Exhibit 10.33
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2024
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 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 No.) | |
155 Plant Avenue Hauppauge, NY |
11788 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (631) 521-7831
Securities registered pursuant to Section 12(g) of the Exchange Act: Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The Stock Market LLC |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 and posted 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 (Check one):
| 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s common stock, par value $0.001 per share, held by non-affiliates of the registrant, based on the closing price of the common stock as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $7,110,606.
As of March 27, 2025, the registrant had shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
AMPLITECH GROUP, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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Use of Certain Defined Terms
Except as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “our Company”, or “the Company” are to the combined business of the Company, its subsidiary AmpliTech, Inc. and the Company’s divisions, Specialty Microwave, Spectrum Semiconductor Materials, AmpliTech Group MMIC Design Center and AmpliTech Group True G Speed Services.
Forward-Looking Statements
This Annual Report on Form 10-K 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K 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 Annual Report on Form 10-K.
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.
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PART I
ITEM 1. BUSINESS
Business Overview
AmpliTech Group Inc. (“AMPG,” “AmpliTech” or the “Company”), incorporated in 2010 in the state of Nevada, is the parent company of 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 micro-wave component-based amplifiers that meet individual customer specifications. Our products consist of Radio Frequency (“RF”) amplifiers and related subsystems, operating at multiple frequencies from 50kHz to 44GHz, including low noise amplifiers (“LNA”), medium power amplifiers, cryogenic amplifiers, and custom assembly designs for the global satellite communications, telecom (5G & IoT), space, defense, and quantum computing markets. We also offer non-recurring engineering services on a project-by-project basis, for a predetermined fixed contractual amount, or on a time plus material basis. We have both domestic and international customers in such industries as aerospace, governmental, defense and commercial satellite.
Specialty Microwave designs and manufactures state-of- the-art precision SATCOM microwave components, RF subsystems and specialized electronic assemblies for the military and commercial markets, flexible and rugged waveguides, wave guide adapters and more.
On November 19, 2021, AMPG entered into an Asset Purchase Agreement with Spectrum Semiconductor Materials Inc. (“SSM”), a globally authorized distributor of integrated circuit (IC) packaging and lids for semiconductor device assembly, prototyping, testing, and production requirements founded in 1990 and headquartered in San Jose, CA, pursuant to which AMPG acquired substantially all of the assets of the Company (the Acquisition). The Acquisition was completed on December 15, 2021.
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.
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, cryogenic amplifiers 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 infrastructures, as well as advanced military and commercial markets.
Our Corporate History and Structure
AmpliTech Group Inc. 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 outstanding 893,750 shares of Company common stock, 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.
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On September 12, 2019, AmpliTech Group Inc. acquired substantially all of the assets of Specialty Microwave Corporation, a privately held company based in Ronkonkoma, NY. The purchase included all inventory, orders, customers, property and equipment, and goodwill. Following the closing of the asset purchase, we hired all eight team members of SMW. In connection with the acquisition, the Company began using the trade name “Specialty Microwave”. 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%.
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, AmpliTech Group Inc.’s common stock and warrants commenced trading on NASDAQ under the symbols “AMPG” and “AMPGW,” respectively. A reverse split of the outstanding common stock at a 1-for-20 ratio became effective February 17, 2021, as of 12:01 a.m., Eastern Time. All share amounts have been retroactively re-stated to reflect the reverse split.
On November 19, 2021, AmpliTech Group, Inc. entered into an Asset Purchase Agreement with SSM, pursuant to which AmpliTech would acquire substantially all of the assets of SSM. SSM, located in Silicon Valley (San Jose, CA), was a global authorized distributor of IC packaging and lids for semiconductor device assembly, prototyping, testing, and production requirements. The aggregate purchase price for the acquisition was $10,123,276, subject to certain working capital and other adjustments. $665,200 of the aggregate purchase price was paid by the issuance of 188,442 unregistered shares of AmpliTech common stock at the closing of the acquisition. The acquisition was completed on December 15, 2021.
In 2021, the Company opened a 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 a wider base of customers requiring high technology in smaller packages.
In August 2022, our AGTGSS division was founded to serve and provide complete system integration and ORAN compliant O-RU’s (Radio Units) for telcos, enabling the industry to access ‘True 5G Speeds’. AGTGSS provides Managed Services, Cyber Security, Cloud Services, Data Sciences and Telco Cloud Services. AGTGSS will also be providing full installation of Private 5G Networks (P5G) which includes the deployment of AmpliTech Group developed radio units. AGTGSS will implement AmpliTech’s low noise amplifier devices in these systems to promote greater coverage, longer range and faster speeds.
Recent Board Change
On January 17, 2025, Mr. Matthew Kappers resigned as a director of the Company, including his positions as the chairman of the Nominating and Corporate Governance Committee, and as a member of the Audit Committee and the Compensation Committee for personal reasons. Upon Mr. Kappers’ resignation, the Board appointed Mr. Shailesh “Sonny” Modi as a director of the Board of Directors of the Company to fill the vacancy resulting from Mr. Kappers’ resignation. The Board appointed Mr. Modi to serve as the chairman of the Nominating and Corporate Governance Committee, and a member of the Audit Committee and the Compensation Committee.
In addition, on January 20, 2025, each of the following independent directors: Mr. Andrew Lee, Mr. Daniel Mazziota and Mr. Shailesh “Sonny” Modi entered into an independent director agreement with the Company. The Director Agreement provides for a one (1) year term unless terminated earlier upon certain events set forth in the Director Agreement, which includes among other things, resignation or removal. In addition, the Director Agreement also provides, among other things, reimbursement of expenses for attending meetings, indemnification and annual compensation of 15,000 Restricted Stock Units pursuant to the Company’s Amended and Restated 2020 Equity Incentive Plan for services.
Recent Debt Reduction
On July 23, 2024, the Company entered into a business loan and security agreement with Altbanq Lending II LLC in the amount of $1,300,000, which included 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 bore an annual interest rate of 21.2% with prepayment options available. The loan was secured by the Company’s assets through a UCC filing, and proceeds were used for working capital, 5G licensing and certification fees. During the year ended December 31, 2024, the Company repaid the loan in full, through principal payments of $1,534,000, and recorded $260,000 in debt discount amortization.
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Recent Financings
On September 9, 2024, the Company entered into a Securities Purchase Agreement with a single institutional investor to sell 1,369,488 shares of the Company’s common stock, par value $0.001 per share at a per share price of $0.7302. The closing of the offering occurred on September 11, 2024. The gross proceeds to the Company from this offering was approximately $1 million, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $180,000.
On November 24, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 1,425,377 shares of our common stock, at a per share price of $0.92 and prefunded warrants to purchase 177,882 shares of common stock, at $0.919 per prefunded warrant (“Prefunded Warrant”) (the “November Offering”). The closing of the registered direct offering occurred on November 26, 2024. The exercise price of each Prefunded Warrant is $0.001 and 177,882 warrants were exercised in full immediately. The gross proceeds to the Company from the offering was approximately $1,474,998, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $200,000.
On December 11, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 1,352,500 shares of our common stock at a per share price of $1.60 (the “December Offering”). The closing of the registered direct offering occurred on December 13, 2024. The gross proceeds to the Company from this offering was approximately $2,164,000 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $220,000.
On December 16, 2024, we entered into a Securities Purchase Agreement with two institutional investors pursuant to which we sold in a registered direct offering 1,516,680 shares of our common stock at a per share price of $2.10 (the “Second December Offering”). The closing of the registered direct offering occurred on December 18, 2024. The gross proceeds to the Company from this offering was approximately $3,185,028 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $290,000.
On December 24, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 1,871,000 shares of our common stock at a per share price of $3.10 (the “Third December Offering”). The closing of the registered direct offering occurred on December 27, 2024. The gross proceeds to the Company from this offering was approximately $5,800,100 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $490,000.
On December 27, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 2,173,920 shares of our common stock, par value $0.001 per share, at a per share price of $4.60 (“Fourth December Offering”). The closing of the registered direct offering occurred on December 31, 2024. The gross proceeds to the Company from this offering was approximately $10,000,032 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $660,000.
Pursuant to the Securities Purchase Agreements entered into in the November Offering, December Offering, Second December Offering, Third December Offering and Fourth December Offering we agreed to, among other things, not issue any shares of common stock for a period of 45 days after such Offerings’ respective closing dates. Investors who participated in the November Offering, December Offering, Second December Offering and Third December Offering agreed to waive this 45-day prohibition on issuing securities in connection with the Fourth December Offering.
On March 21, 2025, we entered into an equity distribution agreement, or the Equity Distribution Agreement, with Maxim Group LLC , or Maxim, relating to offer and sell shares of our common stock having an aggregate offering price of up to $25 million from time to time through Maxim, acting as our exclusive sales agent, in an “At-the-Market Offering” at our discretion.
Recent Developments
Asset Purchase Agreement
On March 26, 2025, the Company entered into an asset purchase agreement with Titan Crest, LLC, a Delaware limited liability company (the “Seller”), and its affiliate, to purchase certain assets including intellectual property used in developing, manufacturing, marketing and selling products that use radio frequency technology (“5G ORAN radio products”) (the “Asset Purchase Agreement”). The Asset Purchase Agreement contains customary representations and warranties and covenants by each party. In addition to customary closing conditions, the closing of the transactions and the payment of the purchase price contemplated by the Asset Purchase Agreement is conditioned upon certain conditions, including but not limited to (i) the issue of a purchase order from Telus for fiscal year delivery to the Company, (ii) a purchase order between the Company and the Seller or its affiliate pursuant to which the Seller will assist in manufacturing the products to be sold to Telus to meet its purchase order, and (iii) receipt of correspondence from Telus to the Company, indicating Telus’ intention to issue purchase orders (including Telus’ initial purchase order) which purchase orders will be spread out over 3 years (“Telus Subsequent Purchase Orders”).
The aggregate purchase price for the assets is $8,000,000 which consists of $3,000,000 in cash and $5,000,000 in restricted shares of common stock of which the first $2,500,000 in cash and $2,500,000 in restricted common stock will be issued upon the procurement of the Telus’ initial purchase order and receipt of assurance of the Telus Subsequent Purchase Orders; and that the remaining $500,000 in cash to be paid on December 5, 2025 and $2,500,000 in shares of restricted common stock will be issued to Company upon the transfer of the 5G ORAN radio products’ technology and intellectual property rights by the Seller to the Company.
In addition, under the Asset Purchase Agreement, the parties are obligated, subject to certain limitations, to indemnify the other for certain customary and other specified matters, including breaches of representations and warranties, breaches of covenants and for certain liabilities and third-party claims. Further, the Seller and its affiliate, jointly and severally, agreed for a period of 10 years not to engage in certain competitive activities with respect to the business or proposed business relating to the assets sold to the Company. In addition, the Asset Purchase Agreement contemplates that after the closing, the Company and the Seller will enter short-term transition services agreements for up to two of the Seller’s employees to provide Company assistance in the assignment and transfer of the purchased assets from the Seller to the Company for a fee not to exceed $430,000.
In connection with the transaction, Seller’s affiliate agreed to transfer all of its rights, title and interest in 5G ORAN radio products technology and intellectual property rights to Seller. Subsequent to the transaction, Seller’s affiliate will continue its business and retain its employees focusing on software solutions and services.
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Revolving Line of Credit
On March 25, 2025, AmpliTech Group, Inc., a Nevada corporation (the “Company”), entered into a Bank Loan Agreement (the “Loan Agreement”) with Dime Community Bank (the “Bank”) for a revolving line of credit for up to $750,000 (the “Revolving Line of Credit”). The Company has established the Revolving Line of Credit for general working purposes and uses, as needed. As of the date of this filing, there is no outstanding balance on the Revolving Line of Credit. The term of the Loan Agreement expires once all indebtedness under the Revolving Line of Credit has been paid in full, or until such time as the Bank and the Company agree in writing to terminate the Loan Agreement. In addition to interest, the Company agreed to pay an annual fee of $500.00 on the anniversary date of each year the Loan Agreement is in effect, subject to change by the Bank with notice. Pursuant to an Assignment of Deposit Agreement dated March 25, 2025 between us and the Bank, the Revolving Line of Credit is secured by a demand deposit account with the Bank which requires us to have a balance no less than $814,635.
The Revolving Line of Credit is evidenced by a promissory note, which is due on demand, or if there is no demand, then on March 1, 2026, unless extended, modified or renewed (the “Note”). The Company has agreed to pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning April 1, 2025, with all subsequent interest payments to be due on the same day of each month thereafter. The Note bears a variable interest rate based on changes in the Wall Street Journal Prime Rate as published in the Wall Street Journal from time to time, plus 1.000%, provided however, under no circumstances will the interest rate be less than 6.250% per annum or more than the maximum rate allowed by applicable law. Late payment is subject to a fee of 5.000% of the regularly scheduled payment. In the event of default, the Note bears an interest at a rate per annum equal to 5.000% above the rate that is otherwise applicable to such amounts.
Among other things, the Loan Agreement contains customary representations and warranties, events of default, negative and affirmative covenants and financial covenants, and certain limitations on dispositions of assets. The Loan Agreement also contains usual and customary events of default (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default, payment of all amounts payable under the Note may be accelerated at the Bank’s option and/or the Bank’s commitment and obligations will terminate without notice to the Company.
Letter of Intent
On March 20, 2025, the Company entered into a non-binding letter of intent with a contract manufacturer on behalf of its end user for the purchase of $78 million of the Company’s Oran radios. If fulfilled, deliveries of the order are expected to start in FY2025 and will substantially increase each year thereafter into 2027. The non-binding letter of intent is subject to the parties entering into a series of definitive purchase orders. No assurance can be given that the Company will enter into any purchase orders for the total amount of $78 million.
Our Products and Services
Our core AmpliTech Inc. division offers products consisting of connectorized RF amplifiers and related subsystems, operating at frequencies from 50kHz to 44GHz, including low noise amplifiers (LNA’s), medium power amplifiers, cryogenic amplifiers, low noise block-down converters (LNB’s) and custom assembly designs for the aerospace, governmental, defense and commercial satellite markets.
Our fully operational AGMDC division in Texas has successfully transferred our proprietary technology from connectorized products into monolithic microwave integrated circuits, (MMICs) and is offering in chip form, LNA’s, power amplifiers, filters, attenuators, thru lines and has the ability to provide custom design projects. Over 125 new MMIC chip technology products have been released since AGMDC’s inception.
In connection with the acquisition of our Specialty Microwave Division (SMW), we began designing and manufacturing passive microwave components and related subsystems that meet individual customer specifications for both domestic and international customers.
Our SSM division is a globally authorized distributor of IC packaging and lids for semiconductor device assembly, prototyping, testing, and production requirement.
Through our AGTGSS division, we are actively developing and currently manufacturing our newest product line of Open Radio Unit for Sub 6GHz. This new phase array product supports 3.4-4.0 GHz and 2.496-2.69 GHz, with 8 x 4 x 2 = 64 Active Phased Array Elements. It is Digital Beam Forming Compliant With O-RAN/Keysight O-DU. This product uses proprietary technology comprised of existing core LNA products as well as MMICs from our AGMDC division in Texas.
Low Noise Amplifiers
Low Noise Amplifiers, or LNAs, are amplifiers used in receivers of almost every type of communication system (Wi-Fi, radar, satellite, base station, cell phone, radio, etc.) to improve signal strength and increase sensitivity and range of receivers.
Medium Power Amplifiers
Medium Power Amplifiers, or MPAs, provide increased output power and gain in transceiver chains to increase signal power and maintain dynamic range and linearity in radars, base-stations, wireless networks, and almost every communication system.
Satellite Access Point Block Downconverter (BDC)
The Specialty Microwave BDC assembly is used as a test device on Satellite Access Point (SAP) antennas located worldwide. The BDC assembly converts a Ka band signal, 17.7 GHz to 19.7 GHz, from the LNAs on either polarization of the antenna to between 950 and 2150 MHz using a high and low band block downconverter.
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1:2 Tx Protection Switch Panel Subsystem
The Specialty Microwave 1:2 Tx Protection Switch panel is a logic panel used in satellite communications earth stations. The system mechanism operates waveguide and coaxial switches to operator desired positions.
Desktop/Benchtop and Compact Wideband Power Amplifiers
These products are utilized over a frequency range of .1 to 40 GHz used in SATCOM rack mount systems as well as test equipment used in integrators and manufacturers of various communications systems such as cellular base stations, simulators, and point to point wireless radios.
Waveguide to Coaxial Adapters
These adapters are used in all SATCOM and satellite internet gateway systems from S band to K band, or 2GHz to 50 GHz.
Cryogenic Amplifiers
Our line of cryogenic amplifiers is designed to operate at temperatures as low as 4K that offer much lower noise figures than our standard models. Consuming as little DC power as +0.5V DC@8mA, the light weight, compact housings provide excellent performance while generating very little heat. These amplifiers are very useful for applications that require the absolute minimum amounts of noise injection for the growing market of low temperature applications, such as quantum computing, medical applications, RF imaging, research & development, space communications, accelerators, radiometry and telephony.
Our re-designed cryogenic 4.0 – 8.0 GHz amplifiers for quantum computing have been tested and validated by a third-party laboratory for performance.
Cryogenic and Non-Cryogenic 4g/5g Small Cell Subsystems
These products are utilized in private and public high-speed networks and airline WI-FI systems.
IC Packaging
Integrated circuit (“IC”) packaging is the case or enclosure that contains the semiconductor device, protecting it from corrosion or physical damage. The IC packaging also supports the electrical contacts, which connect the semiconductor device to a circuit board. IC packaging often gets sealed with lids, which creates an airtight seal to prevent contaminants, particles, liquids, or gases from entering the packaging to ensure the proper operation of the device. The Company offers multiple IC packaging and lids product lines according to desired product specifications, device performance, dimensions, resistances, and tolerances.
PHEMT MMIC Technology LNA’s
AmpliTech’s new line of low noise amplifiers introduces high performance, high reliability MMIC-based designs. These new products will cover widely used standard frequency ranges in the 2.0 – 4 GHz, 4.0 – 8.00 GHz and 2-18 GHz offering unparalleled low noise figure and featuring its proprietary low noise MMIC technology by our AGMDC Division.
Coaxial In-Line Low Noise Amplifiers
A new product line of competitively priced low noise amplifiers, featuring AmpliTech’s MMIC Technology from our AGMDC Division. These amplifiers offer a very competitive gain performance, exceptional low noise figures, and DC bias through the RF output. These coaxial in-line LNA’s can be used for a wide range of design applications and are suitable for Military and Commercial applications when cost considerations are paramount. Their compact design and outstanding electrical performance make them an indispensable asset in RF design and experimentation.
Coaxial In-Line Band Pass Filters
These bandpass filters cover industry standard frequency ranges, I.e., 17.52-21.45 GHz with 50Ω matched DC blocked RF ports. These products can be used for a wide range of design applications and are suitable for military and commercial applications when cost considerations are paramount. They are also covered by our standard 3-year warranty. Their compact design and outstanding electrical performance make them an indispensable asset in RF design and experimentation.
Low-Noise Block Down Converter Units (LNB’s)
Featuring its proprietary AmpliTech LNA low noise technology, these LNB’s, now available in the C band, X band and Ka band were designed for superior performance in small sats, LEO, MEO, GEO and portable or fixed Bands teleport applications.
Directional Couplers
AmpliTech’s new line of directional couplers presents a high-performance solution in signal splitting and monitoring technology. Designed with precision and engineered for high performance, these couplers provide accurate power division while maintaining signal integrity. With a wide range of coupling ratios and frequency options, these directional couplers are ideal for a variety of applications, including telecommunications, radar systems, and aerospace technology.
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Power Dividers
Our power dividers stand as a testament to AmpliTech’s commitment to delivering innovative solutions through a strategic research and development business plan. Built to handle high-power RF signals, these dividers ensure minimal signal loss during distribution. Whether for in-building wireless systems or distributed antenna systems, these power dividers offer unparalleled efficiency and signal fidelity, making them an essential choice for RF engineers and system integrators.
Quadrature Hybrid 90-degree Couplers
Quadrature hybrid 90-degree coupler components pave the way for seamless integration in phase-critical applications. These hybrids excel in creating two signals with precisely controlled phase separation, making them indispensable for quadrature modulators, demodulators, and phase shifters. Their compact design and outstanding electrical performance make them an indispensable asset in RF design and experimentation.
5G Network in a Box (NIB)
This single box is essentially a “plug-n-play” solution for P5G and local carriers and is another innovative product from our AGTGSS division. A 5G NIB offers several benefits to customers, including rapid deployment, flexibility, cost-effectiveness, localized high-speed connectivity, enhanced security, and interoperability.
Massive MIMO, 64T64R ORAN, CAT B Radio Network
The Massive MIMO, 64T64R ORAN, CAT B Radio Network is expected to become the company’s flagship product. With 16 Layers DL/ 8 Layers UL, CSI-RS and SRS beamforming capabilities and beam steering technology, this radio provides true 5G speeds with improved signal strength, enhanced coverage, increased user capacity and adheres to the ORAN specifications promoting openness and interoperability in radio access networks.
Private 5G – Full ORAN Radio Networks
Our Private ORAN 5G solution is a modern approach in telecommunications where the traditional proprietary hardware and software components of radio access networks (RAN) are disaggregated and replaced with open interfaces and interoperable components. Our ORAN products include:
Radio Units (RUs): These are the physical units responsible for transmitting and receiving radio signals. In ORAN, RUs are often software-defined and designed to be interoperable across different vendors.
Distributed Units (DUs): DUs handle baseband processing and are responsible for functions like modulation and encoding. They are also designed to be vendor-neutral and interchangeable.
Centralized Units (CUs): CUs manage higher-level functions like scheduling, network optimization, and coordination between DUs and core networks. They provide a centralized control function.
Open Interfaces: ORAN networks rely on standardized and open interfaces between the RUs, DUs, and CUs. These interfaces ensure that components from different vendors can seamlessly work together, promoting flexibility and innovation.
Virtualization and Cloud-Native Architecture: ORAN networks often leverage virtualization technologies and cloud-native architectures to improve scalability, efficiency, and agility.
Overall, a 5G ORAN full radio network represents a shift towards more open, flexible, and interoperable infrastructure compared to traditional RAN architectures, potentially leading to cost savings, faster innovation cycles, and improved network performance.
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Our Technology
Our products are supported by hybrid design topologies that create highly linear RF products that amplify and transform signals with minimal addition of noise, achieving high Signal to Noise Ratio (“SNR”) and increased receiver sensitivity and range, at a low cost and low power consumption. We recently received three patents from the United States Patent and Trademark Office (USPTO). Our hybrid design topologies include:
| ● | Discrete Microwave Integrated Circuit (MIC) | |
| ● | Pseudomorphic High Electron Mobility Transistor (PHEMT) | |
| ● | MIC and Low Noise MIC |
We believe the discrete topology that we utilize provides various advantages:
| ● | Can easily optimize Voltage Standing Wave Ratio (VSWR) and Noise Figure | |
| ● | Flexibility of design; can easily adapt to change of specs, technology, etc. | |
| ● | Low DC power consumption | |
| ● | Can control and optimize gain flatness due to discrete gain stages | |
| ● | Optimum use of MIC technology and experience | |
| ● | Use of negative bias is not necessary | |
| ● | Specially selected components with specific parameters that yield proprietary results due to use in a particular configuration |
Research and Development
To date, our research and development activities have primarily been conducted on new product designs to the extent as requested by the customers. The cost of our research and development activities is incorporated into the unit selling prices and, as such, is borne directly by the customers. In addition to the research and development for our customers, we invest in research and development for new products on emerging technologies such as 5G/6G, cryogenic, cybersecurity, MMICs, IoT and wireless products for the future. Research and development costs for the years ended December 31, 2024 and 2023 were $3,590,695 and $2,341,845, respectively.
Industry and Competition
Market Overview
We operate our business in the industry of high-power RF semiconductors. We believe that the RF semiconductor industry has the following features:
High demand for complex, next-generation wireless signal processing applications.
| ● | Mass adoption of internet and web-based applications, and other high-band width applications | |
| ● | Ability to combine analog and digital signal processing into more integrated RF solutions | |
| ● | Widespread application of low-cost, high-performance and functionality wireless networks | |
| ● | Emergence of 5G/6G, WI-FI 6e, satellite and advanced wireless network infrastructure rollouts |
Growing opportunity for advanced RF subsystems, modules and components.
| ● | Demand for precise, high-speed signal conditioning interfaces between analog and digital | |
| ● | Combining analog/digital signal processing capabilities into more highly integrated solutions | |
| ● | Widespread application of low-cost, high-performance wireless network systems | |
| ● | Convergence of computing, communications, and consumer electronics with state-of-the-art signal processing capability with less power consumption |
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Complements original equipment manufacturer, or OEM, design, and manufacturing capabilities.
| ● | Deliver high quality and feature improvements that service provider requires | |
| ● | Lower production costs and shorten product development cycles | |
| ● | Adhere to flexibility, performance, streamlined procurement processes and value requirements |
Current and Future Target Markets.
| ● | High speed terrestrial and satellite terminals (SATCOM, “Internet in the Sky”) | |
| ● | 5G/Wi-Fi6E and 6G wireless infrastructure (Cellular Base Stations, Small Cells, Private Wi-Fi Networks) | |
| ● | IoT (Internet of Things) | |
| ● | Cloud farms, big data and MEC architecture | |
| ● | Quantum supercomputers/Quantum research | |
| ● | Deep space astronomy | |
| ● | Autonomous self-driving vehicles | |
| ● | Telemedicine, AR/VR (Augmented and Virtual Reality) | |
| ● | Drones, UAVs (Unmanned aerial vehicles) | |
| ● | Cyber-security | |
| ● | Military/Defense ECM/EW |
Competition
We face competition in the amplifier industry from many established players. Some of our competitors have longer operating histories and significantly greater financial, research and development, marketing and other resources than us. As a result, some of these competitors can devote greater resources to the development, promotion, sale and support of their products. These competitors may also provide discounted pricing on their products to gain market share. In addition, consolidation in the amplifier industry could intensify the competitive pressures that we face. Many of our existing and potential competitors may be better positioned than we are to acquire other companies, technologies or products. We compete based on technology, cost, and design flexibility.
Our ability to compete successfully depends on numerous factors, including our ability to:
| ● | maintain and increase our market share and the strength of our brand in amplifiers; | |
| ● | maintain and expand our relationships with channel partners; | |
| ● | secure products in large volume in a cost-effective and timely manner from our suppliers; | |
| ● | develop innovative, differentiated, high-performance products relative to our competitors’ solutions; and | |
| ● | protect our intellectual property. |
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We cannot assure you that our solutions will compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by our existing competitors or new companies entering our market. In addition, we cannot assure you that our competitors do not have or will not develop processes or product designs that currently or in the future will enable them to produce competitive products at lower costs than ours.
Our Strategy
Our objective is to become a premier designer, manufacturer and distributor of high quality and state-of-the-art cryogenic microwave amplifiers, RF designs and applications for wireless networks and the future of wireless communication with true 5G performance of or close to 1Gbs per second. Key elements of our strategy include the following:
| ● | Trade on a national exchange to improve access to capital resources and a much broader customer base with higher volumes, as well as better access to large OEMs | |
| ● | New product development | |
| ● | Commercializing of existing core technology into specific high-volume technology sectors and obtaining patent on such technology |
Manufacturing and Distribution
On April 1, 2022, we relocated our manufacturing facility and corporate office to Hauppauge, New York, while maintaining our distribution center in San Jose, California, and our MMIC design center in Plano, Texas. Our manufacturing process in Hauppauge involves the assembly of numerous individual components and precise fine-tuning by production technicians. Our manufacturing facility more than triples our capacity and still has room for expansion. With our already established supply chain, internal capacity and local contract manufacturing sources, we expect to have sufficient capacity to process small and large size orders (thousand + units per month).
We rely on our sales representatives to channel our products throughout the Americas as well as to countries in Europe, the Middle East and South Asia.
On April 1, 2023, the Company announced its partnership with NGK Electronic Devices, to become their US distributor for NGK’s state-of-the-art RF Microwave products. This partnership marks NGK’s first distribution agreement with a US partner, presenting a significant opportunity for both parties. NGK Electronic Devices, based in Japan, is a world leader in the development and manufacturing of ceramic semiconductor packages. These advanced products play a crucial role in the semiconductor packaging industry, addressing key concerns such as heat management and electrical insulation. AmpliTech’s semiconductor distribution division, Spectrum Semiconductor, will leverage its extensive distribution network and expertise to ensure that NGK’s RF Microwave Packages product line is readily available to customers across the United States, further expanding NGK’s global presence.
The Company is ISO 9001:2015 and AS9120B certified for the Distribution of Semiconductor Materials for the Assembly Phase of Integrated Circuit Manufacturing, as well as in compliance with the Conflict Minerals Reporting Template (“CMRT”), the European Union’s Restriction of Hazardous Substances (“RoHS”) and Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”) directives, as well as registered with the U.S. Government’s System for Award Management (“SAM”).
Raw Materials
We purchase a variety of raw materials, primarily consisting of high temperature alloy sheet metal and castings, forgings, pre-plated metals and electrical components from various vendors. The materials used by our operations are generally available from several sources and in sufficient quantities to meet current requirements subject to normal lead times. However, recent cost inflation, tariffs and potential supply chain disruptions may lead to higher material costs in fiscal 2025. Additionally, we are subject to rules promulgated by the Securities Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding the use of certain materials (tantalum, tin, gold and tungsten), known as conflict minerals, which are mined from the Democratic Republic of the Congo and adjoining countries. These rules may impose additional costs and may introduce new risks related to our ability to verify the origin of any conflict minerals used in our products.
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Suppliers
Our material consists of purchased component parts used in our assembly process or distributed. The following table describes supplier concentration based upon the percentage of materials purchased from each supplier for 2024:
| Supplier A | $ | 1,581,069 | 33.05 | % | ||||
| Supplier B | 559,044 | 11.69 | % | |||||
| Supplier C | 517,296 | 10.81 | % | |||||
| Supplier D | 436,008 | 9.11 | % | |||||
| Supplier E | 181,092 | 3.79 | % | |||||
| All other suppliers | 1,509,405 | 31.55 | % | |||||
| Total | $ | 4,783,914 | 100 | % |
Marketing
We employ an aggressive and focused approach to market our products, at various venues including trade shows, strategic alliances, websites and trade magazines. We target specific types of customers such as system integrators, defense contractors, cellular and wireless service providers but it should be noted that we are also focused on expanding our customer base to include users of consumer applications and products. We continue our online and print ads as well as our virtual meetings and conferences.
Trade Shows
We attend trade shows such as IMS (International Microwave Symposium), European Microwave Symposium, MWC (Mobile World Congress) and the Satellite Show in Washington D.C. We may also sponsor some trade shows to gain recognition and presence.
Strategic Alliances
We explore opportunities with global OEMs by seeking out strategic alliances that improve sales and presence in the marketplace and expand our product line and capabilities, thereby broadening our customer base.
Website
We maintain a dynamic website to capture more business via worldwide customer searches for our products on the internet. Our website has also been updated to include an e-commerce dashboard with access to purchase our products. Our website is available at www.amplitechgroup.com.
Trade Magazines
We advertise our products in Microwave Product Digest and Microwave Journal.
Customers
We serve a diverse customer base located primarily in the United States, Europe and South Asia, in the aerospace, governmental defense, commercial satellite and wireless industries. Some of our customers include Viasat, L3 Harris Technologies, CPI, Lockheed Martin, Microsemi, and Paramount Global. As of December 31, 2024, there was one customer that accounted for 13.97% of our total revenue. We have both direct and indirect relationships with these customers domestically and abroad via exclusive and non-exclusive sales representatives.
