure Schedules. Buyer and Seller agree that this Section 5.06(b) shall not affect Buyer’s obligations to assume the sales commissions set forth on Section 1.03(a)(ii) of the Disclosure Schedules.
(c) Seller shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of current or former employees, officers, directors, independent contractors or consultants of the Business or the spouses, dependents or beneficiaries thereof, which claims relate to events occurring on or prior to the Closing Date. Seller also shall remain solely responsible for all worker’s compensation claims of any current or former employees, officers, directors, independent contractors or consultants of the Business which relate to events occurring on or prior to the Closing Date. Seller shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.
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Section 5.07 Books and Records.
Section 5.08 Closing Conditions From the date hereof until the Closing, each party hereto shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VII hereof.
Section 5.09 Non-Competition; Non-Solicitation.
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Section 5.14 Tax Clearance Certificates. If requested by Buyer, Seller shall notify all of the taxing authorities in the jurisdictions that impose Taxes on Seller or where Seller has a duty to file Tax Returns of the transactions contemplated by this Agreement in the form and manner required by such taxing authorities, if the failure to make such notifications or receive any available tax clearance certificate (a “Tax Clearance Certificate”) could subject the Buyer to any Taxes of Seller. If any taxing authority asserts that Seller is liable for any Tax, Seller shall promptly pay any and all such amounts and shall provide evidence to the Buyer that such liabilities have been paid in full or otherwise satisfied.
Section 5.15 Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances, and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents. Seller shall deliver the information set forth in Section 5.15 of the Disclosure Schedules within 30 days of the Closing Date.
Section 6.01 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until March 31, 2023; provided, however, that the representations and warranties in Sections 3.13 Compliance with Laws and 3.14 Taxes shall survive to but not beyond the statute of limitations of the underlying laws that were to be complied with or the taxes that were to be paid. All covenants and agreements of the parties contained herein shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.
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Section 6.05 Payments; Indemnification Escrow Fund.
Section 6.07 General Provisions. Neither Buyer nor Seller shall seek any indemnification against the other unless the net claim (net of the other party’s claims) is at least Fifty Thousand Dollars ($50,000.00, the “Basket), and if so, only for the amount that exceeds the Basket. Except in the cases of fraud or intentional misrepresentation, the maximum amount that Seller (and their related parties) or Buyer (and their related parties) may be subject to for any form of indemnification under this Agreement is Five Million Dollars ($5,000,000.00, the “Cap”).
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ARTICLE VII CONDITIONS TO CLOSING
Section 7.01 Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions: no Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
Section 7.02 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions:
(e) Seller shall have delivered to Buyer such other documents and deliveries set forth in Section 2.02(a).
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Section 7.03 Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the following conditions:
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(d) Buyer shall have delivered to Seller such documents and deliveries set forth in Section 2.02(b)
If to Seller: |
P.O. Box 130
LaHonda, CA 94020
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with a copy to: |
The Small Business Law Firm, P.C. 299 W. Hillcrest Drive #214
Thousand Oak, CA 91360
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If to Buyer: |
AmpliTech Group, Inc. 620 Johnson Avenue Bohemia NY 11716 Email: fmaqbool@amplitechinc.com Attention: Chief Executive Officer |
with a copy to: |
Sichenzia Ross Ference LLP
New York, NY 10036
Email: gsichenzia@srf.law
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Section 8.08 Governing Law; Submission to Jurisdiction. Any and all disputes, relating to this Agreement, termination, enforcement, interpretation or validity, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Santa Clara County, California before one (1) arbitrator. At the request of any party, the arbitration may be held via videoconference without any physical appearance required. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. Judgment on a JAMS award may be entered in any court having jurisdiction over the Parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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SELLER:
SPECTRUM SEMICONDUCTOR MATERIALS, INC. |
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/s/ Robert Larson |
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Robert Larson
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BUYER:
AMPLITECH GROUP, INC. |
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By |
/s/ FAWAD MAQBOOL |
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FAWAD MAQBOOL
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EXHIBIT 99.1
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AmpliTech to More Than Triple its Revenue Base with Definitive Agreement to
Purchase Silicon Valley-based Spectrum Semiconductor Materials
While Substantially Expanding its Distribution Reach and Growth Potential.
San Jose, CA & Bohemia, NY, November 19, 2021 -- AmpliTech Group, Inc. (Nasdaq: AMPG), a designer, developer, and manufacturer of state-of-the-art signal-processing components for satellite and 5G communications networks, defense, space, and other commercial applications, announced today that it has executed a definitive agreement to acquire the assets and operations of Spectrum Semiconductor Materials Inc., a rapidly-growing global specialty distributor of semiconductor components based in San Jose, CA. The transaction is expected to close within our fiscal year 2021, subject to the satisfaction of certain closing conditions.
The purchase is expected to deliver significant strategic and top and bottom-line benefits while also building on AmpliTech’s technical and management expertise and distribution reach. Spectrum is on track to achieve unaudited 2021 revenue of $10M - $11M, representing double-digit growth over Spectrum Semiconductor Materials sales in fiscal 2020, with 2021 pre-tax net income of approximately 25% of revenue. Spectrum achieves such strong net margins by stocking a wide variety of specialty products and employing disruptive digital inventory practices that optimize operating efficiency. AmpliTech’s revenue for the past four quarters was $3.5M and recently announced a record order backlog of $3.4M following $1.2m in new orders. Spectrum Semiconductors has a record current order backlog of $8M in orders anticipated to ship through June 30, 2022.
