UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2024

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

For the transition period from to

Commission File Number 001-40069

AmpliTech Group, Inc.

(Exact name of registrant as specified in its charter)

Nevada

27-4566352

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

155 Plant Avenue

Hauppauge, NY 11788

(Address of principal executive offices) (Zip Code)

(631)-521-7831

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

AMPG

The Nasdaq Stock Market LLC

Warrants to Purchase Common Stock

AMPGW

The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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

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

As of August 9, 2024, the registrant had 9,719,613 shares of common stock, par value $0.001 per share, issued and outstanding.

AMPLITECH GROUP, INC.

QUARTERLY REPORT ON FORM 10-Q

June 30, 2024

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	38

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	39

Item 6.	Exhibits	39

SIGNATURES		40

Use of Certain Defined Terms

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

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

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

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

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

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

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AmpliTech Group, Inc.

Condensed Consolidated Balance Sheets

	June 30,			December 31,
	2024			2023
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	1,014,204		$	6,726,013
Accounts receivable		1,139,052			2,542,710
Inventories, net		7,533,637			6,537,578
Prepaid expenses		1,963,782			1,342,335
Total Current Assets		11,650,675			17,148,636

Property and equipment, net		2,429,613			2,599,448
Operating lease right of use assets		3,268,136			3,538,798
Intangible assets, net		2,909,203			2,984,133
Goodwill		4,696,883			4,696,883
Cost method investment		348,250			348,250
Security deposits		109,480			91,481

Total Assets	$	25,412,240		$	31,407,629

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued expenses	$	1,164,201		$	846,179
Customer deposits		15,344			14,239
Current portion of financing lease obligations		17,208			16,799
Current portion of operating lease obligations		421,803			541,324
Current portion of notes payable		36,388			80,841
Total Current Liabilities		1,654,944			1,499,382

Long-term Liabilities
Financing lease obligations, net of current portion		23,829			32,537
Operating lease obligations, net of current portion		3,025,741			3,171,979
Deferred tax liability		24,000			24,000
Total Liabilities		4,728,514			4,727,898

Commitments and Contingencies		-			-

Stockholders’ Equity
Common stock, par value $0.001, 500,000,000 shares authorized, 9,719,613 and 9,714,613 shares issued and outstanding, respectively		9,720			9,715
Additional paid-in capital		36,675,164			36,439,739
Accumulated deficit		(16,001,158	)		(9,769,723	)

Total Stockholders’ Equity		20,683,726			26,679,731

Total Liabilities and Stockholders’ Equity	$	25,412,240		$	31,407,629

See accompanying notes to the condensed consolidated financial statements

AmpliTech Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	2024			2023			2024			2023
	For The Three Months Ended						For The Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2024			2023			2024			2023

Revenues	$	2,527,442		$	4,073,231		$	4,820,773		$	8,185,530

Cost of Goods Sold		1,470,355			2,152,022			2,881,056			4,401,540

Gross Profit		1,057,087			1,921,209			1,939,717			3,783,990

Operating Expenses
Selling, general and administrative		2,165,055			1,731,414			4,198,802			3,693,326
Research and development		460,122			697,905			736,877			1,217,885
Total Operating Expenses		2,625,177			2,429,319			4,935,679			4,911,211

Loss From Operations		(1,568,090	)		(508,110	)		(2,995,962	)		(1,127,221	)

Other Income (Expenses)
Loss on investment in digital assets		-			-			(3,248,911	)		-
Unrealized gain on investments		-			19,056			-			37,602
Realized gain on investments		-			8,979			25,965			13,807
Interest Income (expense), net		(8,184	)		7,314			(12,527	)		21,085
Total Other Income (Expenses)		(8,184	)		35,349			(3,235,473	)		72,494

Net Loss Before Income Taxes		(1,576,274	)		(472,761	)		(6,231,435	)		(1,054,727	)

Provision For Income Taxes		-			-			-			-

Net Loss	$	(1,576,274	)	$	(472,761	)	$	(6,231,435	)	$	(1,054,727	)
Net Loss Per Share;
Basic and diluted	$	(0.16	)	$	(0.05	)	$	(0.64	)	$	(0.11	)

Weighted Average Common Shares Outstanding;
Basic and diluted		9,718,239			9,638,252			9,716,976			9,636,988

See accompanying notes to the condensed consolidated financial statements

AmpliTech Group, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Shares		Value		Capital			Deficit			Equity
	For The Three Months Ended June 30, 2024