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Government Regulation
We are subject to the local, state and national laws and regulations of the jurisdictions where we operate that affect companies generally, including laws and regulations around commerce, intellectual property, trade, health and safety, commerce and contracts, privacy and communications, consumer protection, web services, tax, and state corporate laws and securities laws; and specifically those conducting business of electronics, many of which are still evolving and could be interpreted in ways that could harm our business. Existing and future laws and regulations may impede our growth. These regulations and laws may change over time. Unfavorable regulations and laws could diminish the demand for our products and services and increase our cost of doing business.
In addition, our operations are subject to extensive, and frequently changing, federal, state and local environmental laws and substantial related regulation by government agencies, including the Environmental Protection Agency. Among other matters, these regulatory authorities impose requirements that regulate the operation, handling, transportation and disposal of hazardous materials; protect the health and safety of workers; and require us to obtain and maintain licenses and permits in connection with our operations. This extensive regulatory framework imposes significant compliance burdens and risks on us. Notwithstanding these burdens, we believe that we are in material compliance with all federal, state and local environmental laws and regulations governing our operations.
There has been no material adverse effect to our consolidated financial statements nor competitive positions because of these government and environmental regulations.
Intellectual Property
We regard domain names, tradenames, customer relationships, trade secrets, proprietary technologies and similar intellectual property important to our success.
We rely on contractual restrictions to protect our proprietary rights in products and services. It is our policy to enter into confidentiality and invention assignment agreements with our employees and contractors as well as nondisclosure agreements with our suppliers and strategic partners to limit access to and disclosure of our proprietary information. We cannot assure you that these contractual arrangements or the other steps taken by us to protect our intellectual property will prove enough to prevent misappropriation of our technology or to deter independent third-party development of similar technologies. We recently received three patents from the United States Patent and Trademark Office (USPTO), and we plan to use the information obtained from the IP story to file additional patents relating to our intellectual property and trade secrets.
Human Capital Resources
As of March 21, 2025, we have forty-six (47) full time employees. From time to time, we may hire additional workers on a contract basis as the need arises.
Corporate Office
Our corporate headquarters consisting of approximately 20,000 square feet and is located 155 Plant Avenue, Hauppauge, NY 11788.
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ITEM 1A. RISK FACTORS
RISK FACTORS
An investment in our securities involves a high degree of risk. You should carefully consider all of the risks described below, together with the other information contained in this report, including the financial statements, before making a decision to invest in our common stock. If any of the following events occur, our business, financial condition and operating results may be materially and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business.
Risks Relating to our Business
Our revenue, earnings, margins and other operating results have fluctuated significantly in the past and may fluctuate significantly in the future.
If demand for our products fluctuates, because of economic conditions or for other reasons, our revenue and profitability could be impacted. We incurred net losses of $11,242,404 in 2024 and $2,465,439 in 2023. As of December 31, 2024, we had an accumulated deficit of $21,012,127. These losses and our accumulated deficit reflect the substantial investments we have made to develop our products. Our future operating results will depend on many factors affecting our new market segments, including the following, many of which are out of our control: the continued market acceptance of our current and new products for 5G, cryogenic quantum computing, internet of things (IoT) and MMICs. Although hard to predict under the current global environment, we believe our core LNA product line, as well as Spectrum Semiconductor Material and 5G product lines will continue to be in demand and generate top line revenue and cash flow to sustain ongoing activities.
There is no assurance that the Asset Purchase Agreement will close or that even if we close we will realize the anticipated benefits.
On March 26, 2025, the Company entered into the Asset Purchase Agreement. The closing of the Asset Purchase Agreement is subject to the occurrence of certain closing conditions, which include actions to be taken by a certain third-party customer. There can be no guarantees that the closing conditions will be met satisfied. Even if the transactions contemplated by the Asset Purchase Agreement is completed, the acquisition of the assets may not materialize into purchase orders and new customers and generate the financial and strategic benefits we expected. In addition, purchase orders are subject to cancellation, modification or delays, which could negatively impact our revenues and return on investment. In addition, we may face operational challenges and unforeseen liabilities that may negatively impact our business.
We have entered into non-binding letter of intent for purchase orders and there no assurance that we will enter into definitive purchase orders or generate revenues as expected.
On March 20, 2025, the Company entered into a non-binding letter of intent with a contract manufacturer on behalf of its end user for the purchase of $78 million of the Company’s Oran radios. There is no assurance that the letter of intent will result in a series of definitive purchase orders or generate revenues as expected. Even if we enter into definitive purchase orders, they are subject to delay, modification or cancellation, which may adversely affect our revenue and financial performance.
The Company is dependent on the global supply chain and has in the past experienced supply chain constraints, as well as increased costs on components and shipping.
The Company has experienced supply chain constraints which have slowed down production which may negatively impact the timing of deploying ASRs (Available Supply Rate) to our clients. These supply constraints include, but are not limited to, semiconductor shortages as well as shortages of certain commodities. Extended lead times on certain parts as well as a lack of immediate availability may delay our ability to deploy ASRs, and consequently, may delay our ability to recognize revenue. In addition, the Company has also faced increased costs of components and freight. Further, current or future governmental policies may increase the risk of inflation and tariffs, which could further increase the costs of raw materials and components for our business. Similarly, if the costs of goods continue to increase, our suppliers may seek price increases from us. If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our results of operations and financial condition could be negatively impacted. Even if we can raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brand, reputation, and sales. If our competitors substantially lower their prices, we may lose customers and mark down prices. Our profitability may be impacted by lower prices, which may negatively impact gross margins. Even though we are working to alleviate supply chain constraints through various measures, we are unable to predict the impact of these constraints on the timing of revenue and operating costs of our business in the near future. Raw material supply shortages and supply chain constraints, including tariffs and cost inflation, may impact and could continue to negatively impact our ability to meet increased demand, which in turn could impact on our net sales revenues and market share.
Our market is very competitive. If we fail to compete successfully, our business and operating results will suffer.
We face significant competition in the amplifier industry from both established and emerging players such as Lucix, Erzia, and Narda-Miteq. Some of our competitors have longer operating histories and significantly greater financial, research and development, marketing and other resources than us. As a result, some of these competitors can devote greater resources to the development, promotion, sale and support of their products. These competitors may also provide discounted pricing on their products to gain market share. In addition, consolidation in the amplifier industry could intensify the competitive pressures that we face. Many of our existing and potential competitors may be better positioned than we are to acquire other companies, technologies or products.
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Some of our customers may also maintain diverse supplier bases to enhance competition and maintain multiple providers of amplifier products. Our ability to increase order sizes from these customers and maintain or increase our market share would be constrained by these policies. In addition, any decline in the quality or availability of our products or any increase in the number of suppliers that such a customer use may decrease demand for our products and adversely affect our operating results, business and prospects.
Our ability to compete successfully depends on numerous factors, including our ability to:
| ● | maintain and increase our market share and the strength of our brand in amplifiers; | |
| ● | maintain and expand our relationships with channel partners; | |
| ● | secure products in large volume in a cost-effective and timely manner from our suppliers; | |
| ● | develop innovative, differentiated, high-performance products relative to our competitors’ solutions; and | |
| ● | protect our intellectual property. |
We cannot assure you that our solutions will compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by our existing competitors or new companies entering our market. In addition, we cannot assure you that our competitors do not have or will not develop processes or product designs that currently or in the future will enable them to produce competitive products at lower costs than ours. Any failure to compete successfully would materially adversely affect our business, prospects, operating results and financial condition.
Global economic uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts, such as the conflict in the Middle East or the conflict between Russia and Ukraine, could make it more difficult for us to access financing and could adversely affect our business and operations.
Our abilities to raise capital and operate our business are subject to the risk of adverse changes in the market value of our securities. Periods of macroeconomic weakness or recession and heightened market volatility caused by adverse geopolitical developments could increase these risks, potentially resulting in adverse impacts on our ability to raise further capital on favorable terms. The impact of geopolitical tension, such as a deterioration in the bilateral relationship between the US and China, the conflicts in the Middle East and between Russia and Ukraine, including any resulting sanctions, export controls or other restrictive actions that may be imposed by the US and/or other countries against governmental or other entities could lead to disruption, instability and volatility in global trade patterns, which may in turn impact our ability to source necessary reagents, raw materials and other inputs for our operations.
Changes in US trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
Changes in the import and export policies, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments, could require us to change the way we conduct business and adversely affect our financial condition, results of operations, reputation and our relationships with customers, suppliers and employees in the short- or long-term.
On February 1, 2025, the U.S. government announced a 25% tariff on product imports from certain countries, including Mexico and Canada, and 10% tariffs on product imports from certain countries, including China. On February 3, 2025, the prospective tariffs on Canada and Mexico were deferred for 30 days, though the execution of these tariff increases remain possible beyond the current short-term reprieve. The 10% additional tariff on all imports from China went into effect, and on February 4, 2025, China retaliated with various levels of tariffs on certain products imported into that country from the U.S. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. Further, actions we take to adapt to new tariffs or trade restrictions may cause us to modify our operations or forgo business opportunities. There can be no assurances that these disruptions will not continue or increase in the future, with the previously mentioned countries or additional countries with which we do business. We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the US economy, which in turn could adversely impact our business, financial condition and results of operations.
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Economic conditions may adversely impact our business, operating results and financial condition.
Economic conditions, market and political instability, changes in trade agreements and conflicts, such as the conflict in the Middle East or the conflict between Russia and Ukraine, could adversely affect global markets and transactions and may adversely affect our customers and suppliers. Any adverse financial or economic impact to our customers may impact their ability to pay in a timely manner or result in their inability to pay. It may also impact their ability to fund future purchases or increase the sales cycles which could lead to a reduction in revenue and accounts receivable. Our suppliers may increase their prices or may be unable to supply the necessary raw materials on a timely basis which could result in our inability to meet customers’ demand or affect our gross margins. Our suppliers may also impose more stringent payment terms on us. The timing and nature of any recovery from the effects of adverse economic conditions or market and political instability on credit and financial markets is uncertain, and there can be no assurance that market conditions will improve in the near future or that our results will not be materially and adversely affected.
Changes in our product mix could cause our overall gross margin to decline, which may adversely affect our operating results and financial condition.
Our gross margin is dependent on product mix. A shift in sales mix away from our higher margin products could adversely affect our gross margins, and there can be no assurance that we will be able to maintain our historical gross margins. In addition, as our product mix becomes more customer specific and diversified, our cost of manufacturing has increased. If revenue from LNAs and customer-specific products continues to grow relative to our other products and services, our company-wide gross margin will likely decline. Additionally, increased competition and the existence of product alternatives, weaker than expected demand and other factors may lead to further price erosion, lower revenue and lower margins for us in the future, adversely affecting our operating results and financial condition.
Our products must meet exact technical and quality specifications. Defects, errors in or interoperability issues with our products or the failure of our products to operate as expected could affect our reputation, result in significant costs to us and impair our ability to sell our products.
Our products may contain defects or errors or not operate as expected, which could materially and adversely affect our reputation, result in significant costs to us and impair our ability to sell our products in the future. Our customers have demanding specifications for quality, performance and reliability that our tag and reader products must meet. Our products are highly technical and designed to be deployed in large and complex systems, networks and other settings under a wide variety of conditions. Customers and end users may discover errors, defects or incompatibilities in our products only after they have been fully deployed. In addition, users of our products may experience compatibility or interoperability issues between our products and their enterprise software systems or networks, or between our products and other amplifying products they use.
We may also experience quality problems with our products that are combined with or incorporated into products from other vendors, such as tags produced by our inlay manufacturers, or that are assembled by subcontractors. We may have difficulty identifying and correcting the source of problems when third parties are combining, incorporating or assembling our products.
If we are unable to fix errors or other problems, we could experience:
| ● | loss of customers or customer orders; | |
| ● | lost or delayed market acceptance and sales of our products; | |
| ● | loss of market share; | |
| ● | damage to our brand and reputation; |
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| ● | impaired ability to attract new customers or achieve market acceptance; | |
| ● | diversion of development resources; | |
| ● | increased service and warranty costs; | |
| ● | replacement costs; | |
| ● | legal actions by our customers; and | |
| ● | increased insurance costs. |
We may be required to indemnify our customers against liabilities arising from defects in our products or their solutions which incorporate our products. These liabilities may also include costs incurred by our customers or end users to correct the problems or replace our products.
While we test our products for defects or errors prior to product release, defects or errors are occasionally identified by our customers. Such defects or errors have occurred in the past and may occur in the future. To the extent product failures are material, they could adversely affect our business, operating results, customer relationships, reputation and prospects.
We may face claims of intellectual property infringement, which could be time consuming, costly to defend or settle and result in the loss of significant rights.
Our industry is characterized by companies that hold large numbers of patents and other intellectual property rights and which may vigorously pursue, protect and enforce their intellectual property rights. We may in the future be required to license patents and other intellectual property rights to technologies that are important to our business, which may be costly or prohibitively expensive to our business operations. We may also receive assertions against us, our customers or distributor, claiming that we infringe patent or other intellectual property rights. Claims that our products, processes, technology or other aspects of our business infringe third-party intellectual property rights, regardless of their merit or resolution, could be costly to defend or settle and could divert the efforts and attention of our management and technical personnel. If we decline to accept an offer, the offering party may allege that we infringe such patents, which could result in litigation.
In addition, many of our customer agreements require us to indemnify and defend our customers from third-party infringement claims and pay damages in the case of adverse rulings. Moreover, we may not know whether we are infringing a third party’s rights, due to the large number of patents related to amplifiers or to other systemic factors. For instance, patent applications in the United States are maintained in confidence for up to 18 months after their filing or, in some cases, for the entire time prior to issuance as a patent. Thus, we would not be able to account for such rights before publication. Competitors may also have filed patent applications or received patents and may obtain additional patents and proprietary rights that block or compete with our patents. Claims of this sort could harm our relationships with our customers or distributor and might deter future customers from doing business with us. We do not know whether we will prevail in any such future proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. If any pending or future proceedings result in an adverse outcome, we could be required to:
| ● | cease the manufacture, use or sale of the infringing products, processes or technology; | |
| ● | pay substantial damages for infringement; | |
| ● | expend significant resources to develop non-infringing products, processes or technology; | |
| ● | license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all; |
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| ● | cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; or | |
| ● | pay substantial damages to our customers or end users to discontinue their use of or to replace infringing technology sold to them with non-infringing technology. |
Any of the foregoing results could have a material adverse effect on our business, financial condition and operating results.
We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a result of litigation or other proceedings.
We may incur substantial costs enforcing or acquiring intellectual property rights and defending against third-party claims as a result of litigation or other proceedings. In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property rights or disputes related to the validity or alleged infringement of third-party intellectual property rights, including patent rights, we may be subject to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation may be costly and can be disruptive to our business operations by diverting the attention and energies of management and key technical personnel, and by increasing our costs of doing business. If we fail to prevail in any future litigation and disputes, it could adversely affect our results of operations and financial condition. Third-party intellectual property claims asserted against us could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from assembling or licensing certain of our products, subject us to injunctions restricting our sale of products, cause severe disruptions to our operations or the marketplaces in which we compete or require us to satisfy indemnification commitments with our customers, including contractual provisions under various license arrangements. In addition, we may incur significant costs in acquiring the necessary third-party intellectual property rights for use in our products. Any of these could seriously harm our business.
If we are unable to obtain patent protection for our products or otherwise protect our intellectual property rights, our business could suffer.
Our success depends, in part, on our ability to obtain patent protection for or maintain as trade secrets our proprietary products, technologies and inventions and to maintain the confidentiality of our trade secrets and know-how, operate without infringing upon the proprietary rights of others and prevent others from infringing upon our business proprietary rights. Despite our efforts to protect our proprietary rights, it is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose our technologies, inventions, processes or improvements. We cannot assure you that any of our existing or future patents or other intellectual property rights will be enforceable, will not be challenged, invalidated or circumvented, or will otherwise provide us with meaningful protection or any competitive advantage. In addition, our pending patent applications may not be granted. If our patents do not adequately protect our technology, our competitors may be able to offer additive manufacturing systems or other products like ours. Our competitors may also be able to develop similar technology independently or design around our patents, and we may not be able to detect the unauthorized use of our proprietary technology or take appropriate steps to prevent such use. Any of the foregoing events would lead to increased competition and lower revenues or gross margins, which could adversely affect our operating results.
Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of trade secrets and other proprietary information, and our inability to maintain the confidentiality of that information, due to unauthorized disclosure or use, or other events, could have a material adverse effect on our business.
In addition to the protection afforded by patents, we seek to rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce, and any other elements of our product discovery and development processes that involve proprietary know-how, information, or technology that is not covered by patents. Trade secrets, however, may be difficult to protect. We seek to protect our proprietary processes, in part, by entering into confidentiality agreements with our employees, consultants, advisors, contractors and collaborators. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, advisors, contractors, and collaborators might intentionally or inadvertently disclose our trade secret information to competitors. In addition, competitors may otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable to prevent unauthorized material disclosure of our intellectual property to third parties, or misappropriation of our intellectual property by third parties, we will not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, operating results and financial condition.
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We are subject to order and shipment uncertainties. Inaccuracies in our estimates of customer demand and product mix could negatively affect our inventory levels, sales and operating results.
We derive revenue primarily from customer purchase orders rather than long-term purchase commitments. To ensure the availability of our products, in some cases we start manufacturing based on forecasts provided by customers in advance of receiving purchase orders from them. In some cases, our supply chain has been affected by both tariffs and supply chain disruptions. Some of our products are manufactured according to our estimates of customer demand, which requires us to make demand forecast assumptions for every customer, and which may introduce significant variability into our aggregate estimate. We typically sell to channel partners and end users, and we consequently have limited visibility into future end-user demand, which could adversely affect our revenue forecasts and operating margins. Additionally, we sometimes receive soft commitments for larger order sizes which do not materialize. If we manufacture more products than we can sell to our customers or channel partners, we will incur losses and our results of operation and financial condition will be harmed.
Our sales and marketing efforts may be unsuccessful in maintaining and expanding existing sales channels, developing new sales channels and increasing the sales of our products.
To grow our business, we must add new customers for our products in addition to retaining and increasing sales to our current customers. Our ability to attract new customers will depend in part on the success of our sales and marketing efforts. There can be no guarantee that we will be successful in implementing our sales and marketing strategy. If suitable sales channels do not develop, we may not be able to sell certain of our products in significant volumes and our operating results, business and prospects may be harmed.
Our business would be adversely affected by the departure of members of our executive management team.
Our success depends, in large part, on the continued contributions of Fawad Maqbool, our Chairman, President and Chief Executive Officer. Mr. Maqbool is not bound by any employment contract to remain with us for a specified period. Although we have additional engineering, technical and sales personnel, the loss of Mr. Maqbool’s service could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.
If we are unable to attract, train and retain qualified personnel, especially our design and technical personnel, we may not be able to effectively execute our business strategy.
Our future success depends on our ability to attract, retain and motivate qualified personnel, including our management, sales and marketing, finance and especially our design and technical personnel. We do not know whether we will be able to retain all these personnel as we continue to pursue our business strategy. As the source of our technical and product innovations, our design and technical personnel are a significant asset. The competition for qualified personnel in the New York area where we are headquartered constrains our ability to attract qualified personnel. The loss of the services of one or more of our key employees, especially of our key design and technical personnel, or our inability to attract, retain and motivate qualified personnel could have a material adverse effect on our business, financial condition and operating results.
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We have material weaknesses in our internal accounting control over financial reporting and failure to remediate a material weakness in internal accounting controls could result in material misstatements in our financial statements.
Our management has identified material weaknesses in our internal control over financial reporting related to lack of segregation of duties resulting from our limited personnel and ineffective control over financial statement disclosure as controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements and has concluded that, due to such material weaknesses, our disclosure controls and procedures were not effective as of December 31, 2024 and 2023.
In addition, during the three months ended March 31, 2024, we made several transactions in digital currency in the total amount of approximately $3.25 million (the “Digital Currency Investment”) which was fraudulently induced. As a result, we identified further additional material weaknesses regarding our internal controls over financial reporting including, but not limited to, the lack of segregation of duties involved in the execution and approvals of wire transfers for material investments in digital assets.
We have identified certain steps necessary to address the material weaknesses, and we continue to implement the remedial procedures. However, if not remediated, or if we identify further material weaknesses in our internal controls, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.
On October 31, 2024, the Company received a shareholder letter demanding that the Company’s Board take action against certain and/or former officers and directors of the Company asserting violations of fiduciary duties of good faith, loyalty and due care, and/or the aiding and abetting of such breaches of fiduciary duty in connection with the Digital Currency Investment. We have established a Board committee to review this letter and to prepare a response thereto. In addition, as previously discussed, the Company’s Board has taken steps and adopted procedures in response to the material weakness related to the Digital Currency Investment.
If not remediated, or if we identify further material weaknesses in our internal controls, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.
If we fail to implement proper and effective internal controls, our ability to produce accurate financial statements would be impaired, which could adversely affect our operating results, our ability to operate our business and our stock price.
We must ensure that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis. We have tested our internal controls and identified material weaknesses and may find additional areas for improvement in the future. Remediating these material weaknesses will require us to hire and train additional personnel. Implementing any future changes to our internal controls may require compliance training of our directors, officers and employees, entail substantial costs to modify our accounting systems and take a significant period to complete. Such changes may not, however, be effective in establishing the adequacy of our internal control over financial reporting, and our failure to produce accurate financial statements on a timely basis could increase our operating costs and could materially impair our ability to operate our business. In addition, investors’ perceptions that our internal control over financial reporting is inadequate or that we are unable to produce accurate financial statements may materially adversely affect our stock price.
We may need to raise additional capital, which may not be available on favorable terms, if at all, and which may cause dilution to holders of our common stock, restrict our operations or adversely affect our ability to operate our business.
If we need to raise additional funds due to material expenditures or if our operating results are worse than expected, we cannot be certain that we will be able to obtain additional financing on favorable terms, if at all, and any additional financings could result in additional dilution to holders of our common stock. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, expending capital or declaring dividends, or which impose financial covenants on us that limit our ability to achieve our business objectives. If we need additional capital and cannot raise it on acceptable terms, we may not be able to meet our business objectives, our stock price may fall, and you may lose some or all your investment.
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Breaches of network or information technology security, natural disasters or terrorist attacks could have an adverse effect on our business.
Cyber-attacks or other breaches of network or information technology (IT) security, natural disasters, terrorist acts or acts of war may cause equipment failures or disrupt our systems and operations. We may be subject to attempts to breach the security of our networks and IT infrastructure through cyber-attacks, malware, computer viruses and other means of unauthorized access. Unauthorized use of company credentials or other information could compromise our systems and operations, materially adversely impact our financial condition and subject us to scrutiny and/or litigation from regulators and our customers. A failure to protect the privacy of customer and employee confidential data against breaches of network or IT security could result in damage to our reputation.
The unfavorable outcome of any future litigation or administrative action could negatively impact us.
Our financial results could be negatively impacted by unfavorable outcomes in any future litigation or administrative actions. We cannot assure favorable outcomes in litigation or administrative proceedings. Costs associated with litigation and administrative proceedings are very high and could negatively impact our financial results.
Non-compliance with, or changes in, the legal and regulatory environment in the countries in which we operate could increase our costs or reduce our net operating revenues.
Our business is subject to various laws and regulations in the US and in the countries throughout the world in which we do business, including laws and regulations relating to commerce, intellectual property, trade, environmental, health and safety, commerce and contracts, privacy and communications, consumer protection, web services, tax and state corporate laws and securities laws, and specifically those conducting business of electronics, many of which are still evolving and could be interpreted in ways that could harm our business. There is no assurance that we will be completely effective in ensuring our compliance with all applicable laws and regulations. Changes in applicable laws or regulations or evolving interpretations thereof, including increased government regulation, may result in increased compliance costs, capital expenditures and other financial obligations for us and could affect our profitability or impede the production or distribution of our products, which could affect our net operating revenues.
Acquisitions may expose us to additional risks.
We may acquire or make investments in businesses, technologies or products, whether complementary or otherwise, to expand our business, if appropriate opportunities arise. There can be no assurance that we will be able to identify suitable candidates or consummate these transactions on favorable terms. If required, the financing for these transactions could result in an increase in our indebtedness, dilute the interests of our stockholders or both. The purchase price for some acquisitions may include additional amounts to be paid in cash in the future, a portion of which may be contingent on the achievement of certain future operating results of the acquired business. If the performance of any such acquired business exceeds such operating results, then we may incur additional charges and be required to pay additional amounts. Acquisitions including strategic investments or alliances entail numerous risks, which may include:
| ● | difficulties in integrating acquired operations or products, including the loss of key employees from, or customers of, acquired businesses; |
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| ● | diversion of management’s attention from our existing businesses; | |
| ● | adverse effects on existing business relationships with suppliers and customers; | |
| ● | adverse impacts of margin and product cost structures different from those of our current mix of business; and | |
| ● | conforming standards, controls, procedures, accounting and other policies, business cultures, and compensation structures between the two companies. |
Many of these factors are outside of our control and any one of these factors could result in, among other things, increased costs and decreases in the amount of expected revenues, which could materially adversely impact our business, financial condition, and results of operations. In addition, even if we can successfully integrate acquired businesses, the full benefits, including the synergies, cost savings, revenue growth, or other benefits that are expected, may not be achieved within the anticipated time frame, or at all. All of these factors could decrease or delay the expected accretive effect of the acquisitions, and negatively impact our business, operating results, and financial condition.
Our revenue and operating results can fluctuate from period to period. We derive revenue primarily from customer purchase orders rather than long-term purchase commitments. Our revenue from period to period can significantly fluctuate for a variety of reasons, including, without limitation, our supply chain as well as receipt of customer orders. Such fluctuations may have a material adverse impact on our results of our operations.
We and/or certain of our current and former officers and directors, may face litigation and legal proceedings which could adversely affect our business, financial condition, results of operations or cash flows.
We are subject to lawsuits, legal proceedings and claims in the normal course of our business, which can be expensive, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. These proceedings and any other regulatory proceedings or actions may be time consuming, could cause us to incur significant defense costs and could damage our reputation or adversely affect our stock price. Any adverse ruling or unfavorable resolution in any legal or regulatory proceeding or action could have a material adverse effect on our business, operating results or financial condition.
Risks Relating to our Common Stock and our Listed Warrants
If our business developments and achievements do not meet the expectations of investors or securities analysts or for other reasons the expected benefits do not occur, the market price of shares of our Common Stock traded on Nasdaq may decline.
If our business developments and achievements do not meet the expectations of investors or securities analysts, the market price of shares of our Common Stock traded on Nasdaq may decline. The trading price of shares of our Common Stock could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors mentioned in this “Risk Factors” section and elsewhere in this report could have a negative impact on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
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The price of shares of our Common Stock has fluctuated substantially and the price of our common stock could decline at a time when you want to sell your holdings.
The price of shares of our Common Stock has fluctuated substantially. Therefore, some investors who have purchased our Common Stock at high prices face the risk of losing a significant portion of their original investment if they have to sell at a time when the price of shares of our Common Stock has declined.
For example, during the fourth quarter of 2024, and in particular the months of November and December 2024, the price of our Common Stock and trading volume significantly increased. During this period, we did not make any significant announcements other than our financial condition and results of operations for the three and nine months ended September 30, 2024. Accordingly, the market price of our Common Stock may fluctuate dramatically and may decline rapidly, irrespective of any developments in our business. In addition, the volatility of our stock price could cause other consequences including causing a short squeeze due to the difference in investment decisions by short sellers of shares of our Common Stock and buy-and-hold decisions of longer investors.
An investment in securities can be risky, and you should invest in securities only if you can withstand a significant loss and wide fluctuations in the market value of your investment. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. Some factors that may cause the market price of shares of our Common Stock to fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this report, are:
| ● | sale of shares of our Common Stock by our stockholders; | |
| ● | volatility in trading volumes of our shares of Common Stock; | |
| ● | our ability to obtain financings to conduct and complete our business activities; | |
| ● | possible delays in the expected recognition of revenue due to lengthy and sometimes unpredictable sales timelines; | |
| ● | failures to meet external expectations or management guidance; | |
| ● | changes in our capital structure and future issuances of securities; | |
| ● | our cash position; | |
| ● | announcements and events surrounding financing efforts; | |
| ● | changes in general economic, political and market conditions in any area in which we conduct our business; | |
| ● | analyst research reports, recommendations and changes in recommendations, price targets, and withdrawals of coverage; | |
| ● | quarterly variations in our results of operations or those of our competitors; | |
| ● | delays in end-user deployments of products; | |
| ● | our ability to develop and market new and enhanced products on a timely basis; | |
| ● | commencement of, or our involvement in, litigation; | |
| ● | major changes in our Board of Directors or management, including the departure of Mr. Maqbool; | |
| ● | our failure to generate material revenues; | |
| ● | our public disclosure of the terms of any financing which we may consummate in the future; | |
| ● | cancellation of key contracts; | |
| ● | short selling activities; and | |
| ● | other events or factors, many of which may be out of our control. |
In addition, if the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of shares of our Common Stock could decline for reasons unrelated to our business, financial condition and results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.
Moreover, securities markets may from time-to-time experience significant price and volume fluctuations for reasons unrelated to operating performance of companies, such as rising inflation and interest rates, global economic uncertainty and political instability. These market fluctuations may adversely affect the price of our common stock and other interests in our company at a time when you want to sell your interest in us.
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Future sales or perceived sales of our common stock could depress our stock price.
If the holders of our currently outstanding shares of common stock were to attempt to sell a substantial amount of their holdings at once, the market price of our common stock could decline. Moreover, the perceived risk of this potential dilution could cause shareholders to attempt to sell their shares and investors to short the common stock, a practice in which an investor sells shares that he or she does not own at prevailing market prices, hoping to purchase shares later at a lower price to cover the sale. As each of these events would cause the number of shares of our common stock being offered for sale to increase, our common stock market price would likely further decline. All of these events could combine to make it very difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.
Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock.
Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time.
Provisions in our articles of incorporation and bylaws could discourage a change in control, or an acquisition of us by a third party, even if the acquisition would be favorable to you, thereby adversely affecting existing shareholders.
Our articles of incorporation and bylaws contain provisions that may have the effect of making it more difficult or delaying attempts by others to obtain control of our Company, even when these attempts may be in the best interests of our shareholders. For example, our articles of incorporation authorize our Board of Directors, without stockholder approval, to issue one or more series of preferred stock, which could have voting and conversion rights that adversely affect or dilute the voting power of the holders of common stock. These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management, including transactions in which stockholders might otherwise receive a premium for their shares over then-current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.
The ability of Fawad Maqbool, our Chairman, to sell his stake in us and speculation about any such sale may adversely affect the market price of our common stock.
Mr. Maqbool owns a significant number of shares of our outstanding common stock, and he may sell any or all of his shares at any time without approval by other shareholders. Speculation by the press, stock analysts, our shareholders or others regarding the intention of Mr. Maqbool to dispose of his shares could adversely affect the market price of our common stock. Moreover, the market price of our common stock may be adversely impacted by the fact that the public float of our common stock is relatively small.
Because Fawad Maqbool, our Chairman controls a significant number of shares of our voting capital stock, he has the ability to influence actions requiring stockholder approval.