The purchase price is $8.0M in cash plus $1.5M to be held in escrow through December 2022, to fund any purchase price or other adjustments, plus the grant of 188,442 restricted shares of AmpliTech common stock. The parties have agreed to a purchase price adjustment of 25% of Spectrum’s cumulative net revenue above or below $20M in sales for calendar years 2021 and 2022 combined. On September 30th AmpliTech had approximately $28M in cash, cash equivalents, and marketable securities, and no long-term debt.
Of strategic importance, Spectrum Semiconductors provides a powerful distribution platform in the U.S., Europe, and Asia for AmpliTech’s new line of monolithic microwave integrated circuit (MMIC) chip designs, and Spectrum has been building its radio frequency (RF) focused semiconductor revenue base. AmpliTech’s innovative MMIC chip designs integrate its industry-leading low noise signal amplification (LNA), signal filter, and signal attenuator technologies into the much smaller and more flexible chip form factor. Foundry production of initial MMIC chipsets is targeted for commercial availability by the end of Q1 2022.
Each company brings proven sales personnel and relationships that will complement each other in addressing the combined company’s expanded market opportunity. Furthermore, as AmpliTech develops its new MMIC line, Spectrum can package the designs for high-volume applications expected to drive sales growth. The acquisition is expected to bring AmpliTech a substantial business development presence in Silicon Valley and international markets, building on its existing East Coast and Texas teams to create a broad global footprint.
AmpliTech CEO, Fawad Maqbool, commented, “Spectrum Semiconductors is a perfect fit for advancing AmpliTech’s strategic goals and delivering shareholder value. With Spectrum, we will add a well-managed, growing business with a long-term track record for high quality and excellent customer service and the ideal distribution platform for the launch of our MMIC chip solutions. This transaction will allow us to more than triple our current annual revenue run rate, while also being immediately accretive to our bottom line.
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“Of equal importance, Spectrum brings us a highly satisfied, long-term, and global customer base with excellent penetration in our core end markets of aerospace, defense, automotive, and computing, along with a deep Silicon Valley presence, to support the launch of MMIC chip solutions we plan to bring to market by the end of Q1 2022. We expect AmpliTech and Spectrum will play a key role in improving the speed and efficiency of communications systems around the world in high-growth applications such as 5G cellular, MEO and LEO satellites, quantum computing, and autonomous vehicles. Importantly, AmpliTech is well funded to complete this transaction and to then execute on the growth opportunities of the combined business.”
Robert Larson, Spectrum CEO, commented, “Joining forces with AmpliTech is a big win for our company, our customers, and our suppliers. It provides us with a broader base of opportunity and exciting growth potential as we collaborate to bring AmpliTech’s premier MMIC chip solutions to market. I look forward to collaborating with the transition efforts with the AmpliTech team to execute on this exciting growth.”
About Spectrum Semiconductor Materials, Inc.
Spectrum is a global authorized distributor of semiconductor components for integrated circuit (IC) assembly for prototyping, testing and production requirements. It has a 31-year track record for delivering high-quality products, excellent customer service and long-standing supplier relationships.
Spectrum’s particular strength is its flexibility and ability to meet customer needs, stocking the broadest range of off-the-shelf or custom package configurations and providing support in tooling packages for specific technical requirements. Spectrum economies of scale allow it to meet customers’ quantity requirements with quick turn capabilities at highly competitive pricing.
Spectrum QMS is ISO 9001:2015 and AS9120B certified, meeting the highest standards required by global and environmental directives. Spectrum sources only the highest quality materials from major manufacturers such as Kyocera, NTK and Materion Advanced Materials.
About AmpliTech (www.AmpliTechinc.com)
AmpliTech Group, Inc. designs, develops, and manufactures state-of-the-art radio frequency (RF) microwave components for global satellite communications, telecom (5G & IoT), space, defense, and quantum computing markets as well as systems and component design consulting services. AmpliTech has a 13+ year track record of developing high performance, custom solutions to meet the unique needs of some of the largest companies in the global industries we serve. We are proud of the unique skills, experience and dedication of our focused team which enables us to deliver superior solutions, faster time to market, competitive pricing and excellent customer satisfaction and repeat business.
Safe Harbor Statement
This release contains statements that constitute forward-looking statements. These statements appear in several places in this release and include all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company's ability to consummate the acquisition and to execute its business plan as anticipated; (ii) trends affecting the Company's financial condition or results of operations; (iii) the Company's growth strategy and operating strategy. The words "may" "would" "will" "expect" "estimate" "anticipate" "believe" "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements because of various factors. Other risks are identified and described in more detail in the “Risk Factors” section of the Company’s filings with the SEC, all of which are available on our website. We undertake no obligation to update, and we do not have a policy of updating or revising, these forward-looking statements, except as required by applicable law.
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Non-GAAP Financial Information
This press release includes a statement relating to the Company’s and Spectrum’s order backlog. Backlog represents the dollar amount of net sales that we expect to recognize in the future from sales orders that have been received from customers in the ordinary course of business. The Company considers order backlog a relevant and preferred supplemental measure for understanding the Company’s financial and market position. However, such measure has inherent limitations, is not required to be uniformly applied or audited and other companies may use methodologies to calculate similar measures that are not comparable. Readers should be aware of these limitations and should be cautious as to their use of such measure.
Corporate Social Media |
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Investor Social Media |
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Twitter: @AmpliTechAMPG |
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Twitter: @AMPG_IR |
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Instagram: @AmpliTechampg Facebook: AmpliTechInc |
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StockTwits: @AMPG_IR |
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Company Contact: |
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Investor Contact: |
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Shan Sawant, Director of Communications |
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David Collins or Bill Jones, Investor Relations |
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AmpliTech Group, Inc. |
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Catalyst IR |
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shan@AmpliTech.com |
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AMPG@catalyst-ir.com |
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646-546-7128 |
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212-924-9800 |
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