	Common Stock				Additional						Total
	Number of		Par		Paid-In			Accumulated			Stockholders’
	Shares		Value		Capital			Deficit			Equity

Balance, March 31, 2024		9,717,113	$	9,717	$	36,578,394		$	(14,424,884	)	$	22,163,227

Stock based compensation		-		-		96,773			-			96,773

Common stock issued for vesting of RSU’s		2,500		3		(3	)		-			-

Net loss for the three months ended June 30, 2024		-		-		-			(1,576,274	)		(1,576,274	)

Balance, June 30, 2024		9,719,613	$	9,720	$	36,675,164		$	(16,001,158	)	$	20,683,726

	For The Six Months Ended June 30, 2024

Balance, December 31, 2023		9,714,613	$	9,715	$	36,439,739		$	(9,769,723	)	$	26,679,731

Stock based compensation		-		-		235,430						235,430

Common stock issued for vesting of RSU’s		5,000		5		(5	)		-			-

Net loss for the six months ended June 30, 2024		-		-		-			(6,231,435	)		(6,231,435	)

Balance, June 30, 2024		9,719,613	$	9,720	$	36,675,164		$	(16,001,158	)	$	20,683,726

	For the Three Months Ended June 30, 2023

	Common Stock				Additional						Total
	Number of		Par		Paid-In			Accumulated			Stockholders’
	Shares		Value		Capital			Deficit			Equity

Balance, March 31, 2023		9,637,113	$	9,637	$	36,116,200		$	(7,886,250	)	$	28,239,587

Stock based compensation		-		-		64,934			-			64,934

Common stock issued for vesting of RSU’s		2,500		3		(3	)		-			-

Net loss for the three months ended June 30, 2023		-		-		-			(472,761	)		(472,761	)

Balance, June 30, 2023		9,639,613	$	9,640	$	36,181,131		$	(8,359,011	)	$	27,831,760

	For the Six Months Ended June 30, 2023

Balance, December 31, 2022		9,634,613	$	9,635	$	36,050,161		$	(7,304,284	)	$	28,755,512
Balance		9,634,613	$	9,635	$	36,050,161		$	(7,304,284	)	$	28,755,512

Stock based compensation		-		-		130,975			-			130,975

Common stock issued for vesting of RSU’s		5,000		5		(5	)					-

Net loss for the six months ended June 30, 2023		-		-		-			(1,054,727	)		(1,054,727	)

Balance, June 30, 2023		9,639,613	$	9,640	$	36,181,131		$	(8,359,011	)	$	27,831,760
Balance		9,639,613	$	9,640	$	36,181,131		$	(8,359,011	)	$	27,831,760

See accompanying notes to the condensed consolidated financial statements

AmpliTech Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	June 30,			June 30,
	For The Six Months Ended
	June 30,			June 30,
	2024			2023
Cash Flows from Operating Activities:
Net loss	$	(6,231,435	)	$	(1,054,727	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		258,445			230,123
Operating lease costs		270,662			279,655
Stock based compensation		235,430			130,975
Gain on termination of right-of-use operating lease		-			(8,461	)
Inventory reserve		17,000			-
Change in fair value of marketable securities		-			(37,602	)
Loss on investment of digital assets		3,248,911			-
Changes in Operating Assets and Liabilities:
Accounts receivable		1,403,658			(690,186	)
Inventories		(1,013,059	)		(269,460	)
Prepaid expenses		(621,447	)		(829,565	)
Security deposits		(17,999	)		21,704
Accounts payable and accrued expenses		318,022			1,199,611
Operating lease obligations		(265,759	)		(266,060	)
Customer deposits		1,105			37,107
Net cash used in operating activities		(2,396,466	)		(1,256,886	)

Cash Flows from Investing Activities:
Purchase of property and equipment		(13,680	)		(776,507	)
Net investment in marketable securities		-			(2,771,185	)
Purchase of investment in digital assets		(3,248,911	)		-
Net cash used in investing activities		(3,262,591	)		(3,547,692	)

Cash Flows from Financing Activities:
Repayment on financing lease liabilities		(8,299	)		(25,378	)
Repayment of notes payable		(44,453	)		(80,296	)
Payment of revenue earnout		-			(2,180,826	)
Net cash used in financing activities		(52,752	)		(2,286,500	)

Net change in cash and cash equivalents		(5,711,809	)		(7,091,078	)

Cash and Cash Equivalents, Beginning of the Period		6,726,013			13,290,222

Cash and Cash Equivalents, End of the Period	$	1,014,204		$	6,199,144

Supplemental disclosures:
Cash paid for interest expense	$	14,595		$	14,432
Cash paid for income taxes	$	-		$	50

Non-Cash Investing and Financing Activities:
Common Stock issued on vesting of RSUs	$	5		$	5
Gain on termination of right-of-use operating lease	$	-		$	8,461
Disposal of property and equipment	$	61,133		$	-

See accompanying notes to the condensed consolidated financial statements

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 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 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.