As of the date of this report, Fawad Maqbool, our Chairman, President Chief Executive Officer, held 14% of our outstanding shares of common stock. As a result, Mr. Maqbool could significantly influence the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, Mr. Maqbool could influence the management and affairs of our company. Accordingly, any investors who purchase shares will likely be minority shareholders and as such will have little to no say in the direction of us and the election of directors. Additionally, this concentration of ownership might harm the market price of our common stock by:
| ● | delaying, deferring or preventing a change in corporate control; |
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| ● | impeding a merger, consolidation, takeover or other business combination involving us; or | |
| ● | discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. |
Because we do not intend to pay cash dividends on our shares of common stock, any returns will be limited to the value of our shares.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share price that stockholders may be able to realize if they sell their shares.
You may experience future dilution as a result of future equity offerings and other issuances of our common stock or other securities. In addition, future equity offerings and other issuances of our common stock or other securities may adversely affect our common stock price.
In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share paid by you. We may not be able to sell shares or other securities in any other offering at a price per share that is equal to or greater than the price per share paid by you, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our common stock or securities convertible into common stock in future transactions may be higher or lower than the price per share you paid. You will incur dilution upon exercise of any outstanding stock options, warrants or upon the issuance of shares of common stock under our stock incentive programs. In addition, the sale of any future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the price of our common stock. We cannot predict the effect, if any, that market sales of those shares of common stock or the availability of those shares for sale will have on the market price of our common stock.
There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq Capital Market, a failure which could result in the de-listing of our common stock.
The listing of our Common Stock on The Nasdaq Capital Market is contingent upon our compliance with The Nasdaq Capital Market’s conditions for continued listing. If we fail to meet any Nasdaq listing requirements, including the minimum bid price, satisfaction of minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity and certain corporate governance requirements, and do not regain compliance, we may be subject to delisting by Nasdaq. If we are unable to satisfy these requirements or standards, we could be subject to delisting, which would have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event our common stock is no longer listed for trading on Nasdaq, our trading volume and share price may decrease and you may have a difficult time selling your shares of common stock. In addition, we may experience difficulties in raising capital which could materially adversely affect our operations and financial results. Further, delisting from Nasdaq markets could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers and employees. Finally, delisting could make it harder for you and the Company to sell the securities and hard for us to raise capital.
The Listed Warrants are speculative in nature.
The Listed Warrants do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Listed Warrants may exercise their right to acquire the common stock and pay an exercise price of $7.00 per share, prior to five years from the date of issuance, after which date any unexercised Listed Warrants will expire and have no further value. In addition, there can be no assurance that an active trading market for the Listed Warrants will develop.
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Holders of the Listed Warrants will have no rights as common stockholders until they acquire our common stock.
Until holders of the Listed Warrants acquire shares of our common stock upon exercise of the Listed Warrants, the holders will have no rights with respect to shares of our common stock issuable upon exercise of the Listed Warrants. Upon exercise of the Listed Warrants, the holder will be entitled to exercise the rights of a common stockholder as to the security exercised only as to matters for which the record date occurs after the exercise.
Provisions of the Listed Warrants could discourage an acquisition of us by a third party.
Certain provisions of the Listed Warrants could make it more difficult or expensive for a third party to acquire us. The Listed Warrants prohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among other things, the surviving entity assumes our obligations under the Listed Warrants. These and other provisions of the Listed Warrants could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to you.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
The Company depends on the proper functioning, availability and security of its information systems, including financial, data processing, communications and operating systems. Several information systems are software applications provided by third parties. Although risks from cybersecurity threats have to date not materially affected, and we do not believe they are reasonably likely to materially affect, us, our business strategy, results of operations or financial condition, like other companies in our industry, we could, from time to time, experience threats and security incidents related to our and our third-party vendors’ information systems, including attempts to gain unauthorized access to our confidential data, and other electronic security breaches. Such cybersecurity attacks can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. While we employ a number of measures to prevent, detect and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cybersecurity attack. A cybersecurity attack could compromise the confidential information of our employees, customers and vendors. A successful cybersecurity attack could disrupt and otherwise adversely affect our business operations.
Assessment, identification and management of cybersecurity related risks are integrated into our overall risk management process. Cybersecurity related risks are included in the risk universe we evaluate to assess top risks to the Company at least annually. To the extent our processes identify a heightened cybersecurity related risk, risk owners are assigned to develop risk mitigation plans, which are then tracked to completion.
Cybersecurity Governance
Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity risk strategy and governance and of other information technology risks to the Audit Committee of the Board of Directors (the “Audit Committee”). The Audit Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. Senior management, including the Company’s Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, is responsible for assessing and managing cybersecurity risk, and provides briefings regarding the assessment and management of such risk to the Audit Committee, which then reports, as necessary, to the Board of Directors.
Although members of our senior management do not have direct cybersecurity expertise obtained through certifications, their experience managing the Company, which includes consulting and coordinating as necessary with in-house information-technology specialists, enables them to effectively assess and manage material risks from cybersecurity threats.
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The Company relies on in-house information-technology specialists to assist in managing relevant risks. Any cybersecurity incident would be reported promptly to management and material and potentially material incidents would be assessed by management and the Audit Committee for remediation and future prevention and detection.
The Company, at least annually, updates its policies or procedures that could help mitigate cybersecurity risks. Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. The Company has incorporated cybersecurity coverage in its insurance policies; however, there is no assurance that the insurance the Company maintains will cover all cybersecurity breaches or that policy limits will be sufficient to cover all related losses.
ITEM 2. PROPERTIES
On September 15, 2019, the Company entered a five- year lease on property located at 120 Raynor Avenue, Ronkonkoma, NY with an option to buy the property during the first two years of the lease for $1.2 mm and then at fair market value for the remainder of the lease term. The option to buy the property has expired and was not exercised. The lease commenced with a monthly rental expense of $7,500, with annual rent increases by 3% in each successive lease year beginning on January 1, 2021. This property was used by Specialty Microwave for manufacturing and engineering services. 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 December 15, 2021, the Company assumed the SSM lease agreement of approximately 11,500 square feet of 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 increases by approximately 3% every year. On September 6, 2024, the lease was amended extending the lease term to March 31, 2030 while maintaining the base rent of $24,234 and 3% increases for each year thereafter.
Since April 1, 2022, our principal executive office consisting of approximately 20,000 square feet has been located at 155 Plant Avenue, Hauppauge, NY. The property at this location is leased by the Company at a monthly rental expense of $28,854 for a term of seven years and two months. The yearly base rent of $346,248 shall increase at a rate of 2.75% per year to begin on the first anniversary of the lease commencement date and each year thereafter. In the event the landlord decides to sell the property, the Company shall have the right of first offer to purchase subject property. Our wholly owned subsidiary, AmpliTech, Inc., and the Company’s divisions, Specialty Microwave and AGTGSS, also operate out of our principal executive office. This property is used for administrative offices and for manufacturing.
On January 15, 2024, the Company entered a triple net lease agreement for a 1,900 square foot facility in Allen, Texas for a term of five years and one month. The yearly base rent of $53,675 shall increase at a rate of 2.5% per year to begin on the first anniversary lease commencement date and each year thereafter. The first month’s rent shall be abated following the commencement lease date. Upon lease execution, the Company paid two months of rent as a security deposit and one month’s rent totaling $17,999. The Company moved into the new facility on August 1, 2024.
As of December 31, 2024, all the facilities described above were in good operating condition, well maintained and in regular use. We believe that our existing facilities are sufficient to meet our operational needs for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which we are a party or of which any of our property is the subject. From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigations are subject to inherent uncertainties and an adverse result in these, or other matters may arise from time to time and harm our business.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock and warrants have been approved for listing on the NASDAQ Capital Market, or NASDAQ, under the symbols “AMPG” and “AMPGW”, respectively, and commenced trading on the NASDAQ on February 17, 2021.
Holders of Record of Common Stock
As of March 21, 2025, there were approximately 44 holders of record of our common stock. This does not reflect the number of persons or entities who held stock in nominee or street name through various brokerage firms.
Dividend Policy
We have never declared or paid dividends on our common stock. We do not anticipate paying any dividends on our common stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. Any future determination to declare dividends will be subject to the discretion of our Board of Directors and will depend on various factors, including applicable laws, our results of operations, financial condition, future prospects and any other factors deemed relevant by our Board of Directors.
Recent Sales of Unregistered Securities
Unregistered securities sold by the Company during the period covered by this report have been previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
Purchases of Equity Securities
None.
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plans as of December 31, 2024:
| Number of securities to be issued upon exercise of outstanding options, warrants, and rights | Weighted-average price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | 1,295,000 | $ | 2.28 | 760,142 | ||||||||
| Equity compensation plans not approved by security holders | ||||||||||||
| Total | 1,295,000 | $ | 2.28 | 760,142 | ||||||||
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ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included in “Item 8. Financial Statements and Supplementary Data.”
Forward-Looking Statements
In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Business Overview
AmpliTech Group Inc. (“AMPG,” “AmpliTech” or the “Company”), incorporated in 2010 in the state of Nevada, is the parent company of 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 micro-wave component-based amplifiers that meet individual customer specifications. Our products consist of RF amplifiers and related subsystems, operating at multiple frequencies from 50kHz to 44GHz, including low noise amplifiers (“LNA”), medium power amplifiers, cryogenic amplifiers, and custom assembly designs for the global satellite communications, telecom (5G & IoT), space, defense, and quantum computing markets. We also offer non-recurring engineering services on a project-by-project basis, for a predetermined fixed contractual amount, or on a time plus material basis. We have both domestic and international customers in such industries as aerospace, governmental, defense and commercial satellite.
Specialty Microwave designs and manufactures state-of- the-art precision SATCOM microwave components, RF subsystems and specialized electronic assemblies for the military and commercial markets, flexible and rugged waveguides, wave guide adapters and more.
On November 19, 2021, AMPG entered into an Asset Purchase Agreement with Spectrum Semiconductor Materials Inc. (“SSM”), a globally authorized distributor of integrated circuit (IC) packaging and lids for semiconductor device assembly, prototyping, testing, and production requirements founded in 1990 and headquartered in San Jose, CA, pursuant to which AMPG acquired substantially all of the assets of the Company (the Acquisition). The Acquisition was completed on December 15, 2021.
In 2021, the Company opened 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.
In August 2022, the AGTGSS division was formed 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.
Recent Debt Reduction
On July 23, 2024, the Company entered into a business loan and security agreement with Altbanq Lending II LLC in the amount of $1,300,000, which included 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 bore an annual interest rate of 21.2% with prepayment options available. The loan was secured by the Company’s assets through a UCC filing, and proceeds were used for working capital, 5G licensing and certification fees. During the year ended December 31, 2024, the Company repaid the loan in full, through principal payments of $1,534,000, and recorded $260,000 in debt discount amortization.
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Recent Financings
On September 9, 2024, the Company entered into a Securities Purchase Agreement with a single institutional investor to sell 1,369,488 shares of the Company’s common stock, par value $0.001 per share at a per share price of $0.7302. The closing of the offering occurred on September 11, 2024. The gross proceeds to the Company from this offering was approximately $1 million, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $180,000.
On November 24, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 1,425,377 shares of our common stock, at a per share price of $0.92 and prefunded warrants to purchase 177,882 shares of common stock, at $0.919 per prefunded warrant (“Prefunded Warrant”) (the “November Offering”). The closing of the registered direct offering occurred on November 26, 2024. The exercise price of each Prefunded Warrant is $0.001 and 177,882 warrants were exercised in full immediately. The gross proceeds to the Company from the offering was approximately $1,474,998, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $200,000.
On December 11, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 1,352,500 shares of our common stock at a per share price of $1.60 (the “December Offering”). The closing of the registered direct offering occurred on December 13, 2024. The gross proceeds to the Company from this offering was approximately $2,164,000 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $220,000.
On December 16, 2024, we entered into a Securities Purchase Agreement with two institutional investors pursuant to which we sold in a registered direct offering 1,516,680 shares of our common stock at a per share price of $2.10 (the “Second December Offering”). The closing of the registered direct offering occurred on December 18, 2024. The gross proceeds to the Company from this offering was approximately $3,185,028 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $290,000.
On December 24, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 1,871,000 shares of our common stock at a per share price of $3.10 (the “Third December Offering”). The closing of the registered direct offering occurred on December 27, 2024. The gross proceeds to the Company from this offering was approximately $5,800,100 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $490,000.
On December 27, 2024, we entered into a Securities Purchase Agreement with three institutional investors pursuant to which we sold in a registered direct offering 2,173,920 shares of our common stock, par value $0.001 per share, at a per share price of $4.60 (“Fourth December Offering”) . The closing of the registered direct offering occurred on December 31, 2024. The gross proceeds to the Company from this offering was approximately $10,000,032 before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $660,000.
Pursuant to the Securities Purchase Agreements entered into in the November Offering, December Offering, Second December Offering, Third December Offering and Fourth December Offering we agreed to, among other things, not issue any shares of common stock for a period of 45 days after such Offerings’ respective closing dates. Investors who participated in the November Offering, December Offering, Second December Offering and Third December Offering agreed to waive this 45-day prohibition on issuing securities in connection with the Fourth December Offering.
On March 21, 2025, we entered into an equity distribution agreement, or the Equity Distribution Agreement, with Maxim Group LLC , or Maxim, relating to offer and sell shares of our common stock having an aggregate offering price of up to $25 million from time to time through Maxim, acting as our exclusive sales agent, in an “At-the-Market Offering”at our discretion.
Recent Developments
Asset Purchase Agreement
On March 26, 2025, the Company entered into an asset purchase agreement with Titan Crest, LLC, a Delaware limited liability company (the “Seller”), and its affiliate, to purchase certain assets including intellectual property used in developing, manufacturing, marketing and selling products that use radio frequency technology (“5G ORAN radio products”) (the “Asset Purchase Agreement”). The Asset Purchase Agreement contains customary representations and warranties and covenants by each party. In addition to customary closing conditions, the closing of the transactions and the payment of the purchase price contemplated by the Asset Purchase Agreement is conditioned upon certain conditions, including but not limited to (i) the issue of a purchase order from Telus for fiscal year delivery to the Company, (ii) a purchase order between the Company and the Seller or its affiliate pursuant to which the Seller will assist in manufacturing the products to be sold to Telus to meet its purchase order, and (iii) receipt of correspondence from Telus to the Company, indicating Telus’ intention to issue purchase orders (including Telus’ initial purchase order) which purchase orders will be spread out over 3 years (“Telus Subsequent Purchase Orders”).
The aggregate purchase price for the assets is $8,000,000 which consists of $3,000,000 in cash and $5,000,000 in restricted shares of common stock of which the first $2,500,000 in cash and $2,500,000 in restricted common stock will be issued upon the procurement of the Telus’ initial purchase order and receipt of assurance of the Telus Subsequent Purchase Orders; and that the remaining $500,000 in cash to be paid on December 5, 2025 and $2,500,000 in shares of restricted common stock will be issued to Company upon the transfer of the 5G ORAN radio products’ technology and intellectual property rights by the Seller to the Company.
In addition, under the Asset Purchase Agreement, the parties are obligated, subject to certain limitations, to indemnify the other for certain customary and other specified matters, including breaches of representations and warranties, breaches of covenants and for certain liabilities and third-party claims. Further, the Seller and its affiliate, jointly and severally, agreed for a period of 10 years not to engage in certain competitive activities with respect to the business or proposed business relating to the assets sold to the Company. In addition, the Asset Purchase Agreement contemplates that after the closing, the Company and the Seller will enter short-term transition services agreements for up to two of the Seller’s employees to provide Company assistance in the assignment and transfer of the purchased assets from the Seller to the Company for a fee not to exceed $430,000.
In connection with the transaction, Seller’s affiliate agreed to transfer all of its rights, title and interest in 5G ORAN radio products technology and intellectual property rights to Seller. Subsequent to the transaction, Seller’s affiliate will continue its business and retain its employees focusing on software solutions and services.
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Revolving Line of Credit
On March 25, 2025, AmpliTech Group, Inc., a Nevada corporation (the “Company”), entered into a Bank Loan Agreement (the “Loan Agreement”) with Dime Community Bank (the “Bank”) for a revolving line of credit for up to $750,000 (the “Revolving Line of Credit”). The Company has established the Revolving Line of Credit for general working purposes and uses, as needed. As of the date of this filing, there is no outstanding balance on the Revolving Line of Credit. The term of the Loan Agreement expires once all indebtedness under the Revolving Line of Credit has been paid in full, or until such time as the Bank and the Company agree in writing to terminate the Loan Agreement. In addition to interest, the Company agreed to pay an annual fee of $500.00 on the anniversary date of each year the Loan Agreement is in effect, subject to change by the Bank with notice. Pursuant to an Assignment of Deposit Agreement dated March 25, 2025 between us and the Bank, the Revolving Line of Credit is secured by a demand deposit account with the Bank which requires us to have a balance no less than $814,635.
The Revolving Line of Credit is evidenced by a promissory note, which is due on demand, or if there is no demand, then on March 1, 2026, unless extended, modified or renewed (the “Note”). The Company has agreed to pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning April 1, 2025, with all subsequent interest payments to be due on the same day of each month thereafter. The Note bears a variable interest rate based on changes in the Wall Street Journal Prime Rate as published in the Wall Street Journal from time to time, plus 1.000%, provided however, under no circumstances will the interest rate be less than 6.250% per annum or more than the maximum rate allowed by applicable law. Late payment is subject to a fee of 5.000% of the regularly scheduled payment. In the event of default, the Note bears an interest at a rate per annum equal to 5.000% above the rate that is otherwise applicable to such amounts.
Among other things, the Loan Agreement contains customary representations and warranties, events of default, negative and affirmative covenants and financial covenants, and certain limitations on dispositions of assets. The Loan Agreement also contains usual and customary events of default (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default, payment of all amounts payable under the Note may be accelerated at the Bank’s option and/or the Bank’s commitment and obligations will terminate without notice to the Company.
Letter of Intent
On March 20, 2025, the Company entered into a non-binding letter of intent with a contract manufacturer on behalf of its end user for the purchase of $78 million of the Company’s Oran radios. If fulfilled, deliveries of the order are expected to start in FY2025 and will substantially increase each year thereafter into 2027. The non-binding letter of intent is subject to the parties entering into a series of definitive purchase orders. No assurance can be given that the Company will enter into any purchase orders for the total amount of $78 million.
Results of Operations
As of December 31, 2024, the Company had a working capital of $26,795,745 and an accumulated deficit of $21,012,127. The Company recorded a net loss of $11,242,404 and $2,465,439 for the years ended December 31, 2024 and December 31, 2023, respectively.
For Years Ended December 31, 2024 and December 31, 2023
Revenues
Sales decreased from $15,584,577 for the year ended December 31, 2023 to $9,508,372 for the year ended December 31, 2024, a decrease of $6,076,205 or approximately 38.99%. Spectrum sales decreased by $3,288,527, or 35.76%. AmpliTech and Specialty’s sales decreased by $2,787,678 or 43.64%. 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, specifically in the Asian markets. Our RFQ (Request for Quote) activity has since increased in the first quarter of 2025 resulting in an increase in our backlog which we believe should translate to increased sales.
Cost of Goods Sold and Gross Profit
Cost of goods sold decreased to $6,023,265 in 2024 from $8,308,949 in 2023, a decrease of $2,285,684 or approximately 27.51%. This decrease is directly related to the decline in sales. As a result, the gross profit was $3,485,107 for 2024 compared to $7,275,628 for 2023, a decrease of $3,790,521 or 52.10%. Gross profit as a percentage of sales decreased to 36.65% from 46.69%, representing a shift in the sales mix away from our higher gross margin products, while maintaining fixed production and overhead expenses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $7,856,471 in 2024 from $7,511,319 in 2023, an increase of $345,152, or approximately 4.60%. The Company experienced an increase in professional fees, such as accounting, legal and consulting fees as well as stock compensation, offset by the decrease in officers’ compensation in the second half of the year and other general and administrative expenses.
Intangible asset impairment
As of December 31, 2024, intangible assets, consisting of trade name, customer relationships and intellectual property related to the purchase of Specialty Microwave were deemed impaired in the amount of $467,928.
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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 employee salaries and benefits, consultants, outside service, and supplies.
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 has progressed 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.
Research and development costs for the years ended December 31, 2024 and 2023 were $3,590,695 and $2,341,845 respectively. Research and development expenses have increased by $1,248,850, or by 53.33%, mainly attributable to the completion of our massive MIMO 64T64R Oran Cat B radio network, which provides true 5G speeds with improved signal strength, enhanced coverage, increased user capacity and adheres to the ORAN specifications promoting openness and interoperability in radio access networks. This radio is currently being tested and certified at Northeastern University and is expected to become the Company’s flagship product.
Loss From Operations
As a result of the above, the Company has a loss from operations of $8,429,987 and $2,577,536 for the years ended December 31, 2024 and 2023, respectively.
Other Income (Expenses)
As a result of the fraudulent digital currency transactions noted above, during the year ended December 31, 2024, the Company recorded an impairment loss of $3,248,911 related to digital assets.
Loss on disposal of property and equipment was $16,403 for the year ended December 31, 2023.
In 2024, Spectrum was able to reclaim $716,943 of gold contained in its obsolete/slow moving inventory.
Due to market fluctuations, the Company recorded an unrealized gain on investments of $1,697 for the year ended December 31, 2023.
Realized gain on investments, resulting from the redemption of treasury bills, was $26,746 and $131,522 for the years ended December 31, 2024 and 2023.
Interest expense, net for the year ended December 31, 2024 was $292,195 and interest income, net for the year ended December 31, 2023 was $19,281. Interest expense increased as a result of debt financing obtained during the year with Altbanq. The outstanding obligations under the loan was paid in full as of December 31, 2024.
Net Loss
The Company reported a net loss of $11,242,404 and $2,465,439 in 2024 and 2023, respectively.
Liquidity and Capital Resources
Operating Activities
The net cash used in operating activities for the year ended December 31, 2024 was $5,295,714, resulting primarily from net loss, the impairment of intangible assets and the loss on investment of digital assets, as well as the operating changes in accounts receivable, inventories, prepaid expenses, accounts payable and accrued expenses as well as customer deposits and operating lease liability.
The net cash used in operating activities for the year ended December 31, 2023 was $3,470,890 resulting primarily from net loss and the operating changes in accounts receivable, inventories, prepaid expenses, accounts payable and accrued expenses, customer deposits and operating lease liability.
Investing Activities
The net cash used in investing activities for the year ended December 31, 2024 was $3,291,831 for the purchase of property and equipment and the net investment in marketable securities.
The net cash used in investing activities for the year ended December 31, 2023 was $725,899 for the purchase of property and equipment offset with the net investments in marketable securities.
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Financing Activities
The net cash provided by financing activities for the year ended December 31, 2024 was $21,177,516, a result of the proceeds received from the registered direct offerings and net proceeds received from notes payable offset by the repayment of financing lease liabilities and notes payable.
The net cash used in financing activities for the year ended December 31, 2023 was $2,367,420, for the repayment of financing lease liabilities, notes payable and the revenue earnout.
As of December 31, 2024, we had cash and cash equivalents of $19,315,984, working capital of $26,795,745 and an accumulated deficit of $21,012,127.
We intend to continue to finance our internal growth with cash on hand and 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 judgments and estimates.
The discussion and analysis of our financial condition and results of operations is based upon our financial statements that 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, the impairment analysis of intangible assets and goodwill, the valuation of stock-based compensation, 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.
We cannot predict what future laws and regulations might be passed that could have a material effect on the 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.
Basis of Accounting
The accompanying consolidated financial statements have been prepared using the accrual basis of accounting.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. 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.
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 December 31, 2024, the Company’s cash and cash equivalents were deposited in four financial institutions.
The Company’s policy is to place its cash and cash equivalents with high-quality, major financial and investment institutions to limit the amount of credit exposure. Accounts at each financial institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2024 and 2023, the Company had $18,749,154 and $3,170,500 in excess of FDIC insured limits, respectively. The Company has not experienced any losses in such accounts.
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Accounts Receivable
Accounts receivable consist of trade receivables arising from credit sales to customers in the normal course of business. These receivables are recorded at the time of sale, net of an allowance for current expected credit losses. In accordance with ASC Topic 326, “Financial Instruments – Credit Losses,” the Company estimates expected credit losses based on historical bad debt experience, the aging of accounts receivable, the current creditworthiness of our customers, prevailing economic conditions, and reasonable and supportable forward-looking information.
An allowance of $0 has been recorded at December 31, 2024 and 2023, 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 consist 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).
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 goods sold. Inventory items that are determined obsolete are written off currently with a corresponding charge to cost of goods sold.
As of December 31, 2024 and 2023, the reserve for inventory obsolescence was $1,062,000 and $1,146,000, 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 15 years | Straight-line | |||
| Computer equipment/software | 1 to 7 years | Straight-line | |||
| Vehicles | 5 years | Straight-line | |||
| Leasehold improvements | 7 years | Straight-line |
Intangible Assets
Definite-lived intangible assets including customer relationships and intellectual property are subject to amortization. Intangible assets are amortized over their estimated useful life on a straight-line basis. Estimated useful lives are determined considering the period the assets are expected to contribute to future cash flows. Indefinite-lived intangible assets are not subject to amortization.
Intangible assets are amortized as follows:
| Description | Useful Life | Method | |||
| Trade names | Indefinite | N/A | |||
| Customer relationships | 15 to 20 years | Straight-line | |||
| Intellectual property | 15 years | Straight-line |
Long-Lived Assets
The Company reviews the carrying value of long-lived assets such property and equipment, right-of-use (“ROU”) assets, and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to; significant decrease in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.
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The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of fair value less costs to sell and would no longer be depreciated. The depreciable basis of assets that are impaired and continue in use is their respective fair values.
Goodwill and Indefinite-Lived Intangible Assets
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 tangible and identifiable intangible assets acquired.
Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are tested for impairment annually on December 31, or more frequently when events or circumstances indicate an impairment may have occurred. When assessing the recoverability of goodwill and indefinite-lived intangible assets, the Company may first assess qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit, including goodwill, or an indefinite-lived intangible asset is less than its carrying amount. The qualitative assessment is based on several factors, including the current operating environment, industry and market conditions, and overall financial performance. The Company may elect to bypass this qualitative assessment for some or all of its reporting units or other indefinite-lived intangible assets and perform a quantitative assessment, based on management’s judgment.
If we quantitatively test goodwill and indefinite-lived intangible assets for possible impairment, we calculate the fair value for the reporting unit and indefinite-lived assets and compare the amount to their carrying amount. If the fair value of a reporting unit and indefinite-lived asset exceeds their carrying amount, the reporting unit and indefinite-lived assets are not considered impaired. If the carrying amount of the reporting unit and indefinite-lived assets exceed their fair value, the reporting unit and indefinite-lived assets are considered to be impaired, and an impairment charge is recognized for the difference.
We estimate the fair value of our reporting units and indefinite-lived intangible assets based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate the future cash flows used to measure fair value. Our estimates of future cash flows consider past performance, current and anticipated market conditions and internal projections and operating plans. Additional assumptions include forecasted growth rates, estimated discount rates, and estimated royalty rates for our indefinite-lived intangible assets.
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 have the ability to 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 December 31, 2024 and December 31, 2023, respectively. (see Note 9). These investments are included in other assets on the consolidated balance sheets. There were no indicators of impairment during the years ended December 31, 2024 and 2023.
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Investment in Digital Assets
We account for all digital assets as indefinite-lived intangible assets in accordance with ASC Topic 350, “Intangibles—Goodwill and Other.” The Company presents digital assets separately from other intangible assets, recorded as digital assets on the consolidated balance sheets. The digital assets are initially recorded at cost and are subsequently remeasured at cost, net of any impairment losses incurred since acquisition.
We conducted an analysis to identify whether events or changes in circumstances, principally decreases in the quoted prices on active exchanges, indicate that it is more likely than not that our digital assets are impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on the active exchange since acquiring the digital asset. When the then current carrying value of a digital asset exceeds the fair value determined each quarter, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the prices determined. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets. In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
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:
Identify the contract with the customer. A contract with a customer exists when (i) we enter into 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.
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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 December 31, 2024 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. We 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.
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 the cost of sales.
Research and Development
In accordance with ASC Topic 730, “Research and Development,” the Company expenses research and development costs as incurred. The major components of research and development costs include payroll, consultants, outside service, and supplies.
Research and development costs for the years ended December 31, 2024 and 2023 were $3,590,695 and $2,341,845, 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 tax rates enacted 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 December 31, 2024 and 2023, the Company had no material unrecognized tax benefits.
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Loss Per Share
Basic loss per share is calculated by dividing net loss by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share is calculated by adjusting the weighted average number of shares of common stock outstanding for the dilutive effect, if any, of common stock equivalents. Common stock equivalents whose effect would be anti-dilutive are not included in diluted loss per share. The Company uses the treasury stock method to determine the dilutive effect, which assumes that all common stock equivalents have been exercised at the beginning of the period and that the funds obtained from those exercises were used to repurchase shares of common stock of the Company at the average closing market price during the period. As of December 31, 2024 and 2023, there were 4,594,442 and 4,545,442, respectively, potential common share equivalents from stock options, warrants and restricted stock units which have been excluded from the diluted loss per share calculations as their effect is anti-dilutive.
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 Topic 718, “Share-Based Payments.” 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.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable.
The Company places its cash and cash equivalents and marketable securities with high-quality, major financial and investment institutions in order to limit the amount of credit exposure. For accounts receivable, the Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses.
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Sales to the Company’s largest customer represented approximately 13.97% and 8.45% of total sales for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, there were two vendors that accounted for 33.05% and 11.69%, and 33.14% and 17.18%, respectively, of total component parts purchased.
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. ASU 2023-07 also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In August 2023, the FASB issued ASU 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its consolidated financial statements.
Off Balance Sheet Transactions
As of December 31, 2024, we did not have any off-balance sheet arrangements.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item begin on page F-1 with the index to financial statements followed by the financial statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. As a result of this evaluation, our chief executive officer and chief financial officer have concluded that, as of December 31, 2024, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below. Notwithstanding the identified material weaknesses, management, including our chief executive officer and chief financial officer, believes the consolidated financial statements included in this report fairly represent, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the 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.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Management has evaluated the effectiveness of our internal control over financial reporting based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management has concluded that, as of December 31, 2024, our internal control over financial reporting was not effective due to the material weaknesses in internal control over financial reporting described below. As a smaller reporting company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm in this report.
Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes policies and procedures that:
| ● | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| ● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and our board of directors; and |
| ● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. |
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Material Weaknesses in Internal Control over Financial Reporting
We identified material weaknesses in our internal controls over financial reporting. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified include:
| ● | We do not have written documentation of our internal control policies and procedures, including written policies and procedures to ensure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements; | |
| ● | We failed to maintain a sufficient complement of personnel in our accounting and reporting department to ensure adequate segregation of duties such that appropriate review and monitoring of its financial records are executed; | |
| ● | We failed to maintain sufficient segregation of duties and approval hierarchy for material transactions and cash disbursements, specifically, there was a lack of segregation of duties involved in the execution and approvals of wire transfers for material investments in digital assets; | |
| ● | We did not design and maintain effective internal controls related to our information technology general controls in the areas of user access and program change-management over certain information technology systems that support our financial reporting processes; and | |
| ● | We failed to understand and consistently follow proper corporate procedures. |
Material Weakness Remediation
Our management, with the oversight of our audit committee, has initiated steps and plans to take additional measures to remediate the underlying causes of the material weakness. It is possible that we may determine that additional remediation steps will be necessary in the future.
The Company’s remediation plan at December 31, 2024 included the following actions:
| ● | increasing personnel resources and technical accounting expertise within the accounting function; | |
| ● | until we have sufficient technical accounting resources, we have engaged external consultants to provide support and to assist us in our evaluation of more complex applications of GAAP; | |
| ● | engaging internal control consultants to assist us in performing a financial reporting risk assessment as well as identifying and designing our system of internal controls necessary to mitigate the risks identified; | |
| ● | preparation of written documentation of our internal control policies and procedures and accounting processes; | |
| ● | requiring an approval hierarchy for all material expenses and transactions, which we implemented in the second quarter of 2024; and | |
| ● | commencing in the second quarter of 2024, requiring dual authorization on all ACH payments and bank wires, including an appropriate approval hierarchy, including board approval, on material transactions and agreements or any investment of Company funds. |
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.
Changes in Internal Control over Financial Reporting
Except for the foregoing, 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.
ITEM 9B. OTHER INFORMATION
None.
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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our current executive officers and directors are as follows:
| Name | Age | Position | ||
| Fawad Maqbool | 64 | Chairman, President, Chief Executive Officer, Treasurer, Director | ||
| Louisa Sanfratello | 59 | Chief Financial Officer and Secretary, Director | ||
| Jorge Flores | 57 | Chief Operating Officer | ||
| Andrew Lee | 41 | Director | ||
| Daniel Mazziota | 87 | Director | ||
| Shailesh “Sonny” Modi | 62 | Director |
A brief description of the background and business experience of our executive officer and directors for the past five years is as follows:
Fawad Maqbool, age 64, has served as the Company’s President, Chief Executive Officer and Chairman of the Board of Directors since founding AmpliTech, Inc. in 2002. Prior to founding AmpliTech, Inc., Mr. Maqbool was the President of Aeroflex Amplicomm, Inc. for 2000 and 2001. His duties included, among other things, overseeing the design and development of amplifiers specifically for fiber optic communication applications. Mr. Maqbool was with MITEQ, Inc. from 1987 through 1999 where he began as an Engineering Group Leader and ultimately held the title of Department Head responsible for a staff of thirty-two consisting of engineers, technicians, assemblers and support personnel. His professional career began with the Hazeltine Corporation in 1983 where he was a Microwave Design Engineer through 1986. Mr. Maqbool received a bachelor’s degree in electrical engineering (major in microwaves and RF) and biomedical engineering from the City College of New York. He subsequently earned a master’s degree in electrical engineering (major in microwaves and RF) from Polytechnic University, now the New York University Tandon School of Engineering. Through his prior service, Mr. Maqbool possesses the knowledge and experience in microwaves and RF electrical engineering that aids him in efficiently and effectively identifying and executing the Company’s strategic priorities. As our Chief Executive Officer, Chairman and founder, Mr. Maqbool brings to the Board of Directors extensive knowledge of the Company’s products, structure, history, and culture as well as years of expertise in the industry.
Louisa Sanfratello, CPA, age 59, has been an accountant, servicing numerous clients in various industries since 1987. Her professional career began with the public accounting firm of Holtz Rubenstein & Co, where she gathered audit experience for several years and moved on to more challenging positions in both the public and private sector. She served as a Controller for The New Interdisciplinary School for over 10 years. Her responsibilities included overseeing the accounting department in addition to working directly with the NYS Department of Education. Ms. Sanfratello was also employed by the Make A Wish Foundation of Suffolk County as chief accountant working directly with the President and CFO. She joined AmpliTech, Inc. in 2012 as Chief Financial Officer, where she manages the company’s finances and SEC filings. Her responsibilities also include assisting the Chief Executive Officer in developing new business, maintaining operating budgets and ensuring adequate cash flow. Ms. Sanfratello was appointed to the Board of Directors for her extensive knowledge of the Company’s products and her financial and accounting expertise.
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Jorge Flores, age 57, joined AmpliTech at the end of March in 2021 as Executive Director of Operations, bringing with him over 30 years of combined operations and program management experience. Prior to joining AmpliTech’s executive leadership team, Mr. Flores held various leadership roles at Comtech Telecommunications, a Nasdaq listed corporation with over 2,000 employees and revenues of over $600,000,000. Previous management roles included Director of Program Management Office, Business Unit Manager and Supply Line Management. Mr. Flores holds an MBA with concentration in Operations Management and Leadership from Dowling NY and, a BS in Business Administration, Major in Operations Management from NYIT. Mr. Flores was promoted to Chief Operating Officer effective February 21, 2022. As Chief Operating Officer, Mr. Flores leads critical initiatives to further streamline operations, drive growth, and take ownership of creating an enhanced experience for AmpliTech’s valued customers.
Andrew Lee, age 41, has served as a director of the Company since January 2021. Mr. Lee serves as the chairman of the Audit Committee. Mr. Lee is a licensed CPA and holds his MBA degree from Washington State University. Mr. Lee received his Bachelor of Business Administration, with concentrations in Finance and Accounting, from Walla Walla University. Mr. Lee is currently serving as CFO of Scythe Robotics. Prior to joining Scythe Robotics, Mr. Lee served as CFO of RealWear and Ryonet Corporation, a high-growth firm in Vancouver, Washington. Mr. Lee’s finance and accounting experience qualifies him to serve on our board of directors.
Daniel Mazziota, age 87, has served as a director of the Company since January 2021. He serves as the chairman of the Compensation Committee. Mr. Mazziota founded Microwave Power Devices, Inc. in 1967, which he sold in 1980 to Macom Technology Solutions, a Nasdaq listed developer and producer of radio, microwave, and millimeter wave semiconductor devices and components. He served as the President of Microwave Power Devices, Inc. until his retirement in 1988. He has served as president of IDM Consulting since 1965. IDM Consulting provides consulting services to the microwave component and sub system industry. He received his BEE and MSEE degrees from New York Polytechnic Institute and is a fellow of the Institute. Mr. Mazziota’s microwave component and subsystem industry experience qualifies him to serve on our board of directors.
Shailesh “Sonny” Modi, age 62, has served as a director of the Company since January 2025. Mr. Modi has served as chief financial officer and treasurer of ShelterPoint Life Insurance Company (“ShelterPoint”) since December 2015 and was instrumental in leading the successful sale of ShelterPoint to Protective Life Insurance Company in 2024. Prior to ShelterPoint, Mr. Modi served as senior vice president of Global Insurance Strategic Planning & Analysis at Aspen Insurance Holdings from April 2014 to June 2015. Earlier in his career, he spent 10 years at Deloitte & Touche LLP, focusing on financial services and participating in initial public offerings. Mr. Modi holds a B.S. in Accounting and an MBA in Finance & Computer Systems from New York University. He has served on various boards, including InRoads and the Insurance Accounting and Systems Association (IASA), and has been involved in volunteer organizations such as the Boy Scouts of America. Mr. Modi’s finance and accounting experience qualifies him to serve on our board of directors.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board of Directors.
Family Relationships
There are no family relationships between any of our directors or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past ten years, none of our directors or executive officers were involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
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Potential Conflicts of Interest
We are not aware of any current or potential conflicts of interest with our director or executive officers.
Board Committees
Effective January 20, 2021, we formed an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each of which is comprised of our three independent directors. Mr. Modi was appointed chairman of the Nominating and Corporate Governance Committee, Mr. Lee as the chairman of the Audit Committee and Mr. Mazziota as the chairman of the Compensation Committee. Mr. Lee’s finance and accounting experience qualifies him as the audit committee financial expert.
Our Board of Directors has determined that each of Mr. Modi, Mr. Lee and Mr. Mazziota is independent within the meaning of Rule 5605(a)(2) of the Nasdaq Listing Rules and the rules and regulations promulgated by the SEC. In making its independence determinations, the Board of Directors sought to identify and analyze all of the facts and circumstances related to any relationship between a director, his or her immediate family and our company and our affiliates and did not rely on categorical standards other than those contained in the Nasdaq rule referenced above. Our Board of Directors has determined that Mr. Modi, Mr. Lee and Mr. Mazziota meet the additional test for independence for audit committee members imposed by SEC regulations and Section 5605(c)(2)(A) of the Nasdaq Stock Market listing rules and that Mr. Modi, Mr. Lee and Mr. Mazziota meet the additional test for independence for compensation committee members imposed by Section 5605(d)(2)(A) of the Nasdaq Stock Market listing rules.
Audit Committee
The primary purpose of our audit committee is to assist our Board of Directors in the oversight of the integrity of our accounting and financial reporting process, the audits of our consolidated financial statements, and our compliance with legal and regulatory requirements. Our audit committee met 13 times during the year ended December 31, 2024. The functions of our audit committee include, among other things:
| ● | hiring the independent registered public accounting firm to conduct the annual audit of our consolidated financial statements and monitoring its independence and performance; | |
| ● | reviewing and approving the planned scope of the annual audit and the results of the annual audit; | |
| ● | pre-approving all audit services and permissible non-audit services provided by our independent registered public accounting firm; | |
| ● | reviewing the significant accounting and reporting principles to understand their impact on our consolidated financial statements; | |
| ● | reviewing our internal financial, operating and accounting controls with management, our independent registered public accounting firm and our internal audit provider; | |
| ● | reviewing with management and our independent registered public accounting firm, as appropriate, our financial reports, earnings announcements and our compliance with legal and regulatory requirements; | |
| ● | periodically reviewing and discussing with management the effectiveness and adequacy of our system of internal controls; | |
| ● | in consultation with management and the independent auditors, reviewing the integrity of our financial reporting process and adequacy of disclosure controls; | |
| ● | reviewing potential conflicts of interest under and violations of our code of conduct; | |
| ● | establishing procedures for the treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and confidential submissions by our employees of concerns regarding questionable accounting or auditing matters; | |
| ● | reviewing and approving related-party transactions; and | |
| ● | reviewing and evaluating, at least annually, our audit committee’s charter. |
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With respect to reviewing and approving related-party transactions, our audit committee will review related-party transactions for potential conflicts of interests or other improprieties. Under SEC rules, related-party transactions are those transactions to which we are or may be a party in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors or executive officers or any other related person had or will have a direct or indirect material interest, excluding, among other things, compensation arrangements with respect to employment and Board of Directors membership. Our audit committee could approve a related-party transaction if it determines that the transaction is in our best interests. Our directors are required to disclose to this committee or the full Board of Directors any potential conflict of interest, or personal interest in a transaction that our Board of Directors is considering. Our executive officers are required to disclose any related-party transaction to the audit committee. We also poll our directors on an annual basis with respect to related-party transactions and their service as an officer or director of other entities. Any director involved in a related-party transaction that is being reviewed or approved must recuse himself or herself from participation in any related deliberation or decision. Whenever possible, the transaction should be approved in advance and if not approved in advance, must be submitted for ratification as promptly as practical.
The financial literacy requirements of the SEC require that each member of our audit committee be able to read and understand fundamental financial statements. In addition, at least one member of our audit committee must qualify as an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act and have financial sophistication in accordance with the Nasdaq Stock Market listing rules. Our Board of Directors has determined that Mr. Lee qualifies as an audit committee financial expert.
Both our independent registered public accounting firm and management periodically meet privately with our audit committee.
Our audit committee charter is available on our website at www.amplitech.com under “Investors—Governance—Governance Documents”.
Compensation Committee
The primary purpose of our compensation committee is to assist our Board of Directors in exercising its responsibilities relating to compensation of our executive officers and employees and to administer our equity compensation and other benefit plans. Our compensation committee met 4 times during the year ended December 31, 2024. In carrying out these responsibilities, this committee reviews all components of executive officer and employee compensation for consistency with its compensation philosophy, as in effect from time to time. The functions of our compensation committee include, among other things:
| ● | designing and implementing competitive compensation, retention and severance policies to attract and retain key personnel; | |
| ● | reviewing and formulating policy and determining the compensation of our Chief Executive Officer, our other executive officers and employees; | |
| ● | reviewing and recommending to our Board of Directors the compensation of our non-employee directors; | |
| ● | reviewing and evaluating our compensation risk policies and procedures; | |
| ● | administering our equity incentive plans and granting equity awards to our employees, consultants and directors under these plans; | |
| ● | administering our performance bonus plans and granting bonus opportunities to our employees, consultants and non-employee directors under these plans; | |
| ● | if required from time to time, preparing the analysis or reports on executive officer compensation required to be included in our annual proxy statement; | |
| ● | engaging compensation consultants or other advisors it deems appropriate to assist with its duties; and | |
| ● | reviewing and evaluating, at least annually, our compensation committee’s charter. |
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The compensation committee retains sole authority to hire any compensation consultant, approve such consultant’s compensation, determine the nature and scope of its services, evaluate its performance, and terminate its engagement.
The compensation committee reviews our compensation policies and practices for all employees, including our named executive officers, as they relate to risk management practices and risk-taking incentives to assess and determine that there are no risks arising from these policies and practices that are reasonably likely to have a material adverse effect on us.
Our compensation committee charter is available on our website at www.amplitech.com under “Investors—Governance—Governance Documents”.
Nominating and Corporate Governance Committee
The primary purpose of our nominating and corporate governance committee is to assist our Board of Directors in promoting the best interest of our company and our stockholders through the implementation of sound corporate governance principles and practices. Our nominating and corporate governance committee met 4 times during the year ended December 31, 2024. The functions of our nominating and corporate governance committee include, among other things:
| ● | identifying, reviewing and evaluating candidates to serve on our Board of Directors; | |
| ● | determining the minimum qualifications for service on our Board of Directors; | |
| ● | developing and recommending to our Board of Directors an annual self-evaluation process for our Board of Directors and overseeing the annual self-evaluation process; | |
| ● | developing, as appropriate, a set of corporate governance principles, and reviewing and recommending to our Board of Directors any changes to such principles; and | |
| ● | periodically reviewing and evaluating our nominating and corporate governance committee’s charter. |
Our nominating committee charter is available on our website at www.amplitechinc.com under “Investors—Governance—Governance Documents”.
Board of Directors Diversity
Our Board of Directors is committed to fostering a diversity of backgrounds and perspectives so that our Board of Directors positions our company for the future. The members of our Board of Directors represent a mix of ages, genders, races, ethnicities, geographies, cultures, and other perspectives that we believe expand our Board of Directors’ understanding of the needs and viewpoints of our partners, employees, stockholders, and other stakeholders.
Director Candidates
Our Board of Directors has a critical role in guiding our strategic direction and overseeing the management of our business, and accordingly, we seek to attract and retain highly qualified directors who have sufficient time to engage in the activities of our Board of Directors and to understand and enhance their knowledge of our industry and business plans. In evaluating the suitability of individual candidates, our Board of Directors, in approving (and, in the case of vacancies, appointing) such candidates, may take into account many factors, including: personal and professional integrity; ethics and values; experience in corporate management, such as serving as an officer or former officer of a publicly held company; strong finance experience; experience relevant to our industry; experience as a board member or executive officer of another publicly held company; relevant academic expertise or other proficiency in an area of our operations; diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; diversity of background and perspective, including, but not limited to, with respect to age, gender, race, place of residence and specialized experience; practical and mature business judgment, including, but not limited to, the ability to make independent analytical inquiries; and any other relevant qualifications, attributes or skills. The core competencies of directors should address accounting or finance experience, market familiarity, business or management experience, industry knowledge, customer-base experience or perspective, crisis response, leadership, and/or strategic planning. Our Board of Directors evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas.
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Our Board of Directors will consider candidates for director recommended by stockholders, so long as such recommendations comply with our Articles of Incorporation, Bylaws, nominating and corporate governance committee charter and applicable laws, rules and regulations, including those promulgated by the SEC. Our Board of Directors will evaluate such recommendations in accordance with our Bylaws and our policies and procedures for director candidates, including our corporate governance guidelines. This process is designed to ensure that our Board of Directors includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to our business. Eligible stockholders wishing to recommend a candidate for nomination should contact us in writing. Such recommendations must include information about the candidate, a statement of support by the recommending stockholder, evidence of the recommending stockholder’s ownership of our common stock and a signed letter from the candidate confirming willingness to serve on our Board of Directors.
Stockholder Communications
Although we do not have a formal policy regarding stockholder communications with our Board of Directors, stockholders may communicate with our Board of Directors, or any individual director on our Board of Directors, by writing to us at the address of our principal executive offices, addressing the communication to the attention of our Chief Executive Officer, and specifying the Board of Directors or, if applicable, the individual member thereof as the intended recipient of the communication. Our Corporate Secretary will forward to the directors all communications that, in his judgment, are appropriate for consideration by the directors. Examples of communications that would not be appropriate for consideration by the directors include commercial solicitations and matters not relevant to the stockholders, to the functioning of the Board of Directors or to the affairs of our Company. Any correspondence received that is addressed generically to the Board of Directors will be forwarded to the Chairman of the Board of Directors.
Board Leadership Structure and Role in Risk Oversight
The Board of Directors does not have a formal policy on whether or not the roles of Chairman of the Board and Chief Executive Officer should be separate and believes that it should retain the flexibility to make this determination in the manner it believes will provide the most appropriate leadership for our company from time to time. Currently, Fawad Maqbool serves as Chairman of the Board and Chief Executive Officer. We do not have a lead independent director. Mr. Maqbool sets the strategic direction for the company and provides day-to-day leadership. As Chairman of the Board of Directors, Mr. Maqbool further oversees the agenda for board meetings in collaboration with the other board members. Our Board believes that it is in the best interest of the company and its stockholders for Mr. Maqbool to serve in both roles at this time given his knowledge of our company and industry. We believe that this structure provides appropriate leadership and oversight of the company and facilitates effective functioning of both management and our Board of Directors. Our Board of Directors will continue to reassess the structure to determine what is in the best interests of the Company and stockholders.
The Board of Directors oversees our exposure to risk through its interaction with management and receipt from management of periodic reports outlining matters related to financial, operational, regulatory, legal and strategic risks. Risk assessment and oversight are an integral part of our governance and management processes. Our Board of Directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the Board of Directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies and presents the steps taken by management to mitigate or eliminate such risks.
| 48 |
Code of Conduct
We have adopted a Code of Ethics and Business Conduct that applies to all our directors, officers (including our Chief Executive Officer, Chief Financial Officer and any person performing similar functions) and employees. We have made our Code of Business Conduct and Ethics available on our website at the following address: https://www.amplitechinc.com/amplitech-group-inc-code-of-ethics. We expect that any future amendments to our Code of Ethics and Business Conduct, or any waivers of its requirements, will be disclosed on our website.
Clawback Policy
To comply with Section 10D of the Securities Exchange Act of 1934, as amended, Rule 10D-1 promulgated under the Securities Exchange Act of 1934, as amended, and Nasdaq Listing Rule 5608 applicable to incentive-based compensation for executive officers of listed companies, in November 2023, the Board adopted a Policy for the Recovery of Erroneously Awarded Compensation (the “Clawback Policy”) with an effective date of October 2, 2023. Current executive officers of the Company have agreed in writing to the terms and conditions of the Clawback Policy. Under the Clawback Policy, if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the federal securities laws, the Company will recoup any erroneously awarded incentive-based compensation from the Company’s current and former executive officers. Administration of the Clawback Policy will be by the Compensation Committee of the Company.
Hedging Transactions
Our Insider Trading Policy prohibits insiders from buying or selling puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of the Company’s Securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities or engage in any other hedging transaction with respect to the Company’s securities, at any time, with the exception of the Company’s tradeable warrants.
Director Compensation
Persons serving as both an officer and a director of the Company are only included in the Executive Compensation Table for the year ended December 31, 2024 and 2023:
| Name | Fiscal Year | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | ||||||||||||||||||||||
| Matthew Kappers(1) | 2023 | - | 27,600 | - | - | - | - | 27,600 | ||||||||||||||||||||||
| 2024 | - | 30,000 | - | - | - | - | 30,000 | |||||||||||||||||||||||
| Andrew Lee | 2023 | - | 27,600 | - | - | - | - | 27,600 | ||||||||||||||||||||||
| 2024 | - | 30,000 | - | - | - | - | 30,000 | |||||||||||||||||||||||
| Daniel Mazziota | 2023 | - | 27,600 | - | - | - | - | 27,600 | ||||||||||||||||||||||
| 2024 | - | 30,000 | - | - | - | - | 30,000 | |||||||||||||||||||||||
| (1) | Mr. Kappers resigned as a director of the Company on January 17, 2025. Upon Mr. Kapper’s resignation, Mr. Modi was appointed as a director of the Company on January 17, 2025. |
On January 20, 2025, the Company entered into a standard form of director agreement (the “Director Agreement”) with each of the foregoing independent directors: Mr. Andrew Lee, Mr. Daniel Mazziota and Mr. Shailesh “Sonny” Modi. The Director Agreement provides for a one (1) year term unless terminated earlier upon certain events set forth in the Director Agreement, which includes among other things, resignation or removal. In addition, the Director Agreement also provides, among other things, reimbursement of expenses for attending meetings, indemnification and annual compensation of 15,000 Restricted Stock Units pursuant to the Company’s Amended and Restated 2020 Equity Incentive Plan for services.
On August 18, 2023, the Company granted restricted stock awards under the Company’s 2020 Plan to Messrs. Kappers, Lee and Mazziota an aggregate of 45,000 shares of common stock (15,000 each) valued at $82,800. These restricted stock awards vested immediately.
On December 19, 2024, the Company granted restricted stock awards under the Company’s 2020 Plan to Messrs. Kappers, Lee and Mazziota an aggregate of 45,000 shares of common stock (15,000 each) valued at $90,000. These restricted stock awards vested immediately.
| 49 |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires that our directors and executive officers and persons who beneficially own more than 10% of our common stock (referred to herein as the “reporting persons”) file with the SEC various reports as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of copies of the reports filed with the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements for fiscal year ended December 31, 2024 were complied with by each person who at any time during the fiscal year ended December 31, 2024 was a director or an executive officer or held more than 10% of our common stock.
Code of Ethics
We have adopted a code of ethics that applies to our officers, employees and directors, including our Chief Executive Officer and Chief Financial Officer. Our code of ethics is available on our website.
Insider Trading Policy and Rule 10b5-1 Trading Programs
We have adopted an Insider Trading Policy which prohibits directors, officers and all other employees, or consultants or contractors, as well as family members of such persons (or any other person subject to the policy) from engaging in any transaction involving a purchase or sale of the our securities, including any offer to purchase or offer to sell, based on material nonpublic information regarding the Company (“Material Nonpublic Information”).
Under our Insider Trading Policy and pursuant to SEC Rule 10b5-1, directors, officers and employees may establish written programs which permit (i) automatic trading of the Company’s stock through a third-party broker or (ii) trading of the Company’s stock by an independent person (such as an investment bank) who is not aware of Material Nonpublic Information at the time of a trade. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director, executive officer, or other employee when entering into the plan, without further direction from such insider.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to, the named person, during the years ended December 31, 2024 and 2023:
Summary Compensation of Named Executive Officers
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
| Fawad Maqbool | 2024 | 446,154 | - | - | - | - | 446,154 | |||||||||||||||||||
| Chairman, President and Chief Executive Officer | 2023 | 500,000 | - | - | 157,797 | - | 657,797 | |||||||||||||||||||
| Louisa Sanfratello | 2024 | 245,384 | - | - | - | - | 245,384 | |||||||||||||||||||
| Chief Financial Officer, Secretary | 2023 | 275,000 | - | - | 78,898 | - | 353,898 | |||||||||||||||||||
| Jorge Flores | 2024 | 245,384 | - | - | - | - | 245,384 | |||||||||||||||||||
| Chief Operating Officer | 2023 | 275,000 | - | - | 78,898 | - | 353,898 | |||||||||||||||||||
On February 21, 2022, the Company’s Board of Directors approved an increase in salary, effective as of January 1, 2022, for Mr. Maqbool, to $500,000 per year, and for Ms. Sanfratello and Mr. Flores to $275,000 per year. In June of 2024, the officers of the Company voluntarily reduced their salaries by 20%. Those salaries have been reinstated effective January 1, 2025.
| 50 |
Pursuant to the terms of his employment agreement entered into on February 21, 2022, Mr. Flores will receive a base annual salary of $275,000 and is eligible to participate in the Company’s 2020 Equity Incentive Plan or successor to such plan. The agreement contains a perpetual confidentiality covenant as well as non-competition and employee and customer non-solicitation covenants that apply during his employment and for a period of one year following his termination. The agreement was amended on March 27, 2023 to extend its term to March 20, 2024 and again on amended on March 20, 2024 to extend its term to March 20, 2027.
Outstanding Equity Awards at Fiscal Year End
On December 20, 2023, the Company granted Mr. Maqbool ten-year stock options to purchase 100,000 shares of common stock according to the Company’s 2020 Plan. In addition, Ms. Sanfratello and Mr. Flores were each granted stock options to purchase 50,000 shares of common stock. The stock options vest in quarterly installments over a 5-year period with an exercise price of $1.73 per share. The Company has calculated these options estimated fair market value at $315,593 using the Black-Scholes model, with the following assumptions: expected term of 7.36 years, stock price of $1.73, exercise price of $1.73, volatility of 120.7%, risk-free rate of 3.88%, and no forfeiture rate.
The following table sets forth the outstanding equity awards for our named executive officers as of the fiscal year ended December 31, 2024.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | ||||||||||||||
| Fawad Maqbool | ||||||||||||||||||||
| December 20, 2023 | 25,000 | 75,000 | -0- | $ | 1.73 | December 20, 2033 | ||||||||||||||
| Louisa Sanfratello | ||||||||||||||||||||
| December 20, 2023 | 12,500 | 37,500 | -0- | $ | 1.73 | December 20, 2033 | ||||||||||||||
| Jorge Flores | ||||||||||||||||||||
| December 20, 2023 | 12,500 | 37,500 | -0- | $ | 1.73 | December 20, 2033 | ||||||||||||||
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Amended and Restated 2020 Equity Incentive Plan
In October 2020, the Board of Directors and shareholders adopted 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 common stock of the Company 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. In 2023, the Board and the shareholders adopted the Company’s Amended and Restated 2020 Equity Incentive Plan (the “Amended and Restated Plan”), effective as of December 11, 2023. The Amended and Restated Plan is substantially similar to the 2020 Plan except that it increases the shares of our common stock available for issuance thereunder to 2,250,000 shares of common stock.
In December 2023, the Board of Directors and shareholders amended and restated the current plan to increase the number of shares available for issuance under the plan to 2,250,000 shares of common stock.
Policies and Practices Related to the Timing of Grants of Certain Equity Awards
The Compensation Committee’s does not have a policy or practice on when to grant option awards. The Compensation Committee does not have a policy or practice of taking into account material nonpublic information when determining the timing and terms of option awards and does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. Option awards are not granted in anticipation of the release of material non-public information, and the release of material non-public information is not timed on the basis of option grant dates. However, if public announcement of material information is anticipated, the grant date of any option awards may be deferred at the discretion of the Compensation Committee until the first trading day after release of such information.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) each director and named executive officer, (ii) all executive officers and directors as a group; and (iii) each shareholder known to be the beneficial owner of 5% or more of the outstanding common stock of the Company as of March 27, 2025. Beneficial ownership is determined in accordance with the rules of the SEC. Generally, a person is considered to beneficially own securities: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, and (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days (such as through exercise of stock options or warrants). For purposes of computing the percentage of outstanding shares held by each person or group of persons, any shares that such person or persons has the right to acquire within 60 days are deemed to be outstanding but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. Unless otherwise indicated below, the address of each person listed in the table below is c/o 155 Plant Avenue, Hauppauge, NY 11788.
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Amount and Nature of Beneficial Ownership Common Stock (1) | ||||||||
| Name and Address of Beneficial Owner | No. of Shares | % of Class | ||||||
| Directors and Officers | ||||||||
| Fawad Maqbool, Chairman, President, and Chief Executive Officer | 2,898,364 | (2) | 14.6 | % | ||||
| Louisa Sanfratello, Chief Financial Officer | 127,500 | (3) | * | |||||
| Jorge Flores | 122,500 | (4) | * | |||||
| Daniel Mazziota | 276,618 | (5) | 1.40 | % | ||||
| Andrew Lee | 59,750 | (6) | * | |||||
| Shailesh “Sonny” Modi | - | * | ||||||
| All officers and directors as a group (7 persons) | 3,484,732 | 16.0 | % | |||||
| 5% Stockholders | ||||||||
| Bard Associates, Inc. 135 South LaSalle Street, Suite 3700 Chicago, IL 60603 | 1,741,019 | 8.8 | % | |||||
| * | Less than 1% |
| 1) | Based on 19,658,960 shares of common stock issued and outstanding and common stock issuable upon exercise of vested stock options. |
| 2) | Includes (i) 2,663,364 shares of common stock and (ii) options to purchase 235,000 shares of common stock, |
| 3) | Includes (i) 10,000 shares of common stock and (ii) 117,500 options to purchase shares of common stock. |
| 4) | Includes (i) 25,000 shares of common stock and (ii) 97,500 options to purchase shares of common stock. |
| 5) | Includes (i) 235,743 shares of common stock and (ii) 40,875, options to purchase shares of common stock |
| 6) | Includes (i) 45,000 shares of common stock and (ii) 14,750 options to purchase of common stock |
| 7) | Based on Amendment No. 1 to Schedule 13G filed with the SEC on January 8, 2025 Reflects shared dispositive power of 1,657,154 shares of common stock and 83,8655 shares of common stock underlying warrants. |
ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
We had no transactions since the beginning of the fiscal year of ended December 31, 2024, and we do not have any currently proposed transaction, in which the Company was to be a participant and the amount involved exceeded or exceeds $120,000 and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”).
Director Independence
Mr. Modi, Mr. Lee and Mr. Mazziota are independent using the definition of independence under NASDAQ Listing Rule 5605 (a) (2).
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Fees Paid to the Independent Registered Public Accounting Firm
The following table shows the aggregate fees incurred for professional services provided to us for 2024 and 2023:
| 2024 | 2023 | |||||||
| Audit Fees | $ | 255,460 | $ | 150,100 | ||||
| Audit-Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | 10,885 | $ | 6,665 | ||||
| All Other Fees | - | - | ||||||
| Total | $ | 266,345 | $ | 156,765 | ||||
Audit Fees
For the years ended December 31, 2024 and 2023, we incurred $255,460 and $150,100, respectively for professional services rendered for the audit and review of our financial statements.
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Audit Related Fees
For the years ended December 31, 2024 and 2023, we incurred approximately $0 respectively, for audit related services.
Tax Fees
For our years ended December 31, 2024 and 2023, we incurred $10,885 and $6,665 respectively, for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
We did not incur any other fees related to services rendered by our independent registered public accounting firm for the years ended December 31, 2024 and 2023.
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors
The audit committee pre-approves all audits (including audit-related) and permitted non-audit services to be performed by the independent auditors. The audit committee will annually approve the scope and fee estimates for the year-end audit to be performed by the Company’s independent auditors for the fiscal year. With respect to other permitted services, the audit committee pre-approves specific engagements, projects and categories of services on a fiscal year basis, subject to individual projects and annual maximums. To date, the Company has not engaged its auditors to perform any non-audit related service.
The Audit Committee pre-approved all services provided by our independent registered public accounting firm. All the above services and fees during 2024 were pre-approved by our Audit Committee. All the above services in 2024 were reviewed and approved by our Audit Committee either before or after the respective services were rendered.
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of this Annual Report.
| 1. | Report of Independent Registered Public Accounting Firm (PCAOB ID 3627) |
| 2. | Financial Statement Schedules. All schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required. |
Exhibits:
The exhibits required by Item 601 of Regulation S-K are listed below
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*filed herewith
** furnished herewith
† Pursuant to item 601(b)(10)(iv) of Regulation S-K, certain information has been excluded because it is both not material and the type of information that the registrant treats as private or confidential.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 31, 2025 | By: | /s/ Fawad Maqbool |
| Fawad Maqbool | ||
President and Chief Executive Officer
(Principal Executive Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Title | Date | ||
| /s/ Fawad Maqbool | President, Chief Executive Officer and | March 31, 2025 | ||
| Fawad Maqbool | Chairman of the Board of Directors (Principal Executive Officer) |
|||
| /s/ Louisa Sanfratello | Chief Financial Officer and Secretary | March 31, 2025 | ||
| Louisa Sanfratello | (Principal Financial and Accounting Officer) | |||
| /s/ Andrew Lee | Director | March 31, 2025 | ||
| Andrew Lee | ||||
| /s/ Daniel Mazziota | Director | March 31, 2025 | ||
| Daniel Mazziota | ||||
| /s/ Shailesh “Sonny” Modi | Director | March 31, 2025 | ||
| Shailesh “Sonny” Modi |
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AmpliTech Group, Inc.
Index to Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of AmpliTech Group, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AmpliTech Group, Inc. (“the Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/ Sadler, Gibb & Associates, LLC
We have served as the Company’s auditor since 2013.
Draper, UT
March 31, 2025
| F-2 |
AmpliTech Group, Inc.
Consolidated Balance Sheets
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 19,315,984 | $ | 6,726,013 | ||||
| Accounts receivable | 1,256,725 | 2,542,710 | ||||||
| Inventories, net | 7,588,764 | 6,537,578 | ||||||
| Prepaid expenses | 169,913 | 1,342,335 | ||||||
| Total Current Assets | 28,331,386 | 17,148,636 | ||||||
| Property and equipment, net | 2,253,695 | 2,599,448 | ||||||
| Operating lease right of use assets | 4,399,975 | 3,538,798 | ||||||
| Intangible assets, net | 2,366,119 | 2,984,133 | ||||||
| Goodwill | 4,696,883 | 4,696,883 | ||||||
| Cost method investment | 348,250 | 348,250 | ||||||
| Long-term deposits | 824,174 | 91,481 | ||||||
| Total Assets | $ | 43,220,482 | $ | 31,407,629 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | 941,408 | $ | 846,179 | |||||
| Customer deposits | 128,089 | 14,239 | ||||||
| Current portion of finance lease obligations | 16,522 | 16,799 | ||||||
| Current portion of operating lease obligations | 449,622 | 541,324 | ||||||
| Current portion of notes payable | 80,841 | |||||||
| Total Current Liabilities | 1,535,641 | 1,499,382 | ||||||
| Long-term Liabilities | ||||||||
| Finance lease obligations, net of current portion | 15,478 | 32,537 | ||||||
| Operating lease obligations, net of current portion | 4,139,562 | 3,171,979 | ||||||
| Deferred tax liability | 39,000 | 24,000 | ||||||
| Total Liabilities | 5,729,681 | 4,727,898 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, par value $, shares authorized, and shares issued and outstanding, respectively | 19,656 | 9,715 | ||||||
| Additional paid-in capital | 58,483,272 | 36,439,739 | ||||||
| Accumulated deficit | (21,012,127 | ) | (9,769,723 | ) | ||||
| Total Stockholders’ Equity | 37,490,801 | 26,679,731 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 43,220,482 | $ | 31,407,629 | ||||
See accompanying notes to the consolidated financial statements
| F-3 |
AmpliTech Group, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2024 and 2023
| 2024 | 2023 | |||||||
| Revenues | $ | 9,508,372 | $ | 15,584,577 | ||||
| Cost of Goods Sold | 6,023,265 | 8,308,949 | ||||||
| Gross Profit | 3,485,107 | 7,275,628 | ||||||
| Operating Expenses | ||||||||
| Selling, general and administrative | 7,856,471 | 7,511,319 | ||||||
| Impairment of intangible assets | 467,928 | - | ||||||
| Research and development | 3,590,695 | 2,341,845 | ||||||
| Total Operating Expenses | 11,915,094 | 9,853,164 | ||||||
| Loss From Operations | (8,429,987 | ) | (2,577,536 | ) | ||||
| Other Income (Expenses) | ||||||||
| Loss on investment in digital assets | (3,248,911 | ) | ||||||
| Loss on disposal of property and equipment | (16,403 | ) | ||||||
| Unrealized gain on investments | 1,697 | |||||||
| Other income | 716,943 | |||||||
| Realized gain on investments | 26,746 | 131,522 | ||||||
| Interest Income (expense), net | (292,195 | ) | 19,281 | |||||
| Total Other Income (Expenses) | (2,797,417 | ) | 136,097 | |||||
| Net Loss Before Income Taxes | (11,227,404 | ) | (2,441,439 | ) | ||||
| Provision For Income Taxes | 15,000 | 24,000 | ||||||
| Net Loss | $ | (11,242,404 | ) | $ | (2,465,439 | ) | ||
| Net Loss Per Share; | ||||||||
| Basic and diluted | $ | ) | $ | ) | ||||
| Weighted Average Common Shares Outstanding; | ||||||||
| Basic and diluted | ||||||||
See accompanying notes to the consolidated financial statements
| F-4 |
AmpliTech Group, Inc.
Consolidated Statements of Stockholders’ Equity
For the Years Ended December 31, 2024 and 2023
| Common Stock | Additional | Total | ||||||||||||||||||
| Number of | Par | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||
| Shares | Value | Capital | Deficit | Equity | ||||||||||||||||
| Balance, December 31, 2022 | 9,634,613 | $ | 9,635 | $ | 36,050,161 | $ | (7,304,284 | ) | $ | 28,755,512 | ||||||||||
| Stock based compensation | - | 389,658 | 389,658 | |||||||||||||||||
| Common stock issued for vesting of RSU’s | 80,000 | 80 | (80 | ) | ||||||||||||||||
| Net loss for the year ended December 31, 2023 | - | (2,465,439 | ) | (2,465,439 | ) | |||||||||||||||
| Balance, December 31, 2023 | 9,714,613 | $ | 9,715 | $ | 36,439,739 | $ | (9,769,723 | ) | $ | 26,679,731 | ||||||||||
| Stock based compensation | - | 517,781 | 517,781 | |||||||||||||||||
| Common stock issued for vesting of RSU’s | 55,000 | 55 | (55 | ) | ||||||||||||||||
| Common stock issued in offering | 9,886,847 | 9,886 | 21,525,807 | 21,535,693 | ||||||||||||||||
| Net loss for the year ended December 31, 2024 | - | (11,242,404 | ) | (11,242,404 | ) | |||||||||||||||
| Balance, December 31, 2024 | 19,656,460 | $ | 19,656 | $ | 58,483,272 | $ | (21,012,127 | ) | $ | 37,490,801 | ||||||||||
See accompanying notes to the consolidated financial statements
| F-5 |
AmpliTech Group, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024 and 2023
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (11,242,404 | ) | $ | (2,465,439 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 538,759 | 531,160 | ||||||
| Operating lease costs | 532,065 | 545,065 | ||||||
| Stock-based compensation | 517,781 | 389,658 | ||||||
| Amortization of debt discount | 260,000 | |||||||
| Loss on disposal of property and equipment | 16,403 | |||||||
| Gain on termination of right-of-use operating lease | (8,461 | ) | ||||||
| Deferred taxes | 15,000 | 24,000 | ||||||
| Impairment of intangible assets | 467,928 | - | ||||||
| Inventory reserve | (84,000 | ) | 18,000 | |||||
| Loss on investment of digital assets | 3,248,911 | |||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts receivable | 1,285,985 | (740,941 | ) | |||||
| Inventories | (967,186 | ) | 76,543 | |||||
| Prepaid expenses | 1,167,949 | (1,147,700 | ) | |||||
| Long-term deposits | (732,693 | ) | 21,704 | |||||
| Accounts payable and accrued expenses | 95,229 | (14,187 | ) | |||||
| Operating lease obligations | (512,888 | ) | (196,609 | ) | ||||
| Customer deposits | 113,850 | (520,086 | ) | |||||
| Net cash used in operating activities | (5,295,714 | ) | (3,470,890 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | (42,920 | ) | (973,349 | ) | ||||
| Net investment in marketable securities | (3,248,911 | ) | 247,450 | |||||
| Net cash used in investing activities | (3,291,831 | ) | (725,899 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Net proceeds from issuance of common shares in a private equity offering | 21,535,693 | |||||||
| Net proceeds from notes payable | 1,274,000 | |||||||
| Repayment on finance lease obligations | (17,336 | ) | (153,114 | ) | ||||
| Repayment of notes payable | (1,614,841 | ) | (33,480 | ) | ||||
| Payment of revenue earnout | (2,180,826 | ) | ||||||
| Net cash provided by (used in) financing activities | 21,177,516 | (2,367,420 | ) | |||||
| Net change in cash and cash equivalents | 12,589,971 | (6,564,209 | ) | |||||
| Cash and Cash Equivalents, Beginning of the Period | 6,726,013 | 13,290,222 | ||||||
| Cash and Cash Equivalents, End of the Period | $ | 19,315,984 | $ | 6,726,013 | ||||
| Supplemental disclosures: | ||||||||
| Cash paid for interest expense | $ | 298,811 | $ | 27,259 | ||||
| Cash paid for income taxes | $ | 8,632 | $ | 10,200 | ||||
| Non-Cash Investing and Financing Activities: | ||||||||
| Common Stock issued on vesting of RSUs | $ | 55 | $ | 80 | ||||
| Debt discount on notes payable | $ | 260,000 | $ | |||||
| Operating lease right-of-use asset and liability measurement | $ | 1,393,242 | $ | 20,880 | ||||
See accompanying notes to the consolidated financial statements
| F-6 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(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 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 shares of the outstanding shares of Company common stock, 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 all 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, AmpliTech Group, Inc., common stock and warrants under the symbols “AMPG” and “AMPGW”, respectively, commenced trading on NASDAQ. A reverse split of the outstanding common stock at a 1-for-20 ratio became effective February 17, 2021 as of 12:01 a.m., Eastern Time. In connection with the public offering, units at an offering price of $ per unit were sold. Each unit issued in the offering consisted of one share of common stock and one warrant.
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 a wider base of customers requiring high technology in smaller packages.
| F-7 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
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 would acquire 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, AmpliTech Group’s True G Speed Services (AGTGSS) division was founded to serve and provide complete system integration and ORAN compliant O-RU’s (Radio Units) for telcos, enabling the industry to access ‘True 5G Speeds’. AGTGSS provides Managed Services, Cyber Security, Cloud Services, Data Sciences and Telco Cloud Services. AGTGSS will also be providing full installation of Private 5G Networks (P5G) which includes the deployment of AmpliTech Group’s developed radio units. AGTGSS will implement AmpliTech’s low noise amplifier devices in these systems to promote greater coverage, longer range and faster speeds.
(2) Loss on Investment of Digital Assets
During the three months ending 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 year ended December 31, 2024, the Company recorded a complete loss from the investment in digital assets of $3,248,911. As of December 31, 2024, the remaining balance of digital assets was $0.
(3) Summary of Significant Accounting Policies
Basis of Accounting
The accompanying consolidated financial statements have been prepared using the accrual basis of accounting.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All Intercompany accounts and transactions have been eliminated in consolidation.
| F-8 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
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.
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 December 31, 2024, the Company’s cash and cash equivalents were deposited in four financial institutions.
The Company’s policy is to place its cash and cash equivalents with high-quality, major financial and investment institutions to limit the amount of credit exposure. Accounts at each financial institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2024 and 2023, the Company had $18,749,154 and $3,170,500 in excess of FDIC insured limits, respectively. The Company has not experienced any losses in such accounts.
Accounts Receivable
Accounts receivable consist of trade receivables arising from credit sales to customers in the normal course of business. These receivables are recorded at the time of sale, net of an allowance for current expected credit losses. In accordance with ASC Topic 326, “Financial Instruments – Credit Losses,” the Company estimates expected credit losses based on historical bad debt experience, the aging of accounts receivable, the current creditworthiness of our customers, prevailing economic conditions, and reasonable and supportable forward-looking information.
An allowance of $0 has been recorded at December 31, 2024 and 2023, 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.
| F-9 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Inventories
Inventories, which consist 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).
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 goods sold. Inventory items that are determined obsolete are written off currently with a corresponding charge to cost of goods sold.
As of December 31, 2024 and 2023, the reserve for inventory obsolescence was $1,062,000 and $1,146,000, 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 15 years | Straight-line | |||
| Computer equipment/software | 1 to 7 years | Straight-line | |||
| Vehicles | 5 years | Straight-line | |||
| Leasehold improvements | 7 years | Straight-line |
Intangible Assets
Definite-lived intangible assets including customer relationships and intellectual property are subject to amortization. Intangible assets are amortized over their estimated useful life on a straight-line basis. Estimated useful lives are determined considering the period the assets are expected to contribute to future cash flows. Indefinite-lived intangible assets are not subject to amortization.
Intangible assets are amortized as follows:
| Description | Useful Life | Method | |||
| Trade names | Indefinite | N/A | |||
| Customer relationships | 15 to 20 years | Straight-line | |||
| Intellectual property | 15 years | Straight-line |
| F-10 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Long-Lived Assets
The Company reviews the carrying value of long-lived assets such property and equipment, right-of-use (“ROU”) assets, and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Circumstances which could trigger a review include, but are not limited to; significant decrease in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.
The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of fair value less costs to sell and would no longer be depreciated. The depreciable basis of assets that are impaired and continue in use is their respective fair values.
Goodwill and Indefinite-Lived Intangible Assets
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 tangible and identifiable intangible assets acquired.
Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are tested for impairment annually on December 31, or more frequently when events or circumstances indicate an impairment may have occurred. When assessing the recoverability of goodwill and indefinite-lived intangible assets, the Company may first assess qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit, including goodwill, or an indefinite-lived intangible asset is less than its carrying amount. The qualitative assessment is based on several factors, including the current operating environment, industry and market conditions, and overall financial performance. The Company may elect to bypass this qualitative assessment for some or all of its reporting units or other indefinite-lived intangible assets and perform a quantitative assessment, based on management’s judgment.
If
we quantitatively test goodwill and indefinite-lived intangible assets for possible impairment, we calculate the fair value for the reporting
unit and indefinite-lived assets and compare the amount to their carrying amount. If the fair value of a reporting unit and indefinite-lived
asset exceeds their carrying amount, the reporting unit and indefinite-lived assets are not considered impaired. If the carrying amount
of the reporting unit and indefinite-lived assets exceed their fair value, the reporting unit and indefinite-lived assets are considered
to be impaired, and an impairment charge is recognized for the difference.
| F-11 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
We estimate the fair value of our reporting units and indefinite-lived intangible assets based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate the future cash flows used to measure fair value. Our estimates of future cash flows consider past performance, current and anticipated market conditions and internal projections and operating plans. Additional assumptions include forecasted growth rates, estimated discount rates, and estimated royalty rates for our indefinite-lived intangible assets.
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 have the ability to 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 December 31, 2024 and December 31, 2023, respectively. (see Note 9). These investments are included in other assets on the consolidated balance sheets. There were no indicators of impairment during the years ended December 31, 2024 and 2023.
Investment in Digital Assets
We account for all digital assets as indefinite-lived intangible assets in accordance with ASC Topic 350, “Intangibles—Goodwill and Other.” The Company presents digital assets separately from other intangible assets, recorded as digital assets on the consolidated balance sheets. The digital assets are initially recorded at cost and are subsequently remeasured at cost, net of any impairment losses incurred since acquisition.
We conducted an analysis to identify whether events or changes in circumstances, principally decreases in the quoted prices on active exchanges, indicate that it is more likely than not that our digital assets are impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on the active exchange since acquiring the digital asset. When the then current carrying value of a digital asset exceeds the fair value determined each quarter, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the prices determined. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets. In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
| F-12 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 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:
Identify the contract with the customer. A contract with a customer exists when (i) we enter into 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 December 31, 2024 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.
| F-13 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Allocate the transaction price to performance obligations in the contract. We typically do not have multiple performance obligations in our contracts with customers. We 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.
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 the cost of sales.
Research and Development
In accordance with ASC Topic 730, “Research and Development,” the Company expenses research and development costs as incurred. The major components of research and development costs include payroll, consultants, outside service, and supplies.
Research and development costs for the years ended December 31, 2024 and 2023 were $3,590,695 and $2,341,845, 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 tax rates enacted 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 December 31, 2024 and 2023, the Company had no material unrecognized tax benefits.
| F-14 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Basic loss per share is calculated by dividing net loss by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share is calculated by adjusting the weighted average number of shares of common stock outstanding for the dilutive effect, if any, of common stock equivalents. Common stock equivalents whose effect would be anti-dilutive are not included in diluted loss per share. The Company uses the treasury stock method to determine the dilutive effect, which assumes that all common stock equivalents have been exercised at the beginning of the period and that the funds obtained from those exercises were used to repurchase shares of common stock of the Company at the average closing market price during the period. As of December 31, 2024 and 2023, there were and , respectively, potential common share equivalents from stock options, warrants and restricted stock units which have been excluded from the diluted loss per share calculations as their effect is anti-dilutive.
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 Topic 718, “Share-Based Payments.” 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.
| F-15 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable.
The Company places its cash and cash equivalents and marketable securities with high-quality, major financial and investment institutions in order to limit the amount of credit exposure. For accounts receivable, the Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses.
Sales to the Company’s largest customer represented approximately 13.97% and 8.45% of total sales for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, there were two vendors that accounted for and , and and , respectively, of total component parts purchased.
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. ASU 2023-07 also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In August 2023, the FASB issued ASU 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
| F-16 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization included in each relevant expense caption presented on the statement of operations. The standard also requires disclosure of qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, as well as the total amount of selling expenses and an entity’s definition of selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact this standard will have on its consolidated financial statements.
The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its consolidated financial statements.
(4) Revenues
The following table presents sales disaggregated based on geographic regions and for the years ended:
| AmpliTech Inc. and Specialty Microwave | December
31, 2024 | December 31, 2023 | ||||||
| Domestic sales
| $ | 2,660,340 | $ | 5,120,694 | ||||
| International
sales | 940,135 | 1,267,459 | ||||||
| Total sales | $ | 3,600,475 | $ | 6,388,153 | ||||
| Spectrum | ||||||||
| Domestic sales | $ | 4,088,483 | $ | 6,234,934 | ||||
| International
sales | 1,819,414 | 2,961,490 | ||||||
| Total sales | $ | 5,907,897 | $ | 9,196,424 | ||||
Total sales for the year ended December 31, 2024 and 2023 were $9,508,372 and $15,584,577.
| F-17 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(5) Segment Reporting
ASC Topic 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. Operating segments are components of an enterprise for which separate discrete financial information is available and regularly evaluated by the CODM to allocate resources and assess performance. The Company has identified its Chief Executive Officer (“CEO”) as the CODM and has determined that it operates in two reportable segments; the manufacturing and engineering segment, which is operated by AmpliTech Inc. and Specialty Microwave: and the distribution segment, which is operated by Spectrum. The manufacturing and engineering segment assembles microwave components, and the distribution segment is a global distributor of integrated circuits packages and lids. The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Corporate” below and include costs associated with executive management, financing activities and public company compliance.
The following table presents summary information by segment for the year ended December 31, 2024:
| Manufacturing and Engineering | Distribution | Corporate | Total | |||||||||||||
| Revenue | $ | 3,600,475 | $ | 5,907,897 | $ | - |
$ | 9,508,372 | ||||||||
| Cost of goods sold | 3,227,140 | 2,796,125 | 6,023,265 | |||||||||||||
| Net income (loss) | (7,379,725 | ) | 1,146,548 | (5,009,227 | ) | (11,242,404 | ) | |||||||||
| Research and development (1) | 3,590,695 | 3,590,695 | ||||||||||||||
| Total assets | 27,344,872 | 15,821,000 | 54,410 | 43,220,482 | ||||||||||||
| Depreciation and amortization | 418,733 | 120,026 | 538,759 | |||||||||||||
| Interest expense, net | 25,216 | 266,979 | 292,195 | |||||||||||||
| F-18 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
The following table presents summary information by segment for the year ended December 31, 2023:
| Manufacturing and Engineering | Distribution | Corporate | Total | |||||||||||||
| Revenue | $ | 6,388,153 | $ | 9,196,424 | $ | $ | 15,584,577 | |||||||||
| Cost of goods sold | 3,565,467 | 4,743,482 | 8,308,949 | |||||||||||||
| Net income (loss) | (3,619,842 | ) | 2,060,234 | (905,831 | ) | (2,465,439 | ) | |||||||||
| Research and development (2) | 2,341,845 | 2,341,845 | ||||||||||||||
| Total assets | 11,461,268 | 16,540,789 | 3,405,572 | 31,407,629 | ||||||||||||
| Depreciation and amortization | 362,663 | 168,497 | 531,160 | |||||||||||||
| Interest expense, net | 26,901 | (7,620 | ) | 19,281 | ||||||||||||
| (1) | Research and development for the year ending December 31, 2024 was comprised of $2,030,071 of 5G expenses and $1,560,624 of MMIC design expenses. | |
| (2) | Research and development for the year ending December 31, 2023 was comprised of $157,984 of 5G expenses and $2,183,861 of MMIC design expenses. |
(6) Inventories
The inventory consists of the following at December 31, 2024 and 2023:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Raw Materials | $ | 1,261,307 | $ | 959,645 | ||||
| Work-in Progress | 190,818 | 51,140 | ||||||
| Finished Goods | 7,198,639 | 6,672,793 | ||||||
| Subtotal | $ | 8,650,764 | $ | 7,683,578 | ||||
| Less: Reserve for | ||||||||
| Obsolescence | (1,062,000 | ) | (1,146,000 | ) | ||||
| Total | $ | 7,588,764 | $ | 6,537,578 | ||||
| F-19 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(7) Property and Equipment
Property and Equipment consisted of the following at December 31, 2024 and 2023:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Lab Equipment | $ | 3,429,447 | $ | 3,400,207 | ||||
| Manufacturing Equipment | 129,745 | 129,745 | ||||||
| Automobiles | 7,335 | 7,335 | ||||||
| Computer Equipment and Software | 146,785 | 194,238 | ||||||
| Leasehold Improvements | 84,172 | 84,172 | ||||||
| Furniture and Fixtures | 170,643 | 170,643 | ||||||
| Subtotal | 3,968,127 | 3,986,340 | ||||||
| Less: Accumulated Depreciation | (1,714,432 | ) | (1,386,892 | ) | ||||
| Total | $ | 2,253,695 | $ | 2,599,448 | ||||
Depreciation expense for the years ended December 31, 2024 and 2023 was $388,673 and $381,185 respectively, of which $308,071 and $256,248, respectively were included in cost of goods sold.
Property and equipment purchased in the amount of $234,036 under financing leases are included in the totals above (see Note 10).
Disposals of property and equipment as of December 31, 2024 and 2023 was $61,133 and $0, respectively.
(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 as 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 and financial statement purposes. As of December 31, 2024 and 2023, goodwill was $4,696,883, respectively.
| F-20 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Other Intangible Assets
Intangible assets consisted of the following at December 31, 2024:
| Gross Carrying | Accumulated | Weighted | ||||||||||||||
| Amount | Amortization | Net | Average Life | |||||||||||||
| Trade name | $ | 514,284 | $ | $ | 514,284 | Indefinite | ||||||||||
| Customer relationships | 2,178,631 | 326,796 | 1,851,835 | 16.97 | ||||||||||||
| Total | $ | 2,692,915 | $ | 326,796 | $ | 2,366,119 | ||||||||||
Intangible assets consisted of the following at December 31, 2023:
| Gross Carrying | Accumulated | Weighted | ||||||||||||||
| Amount | Amortization | Net | Average Life | |||||||||||||
| Trade name | $ | 584,517 | $ | $ | 584,517 | Indefinite | ||||||||||
| Customer relationships | 2,591,491 | 336,330 | 2,255,161 | 16.81 | ||||||||||||
| Intellectual property | 202,771 | 58,316 | 144,455 | 10.71 | ||||||||||||
| Total | $ | 3,378,779 | $ | 394,646 | $ | 2,984,133 | ||||||||||
Amortization expense for the years ended December 31, 2024 and 2023 was $150,086 and $149,975, respectively. Intangible asset impairments, consisting of trade name, customer relationships and intellectual property related to the purchase of Specialty Microwave, for the years ended December 31, 2024 and 2023, were $467,928 and $0, respectively.
Annual amortization of intangible assets are as follows:
| 2025 | 108,932 | |||
| 2026 | 108,932 | |||
| 2027 | 108,932 | |||
| 2028 | 108,932 | |||
| 2029 | 108,932 | |||
| Thereafter | 1,307,175 | |||
| $ | 1,851,835 |
(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 represented 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. Considering this amendment, the Company overpaid $1,750 for the membership interest and was subsequently reimbursed. As of December 31, 2024, the Company has made an investment of $348,250 for a 19.9% membership interest.
| F-21 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(10) Leases
The following was included in our balance sheet as of December 31, 2024 and 2023:
| December
31, 2024 | December
31, 2023 | |||||||
| Operating leases | ||||||||
| Assets | ||||||||
| ROU operating lease assets | $ | 4,399,975 | $ | 3,538,798 | ||||
| Liabilities | ||||||||
| Current portion of operating lease | $ | 449,622 | $ | 541,324 | ||||
| Operating lease, net of current portion | $ | 4,139,562 | $ | 3,171,979 | ||||
| Total operating lease liabilities | $ | 4,589,184 | $ | 3,713,303 | ||||
| Financing leases | ||||||||
| Assets | ||||||||
| Property and equipment, gross | $ | 234,036 | $ | 234,036 | ||||
| Accumulated depreciation | (190,217 | ) | (151,919 | ) | ||||
| Property and equipment, net | $ | 43,819 | $ | 82,117 | ||||
| Liabilities | ||||||||
| Current portion of financing lease | $ | 16,522 | $ | 16,799 | ||||
| Financing lease, net of current portion | $ | 15,478 | $ | 32,537 | ||||
| Total financing lease liabilities | $ | 32,000 | $ | 49,336 | ||||
| F-22 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
The weighted average remaining lease term and weighted average discount rate at December 31, 2024 and 2023 are as follows:
| Weighted average remaining lease term (years) | December 31, 2024 | December 31, 2023 | ||||||
| Operating leases | 7.95 | 9.36 | ||||||
| Financing leases | 2.08 | 2.97 | ||||||
| Weighted average discount rate | ||||||||
| Operating leases | 6.40 | % | 4.45 | % | ||||
| Financing leases | 4.65 | % | 4.72 | % | ||||
Operating Leases
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 as of December 31, 2022. 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 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.
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 increases by approximately 3% every year. On September 6, 2024, the lease was amended extending the lease term to March 31, 2030 while maintaining the base rent of $24,234 and 3% increases for each year thereafter.
On August 9, 2023, the Company entered a 39-month agreement for $20,880 to lease an automobile with a monthly payment of $605.
| F-23 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
On January 15, 2024, the Company entered a triple net lease agreement for a 1,900 square foot facility in Allen, Texas for a term of five years and one month. The yearly base rent of $53,675 shall increase at a rate of 2.5% per year to begin on the first anniversary lease commencement date and each year thereafter. The first month’s rent shall be abated following the commencement lease date. Upon lease execution, the Company paid two months of rent as a security deposit and one month’s rent totaling $17,999. The Company moved into the new facility on August 1, 2024.
The following table reconciles future minimum operating lease payments to the discounted lease liability as of December 31, 2024:
| 2025 | 721,020 | |||
| 2026 | 744,511 | |||
| 2027 | 763,543 | |||
| 2028 | 779,311 | |||
| 2029 | 781,351 | |||
| Thereafter | 1,980,928 | |||
| Total lease payments | 5,770,664 | |||
| Less imputed interest | (1,181,480 | ) | ||
| Total lease obligations | 4,589,184 | |||
| Less current obligations | (449,622 | ) | ||
| Long-term lease obligations | $ | 4,139,562 |
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 December 31, 2024:
| 2025 | 17,630 | ||||
| 2026 | 11,982 | ||||
| 2027 | 3,994 | ||||
| Total lease payments | 33,606 | ||||
| Less imputed interest | (1,606 | ) | |||
| Total lease obligations | 32,000 | ||||
| Less current obligations | (16,522 | ) | |||
| Long-term lease obligations | $ | 15,478 |
| F-24 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(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 due October 1, 2024 of $9,203. As of December 31, 2024, the balance of this promissory note was $0. Principal payments of $80,841 along with interest expense of $2,082 were paid during the year ended December 31, 2024.
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 4.27%. Principal payments of $3,230 and interest expense of $30 were paid for the year ended December 31, 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 4.28%. Principal payments of $6,012 and interest expense of $68 were paid for the year ended December 31, 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, which had $0 balance. All UCC filings on the Company assets have been released as well as the 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 December 31, 2024 and 2023 was $0, respectively. Principal payments of $0 and $41,700 and interest expense of $0 and $430 were paid for the years ended December 31, 2024 and 2023, respectively.
On July 23, 2024, the Company entered into a business loan and security agreement with Altbanq Lending II LLC in the amount of $1,300,000, which included 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 bore an annual interest rate of 21.2% with prepayment options available. The loan was secured by the Company’s assets through a UCC filing, and proceeds were used for working capital, 5G licensing and certification fees. During the year ended December 31, 2024, the Company repaid the loan in full, through principal payments of $1,534,000, and recorded $260,000 in debt discount amortization.
| F-25 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
(12) Income Taxes
As of December 31, 2024 and 2023, the Company had net operating loss carry forwards of $11.6 million and $7.9 million, respectively, that may be available to reduce future years’ taxable income indefinitely. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur. Accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. For the years ending December 31, 2024 and 2023, the Company reflects a deferred tax liability in the amount of $39,000 and $24,000, respectively, due to the future tax liability from an asset with an indefinite life known as a “naked credit.” The future tax liability from this indefinite lived asset can be offset by up to 80% of net operating loss carryforwards created after 2017. The remaining portion of the future tax liability from indefinite lived assets cannot be used to offset definite lived deferred tax assets.
The components for the provision of income taxes include the following:
| December
31, 2024 | December
31, 2023 | |||||||
| Current federal and state | $ | $ | ||||||
| Deferred federal and state | 15,000 | 24,000 | ||||||
| Total provision for income taxes | $ | 15,000 | $ | 24,000 | ||||
A reconciliation of the statutory US federal income tax rate to the Company’s effective income tax rate is as follows:
| December
31, 2024 | December
31, 2023 | |||||||
| Federal tax | 21.0 | % | 21.0 | % | ||||
| State tax | 0.8 | % | 0.8 | % | ||||
| Permanent items | (0.1 | )% | (0.4 | )% | ||||
| Change in rate | 0.0 | % | 2.5 | % | ||||
| Valuation allowance | (21.9 | )% | (24.9 | )% | ||||
| Effective income tax rate | (0.2 | )% | (1.0 | )% | ||||
| F-26 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and amounts used for tax purposes. The Company has a net cumulative deferred tax liability of $39,000. The major components of deferred tax assets and liabilities are as follows:
| December
31, 2024 | December
31, 2023 | |||||||
| Deferred tax assets | ||||||||
| Inventory obsolescence | $ | 232,000 | $ | 250,000 | ||||
| ROU assets | 40,000 | 31,000 | ||||||
| Stock-based compensation | 227,000 | 27,000 | ||||||
| Research and development | 588,000 | 426,000 | ||||||
| Loss carryforward | 3,474,000 | 1,723,000 | ||||||
| Valuation allowance | (4,315,000 | ) | (2,150,000 | ) | ||||
| Total deferred tax assets | $ | 246,000 | $ | 307,000 | ||||
| Deferred tax liabilities | ||||||||
| Fixed assets | $ | (120,000 | ) | $ | (149,000 | ) | ||
| Cost method investment | (29,000 | ) | (28,000 | ) | ||||
| Intangible assets | (136,000 | ) | (154,000 | ) | ||||
| Total deferred tax liabilities | $ | (285,000 | ) | $ | (331,000 | ) | ||
| Total net deferred income tax liabilities | $ | (39,000 | ) | $ | (24,000 | ) | ||
(13) Stockholders’ Equity
The total number of shares of stock this Corporation is authorized to issue shall be five hundred one million () shares, par value $ per share. Our authorized capital stock consists of shares of common stock and 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 shares of Preferred Stock, par value $ 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 shares, $ 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 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 converts 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.
| F-27 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Common Stock:
The Company originally authorized shares of common stock with a par value of $. Effective May 20, 2014, the Company increased its authorized shares of common stock from to .
On February 17, 2021, AmpliTech Group Inc., common stock and warrants under the symbols “AMPG” and “AMPGW”, respectively, commenced trading on NASDAQ.
On September 9, 2024, the Company entered into a Securities Purchase Agreement with a single institutional investor to sell shares of the Company’s common stock, par value $ per share at a per share price of $. The closing of the offering occurred on September 11, 2024. The gross proceeds to the Company from this offering was approximately $1 million, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $180,000.
On November 24, 2024, the Company entered into a Securities Purchase Agreement with three institutional investors pursuant to which the Company agreed to sell in a registered direct offering, shares of the Company’s common stock, par value $ per share, at a per share price of $ and prefunded warrants of 177,882 shares of common stock, at $ per prefunded warrant. The closing of the registered direct offering occurred on November 26, 2024. The exercise price of each Prefunded Warrant is $0.001 and 177,882 warrants were exercised in full immediately. The gross proceeds to the Company from the offering was approximately $1,474,998, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $200,000.
On December 11, 2024, the Company entered into a Securities Purchase Agreement with three institutional investors pursuant to which the Company agreed to sell in a registered direct offering, shares of the Company’s common stock, par value $ per share, at a per share price of $. The closing of the registered direct offering occurred on December 13, 2024. The gross proceeds to the Company from the offering was approximately $2,164,000, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $220,000.
On December 16, 2024, the Company entered into a Securities Purchase Agreement with two institutional investors pursuant to which the Company agreed to sell in a registered direct offering, shares of the Company’s common stock, par value $ per share, at a per share price of $. The closing of the registered direct offering occurred on December 18, 2024. The gross proceeds to the Company from the offering was approximately $3,185,028, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $290,000.
On December 19, 2024, the Company granted restricted stock awards under the Company’s 2020 Plan to directors of the Company for an aggregate of shares of common stock ( each) valued at $90,000. These restricted stock awards vested immediately.
On December 24, 2024, the Company entered into a Securities Purchase Agreement with three institutional investors pursuant to which the Company agreed to sell in a registered direct offering, shares of the Company’s common stock, par value $ per share, at a per share price of $. The closing of the registered direct offering occurred on December 27, 2024. The gross proceeds to the Company from the offering was approximately $5,800,100, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $490,000.
On December 27, 2024, the Company entered into a Securities Purchase Agreement with three institutional investors pursuant to which the Company agreed to sell in a registered direct offering, shares of the Company’s common stock, par value $ per share, at a per share price of $. The closing of the registered direct offering occurred on December 31, 2024. The gross proceeds to the Company from the offering was approximately $10,000,032, before deducting placement agent’s fees and other offering expenses payable by the Company of approximately $660,000.
On August 18, 2023, the Company granted restricted stock awards under the Company’s 2020 Plan to directors of the Company for an aggregate of shares of common stock ( each) valued at $. These restricted stock awards vested immediately.
On December 20, 2023, the Company granted restricted stock units at an exercise price of $ under the Company’s 2020 Plan to a consultant. This restricted stock award vested immediately and the stock compensation was recorded under research and development.
On May 20, 2022, restricted stock units at an exercise price of $were issued to a board advisor. Vesting will occur in equal quarterly installments of shares beginning on May 20, 2022. As of December 30, 2024 and 2023, shares of common stock were issued, 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.
| F-28 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
In 2023, the Board and the shareholders adopted the Company’s Amended and Restated 2020 Equity Incentive Plan (the “Amended and Restated Plan”), effective as of December 11, 2023. The Amended and Restated Plan is substantially similar to the 2020 Plan except that it increases the shares of our common stock available for issuance thereunder to shares of common stock.
As of December 31, 2024, all outstanding stock options were issued according to the Company’s 2020 Plan, and there remains shares of common stock available for future issuance under the 2020 Plan.
Stock Options:
On January 9, 2024, the Company granted a consultant ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. The stock options vested immediately, with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of %, risk-free rate of %, and no forfeiture rate.
On January 16, 2024, the Company granted an employee ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over five years commencing on April 16, 2024, with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of %, risk-free rate of %, and no forfeiture rate.
On January 25, 2024, the Company granted an independent contractor ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. stock options vested immediately and the balance of shall vest in equal quarterly installments over three years commencing on June 30, 2024, with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
On October 28, 2024, the Company granted an employee ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over three years commencing on October 29, 2024, with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
On February 27, 2023, the Company granted one employee ten-year stock options to purchase 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 $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
On May 1, 2023, the Company granted one employee ten-year stock options to purchase 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 $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of %, and no forfeiture rate.
On June 5, 2023, the Company granted one employee ten-year stock options to purchase 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 $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
On June 12, 2023, the Company granted one employee ten-year stock options to purchase 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 $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of %, risk-free rate of %, and no forfeiture rate.
| F-29 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
On August 18, 2023, the Company granted one employee ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over five years commencing on November 18, 2023, with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
On September 25, 2023, the Company granted one employee ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over five years commencing on December 25, 2023, with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
On October 2, 2023, the Company granted one employee ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. The stock options vest in equal quarterly installments over five years commencing on January 2, 2024, with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
On December 20, 2023, the Company granted Mr. Maqbool ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. In addition, Ms. Sanfratello and Mr. Flores were each granted stock options to purchase shares of common stock. The stock options vest in quarterly installments over a 5-year period with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of, risk-free rate of , and no forfeiture rate.
On December 20, 2023, the Company granted two employees and one consultant ten-year stock options to purchase shares of common stock according to the Company’s 2020 Plan. The stock options vest in quarterly installments over a 5-year period with an exercise price of $ per share. The Company has calculated these options estimated fair market value at $ using the Black-Scholes model, with the following assumptions: expected term of years, stock price of $, exercise price of $, volatility of , risk-free rate of , and no forfeiture rate.
Below is a table summarizing the changes in stock options outstanding for the year ended December 31, 2024 and 2023:
| Number of | Weighted Average | |||||||
| Options | Exercise Price ($) | |||||||
| Outstanding at December 31, 2023 | 1,236,000 | $ | ||||||
| Granted | 72,500 | $ | ||||||
| Exercised | ||||||||
| Forfeited or expired | (13,500 | ) | $ | |||||
| Outstanding at December 31, 2024 | 1,295,000 | $ | ||||||
| Exercisable at December 31, 2024 | 706,202 | $ | ||||||
| Number of | Weighted Average | |||||||
| Options | Exercise Price ($) | |||||||
| Outstanding at December 31, 2022 | 916,000 | $ | ||||||
| Granted | 320,000 | $ | ||||||
| Exercised | ||||||||
| Forfeited or expired | $ | |||||||
| Outstanding at December 31, 2023 | 1,236,000 | $ | ||||||
| Exercisable at December 31, 2023 | 483,344 | $ | ||||||
Stock-based compensation expense related to stock options of $and $was recorded for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the remaining unrecognized compensation cost related to non-vested stock options is $and is expected to be recognized over years. The outstanding stock options have a weighted average remaining contractual life of years and a total intrinsic value of $.
| F-30 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
Warrants:
Below is a table summarizing the changes in warrants outstanding for the year ended December 31, 2024 and 2023:
| Number of | Weighted Average | |||||||
| Warrants | Exercise Price ($) | |||||||
| Outstanding at December 31, 2023 | 3,296,942 | $ | ||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited or expired | ||||||||
| Outstanding at December 31, 2024 | 3,296,942 | $ | ||||||
| Exercisable at December 31, 2024 | 3,296,942 | $ | ||||||
| Number of | Weighted Average | |||||||
| Warrants | Exercise Price ($) | |||||||
| Outstanding at December 31, 2022 | 3,296,942 | $ | ||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited or expired | ||||||||
| Outstanding at December 31, 2023 | 3,296,942 | $ | ||||||
| Exercisable at December 31, 2023 | 3,296,942 | $ | ||||||
Stock-based compensation expense related to warrants of $ was recorded for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the remaining unrecognized compensation cost related to non-vested warrants is $. The outstanding warrants have a weighted average remaining contractual life of years and a total intrinsic value of $.
Restricted Stock Units:
On December 19, 2024, the Company granted restricted stock awards under the Company’s 2020 Plan to directors of the Company for an aggregate of shares of common stock ( each) valued at $. These restricted stock awards vested immediately.
On August 18, 2023, the Company granted restricted stock awards under the Company’s 2020 Plan to directors of the Company for an aggregate of shares of common stock ( each) valued at $. These restricted stock awards vested immediately.
On December 20, 2023, restricted stock units at an exercise price of $ were issued to a consultant. This restricted stock award vested immediately.
On May 20, 2022, restricted stock units at an exercise price of $ were issued to a board advisor. Vesting will occur in equal quarterly installments of 2,500 shares beginning on May 20, 2022. As of December 30, 2024 and 2023, shares of common stock were issued, respectively.
| F-31 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
| Number of | Weighted Average | |||||||
| RSUs | Exercise Price ($) | |||||||
| Outstanding at December 31, 2023 | 12,500 | $ | 1.96 | |||||
| Granted | 45,000 | $ | 2.00 | |||||
| Vested | (55,000 | ) | $ | 1.99 | ||||
| Forfeited or expired | ||||||||
| Outstanding at December 31, 2024 | 2,500 | $ | 1.96 | |||||
Stock-based compensation expense related to restricted stock units of $ and $ was recorded for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the remaining unrecognized compensation cost related to non-vested restricted stock units is $. The outstanding restricted stock units have a weighted average remaining contractual life of years and a total intrinsic value of $.
(14) Commitments and Contingencies
On July 26, 2024, the Company’s AGTGSS division entered into a licensing product agreement. Under the terms of the agreement, the licensor agreed to an exclusive United States distribution and global licensing rights for certain 5G telecom equipment for 18 months for the purpose of marketing, selling, renting, deployment and maintenance of the licensed products with the Company. For services, the Company will pay the Licensor certain software IP license fees in the amount of $1,250,000. In addition, the licensor may provide certain product certification support for certain fees. As of December 31, 2024, $710,000 was paid towards this licensing agreement, and is recorded in long-term deposits on the consolidated balance sheet.
(15) Subsequent events
On January 17, 2025, Mr. Matthew Kappers resigned as a director of the Company, including his positions as the chairman of the Nominating and Corporate Governance Committee, and as a member of the Audit Committee and the Compensation Committee, effective immediately. Mr. Kappers’ resignation is for personal reasons and not due to any disagreement with the Company’s management team or the Company’s board on any matter relating to the operations, policies or practices of the Company or any issues regarding the Company’s accounting policies or practices.
On January 17, 2025, the Board appointed Mr. Shailesh “Sonny” Modi as a director of the Board of Directors of the Company to fill the vacancy resulting from Mr. Kappers’ resignation. The Board appointed Mr. Modi to serve as the chairman of the Nominating and Corporate Governance Committee, and a member of the Audit Committee and the Compensation Committee, effective immediately.
On January 20, 2025, the Company entered into a standard form of director agreement with each of the foregoing independent directors: Mr. Andrew Lee, Mr. Daniel Mazziota and Mr. Shailesh “Sonny” Modi. The Director Agreement provides for a one (1) year term unless terminated earlier upon certain events set forth in the Director Agreement, which includes among other things, resignation or removal. In addition, the Director Agreement also provides, among other things, reimbursement of expenses for attending meetings, indemnification and annual compensation of Restricted Stock Units pursuant to the Company’s Amended and Restated 2020 Equity Incentive Plan for services.
On March 20, 2025, the Company entered into a non-binding letter of intent with a contract manufacturer on behalf of its end user for the purchase of $78 million of the Company’s Oran radios. If fulfilled, deliveries of the order are expected to start in FY2025 and will substantially increase each year thereafter into 2027. The non-binding letter of intent is subject to the parties entering into a series of definitive purchase orders. No assurance can be given that the Company will enter into any purchase orders for the total amount of $78 million.
On March 21, 2025, we entered into an equity distribution agreement, or the Equity Distribution Agreement, with Maxim Group LLC , or Maxim, relating to offer and sell shares of our common stock having an aggregate offering price of up to $25 million from time to time through Maxim, acting as our exclusive sales agent, in an “At-the-Market Offering” at our discretion.
| F-32 |
AmpliTech Group, Inc.
Notes To Consolidated Financial Statements
For the Years Ended December 31, 2024 and 2023
On March 25, 2025, AmpliTech Group, Inc., a Nevada corporation (the “Company”), entered into a Bank Loan Agreement (the “Loan Agreement”) with Dime Community Bank (the “Bank”) for a revolving line of credit for up to $750,000 (the “Revolving Line of Credit”). The Company has established the Revolving Line of Credit for general working purposes and uses, as needed. As of the date of this filing, there is no outstanding balance on the Revolving Line of Credit. The term of the Loan Agreement expires once all indebtedness under the Revolving Line of Credit has been paid in full, or until such time as the Bank and the Company agree in writing to terminate the Loan Agreement. In addition to interest, the Company agreed to pay an annual fee of $500.00 on the anniversary date of each year the Loan Agreement is in effect, subject to change by the Bank with notice. Pursuant to an Assignment of Deposit Agreement dated March 25, 2025 between us and the Bank, the Revolving Line of Credit is secured by a demand deposit account with the Bank which requires us to have a balance no less than $814,635.
The Revolving Line of Credit is evidenced by a promissory note, which is due on demand, or if there is no demand, then on March 1, 2026, unless extended, modified or renewed (the “Note”). The Company has agreed to pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning April 1, 2025, with all subsequent interest payments to be due on the same day of each month thereafter. The Note bears a variable interest rate based on changes in the Wall Street Journal Prime Rate as published in the Wall Street Journal from time to time, plus 1.000%, provided however, under no circumstances will the interest rate be less than 6.250% per annum or more than the maximum rate allowed by applicable law. Late payment is subject to a fee of 5.000% of the regularly scheduled payment. In the event of default, the Note bears an interest at a rate per annum equal to 5.000% above the rate that is otherwise applicable to such amounts.
Among other things, the Loan Agreement contains customary representations and warranties, events of default, negative and affirmative covenants and financial covenants, and certain limitations on dispositions of assets. The Loan Agreement also contains usual and customary events of default (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default, payment of all amounts payable under the Note may be accelerated at the Bank’s option and/or the Bank’s commitment and obligations will terminate without notice to the Company.
On March 26, 2025, the Company entered into an asset purchase agreement with Titan Crest, LLC, a Delaware limited liability company (the “Seller”), and its affiliate, to purchase certain assets including intellectual property used in developing, manufacturing, marketing and selling products that use radio frequency technology (“5G ORAN radio products”) (the “Asset Purchase Agreement”). The Asset Purchase Agreement contains customary representations and warranties and covenants by each party. In addition to customary closing conditions, the closing of the transactions and the payment of the purchase price contemplated by the Asset Purchase Agreement is conditioned upon certain conditions, including but not limited to (i) the issue of a purchase order from Telus for fiscal year delivery to the Company, (ii) a purchase order between the Company and the Seller or its affiliate pursuant to which the Seller will assist in manufacturing the products to be sold to Telus to meet its purchase order, and (iii) receipt of correspondence from Telus to the Company, indicating Telus’ intention to issue purchase orders (including Telus’ initial purchase order) which purchase orders will be spread out over 3 years (“Telus Subsequent Purchase Orders”).
The aggregate purchase price for the assets is $8,000,000 which consists of $3,000,000 in cash and $5,000,000 in restricted shares of common stock of which the first $2,500,000 in cash and $2,500,000 in restricted common stock will be issued upon the procurement of the Telus’ initial purchase order and receipt of assurance of the Telus Subsequent Purchase Orders; and that the remaining $500,000 in cash to be paid on December 5, 2025 and $2,500,000 in shares of restricted common stock will be issued to Company upon the transfer of the 5G ORAN radio products’ technology and intellectual property rights by the Seller to the Company.
In addition, under the Asset Purchase Agreement, the parties are obligated, subject to certain limitations, to indemnify the other for certain customary and other specified matters, including breaches of representations and warranties, breaches of covenants and for certain liabilities and third-party claims. Further, the Seller and its affiliate, jointly and severally, agreed for a period of 10 years not to engage in certain competitive activities with respect to the business or proposed business relating to the assets sold to the Company. In addition, the Asset Purchase Agreement contemplates that after the closing, the Company and the Seller will enter short-term transition services agreements for up to two of the Seller’s employees to provide Company assistance in the assignment and transfer of the purchased assets from the Seller to the Company for a fee not to exceed $430,000.
In connection with the transaction, Seller’s affiliate agreed to transfer all of its rights, title and interest in 5G ORAN radio products technology and intellectual property rights to Seller. Subsequent to the transaction, Seller’s affiliate will continue its business and retain its employees focusing on software solutions and services.
| F-33 |
Exhibit 4.4
DESCRIPTION OF CAPITAL STOCK
The following information describes the common stock, par value $0.001 per share, as well as certain provisions of our amended and restated articles of incorporation (our “Articles of Incorporation”) and our amended and restated bylaws (“Bylaws”). This description is only a summary. You should also refer to our Articles of Incorporation and Bylaws, which have been filed with the SEC as exhibits to the registration statement of which this prospectus forms a part.
Authorized and Outstanding Capital Stock
Our authorized capital stock consists of 500,000,000 shares of common stock, $0.001 par value per share, and 1,000,000 shares of blank check preferred stock, $0.001 par value per share. As of March 13, 2025, there are 19,658,960 shares of common stock and 0 shares of preferred stock outstanding.
Common Stock
Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, and do not have cumulative voting rights. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available for dividend payments. All outstanding, shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued upon completion of this offering will be fully paid and nonassessable. The holders of common stock have no preferences or rights of cumulative voting, conversion, or pre-emptive or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in any of our assets remaining after payment or provision for payment of all of our debts and obligations and after liquidation payments to holders of outstanding shares of preferred stock, if any.
Our common stock is traded on Nasdaq under the symbol “AMPG.”
The transfer agent and registrar for our common stock is VStock Transfer LLC.
Preferred Stock
The Board generally will be authorized, without further stockholder approval, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock, in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers (or special, preferential or no voting powers), relative, participating, optional or other special rights and privileges and such qualifications, limitations or restrictions as is determined by the Board, which may include, among others, the right to provide that the shares of each such series may be: (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Company; (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock of the Company at such price or prices or at such rates of exchange and with such adjustments, if any; or (v) entitled to the benefit of such limitations, if any, on the issuance of additional shares of such series or shares of any other series of preferred stock.
Our stockholders have granted the Board authority to issue the preferred stock and to determine the rights and preferences of the preferred stock in order to eliminate delays associated with a stockholder vote on specific issuances. The rights of the holders of common stock will be subordinate to the rights of holders of any preferred stock issued in the future. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could adversely affect the voting power or other rights of the holders of common stock, and could make it more difficult for a third party to acquire, or discourage a third party from attempting to acquire, a majority of our outstanding voting stock.
Public Warrants
In connection with our public offering in February 2021, 1,371,428 units at an offering price of $7.00 per unit were sold. Each unit issued in the offering consisted of one share of common stock and one warrant. On February 17, 2021, our public warrants under the symbols “AMPGW,” commenced trading on Nasdaq Capital Market (“Public Warrants”). The following summary of certain terms and provisions our Public Warrants.
Exercisability. The Warrants are exercisable at any time after their original issuance and at any time up to February 19, 2026 The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the Warrant Agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of Warrants being exercised. Under the terms of the Warrant Agreement, we must use our best efforts to maintain the effectiveness of the registration statement and current prospectus relating to common stock issuable upon exercise of the Warrants until the expiration of the Warrants. If we fail to maintain the effectiveness of the registration statement and current prospectus relating to the common stock issuable upon exercise of the Warrants, the holders of the Warrants shall have the right to exercise the Warrants solely via a cashless exercise feature provided for in the Warrants, until such time as there is an effective registration statement and current prospectus.
Exercise Limitation. A holder may not exercise any portion of a Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as a group, would own more than 4.99% of the outstanding common stock after exercise, as such percentage ownership is determined in accordance with the terms of the Warrant, except that upon prior notice from the holder to us, the holder may waive such limitation up to a percentage not in excess of 9.99%.
Exercise Price. The exercise price per whole share of common stock purchasable upon exercise of the Warrants is $7.00 per share. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders.
Fractional Shares. No fractional shares of common stock will be issued upon exercise of the Warrants. If, upon exercise of the Warrant, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, pay a cash adjustment in respect of such fraction in an amount equal to such fraction multiplied by the exercise price. If multiple Warrants are exercised by the holder at the same time, we shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the exercise price.
Transferability. Subject to applicable laws, the Warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange Listing. The Warrants are listed on the Nasdaq Capital Market under the symbol “AMPGW”.
Warrant Agent; Global Certificate. The Warrants were issued in registered form under a warrant agent agreement between the Warrant Agent and us. The warrants shall initially be represented only by one or more global warrants deposited with the Warrant Agent, as custodian on behalf of The Depository Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.
Fundamental Transactions. In the event of a fundamental transaction, as described in the Warrants and generally including any reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holders of the Warrants will be entitled to receive the kind and amount of securities, cash or other property that the holders would have received had they exercised the warrants immediately prior to such fundamental transaction.
Rights as a Stockholder. The Warrant holders do not have the rights or privileges of holders of common stock or any voting rights until they exercise their Warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Governing Law. The Warrants and the warrant agency agreement are governed by New York law.
Anti-Takeover Effects of Some Provisions of Nevada Law
The following provisions of the Nevada Revised Statutes (“NRS”) could, if applicable, have the effect of discouraging takeovers of our company.
Transactions with Interested Stockholders. The NRS prohibits a publicly-traded Nevada company from engaging in any business combination with an interested stockholder for a period of three years following the date that the stockholder became an interested stockholder unless, prior to that date, the Board of Directors of the corporation approved either the business combination itself or the transaction that resulted in the stockholder becoming an interested stockholder.
An “interested stockholder” is defined as any entity or person beneficially owning, directly or indirectly, 10% or more of the outstanding voting stock of the corporation and any entity or person affiliated with, controlling, or controlled by any of these entities or persons. The definition of “business combination” is sufficiently broad to cover virtually any type of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise benefit its own interests rather than the interests of the corporation and its stockholders.
In addition, business combinations that are not approved and therefore take place after the three year waiting period may also be prohibited unless approved by the board of directors and stockholders or the price to be paid by the interested stockholder is equal to the highest of (i) the highest price per share paid by the interested stockholder within the 3 years immediately preceding the date of the announcement of the business combination or in the transaction in which he or she became an interested stockholder, whichever is higher; (ii) the market value per common share on the date of announcement of the business combination or the date the interested stockholder acquired the shares, whichever is higher; or (iii) if higher for the holders of preferred stock, the highest liquidation value of the preferred stock.
Acquisition of a Controlling Interest. The NRS contains provisions governing the acquisition of a “controlling interest” and provides generally that any person that acquires 20% or more of the outstanding voting shares of an “issuing corporation,” defined as Nevada corporation that has 200 or more stockholders at least 100 of whom are Nevada residents (as set forth in the corporation’s stock ledger); and does business in Nevada directly or through an affiliated corporation, may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholder of the corporation elects to restore such voting rights in whole or in part.
The statute focuses on the acquisition of a “controlling interest” defined as the ownership of outstanding shares sufficient, but for the control share law, to enable the acquiring person, directly or indirectly and individually or in association with others, to exercise (i) one-fifth or more, but less than one-third; (ii) one-third or more, but less than a majority; or (iii) a majority or more of the voting power of the corporation in the election of directors.
The question of whether or not to confer voting rights may only be considered once by the stockholders and once a decision is made, it cannot be revisited. In addition, unless a corporation’s articles of incorporation or bylaws provide otherwise (i) acquired voting securities are redeemable in whole or in part by the issuing corporation at the average price paid for the securities within 30 days if the acquiring person has not given a timely information statement to the issuing corporation or if the stockholders vote not to grant voting rights to the acquiring person’s securities; and (ii) if voting rights are granted to the acquiring person, then any stockholder who voted against the grant of voting rights may demand purchase from the issuing corporation, at fair value, of all or any portion of their securities.
The provisions of this section do not apply to acquisitions made pursuant to the laws of descent and distribution, the enforcement of a judgment, or the satisfaction of a security interest, or acquisitions made in connection with certain mergers or reorganizations.
Exhibit 10.32
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. [*****] INDICATES THAT INFORMATION HAS BEEN REDACTED OR OMITTED.
FORM OF ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMPLITECH GROUP, INC.
AND
TITAN CREST, LLC
March 26, 2025
TABLE OF CONTENTS
| ARTICLE I Purchase and Sale | 1 | ||
| Section 1.01 | Purchase and Sale of Assets | 1 | |
| Section 1.02 | Excluded Assets | 2 | |
| Section 1.03 | Assumed Liabilities | 2 | |
| Section 1.04 | Excluded Liabilities | 2 | |
| Section 1.05 | Purchase Price | 3 | |
| Section 1.06 | [*****] License to Use the Purchased Assets | 4 | |
| Section 1.07 | Buyer License | 4 | |
| Section 1.08 | Transition Services Agreement | 4 | |
| Section 1.09 | Allocation of Purchase Price | 4 | |
| Section 1.10 | Withholding Tax | 4 | |
| Section 1.11 | Closing | 4 | |
| Section 1.12 | Closing Deliverables. | 4 | |
| ARTICLE II Representations and warranties of Seller and [*****] | 5 | ||
| Section 2.01 | Organization and Authority of Seller; Enforceability | 5 | |
| Section 2.02 | No Conflicts; Consents | 6 | |
| Section 2.03 | Title to Purchased Assets | 6 | |
| Section 2.04 | Intellectual Property | 6 | |
| Section 2.05 | Assigned Contracts | 7 | |
| Section 2.06 | Permits | 7 | |
| Section 2.07 | Compliance with Laws | 7 | |
| Section 2.08 | Legal Proceedings. | 7 | |
| Section 2.09 | Brokers | 7 | |
| Section 2.10 | Full Disclosure. | 8 | |
| Section 2.11 | Financial Information | 8 | |
| Section 2.12 | Sufficiency of Assets | 8 | |
| Section 2.13 | Accredited Investor | 8 | |
| Section 2.14 | No Other Representations and Warranties | 8 | |
| ARTICLE III Representations and Warranties of Buyer | 8 | ||
| Section 3.01 | Organization and Authority of Buyer; Enforceability | 8 | |
| Section 3.02 | No Conflicts; Consents | 8 | |
| Section 3.03 | Legal Proceedings. | 9 | |
| Section 3.04 | Brokers | 9 | |
| Section 3.05 | Solvency; Sufficiency of Funds | 9 | |
| Section 3.06 | Full Disclosure | 9 | |
| Section 3.07 | No Other Representations and Warranties | 9 | |
| ARTICLE IV Covenants | 9 | ||
| Section 4.01 | Public Announcements | 9 | |
| Section 4.02 | Non-Competition | 9 | |
| Section 4.03 | Discontinuation of Seller’s Activity Relating to the Purchased Assets | 10 | |
| Section 4.04 | Bulk Sales Laws | 10 | |
| Section 4.05 | Transfer Taxes | 10 | |
| Section 4.06 | Further Assurances; Assistance of Audit | 11 | |
| ARTICLE V Indemnification | 11 | ||
| Section 5.01 | Survival | 11 | |
| Section 5.02 | Indemnification By Seller | 11 | |
| Section 5.03 | Indemnification By Buyer | 11 | |
| Section 5.04 | Indemnification Procedures | 12 | |
| Section 5.05 | Certain Limitations. | 12 | |
| Section 5.06 | Tax Treatment of Indemnification Payments | 13 | |
| Section 5.07 | Cumulative Remedies | 13 | |
| ARTICLE VI Miscellaneous | 13 | ||
| Section 6.01 | Expenses | 13 | |
| Section 6.02 | Notices | 13 | |
| Section 6.03 | Headings | 13 | |
| Section 6.04 | Severability | 13 | |
| Section 6.05 | Entire Agreement | 13 | |
| Section 6.06 | Successors and Assigns | 14 | |
| Section 6.07 | No Third-Party Beneficiaries | 14 | |
| Section 6.08 | Amendment and Modification | 14 | |
| Section 6.09 | Waiver | 14 | |
| Section 6.10 | Governing Law, Dispute Resolution, Venue and Attorneys’ Fees. | 14 | |
| Section 6.11 | Waiver of Jury Trial | 15 | |
| Section 6.12 | Specific Performance | 15 | |
| Section 6.13 | Counterparts | 15 | |
Appendices
Appendix A-Allocation of NRE Payments
Exhibits
Exhibit A - Form of Assignment and Assumption
Exhibit B- [*****] IP Transfer Agreement
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this “Agreement”), dated as of March 26, 2025 (the “Effective Date”), is entered into by and between Titan Crest, LLC, a Delaware limited liability company, with its principal office located at 9 E. Loockerman Street, Suite 311, Dover, Delaware 19901 (“Titan Crest”),(the “Seller”), [*****], a corporation organized under the laws of Canada (solely relating to Section 1.06 and Articles II, IV and V of this Agreement, “[*****]”), and AmpliTech Group, Inc., an Nevada corporation (“Buyer”). Each Seller, [*****] and Buyer are referred to herein, individually, as a “Party” and, collectively, the “Parties.”
RECITALS
A. Seller, either directly or indirectly through its subsidiary [*****] , is in the business of developing, designing, marketing and selling a wide range of [*****] based on ORAN standards (“Seller’s Business”);
B. Seller’s Business includes, but is not limited to, developing, manufacturing, marketing and selling products that use radio frequency technology to make [*****];
C. Prior to execution of this Agreement, [*****] has transferred to Seller all of its right, title and interests, free and clear of any claims, liens and encumbrances, certain assets, including, but not limited to, assets and intellectual property relating to the radio frequency technology used for the [*****] currently being manufactured and sold by [*****] , or in design and development by [*****] , (the “[*****]Assets”) under that certain Intellectual Property Assignment And Transfer Agreement, dated March 26, 2025, a copy of which is attached hereto as Exihibit B (the “ [*****] IP Transfer Agreement”) and Seller desires to sell and Buyer desires to purchase from Seller the [*****] Assets subject to the terms and conditions set forth herein ; and
D. Seller and [*****] will continue to engage in the business of developing, designing, marketing and selling a wide range of [*****] based on ORAN standards, but will not engage in any activity that develops or supports a technology or design that would compete with the [*****] Assets for a period of 10 years from the Closing.
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:
ARTICLE I
Purchase and Sale
Section 1.01 Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in its [*****] Assets, which consists of the following assets:
(a) all related product lines and product specifications listed on Section 1.01(a) of the disclosure schedules attached hereto (“Disclosure Schedules”) or as transferred to Seller under the [*****] IP Transfer Agreement;
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(b) a list of all of Seller’s customers related to [*****] Assets, as set forth on Section 1.01(b) of the Disclosure Schedules or as transferred to Seller under the [*****] IP Transfer Agreement (“[*****] Assets Customers”);
(c) Purchased IP (as defined below) listed on Section 1.01(c) of the Disclosure Schedules related to the [*****] Assets or as transferred to Seller under the [*****] IP Transfer Agreement;
(d) the [*****] IP Transfer Agreement and other contracts of Seller, if any, related to the [*****] Assets set forth on Section 1.01(d) of the Disclosure Schedules (the “Included Contracts”);
(e) the items and rights related to the [*****] Assets including samples, prototypes, inventory, jigs, molds, etc. set forth in Section 1.01(e) of the Disclosure Schedules or as transferred to Seller under the [*****] IP Transfer Agreement.
(f) all [*****] Assets related intellectual property listed on Section 1.01(f) of the Disclosure Schedules, or as transferred to Seller under the [*****] IP Transfer Agreement including, but not limited, the source code for any software related to the [*****] Assets including the intellectual property being developed by [*****] for future delivery under the [*****] IP Transfer Agreement;
(g) all [*****] Assets related data and records, vendor lists, research and development reports and records, production reports and records, operating guides and manuals, product formulas and designs, financial and accounting records, creative materials, advertising materials, promotional materials, studies, and reports or as transferred to Seller under the [*****] IP Transfer Agreement; and
(h) other assets set forth on Section 1.01(h) of the Disclosure Schedules.
Collectively, such assets are referred to herein as the “Purchased Assets” and shall be offered and sold to Buyer free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance (“Encumbrance”). The [*****] related assets and intellectual property shall be delivered to Buyer within thirty (30) days of the Closing Date.
Section 1.02 Excluded Assets. Notwithstanding the foregoing, the Purchased Assets shall not include Seller’s raw materials, work in process, or finished goods (“Seller’s Inventory”), whether or not related to the [*****] Assets nor any assets of Seller that are not included in the Purchased Assets (collectively, the “Excluded Assets”).
Section 1.03 Assumed Liabilities. Following the Closing, Buyer will only pay, perform, discharge and satisfy the liabilities and obligations arising out of or relating to the Purchased Assets that are set forth in Section 1.03 of the Disclosure Schedules and the liabilities and obligations under the Assigned Contracts (as hereinafter defined) arising after the date hereof (collectively, the “Assumed Liabilities”).
Section 1.04 Excluded Liabilities. Notwithstanding any provision in this Agreement to the contrary, other than the Assumed Liabilities set forth in Section 1.03 of this Agreement, Seller will retain and Buyer is not assuming nor will Buyer be responsible for any liability or obligation of Seller or any affiliate of Seller or arising out of or relating to the Purchased Assets including any warranty liability for products sold by Seller prior to the Closing. Specifically, the Buyer is not assuming any liability or obligation relating to the Seller’s Business, or operation of the Seller’s Business, of whatever nature, whether known or unknown, contingent or otherwise, arising out of or relating to Seller’s ownership or operation of the Seller’s Business and the Purchased Assets prior to the Closing (collectively, the “Excluded Liabilities”). All Excluded Liabilities will be retained by and remain obligations and liabilities of Seller.
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Section 1.05 Purchase Price. Buyer intends to acquire the Purchased Assets free and clear of all liens and encumbrances of any kind or nature for a total consideration of Eight Million United States Dollars ($8,000,000) (“Purchase Price”) to the Seller to be paid as follows:
(a) Cash Payment
(i) A first cash payment of Two Million Five Hundred Thousand U.S. Dollars (US$2,500,000) (the “Closing Payment”) which shall be contingent on the following conditions:
1. Assignment or new issuance of a [*****] purchase order from Telus for fiscal year 2025 delivery to the Buyer;
2. Receipt of correspondence from Telus to Buyer, as determined by Buyer in its sole but reasonable discretion, indicating Telus’s intention to issue purchase orders in the amount of [*****](including the initial purchase order indicated in Section 1.05(a)(i)1 above. These purchase orders are to be spread over three (3) years for [*****] to the Buyer. The purchase orders shall include [*****] for non-recurring engineering (NRE) related to the development of [*****], with such payment allocated in accordance with Appendix A attached hereto.
(ii) A second cash payment of Five Hundred Thousand U.S. Dollars (US$500,000) to be paid on December 5, 2025, contingent on the transfer of fully developed design package for [*****] technology (the “Transfer”) as contemplated by the [*****] IP Transfer Agreement and [*****]’s acknowledgment that the documentation/drawing package is suitable for full production purposes. If the Transfer does not occur by October 31, 2025, this milestone payment will be postponed by the same number of days equal to the difference between October 31, 2025 and the day Transfer occurs.
(b) Payment in Common Stock. A total of Five Million U.S. Dollars (US$5,000,000) to be paid in the form of restricted common stock of Buyer upon achievement of the following milestones:
(i) First payment of Two Million Five Hundred Thousand U.S. Dollars (US$2,500,000) in the form of Buyer’s restricted common stock based on the Volume Weighted Average Price of Buyer’s common stock over the preceding thirty (30) trading days from the date the milestone set forth in Section 1.05(a)(i) is achieved.
(ii) Second payment of Two Million Five Hundred Thousand U.S. Dollars (US$2,500,000) in the form of Buyer’s restricted common stock based on the Volume Weighted Average Price of Buyer’s common stock over the preceding thirty (30) trading days from the date of the Transfer.
(c) Issuance of Shares: All share issuances contemplated by this Agreement shall be conducted in full compliance with applicable U.S. Federal and state securities laws, including, but not limited to, the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. The common stock contemplated to be issued in connection with the sale of [*****] Assets shall be subject to a six (6) month restriction period, during which Seller shall not be permitted to engage in any sale, transfer, or other disposition of such shares. All share issuances under this Agreement shall be subject to approval by the Buyer’s shareholders if, and only if, required by NASDAQ Rule 5635(d) or similar rule of another National Stock Exchange, if applicable.
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Section 1.06 [*****] License to Use the Purchased Assets. [*****] hereby grants to Buyer an irrevocable, perpetual, transferable, sublicensable, royalty free, worldwide exclusive license to use the Purchased Assets set forth in Section 1.01 of this Agreement, including, but not limited to, (a) make, use, offer to sell, sell, import, advertise, manufacture, market, and distribute products and provide services related to the Purchased Assets and (b) reproduce, publicly perform, transmit, publicly display, distribute and recreate derivative works based on the Purchased Assets through all media, now known or hereafter developed, for any purpose. Buyer has the sole right, in its discretion, and at its expense, to file, prosecute, and maintain all applications, registrations, and patents relating to the licensed intellectual property covered by this Section 1.06 of this Agreement and [*****] , at the request of Buyer, and at Buyer’s expense, shall provide any reasonably requested assistance with such filing, maintenance and prosecution. It is the intent of the Parties that the Buyer shall have the sole, exclusive, and unencumbered right to commercialize all of the assets described in Section 1.01 of this Agreement. Seller and [*****] further agree to take further action reasonably requested by the Buyer to fully effect the intention of the Parties to the license granted in this Section 1.06 of this Agreement.
Section 1.07 Buyer License. Buyer hereby grants to [*****] and Seller a royalty free, worldwide license to use the Purchased Assets to the extent reasonably necessary for [*****] and/or Seller to perform their respective obligations under this Agreement.
Section 1.08 Transition Services Agreement. Promptly after the Closing, Buyer and Seller shall enter into a short-term transition services agreement for up to two (2) of Seller’s employees to provide Buyer assistance in the assignment and transfer of the Purchased Assets from Seller to Buyer for a fee not to exceed Four Hundred Thirty Thousand U.S. Dollars (US$430,000.00) (the “Transition Services Agreement”).
Section 1.09 Allocation of Purchase Price. Seller and Buyer agree to allocate the Purchase Price, including any Milestone Payments, among the Purchased Assets for all purposes (including tax and financial accounting) as agreed by their respective accountants, negotiating in good faith on their behalf. Buyer and Seller shall file all tax returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation.
Section 1.10 Withholding Tax Buyer shall be entitled to deduct and withhold from the Purchase Price, Milestone Payments and any other payments contemplated by this Agreement such amounts that Buyer may be required to deduct and withhold under any applicable tax law. All such withheld amounts shall be treated as delivered to Seller hereunder.
Section 1.11 Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place promptly upon the satisfaction of the condition set forth in Section 1.05(a)(i) of this Agreement (the day on which the Closing takes place being the “Closing Date”) remotely via electronic exchange of signatures. The consummation of the transactions contemplated by this Agreement shall be deemed to occur at 12:01 a.m. on the Closing Date.
Section 1.12 Closing Deliverables.
(a) At the Closing, Seller shall deliver to Buyer the following:
(i) an assignment and assumption agreement in form and substance satisfactory to Buyer (the “Assignment and Assumption Agreement”) and duly executed by Seller, effecting the assignment to and assumption by Buyer of the Purchased Assets, in substantially the form attached hereto as Exhibit A;
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(ii) copies of all consents, approvals, waivers and authorizations referred to in Section of the Disclosure Schedules;
(iii) a certificate of the Secretary or Assistant Secretary (or equivalent officer) of Seller certifying as to (A) the resolutions of the Members of Seller, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; (B) the names and signatures of the officers of Seller authorized to sign this Agreement and the documents to be delivered hereunder;
(iv) a certificate of the Secretary or Assistant Secretary (or equivalent officer) of [*****] certifying as to (A) the resolutions of the Board of Directors of [*****] , duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement, the transactions contemplated hereby and the Intellectual Property Assignment And Transfer Agreement between [*****] and Seller, dated March ___, 2025, (the “[*****] IP Transfer Agreement”) a copy of which is attached hereto as Exhibit B; (B) the names and signatures of the officers of [*****] authorized to sign this Agreement and the documents to be delivered hereunder; and
(v) such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to this Agreement.
(b) At the Closing, Buyer shall deliver to Seller the following:
(i) the Closing Payment, by wire transfer of immediately available funds to an account designated in writing by Seller to Buyer no later than five (5) days prior to the Closing Date;
(ii) the Assignment and Assumption Agreement duly executed by Buyer;
(iii) a certificate of the Secretary or Assistant Secretary (or equivalent officer) of Buyer certifying as to (A) the resolutions of the board of directors of Buyer, duly adopted and in effect, which authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and (B) the names and signatures of the officers of Buyer authorized to sign this Agreement and the documents to be delivered hereunder;
(iv) a Purchase Order from buyer to [*****] for the same number and for the same price as the Purchase Order from Telus described in Section 1.05(a)(i)1 of this Agreement.
ARTICLE
II
Representations and warranties of Seller and [*****]
Seller and [*****] , jointly and severally represent and warrant to Buyer that the statements contained in this Article III are true and correct as of the date hereof and as of the Closing. For purposes of this Article III, “Seller’s knowledge” and “knowledge of Seller” shall mean the actual knowledge (after reasonable investigation) of _____________, who is the Managing Director of Seller and authorized agent of [*****] .
Section 2.01 Organization and Authority of Seller; Enforceability. Titan Crest is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware. [*****] is a corporation, duly organized, validly existing and in good standing under the federal laws of Canada. Seller and [*****] each has the requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Seller and [*****] of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite company or corporate action on the part of Seller and [*****] , as the case may be. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Seller and [*****] , and (assuming due authorization, execution and delivery by Buyer) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Seller and [*****] , enforceable against each in accordance with their respective terms.
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Section 2.02 No Conflicts; Consents. Other than as set forth on Section 3.02 of the Disclosure Schedules, the execution, delivery and performance by Seller and [*****] of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with the certificate of incorporation, by-laws or other organizational documents of Seller or [*****] ; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Seller and [*****] or the Purchased Assets; (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any contract or other instrument to which Seller or [*****] is a party or to which any of the Purchased Assets are subject; or (d) result in the creation or imposition of any Encumbrance on the Purchased Assets. No consent, approval, waiver or authorization is required to be obtained by Seller or [*****] from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Seller and [*****] of this Agreement and the consummation of the transactions contemplated hereby.
Section 2.03 Title to Purchased Assets. Seller and [*****] own and have good title to the Purchased Assets, free and clear of Encumbrances, except for: (a) liens for taxes not yet due and payable or being contested in good faith by appropriate procedures; (b) mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business; and (c) liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business. Prior to the execution of this Agreement, [*****] has transferred all of its right, title and interest to the Purchased Assets to Seller.
Section 2.04 Intellectual Property.
(a) “Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (i) trademarks and service marks, including all applications and registrations and the goodwill connected with the use of and symbolized by the foregoing; (ii) copyrights, including all applications and registrations related to the foregoing; (iii) trade secrets and confidential know-how; (iv) patents and patent applications; (v) software, both source code and object code, relating to the Purchased Assets; (vi) designs, BOM, and other documents and handbooks reasonably necessary for the manufacture of products from the Purchased Assets; and (vii) other intellectual property and related proprietary rights, interests and protections (including all rights to sue and recover and retain damages, costs and attorneys’ fees for past, present and future infringement and any other rights relating to any of the foregoing).
(b) Section 2.04(b) of the Disclosure Schedules lists all Intellectual Property owned by Seller and related solely and exclusively to the Seller’s Business that is included in the Purchased Assets (“Purchased IP”). Seller and [*****] own or have adequate rights to use all the Purchased IP, free and clear of all Encumbrances. Seller is not bound by any outstanding judgment, injunction, order or decree restricting the use of the Purchased IP, or restricting the licensing thereof to any person or entity. With respect to the registered Intellectual Property listed on Section 2.04(b) of the Disclosure Schedules, (i) all registrations for such Intellectual Property are subsisting and in full force and effect; and (ii) Seller has paid all maintenance fees and made all filings required to maintain Seller’s registrations thereof. For all registered Intellectual Property or Intellectual Property for which an application to register has been filed, Section 2.04(b) of the Disclosure Schedules lists (A) the jurisdiction where the application or registration is located; (B) the application or registration number; and (C) the application or registration date.
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(c) To the knowledge of Seller and [*****] , Seller’s current use and use by [*****] within the last five (5) years of the Purchased IP has not infringed and does not infringe, violate, dilute or misappropriate the Intellectual Property of any person or entity. There are no claims pending or threatened in writing by any person or entity with respect to the ownership, validity, enforceability, effectiveness or use of the Purchased IP. To the knowledge of Seller and [*****] , no person or entity is infringing, misappropriating, diluting or otherwise violating any of the Purchased IP, and neither Seller nor any affiliate of Seller has within the last five (5) years made or asserted any claim, demand or notice against any person or entity alleging any such infringement, misappropriation, dilution or other violation.
Section 2.05 Assigned Contracts. Section 2.05 of the Disclosure Schedules sets forth each material contract related to the Purchased Assets and, other than as indicated therein, each is included in the Purchased Assets and will be assigned to Buyer as part of the transactions contemplated by this Agreement (the “Assigned Contracts”). Each Assigned Contract is valid and binding on Seller in accordance with its terms and is in full force and effect. None of Seller or, to Seller’s knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) or has provided or received any notice of any intention to terminate, any Assigned Contract. No event or circumstance has occurred that, with or without notice or lapse of time or both, would constitute an event of default under any Assigned Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of benefit thereunder). Complete and correct copies of each Assigned Contract have been made available to Buyer. To the knowledge of Seller and [*****] , there are no disputes pending or threatened under any Assigned Contract.
Section 2.06 Permits. Section 2.06 of the Disclosure Schedules lists all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained from governmental authorities related to the Seller’s Business that are included in the Purchased Assets (the “Transferred Permits”). The Transferred Permits are valid and in full force and effect. All fees and charges with respect to such Transferred Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any of the Transferred Permits.
Section 2.07 Compliance with Laws. Seller and [*****] have been in material compliance, and each is now in material compliance, with all applicable international, federal, state and local laws and regulations applicable to the Seller’s Business as conducted at and prior to the Closing relating to the ownership and use of the Purchased Assets.
Section 2.08 Legal Proceedings. There is no claim, action, suit, proceeding or governmental investigation (“Action”) of any nature pending or, to Seller’s knowledge, threatened against or by Seller or [*****] (a) relating to or affecting the Purchased Assets; or (b) that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To the knowledge of Seller and [*****] , no event has occurred or circumstances exist that may give rise to, or serve as a basis, for any such Action.
Section 2.09 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller or [*****] .
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Section 2.10 Full Disclosure. To the knowledge of Seller and [*****] , no representation or warranty by Seller or [*****] in this Agreement and no statement contained in the Disclosure Schedules to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained herein, in light of the circumstances in which they are made, not misleading.
Section 2.11 Financial Information. The financial information provided by Seller to Buyer relating to the [*****] Assets in connection with the transactions contemplated by this Agreement (the “[*****] Assets Financial Information”) was prepared by Seller and was based on final versions of financial statements reviewed by Seller’s independent accountants and other books and records of Seller kept in the ordinary course of its business. The [*****] Assets Financial Information is accurate and complete in all material respects.
Section 2.12 Sufficiency of Assets. Other than as set forth in Section 3.13 of the Disclosure Schedules, the Purchased Assets constitute all of the [*****] Assets and represent all assets reasonably necessary for Buyer’s production of radio frequency products derived from the [*****] Assets in a manner reasonably consistent with Seller’s operation of the Seller’s Business prior to the Closing.
Section 2.13 Accredited Investor. Seller represents that it is an Accredited Investor within the meaning of Section 501(a) of Regulation D promulgated under Securities Act of 1933, as amended.
Section 2.14 No Other Representations and Warranties. Except for the representations and warranties contained in this Article III, neither Buyer nor any other person or entity has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Buyer.
ARTICLE III
Representations and Warranties of Buyer
Buyer represents and warrants to Seller that the statements contained in this Article III are true and correct as of the date hereof. For purposes of this Article III, “Buyer’s knowledge” and “knowledge of Buyer” shall mean the actual knowledge (after reasonable investigation) of Fawad Maqbool, Buyer’s Chief Executive Officer.
Section 3.01 Organization and Authority of Buyer; Enforceability. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada. Buyer has full corporate power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms.
Section 3.02 No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with the certificate of incorporation, by-laws or other organizational documents of Buyer; or (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Buyer. No consent, approval, waiver or authorization is required to be obtained by Buyer from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby.
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Section 3.03 Legal Proceedings. There is no Action of any nature pending or, to Buyer’s knowledge, threatened against or by Buyer that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To Buyer’s knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
Section 3.04 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.
Section 3.05 Solvency; Sufficiency of Funds. Immediately after giving effect to the transactions contemplated hereby, Buyer shall be solvent and shall: (a) be able to pay its debts as they become due; (b) own property that has a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all liabilities); and (c) have adequate capital to carry on its business. No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated hereby with the intent to hinder, delay or defraud either present or future creditors of Buyer or Seller. In connection with the transactions contemplated hereby, Buyer has not incurred, nor plans to incur, debts beyond its ability to pay as they become absolute and matured.
Section 3.06 Full Disclosure. To the knowledge of Buyer, no representation or warranty by Buyer in this Agreement and no statement contained in the Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained herein, in light of the circumstances in which they are made, not misleading.
Section 3.07 No Other Representations and Warranties. Except for the representations and warranties contained in this Article III, neither Buyer nor any other person or entity has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Buyer.
ARTICLE IV
Covenants
Section 4.01 Public Announcements. Unless otherwise required by applicable law, rule or regulation, none of the Parties shall make any public announcements regarding this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties (which consent shall not be unreasonably withheld). Notwithstanding the foregoing, no Party will make any public announcement regarding this Agreement or the transactions contemplated hereby without the prior written consent of Telus.
Section 4.02 Non-Competition. Each of Seller and [*****] , jointly and severally, covenants and agrees that during the period commencing on the Closing Date and expiring ten (10) years from the Closing Date, neither shall, anywhere that Seller or [*****] , prior to the Closing Date, operated or had active plans to expand to after the Closing Date (the “Restricted Territory”), directly or indirectly, own any interest in, manage, control, participate in (whether as an owner, operator, manager, consultant, officer, director, manager, member, employee, investor, agent, representative or otherwise), consult with, render services for or otherwise engage in any business or entity that competes with the Purchased Assets as conducted on or within five (5) years before the Closing Date, or contemplated to be conducted by the Seller or [*****] (the “Restricted Business”).
(a) If, at the time of enforcement of any of the provisions of this Section 4.02, a court determines that the restrictions stated herein are unreasonable under the circumstances then existing, then the Parties agree that the maximum period, scope or geographical area reasonable under the circumstances shall be substituted for the stated period, scope or area. The Parties further agree that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope or geographical area permitted by Law.
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(b) Seller and [*****] each acknowledge and agree that money damages would not be an adequate remedy for any breach or threatened breach of the provisions of this Section 5.02 and that, in such event, Buyer or any of its successors or assigns, shall, in addition to any other rights and remedies existing in their favor, be entitled to specific performance, injunctive and/or other relief in order to enforce or prevent any violations of the provisions of this Section 4.02.
(c) Seller and [*****] each acknowledge and agree that (i) they will each receive substantial benefits by virtue of the transactions contemplated by this Agreement, (ii) certain of the goodwill of Seller also inures in Buyer, and all such goodwill is being transferred to Buyer in connection with the transactions contemplated by this Agreement and (iii) each agrees that the restrictions contained in this Section 5.02 are reasonable and are no greater than necessary to protect the goodwill being received by Buyer in connection with the transactions contemplated by this Agreement.
Section 4.03 Discontinuation of Seller’s Activity Relating to the Purchased Assets. Immediately following the Closing, Seller and [*****] shall each take all actions necessary to cause Seller and [*****] to discontinue and cease, all of its activity, globally of any nature, relating to the Purchased Assets and future development activities that would directly and materially compete with the Purchased Assets acquired by the Buyer in this Agreement other than purchase orders issued by Buyer to Seller or [*****] or as otherwise agreed by Buyer. Seller may continue Seller’s Business in all aspects other than activities relating to the Purchased Assets and future development activities that would directly and materially compete with the Purchased Assets . In furtherance of the foregoing and in recognition of the significant value and importance of the confidential list of customers being purchased by Buyer in this transaction, Seller and [*****] each agree that, neither shall enter into any business or transactions with any of the customers included in the Purchased Assets or take any action that may, directly or indirectly, be reasonably likely to interfere with Buyer’s operation of its business with the customers for the products marketed by Buyer utilizing the Purchased Assets. Notwithstanding anything else to the contrary in this Agreement, Buyer shall issue a Purchase Order to [*****] for the same number of [*****] and for the same price as the initial purchase order from Telus described in Section 1.05(a)(i)1 of this Agreement.
Section 4.04 Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyer; provided, however, that Seller agrees (a) to pay and discharge when due or to contest or litigate all claims of creditors which are asserted against Buyer or the Purchased Assets by reason of such noncompliance; and (b) to indemnify, defend and hold harmless Buyer from and against any and all such claims; and (c) to take promptly all necessary action to remove any lien which is placed on the Purchased Assets by reason of such noncompliance.
Section 4.05 Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the documents to be delivered hereunder shall be borne and paid by Seller when due. Seller shall, at its own expense, timely file any tax return or other document with respect to such taxes or fees (and Buyer shall cooperate with respect thereto as necessary).
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Section 4.06 Further Assurances; Assistance of Audit. Following the Closing, each of the parties hereto shall 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 documents to be delivered hereunder. In addition, if required under the regulations of the U.S. Securities and Exchange Commission (“SEC”), Buyer is required to prepare an audit of the Seller’s Business relating to the Purchased Assets for the Seller’s most recent fiscal year, Seller will assist Buyer in completing such audit in order to comply with SEC regulations.
ARTICLE
V
Indemnification
Section 5.01 Survival. All representations and warranties contained herein and all related rights to indemnification shall survive twenty-four (24) months following the Closing, except for the core representations and warranties contained in Section 3.01 (Seller’s Organization and Authority), Section 3.03 (Seller’s Title to Purchased Assets), and Section 4.01 (Buyer’s Organization and Authority) which shall survive until the seventh anniversary of Closing. The covenants and agreements contained in this Agreement shall survive indefinitely, other than the covenants and agreements in Section 5.02 (Non-Competition) and Section 5.03 (Discontinuation of Seller’s Radio Business) which shall survive for the periods provided 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 such survival period and such claims shall survive until finally resolved.
Section 5.02 Indemnification By Seller. Seller and [*****] , jointly and severally, shall defend, indemnify and hold harmless Buyer, its affiliates and their respective stockholders, members, managers, directors, officers, employees and agents from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including reasonable attorneys’ fees and disbursements (collectively, “Losses”), arising from or relating to:
(a) any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement or any document to be delivered hereunder;
(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement or any document to be delivered hereunder; or
(c) any Excluded Liability.
Section 5.03 Indemnification By Buyer. Buyer shall defend, indemnify and hold harmless each of Seller and [*****] , their affiliates and their respective stockholders, members, managers, directors, officers, employees and agents from and against all Losses, arising from or relating to:
(a) any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any document to be delivered hereunder;
(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or any document to be delivered hereunder; or
(c) any Assumed Liability.
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Section 5.04 Indemnification Procedures. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the “Indemnified Party”) shall promptly provide written notice of such claim to the other party (the “Indemnifying Party”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld or delayed).
Section 5.05 Certain Limitations.
(a) The aggregate amount for which either Seller or Buyer shall be liable pursuant to Section 5.02 or Section 5.03, as applicable, and any other dispute regarding this Agreement or the transactions contemplated hereby, shall not exceed the amount of Purchase Price actually received by Seller.
(b) No Party will be entitled to indemnification under Section 5.02 or Section 5.03, as applicable, for any indemnifiable Losses under this Article VI until the indemnifiable Losses have an aggregated cumulative amount which equals or exceeds $100,000, after which time such indemnifying Party shall be liable in full for the accumulated indemnifiable Losses subject to the provisions of this Article VI.
(c) In no event shall any Party be liable to any other Party for any punitive, special, exemplary, or speculative damages, related to the breach, or alleged breach, of this Agreement or in connection with any transaction contemplated hereby, except (i) if paid or payable to a third party, or (ii) in connection with any fraud on the part of Seller in connection with this Agreement. Notwithstanding the foregoing, each Party shall have the right to recover all other indirect damages including, without limitation, lost profits, loss of future revenue or income, diminution in value, loss of business reputation, or incidental damages except the Seller and [*****] liability for the lost profit, income or revenue shall not exceed the Purchase Price.
(d) Each Party entitled to indemnification hereunder (each, an “Indemnified Party”) shall take, and cause its affiliates to take, all reasonable steps to mitigate any Loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach that gives rise to such Loss but not exceeding Ten Thousand U.S. Dollars (US$10,000); provided, however, that (i) no Indemnified Party shall: (1) be required to take any action to mitigate any Losses incurred or suffered to the extent based upon, arising out of, with respect to or by reason of fraud prior to the Closing; (2) be required to bring a legal proceeding against any person; or (3) have any obligation to take any actions that unreasonably interfere with or impact the business of such Indemnified Party; and (ii) the failure of an Indemnified Party to use such efforts to mitigate shall not constitute a defense to the Indemnifying Party’s obligations to indemnify the Indemnified Party pursuant to this Agreement.
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(e) Provided, however that none of the limitations set forth in this Section 5.05 shall apply with respect to any Losses arising from, in connection with or related to, a breach that constitutes fraud or intentional misrepresentation.
Section 5.06 Tax Treatment of Indemnification Payments. All indemnification payments made by Seller under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by law.
Section 5.07 Cumulative Remedies. The rights and remedies provided in this Article V are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.
ARTICLE
VI
Miscellaneous
Section 6.01 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.
Section 6.02 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the day received or rejected if mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6.02):
Section 6.03 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 6.04 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
Section 6.05 Entire Agreement. This Agreement and the documents to be delivered hereunder constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and the documents to be delivered hereunder, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.
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Section 6.06 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.
Section 6.07 No Third-Party Beneficiaries. Except as provided in Article VI, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Section 6.08 Amendment and Modification. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto.
Section 6.09 Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
Section 6.10 Governing Law, Dispute Resolution, Venue and Attorneys’ Fees.
(a) Governing Law. This Agreement, and the rights and obligations of the Parties hereunder, shall be governed by and construed in accordance with the laws of the State of New York, excluding conflicts of law rules which might apply the law of a different jurisdiction.
(b) Good Faith Negotiations. The Parties shall use their best efforts to resolve any and all claims and disputes arising under this Agreement first through good faith negotiations and without initially resorting to litigation, or other similar proceedings; provided, however, that either Party shall be entitled to: (i) seek injunctive relief in any forum of competent jurisdiction to avoid irreparable harm, for breach of confidentiality, or for infringement or misappropriation of its intellectual property rights; or to (ii) commence litigation in the venue set forth below to avoid being barred by an applicable statute of limitations; in each case without first attempting to resolve such claim or dispute through good faith negotiations or mediation.
(c) Mediation. If the Parties are unable to resolve such claim or dispute via good faith negotiations, the Parties agree, prior to commencement of any legal action or suit, to submit to at least one day of non-binding mediation in Hauppauge, New York with a mediator chosen jointly by the Parties and with costs to be divided equally between the Parties.
(d) Litigation and Venue. Any legal action, suit, or proceeding with respect to this Agreement shall be brought exclusively in federal court in Suffolk County or state court in, Hauppauge, New York if a federal court is not available) and each Party consents to the jurisdiction of said court for all matters that arise under this Agreement. Each Party waives the right to formal service of process and agrees to accept service of process via hand delivery or by U. S. Mail, postage prepaid, certified or registered, return receipt requested, or by such other method as is authorized by applicable law.
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(e) Attorneys’ Fees. The prevailing Party in any litigation hereunder shall be entitled to attorneys’ fees and costs. The prevailing Party, for purposes of awarding attorneys’ fees and costs, shall be: (1) the claiming Party if the judgment is an amount equal to or greater than said Party’s final written settlement demand; or (2) the defending Party if the judgment is equal to or lower than said Party’s final, written settlement offer. If the Parties do not exchange a final, written settlement demand and a corresponding final, written settlement offer, or if the judgment is less than the final, written settlement demand but greater than the final, written settlement offer, the Parties shall pay their own attorneys’ fees and costs.
Section 6.11 Waiver of Jury Trial. Each Party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.
Section 6.12 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
Section 6.13 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[signature page follows]
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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.
TITAN CREST LLC, a Delaware limited liability company | ||
| By: | ||
| Name: | ||
[*****]
| Canadian corporation | ||
| By: | ||
| Name: | ||
| Title: | ||
|
AMPLITECH GROUP, INC., a Nevada corporation | |
| By: | ||
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APPENDIX A
[*****]
EXHIBIT A
Form of Assignment and Assumption
Assignment and Assumption Agreement
This Assignment and Assumption Agreement (the “Agreement”), effective as of March 26, 2025 (the “Effective Date”), is by and between Titan Crest, LLC, a Delaware limited liability company, with its principal office located at 9 E. Loockerman Street, Suite 311, Dover, Delaware 19901 (“Seller”), and AmpliTech Group, Inc., an Nevada corporation (“Buyer”).
WHEREAS, Seller and Buyer have entered into a certain Asset Purchase Agreement, dated as of March 26, 2025 (the “Purchase Agreement”), pursuant to which, among other things, Seller has agreed to assign all of its rights, title and interests in, and Buyer has agreed to assume all of Seller’s duties and obligations under, the Intellectual Property Assignment And Transfer Agreement, dated March 26, 2025, a copy of which is attached to the Purchase Agreement as Exihibit B (the “[*****] IP Transfer Agreement”).
NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions. All capitalized terms used in this Agreement but not otherwise defined herein are given the meanings set forth in the Purchase Agreement.
2. Assignment and Assumption. Seller hereby sells, assigns, grants, conveys and transfers to Buyer all of Seller’s right, title and interest in and to the [*****] IP Transfer Agreement. Buyer hereby accepts such assignment and assumes all of Seller’s duties and obligations under the [*****] IP Transfer Agreement.
3. Terms of the Purchase Agreement. The terms of the Purchase Agreement, including, but not limited to, the representations, warranties, covenants, agreements and indemnities relating to the [*****] IP Transfer Agreement are incorporated herein by this reference. The parties hereto acknowledge and agree that the representations, warranties, covenants, agreements and indemnities contained in the Purchase Agreement shall not be superseded hereby but shall remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms hereof, the terms of the Purchase Agreement shall govern.
4. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
5. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
6. Further Assurances. Each of the parties hereto shall execute and deliver, at the reasonable request of the other party hereto, such additional documents, instruments, conveyances and assurances and take such further actions as such other party may reasonably request to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the date first above written.
| Titan Crest, LLC, a Delaware limited liability company | ||
| By |
| |
| Name: | ||
| Title: | ||
AmpliTech Group, Inc., a Nevada corporation | ||
| By | ||
| Name: | ||
| Title: | ||
EXHIBIT B
[*****] IP Transfer Agreement
Exhibit 10.33
Exhibit 10.34
Exhibit 19.1
AMPLITECH GROUP, INC.
INSIDER TRADING COMPLIANCE POLICY
AmpliTech Group, Inc., a Nevada corporation (the “Company”) prohibits:
| ● | insider trading in the Company’s securities ( “Securities”)1; and | |
| ● | the unauthorized disclosure of the Company’s confidential information that might enable others to engage in insider trading in the Securities. |
The Company adopted this Insider Trading Compliance Policy to prevent insider trading. In this Insider Trading Compliance Policy, we will discuss how you must comply with the laws against insider trading to avoid the serious penalties that could accompany a violation. We also seek to fulfill our obligation to educate and reasonably supervise the activities of employees, officers, directors and consultants who own or trade in the Company’s stock as part of our corporate compliance program. There are severe civil and criminal penalties associated with violations by you, your colleagues or the Company under insider trading laws. It is your obligation to review, understand and comply with this Insider Trading Compliance Policy. Please take the time to become familiar with its content. If you have questions about the Policy or your stock ownership or trading, please speak with Louisa Sanfratello, our Chief Compliance Officer.
PART I. OVERVIEW
A. To Whom does this Insider Trading Compliance Policy Apply?
This Insider Trading Compliance Policy applies to all of us, i.e., the Company’s board of directors (the “Board”), officers, employees and consultants, as well as our Affiliates (as defined below), and to multiple methods of trading in the Securities, such as purchases or sales of stock, options or other forms of equity. This Insider Trading Compliance Policy applies not only to you but also to your “Affiliates” (as defined by the securities laws), which include:
| ● | your spouse, child, parent, significant other or other family member, in each case, living in the same household; | |
| ● | all trusts, family partnerships and other types of entities formed for your benefit or for the benefit of a member of your family over which you have the ability to influence or direct investment decisions concerning securities; | |
| ● | all persons who execute trades on your behalf, e.g., your stockbroker; and | |
| ● | all investment funds, trusts, retirement plans, partnerships, corporations and other types of entities for which you have the ability to influence or direct investment decisions |
1 The law defines “securities” broadly to include common stock, options to purchase common stock, any other type of securities that the Company may issue (such as preferred stock, convertible debentures, warrants, exchange-traded options or other derivative securities), and any derivative securities that provide the economic equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities.
concerning securities. Please note that the Insider Trading Procedures (as defined below) do not apply to entities that engage in the investment of securities in the ordinary course of its business (e.g., mutual funds, an investment fund or partnership) if such entity has established its own insider trading controls and procedures in compliance with applicable securities laws and an Insider has hereby represented to the Company that such Insider’s affiliated entities: (a) engage in the investment of securities in the ordinary course of their respective businesses; (b) have established insider trading controls and procedures in compliance with applicable securities laws; and (c) are aware such securities laws prohibit any person or entity who has material, nonpublic information concerning the Company from purchasing or selling securities of the Company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities.
You are responsible for ensuring compliance with this Insider Trading Compliance Policy, including the Insider Trading Procedures contained herein, by all of your Affiliates. We recommend you obtain advice from your legal and financial advisors regarding trading in Company Securities by your Affiliates.
Special Procedures for Persons with Regular Access to Inside Information:
Members of our Board and our executive officers are deemed to have access to all “inside information” under insider trading laws. Other officers, employees and consultants may also require regular access to “inside information” in performing their work. For this reason and for their protection, additional trading procedures apply to these directors, officers, employees and consultants. We will notify all members of the Board, officers and designated employees and consultants (collectively, and solely for the purpose of this Insider Trading Compliance Policy, “Insiders”) that they are subject to these additional trading procedures (the “Insider Trading Procedures”), which are set forth in Part II of this memorandum. All Insiders must comply with these Insider Trading Procedures.
These Insider Trading Procedures establish trading blackout period restrictions, trading window periods, and pre-clearance requirements. Insiders covered by the Insider Trading Procedures will be restricted from trading in the Securities during blackout periods. Additionally, Insiders covered by the Insider Trading Procedures will be required to pre-clear all transactions in the Securities. You will be notified if you are an Insider and required to comply with the Insider Trading Procedures.
Post-Termination Responsibilities:
In the event that you leave the Company for any reason, this Insider Trading Compliance Policy, including, if applicable, the Insider Trading Procedures, will continue to apply to you and your Affiliates until the completion of one full Trading Day (as defined below) after any material nonpublic information known to you has become public or is no longer material. As used in this Insider Trading Compliance Policy, the term “Trading Day” shall mean a day on which the primary national securities exchange or exchanges and/or over-the-counter market or markets on which Securities of the Company are listed or traded are open for trading.
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B. What is Prohibited by this Insider Trading Compliance Policy?
It is generally illegal for you to trade in the Securities of the Company, whether for your account or for the account of another, while in the possession of material, nonpublic information about the Company or its business activities. It is also generally illegal for you to disclose material, nonpublic information about the Company or its business to others who may trade on the basis of that information. In addition, if we receive material, non-public information from collaborators or from other companies that do business with the Company, then these same prohibitions would apply to trading in the securities of these other companies’ securities. These illegal activities are commonly referred to as “insider trading.”
When you are in possession of material, nonpublic information about the Company, whether positive or negative, you are prohibited from the following activities:
| ● | trading (whether for your account of for the account of another) in Securities, except for trades made in compliance with a valid Rule 10b5-1 trading plan2; | |
| ● | giving trading advice of any kind about the Company; and | |
| ● | disclosing such material, nonpublic information about the Company, whether positive or negative, to anyone else (commonly known as “tipping”). |
The Insider Trading Compliance Policy prohibitions on insider trading do not apply to:
| (1) | an exercise of an employee stock option when payment of the exercise price is made solely in cash to the Company; or | |
| (2) | the withholding by the Company of shares of stock upon vesting of restricted stock or upon settlement of restricted stock units to satisfy applicable tax withholding requirements if (a) such withholding is required by the applicable plan or award agreement or (b) the election to exercise such tax withholding right was made by the Insider in compliance with the Insider Trading Procedures. |
The Insider Trading Compliance Policy prohibitions on insider trading do apply to:
| (1) | the sale of Securities on or after the exercise of an employee stock option; | |
| (2) | the use of outstanding Securities to pay part or all of the exercise price of an option; and | |
| (3) | any sale of stock as part of a broker-assisted cashless exercise of an option or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option. |
The above discussion is a summary; please read further below for additional details on the precise circumstances under which this Insider Trading Compliance Policy applies. These prohibitions continue whenever and for as long as you know or are in possession of material, nonpublic information. Remember, anyone scrutinizing your transactions will be doing so after the fact, with the benefit of
2 Under Rule 10b5-1 of the Exchange Act, you are permitted to enter a written binding plan with your stock broker to trade in the Securities before you knew or had possession of material, nonpublic information and certain other conditions are satisfied.
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hindsight, and often with access to stock trading records and your communications regarding the transactions. As a practical matter, before engaging in any transaction, you should carefully consider how enforcement authorities and others might view the transaction in hindsight.
C. What is Material, Nonpublic Information?
This Insider Trading Compliance Policy prohibits you from trading in the Company’s Securities if you are in possession of information about the Company or its business that is both “material” and “nonpublic.” If you have a question whether certain information you are aware of is material or has been made public, you are encouraged to consult with the Compliance Officer.
“Material” Information
Information about the Company is “material” if it could reasonably be expected to affect the investment or voting decisions of a stockholder or investor. Similarly, information about the Company is “material” if its disclosure could reasonably be expected to significantly alter the total mix of information in the marketplace about the Company and affect investor views. In simple terms, material information is any type of information that could reasonably be expected to affect the price of the Securities. Both positive and negative information may be material. While it is not possible to identify all information that would be deemed “material,” the following items are types of information that should be considered carefully to determine whether they are material:
| ● | program developments, regulatory or clinical status or updates, including communications with regulatory authorities, prior to issuance of a press release or public update; | |
| ● | significant developments regarding collaborations, products, customers, suppliers, orders, contracts or financing sources (e.g., the acquisition or loss of a contract); | |
| ● | potential collaboration discussions or information about an unannounced new collaboration, financing or other similar deals; | |
| ● | projections of future earnings or losses, or other earnings guidance; | |
| ● | earnings or revenue that are inconsistent with the consensus expectations of the investment community; | |
| ● | potential restatements of the Company’s financial statements, changes in auditors or auditor notification that the Company may no longer rely on an auditor’s audit report; | |
| ● | pending or proposed corporate mergers, acquisitions, tender offers, joint ventures or dispositions of significant assets; | |
| ● | changes in senior management or the Board; | |
| ● | significant actual or threatened litigation or governmental investigations or major developments in such matters; | |
| ● | a cybersecurity incident; |
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| ● | changes in dividend policy, declarations of stock splits, or public or private sales of additional securities; | |
| ● | potential defaults under the Company’s credit agreements or indentures, or the existence of material liquidity deficiencies; and | |
| ● | bankruptcies or receiverships. |
In some situations, the above events may not be material and in others, consultation with the Compliance Officer may help you determine that it has been publicly disclosed. In each situation, you should carefully consider and seek advice to determine their materiality (although some determinations will be reached more easily than others). For example, some new products or contracts may clearly be material to one company and not to a much larger company with multiple products; yet that does not mean that all product developments or contracts will be material. This demonstrates, in our view, why no “bright-line” standard or list of items can adequately address the range of situations that may arise. Furthermore, the Company cannot create an exclusive list of events and information that have a higher probability of being considered material. You can look to our public press releases and SEC filings to confirm recent disclosures.
The SEC has stated that there is no fixed quantitative threshold amount for determining materiality, and that even very small quantitative changes can be qualitatively material if they would result in a movement in the price of the Securities.
“Nonpublic” Information
Material information is “nonpublic” when it is not generally available to investors. The rationale is to provide all investors with an equal opportunity to access material information when making investment decisions. To claim information is “public,” we have to be able to point to some fact that establishes that the information has become publicly available, such as the filing of a report with the SEC, the distribution of a press release through a widely disseminated news or wire service, or by other means (such as a pre-announced webcast presentation) that are reasonably designed to provide broad public access.
Information is not considered public at the moment it is disclosed. Before a person who possesses material, nonpublic information can trade, there also must be adequate time for the market as a whole to access and absorb the information that has been disclosed. For the purposes of this Insider Trading Compliance Policy, information will be considered public one full Trading Day after the close of the stock market following the Company’s public release of the information.
For example, if the Company announces material nonpublic information of which you are aware before trading begins on a Tuesday, the first time you can buy or sell Company Securities is the opening of the market on Wednesday. However, if the Company announces this material information after trading begins on that Tuesday, the first time that you can buy or sell Company Securities is the opening of the market on Thursday.
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D. What are the Penalties for Insider Trading and Noncompliance with this Insider Trading Compliance Policy?
Both the SEC and the national securities exchanges, through the Financial Industry Regulatory Authority (“FINRA”), investigate and are very effective at detecting insider trading. They have direct access to examine all trades and typically request names of employees and Insiders from Companies following a public announcement (positive or negative) that impacts a company’s stock price to determine whether suspect insider trading has occurred. The SEC, together with the U.S. Attorneys, pursue insider trading
violations vigorously. For instance, cases have been successfully prosecuted against trading by employees in foreign accounts, trading by family members and friends, and trading involving only a small number of shares.
The penalties for violating insider trading or tipping rules can be severe and include:
| ● | disgorgement of the profit gained or loss avoided by the trading; | |
| ● | payment of the loss suffered by the persons who purchased or sold, as applicable, securities of the same class at prices impacted by the insider trading; | |
| ● | payment of criminal penalties of up to $5,000,000; | |
| ● | payment of civil penalties of up to three times the profit made or loss avoided; and | |
| ● | imprisonment for up to 20 years. |
The Company and/or the supervisors of the person engaged in insider trading may also be required to pay civil penalties of up to the greater of $1,525,000 or three times the profit made or loss avoided, as well as criminal penalties of up to $25,000,000, and could under certain circumstances be subject to private lawsuits.
Violation of this Insider Trading Compliance Policy or any federal or state insider trading laws may subject the person violating such policy or laws to disciplinary action by the Company up to and including termination. The Company reserves the right to determine, in its own discretion and on the basis of the information available to it, whether this Insider Trading Compliance Policy has been violated. The Company may determine that specific conduct violates this Insider Trading Compliance Policy, whether or not the conduct also violates the law. It is not necessary for the Company to await the filing or conclusion of a civil or criminal action against the alleged violator before taking disciplinary action.
E. How Do You Report a Violation of this Insider Trading Compliance Policy?
If you have a question about this Insider Trading Compliance Policy, including whether certain information you are aware of is material or has been made public, you are encouraged to consult with the Compliance Officer. In addition, if you violate this Insider Trading Compliance Policy or any federal or state laws governing insider trading, or know of any such violation by any director, officer or employee of the Company, you should report the violation immediately to the Compliance Officer.
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PART II. INSIDER TRADING PROCEDURES FOR INSIDERS
A. Special Trading Restrictions Applicable to Insiders
In addition to the restrictions on trading in Company Securities set forth above, Insiders and their Affiliates are subject to the following special trading restrictions:
1. Prohibited Transactions At Any Time.
| ● | No Short Sales. No Insider may at any time sell any Securities of the Company that are not owned by such Insider at the time of the sale (a “short sale”). | |
| ● | No Purchases or Sales of Derivative Securities or Hedging Transactions. No Insider may buy or sell puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of the Company’s Securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s Securities or engage in any other hedging transaction with respect to the Company’s Securities, at any time, with the exception of the Company’s tradeable warrants. | |
| ● | No Company Securities Subject to Margin Calls. No Insider may use the Company’s Securities as collateral in a margin account. | |
| ● | No Pledges. No Insider may pledge Company Securities as collateral for a loan (or modify an existing pledge). |
2. Gifts.
No Insider may give or make any other transfer of Company Securities without consideration (e.g., a gift or limited partner distribution, in the case of a fund) during a period when the Insider is not permitted to trade unless the donee agrees not to sell the shares until such time as the Insider can sell.
3. Quarterly Blackout Periods
No Insider may trade in any Company’s Securities during the period commencing on close of business on the seventh (7th) calendar day before the end of each fiscal quarter or fiscal year of the Company and ending at the close of trading on the third (3rd) Trading Day following the date the Company’s financial results for such quarter or year are publicly disclosed. If, for example, the Company were to make a public announcement or filing of such results or on a Monday, Insiders shall not trade in the Company’s Securities until the following Friday. During these “blackout periods,” Insiders may possess or may be presumed to possess material nonpublic information about the Company’s financial results.
4. No Trading During Retirement Plan Blackout Periods.
If the Company adopts a policy to allow ownership of Company stock in any 401(k) or other retirement plan of the Company, then no Insider may trade in any Company Securities, which were acquired in connection with such Insider’s service or employment with the Company, during a “retirement plan blackout period” except as specifically permitted below. A “retirement plan blackout period” includes any period of more than three (3) consecutive Trading Days during which at least fifty percent (50%) of all participants and beneficiaries under all of the individual account plans maintained by the Company and members of its controlled group are prohibited from trading in Company Securities through their plan accounts. Insiders will receive advance notice of any such blackout period from the Compliance Officer.
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5. Special Blackout Periods
There are times when the Company or certain members of its Board or senior management or other team members may be aware of a material, nonpublic development. Although an Insider may not know the specifics of such development, if an Insider engages in a trade before such development is disclosed to the public or resolved, such Insider and the Company might be exposed to a charge of insider trading that could be costly and difficult to refute. In addition, a trade by an Insider during such period could result in adverse publicity for the Company.
Therefore, Insiders may not trade in Company Securities if they are notified that the trading window is closed because of the existence of a material, nonpublic development. The Compliance Officer will subsequently notify the Insiders once the material nonpublic development is disclosed to the public or resolved and that, as a result, the trading window is again open. While the Compliance Officer will undertake reasonable efforts to notify the Insiders that material, nonpublic events have developed, or are soon likely to develop, it is each Insider’s individual duty to ensure that they do not make any trade in Company Securities when material, nonpublic information exists, regardless of whether such Insider is aware of such development.
B. Pre-Clearance Procedures
No Insider may trade in Company Securities unless the trade has been approved by the Compliance Officer in accordance with the procedures set forth below. The Compliance Officer will review and either approve or prohibit all proposed trades by Insiders in accordance with the procedures set forth below. The Compliance Officer may consult with the Company’s other officers and/or outside legal counsel and will receive approval for his/her own trades from each other.
1. Procedures. No Insider may trade in Company Securities until:
| ● | The Insider has notified the Compliance Officer of the amount and nature of the proposed trade(s) using the Stock Transaction Request form attached to this Insider Trading Compliance Policy. In order to provide adequate time for the preparation of any required reports under Section 16 of the Securities and Exchange Act, as amended (“Exchange Act”), a Stock Transaction Request form should, if practicable, be received by the Compliance Officer at least two (2) Trading Days prior to the intended trade date; | |
| ● | The Insider has certified to the Compliance Officer in writing prior to the proposed trade(s) that the Insider is not in possession of material, nonpublic information concerning the Company; | |
| ● | The Insider has informed the Compliance Officer, using the Stock Transaction Request form attached hereto, whether, to the Insider’s best knowledge, (a) the Insider has (or is deemed to have) engaged in any opposite way transactions within the previous six months that were not exempt from Section 16(b) of the Exchange Act and (b) if the transaction involves a sale by an “affiliate” of the Company or of “restricted securities” (as such terms are defined under Rule 144 under the Securities Act of 1933, as amended (“Rule 144”)), whether the transaction meets all of the applicable conditions of Rule 144; and |
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| ● | The Compliance Officer has approved the trade(s) and has certified such approval in writing. Such certification may be made via digitally-signed electronic mail. |
The Compliance Officer do not assume the responsibility for, and approval from the Compliance Officer does not protect the Insider from, the consequences of prohibited insider trading.
2. Additional Information.
Insiders shall provide to the Compliance Officer any documentation reasonably requested by him or her in furtherance of the foregoing procedures. Any failure to provide such requested information will be grounds for denial of approval by the Compliance Officer.
3. No Obligation to Approve Trades.
The existence of the foregoing approval procedures does not in any way obligate the Compliance Officer to approve any trade requested by an Insider. The Compliance Officer may reject any trading request at his or her sole discretion.
From time to time, an event may occur that is material to the Company and is known by only a few directors or executives. Insiders may not trade in Company Securities if they are notified by the Compliance Officer that a proposed trade has not been cleared because of the existence of a material, nonpublic development. Even if that particular Insider is not aware of the material, nonpublic development involving the Company, if any Insider engages in a trade before a material, nonpublic development is disclosed to the public or resolved, the Insider and the Company might be exposed to a charge of insider trading that could be costly and difficult to refute even if the Insider was unaware of the development. So long as the event remains material and nonpublic, the Compliance Officer may determine not to approve any transactions in the Company’s Securities. The Compliance Officer will subsequently notify the Insider once the material, nonpublic development is disclosed to the public or resolved. If an Insider requests clearance to trade in the Company’s Securities during the pendency of such an event, the Compliance may reject the trading request without disclosing the reason.
4. Completion of Trades.
After receiving written clearance to engage in a trade signed by the Compliance Officer, an Insider must complete the proposed trade within two (2) Trading Days or make a new trading request.
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5. Post-Trade Reporting.
Any transactions in the Company’s Securities by an Insider (including transactions effected pursuant to a Rule 10b5-1 Plan) must be reported to the Compliance Officer by completing the “Confirmation of Transaction” section of the Stock Transaction Request form attached to this Insider Trading Compliance Policy on the same day in which such a transaction occurs. Each report an Insider makes to the Compliance Officer should include the date of the transaction, quantity of shares, price and broker-dealer through which the transaction was effected. This reporting requirement may be satisfied by sending (or having such Insider’s broker send) duplicate confirmations of trades to the Compliance Officer if such information is received by the Compliance Officer on or before the required date. Compliance by directors and executive officers with this provision is imperative given the requirement of Section 16 of the Exchange Act that these persons generally must report changes in ownership of the Securities within two business days. The sanctions for noncompliance with this reporting deadline include mandatory disclosure in the Company’s proxy statement for the next annual meeting of stockholders, as well as possible civil or criminal sanctions for chronic or egregious violators.
PART
IV. EXEMPTIONS FROM INSIDER TRADING RESTRICTIONS (ALL DIRECTORS,
OFFICERS, EMPLOYEES AND CONSULTANTS)
A. Pre-Approved Rule 10b5-1 Plan.
The securities law permits establishment of trading plans under Rule 10b5-1 of the Exchange Act that allow for persons to authorize, at a time when they are not in possession of material, nonpublic information, future trading. Under a compliant 10b5-1 Plan, a trade will not be subject to the Company’s trading windows, retirement plan blackout periods or pre-clearance procedures, and Insiders are not required to complete a Stock Transaction Request form for such transactions.
If an Insider intends to trade pursuant to a Rule 10b5-1 Plan, such plan, arrangement or instruction must:
| ● | satisfy the requirements of Rule 10b5-1; | |
| ● | be documented in writing; | |
| ● | be established during a trading window when such Insider does not possess material, nonpublic information; and | |
| ● | be pre-approved by the Compliance Officer. |
Any deviation from, or alteration to, the specifications of an approved Rule 10b5-1 Plan (including, without limitation, the amount, price or timing of a purchase or sale) must be reported immediately to the Compliance Officer. Any transaction pursuant to a Rule 10b5-1 Plan must be timely reported following the transaction in accordance with the procedures set forth above.
The Compliance Officer may refuse to approve a Rule 10b5-1 Plan as he or she deems appropriate including, without limitation, if he or she determines that such plan does not satisfy the requirements of Rule 10b5-1.
Any modification of an Insider’s prior Rule 10b5-1 Plan requires pre-approval by the Compliance Officer. A modification must occur during a trading window and while such Insider is not aware of material, nonpublic information.
B. Employee Benefit Plans.
Exercise of Stock Options. The trading prohibitions and Insider Trading Procedures do not apply to the exercise of a stock option to purchase securities of the Company when payment of the exercise price is solely made in cash and the Securities are held, not sold. The trading prohibitions and Insider Trading
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Procedures do apply to:
| ● | the same day or subsequent sale of the Securities acquired on the exercise of a stock option; | |
| ● | the use of outstanding Securities to pay part or all of the exercise price of an option; | |
| ● | any net option exercise; | |
| ● | any exercise of a stock appreciation right; | |
| ● | share withholding; | |
| ● | any sale of stock as part of a broker-assisted cashless exercise of an option; or | |
| ● | any other market sale for the purpose of generating the cash needed to pay the exercise price of an option. |
For directors and executive officers subject to the requirements of Section 16 of the Exchange Act, the exercise of an option to purchase securities of the Company (and any subsequent sale) each triggers the obligation to file a Form 4 within two days. For this reason, Insiders must comply with the post-trade reporting requirement described in Section C above for any such transaction.
Tax Withholding on Restricted Stock/Units. The trading prohibitions and restrictions set forth in the Insider Trading Procedures do not apply to the withholding by the Company of shares of stock upon vesting of restricted stock or upon settlement of restricted stock units to satisfy applicable tax withholding requirements if (a) such withholding is required by the applicable plan or award agreement or (b) the election to exercise such tax withholding right was made by the director, officer or employee in compliance with the Insider Trading Procedures.
Retirement Plan. The trading prohibitions and restrictions set forth in the Insider Trading Procedures do not apply to purchases of Securities in any 401(k) Plan of the Company (the “Retirement Plan”) resulting from periodic contributions by Insiders to the Retirement Plan pursuant to payroll deduction elections. Such prohibitions and restrictions do apply, however, to certain elections Insiders may make under the Retirement Plan, including: (a) an election to increase or decrease the percentage of periodic contributions that will be allocated to the Company stock fund; (b) an election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund; (c) an election to borrow money against or receive a distribution from such Insider’s Retirement Plan account if the loan or distribution will result in a liquidation of some or all of such Insider’s Company stock fund balance; and (d) an election to pre-pay a plan loan if the pre-payment will result in an allocation of loan proceeds to the Company stock fund.
PART IV. WAIVERS
A waiver of any provision of this Insider Trading Compliance Policy, or the Insider Trading Procedures contained herein, in a specific instance may be authorized in writing by either the Compliance Officer or the Audit Committee of the Board, and any such waiver shall be reported to the such committee or the Board.
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PART V. ACKNOWLEDGEMENT
This Insider Trading Compliance Policy will be delivered to all current Insiders and to all directors, officers, and employees and consultants following its adoption or thereafter at the start of their employment or relationship with the Company. Each individual must acknowledge that he or she has received a copy and agrees to comply with the terms of this Insider Trading Compliance Policy under the Company’s electronic training record system, and, if applicable, the Insider Trading Procedures contained herein. Directors and consultants that do not have access to the electronic training system will furnish a written acknowledgement of acceptance. A form of Acknowledgement is attached as Exhibit B.
All directors, officers, and employees and consultants will be required upon the Company’s request to re-acknowledge and agree to comply with the Insider Trading Compliance Policy (including any amendments or modifications). For such purpose, an individual will be deemed to have acknowledged and agreed to comply with the Insider Trading Compliance Policy, as amended from time to time, when copies of such items have been delivered by regular or electronic mail (or other delivery option used by the Company) by the Compliance Officer.
| * | * | * |
Questions regarding this Insider Trading Compliance Policy are encouraged and may be directed to the Compliance Officer.
| ADOPTED: | August 20, 2021 |
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EXHIBIT A
STOCK TRANSACTION REQUEST
Pursuant to its Insider Trading Compliance Policy, I hereby notify AmpliTech Group, Inc., a Nevada corporation (the “Company”), of my intent to trade the securities of the Company as indicated below:
| REQUESTER INFORMATION |
| Insider’s Name: __________________________________________________________ |
| INTENT TO SELL | |||
| Number of shares: | |||
| Intended trade date: | |||
| Means of selling Shares: | ☐ | Sale through employee benefit plan (please specify): | |
| ☐ | Sale through a broker on the open market | ||
| ☐ | Other (please specify): | ||
| SECTION 16 | RULE 144 (Not applicable if transaction requested involves a purchase) | |||
| ☐ | I am not subject to Section 16. | ☐ | I am not an “affiliate” of the Company and the transaction requested above does not involve the sale of “restricted securities” (as such terms are defined under Rule 144 under the Securities Act of 1933, as amended). | |
☐ |
To the best of my knowledge, I have not (and am not deemed to have) engaged in an opposite way transaction within the previous 6 months that was not exempt from Section 16(b) of the Exchange Act. | ☐ | To the best of my knowledge, the transaction requested above will meet all of the applicable conditions of Rule 144.
| |
☐ |
None of the above. | ☐ | The transaction requested is being made pursuant to an effective registration statement covering such transaction.
| |
| ☐ | ☐ | None of the above. | ||
CERTIFICATION
I hereby certify that I am not (1) in possession of any material, nonpublic information concerning the Company, as defined in the Company’s Insider Trading Compliance Policy and (2) purchasing any securities of the Company on margin in contravention of the Company’s Insider Trading Procedures. I understand that, if I trade while possessing such information or in violation of such trading restrictions, I may be subject to severe civil and/or criminal penalties, and may be subject to discipline by the Company including termination.
| Insider’s Signature | Date |
| AUTHORIZED APPROVAL | ||
Signature of Compliance Officer (or designee) |
Date |
*NOTE: Multiple lots must be listed on separate forms or broken out herein.
EXHIBIT B
ACKNOWLEDGMENT
I hereby acknowledge that I have read, that I understand, and that I agree to comply with, the Insider Trading Compliance Policy of AmpliTech Group, Inc., a Nevada corporation (the “Company”). I further acknowledge and agree that I am responsible for ensuring compliance with the Insider Trading Compliance Policy and the Insider Trading Procedures included therein by all of my “Affiliates”. I also understand and agree that I will be subject to sanctions, including termination of employment, that may be imposed by the Company, in its sole discretion, for violation of the Insider Trading Compliance Policy, and that the Company may give stop-transfer and other instructions to the Company’s transfer agent against the transfer of any Securities in a transaction that the Company considers to be in contravention of the Insider Trading Compliance Policy.
| Date: | Signature: | |
| Name: | ||
| Title: |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements (No. 333-251332 and No. 333-276902) on Form S-8, and Registration Statements (No. 333-255656, No. 333-254969, No. 333-251260, No. 333-264420 and No. 333-278657) on Form S-3 of AmpliTech Group, Inc. of our report dated March 31, 2025, with respect to our audits of the consolidated financial statements of AmpliTech Group Inc. as of and for the years ended December 31, 2023, and 2024, which appears in this Form 10-K.
/s/ Sadler, Gibb & Associates, LLC
Draper, UT
March 31, 2025
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Fawad Maqbool, President and Chief Executive Officer of AmpliTech Group, Inc. (the “Company”), certify that:
1. I have reviewed this annual report on Form 10-K of the Company for the year ended December 31, 2024;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 31, 2025
| By: | /s/ Fawad Maqbool | |
| Fawad Maqbool | ||
|
President and Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Louisa Sanfratello, Chief Financial Officer and Secretary of AmpliTech Group, Inc. (the “Company”), certify that:
1. I have reviewed this annual report on Form 10-K of the Company for the year ended December 31, 2024;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date March 31, 2025
| /s/ Louisa Sanfratello | |
|
Louisa Sanfratello, CPA (Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Fawad Maqbool, President and Chief Executive Officer, of AmpliTech Group, Inc. (the “Registrant”) certifies, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of the Registrant for the year ended December 31, 2024 (the “Report”):
| (1) | fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Dated: March 31, 2025
| By: | /s/ Fawad Maqbool | |
| Fawad Maqbool | ||
|
President and Chief Executive Officer (Principal Executive Officer) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Louisa Sanfratello, Chief Financial Officer and Secretary of AmpliTech Group, Inc. (the “Registrant”) certifies, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of the Registrant for the year ended December 31, 2024 (the “Report”):
| (1) | fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Dated: March 31, 2025
| /s/ Louisa Sanfratello | |
|
Louisa Sanfratello, CPA Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.