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, 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.

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.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 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 ended March 31, 2024, the Company made several transactions in digital currency in the total amount of approximately $3.25 million. The Company believes that it was fraudulently induced to hold its digital currency with a custodian whom the Company believed to be valid, but no longer exists. The Company is taking steps in an attempt to seek recovery of the funds including discussions with local, federal, and international law enforcement agencies and private consultants and is currently conducting a review of its processes and procedures related to this investment. At the present time, the Company is not aware of, and does not expect any additional losses arising out or relating to the above-described investment. In addition, the Company does not believe that the Company’s systems, records, or other assets were otherwise affected or compromised in connection with these investments.

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

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

(3) Summary of Significant Accounting Policies

Basis of Accounting

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

Principles of Consolidation

The accompanying condensed 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 June 30, 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 June 30, 2024 and December 31, 2023, the Company had $434,792 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 June 30, 2024 and December 31, 2023, respectively.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 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 June 30, 2024 and December 31, 2023 the reserve for inventory obsolescence was $1,163,000 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:

Schedule of Intangible Assets

Description	Useful Life	Method
Trade names	Indefinite	N/A
Customer relationships	15 to 20 years	Straight-line
Intellectual property	15 years	Straight-line

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 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. During the six months ended June 30, 2024 and the year ended December 31, 2023, there were no impairments of long-lived assets.

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.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 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.

During the six months ended June 30, 2024 and the year ended December 31, 2023, there were no impairments of 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 June 30, 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 three months ended June 30, 2024 and the year ended December 31, 2023.

Investment in Digital Assets

We account for all digital assets as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. The Company presents digital assets separately from other intangible assets, recorded as digital assets on the condensed 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.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

We performed an analysis this quarter 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.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

Determine the transaction price. Payment by the customer is due under customary fixed payment terms, and we evaluate if collectability is reasonably assured. None of our contracts as of June 30, 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 cost of sales.

Research and Development

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

Research and development costs for the six months ended June 30, 2024 and 2023 were $736,877 and $1,217,885, respectively.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

Income Taxes

The Company’s deferred tax assets and liabilities for the expected future tax consequences of events have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of certain assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At June 30, 2024 and December 31, 2023, the Company had no material unrecognized tax benefits.

Earnings Per Share

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (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 earnings (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 June 30, 2024 and 2023, there were 4,597,942 and 4,242,442, respectively, potential common share equivalents from stock options 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.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

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

Stock-Based Compensation

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

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.

Recent Accounting Pronouncements

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. We are currently evaluating the impact this standard will have on our consolidated financial statement disclosures.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company has adopted this pronouncement and does not expect the adoption to have a material impact on our results of operation, financial position or cash flow.

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. We are currently evaluating the impact this standard will have on our consolidated financial statement disclosures.

(4) Revenues

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

Schedule of disaggregated revenue

	June 30, 2024		June 30, 2023
	Three months ended
	June 30, 2024		June 30, 2023
AmpliTech Inc. and Specialty Microwave
Domestic sales	$	705,794	$	1,445,063
International sales		56,470		317,514
Total sales	$	762,264	$	1,762,577

Spectrum
Domestic sales	$	1,359,811	$	1,497,917
International sales		405,367		812,737
Total sales	$	1,765,178	$	2,310,654

Total sales	$	2,527,442	$	4,073,231

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

	June 30, 2024		June 30, 2023
	Six months ended
	June 30, 2024		June 30, 2023
AmpliTech Inc. and Specialty Microwave
Domestic sales	$	1,383,976	$	2,468,059
International sales		419,155		516,717
Total sales	$	1,803,131	$	2,984,776

Spectrum
Domestic sales	$	2,141,925	$	3,373,860
International sales		875,717		1,826,894
Total sales	$	3,017,642	$	5,200,754

Total sales	$	4,820,773	$	8,185,530

(5) Segment Reporting

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

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

The following table presents summary information by segment for the three months ended June 30, 2024:

Schedule of Segment Reporting

	Manufacturing and Engineering			Distribution		Corporate			Total
Revenue	$	762,264		$	1,765,178		-		$	2,527,442
Cost of Goods Sold		623,830			846,525		-			1,470,355
Net Income (Loss)		(1,314,836	)		253,081		(514,519	)		(1,576,274	)
Total Assets		10,532,203			14,758,006		122,031			25,412,240
Depreciation and Amortization		100,400			28,922		-			129,322
Interest Expense, net		5,847			-		2,337			8,184

The following table presents summary information by segment for the six months ended June 30, 2024:

	Manufacturing and Engineering			Distribution		Corporate			Total
Revenue	$	1,803,131		$	3,017,642		-		$	4,820,773
Cost of Goods Sold		1,399,301			1,481,755		-			2,881,056
Net Income (Loss)		(2,319,810	)		204,134		(4,115,759	)		(6,231,435	)
Total Assets		10,532,203			14,758,006		122,031			25,412,240
Depreciation and Amortization		200,601			57,844		-			258,445
Interest Expense, net		7,527			-		5,000			12,527

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

(6) Inventories

The inventory consists of the following at June 30, 2024 and December 31, 2023:

Schedule of Inventory

	June 30, 2024			December 31, 2023

Raw Materials	$	1,364,072		$	959,645
Work-in Progress		120,119			51,140
Finished Goods		7,212,446			6,672,793
Subtotal	$	8,696,637		$	7,683,578
Less: Reserve for Obsolescence		(1,163,000	)		(1,146,000	)

Total	$	7,533,637		$	6,537,578

(7) Property and Equipment

Property and Equipment consisted of the following at June 30, 2024 and December 31, 2023:

Schedule of Property and Equipment

	June 30, 2024			December 31, 2023

Lab Equipment	$	3,400,207		$	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		3,938,887			3,986,340
Property plant and equipment, gross		3,938,887			3,986,340
Less: Accumulated Depreciation		(1,509,274	)		(1,386,892	)

Total	$	2,429,613		$	2,599,448
Property plant and equipment, net	$	2,429,613		$	2,599,448

Depreciation expense for the three months ended June 30, 2024 and 2023 was $91,857 and $78,212 respectively, of which $71,123 and $58,526, respectively were included in cost of goods sold.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

Depreciation expense for the six months ended June 30, 2024 and 2023 was $183,515 and $155,304 respectively, of which $142,247 and $116,420, respectively were included in cost of goods sold.

Property and equipment purchased in the amount of $234,036 under financing leases is included in the totals above. As of June 30, 2024 and 2023, the outstanding balance of the financing leases were $41,037 and $57,438, respectively.

Disposal of property and equipment as of June 30, 2024 was $61,133.

(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 June 30, 2024 and December 31, 2023, goodwill was $4,696,883, respectively.

Other Intangible Assets

Intangible assets with an estimated useful life of fifteen and twenty years consisted of the following at June 30, 2024:

Schedule of Intangible Assets

	Gross Carrying Amount		Accumulated Amortization		Net		Weighted Average Life
Trade name	$	584,517	$	-	$	584,517		Indefinite
Customer relationships		2,591,491		404,521		2,186,970		16.31
Intellectual Property		202,771		65,055		137,716		10.21

Total	$	3,378,779	$	469,576	$	2,909,203

Amortization expense for the three months ended June 30, 2024 and 2023 was $37,465 and $37,466, respectively.

Amortization expense for the six months ended June 30, 2024 and 2023 was $74,930 and $74,819, respectively.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

Annual amortization of intangible assets are as follows:

Schedule of Amortization of Assets


2024-remaining		75,043
2025		149,974
2026		149,974
2027		149,974
2028		149,974
Thereafter		1,649,747
Total	$	2,324,686

(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. In light of this amendment, the Company overpaid $1,750 for the membership interest and was subsequently reimbursed. As of June 30, 2024, the Company has made an investment of $348,250 for a 19.9% membership interest.

(10) Leases

The following was included in our balance sheet as of June 30, 2024:

	June 30, 2024
Operating leases
Assets
ROU operating lease assets	$	3,268,136

Liabilities
Current portion of operating lease	$	421,803
Operating lease, net of current portion	$	3,025,741
Total operating lease liabilities	$	3,447,544

Financing leases
Assets
Property and equipment, gross	$	234,036
Accumulated depreciation		(171,068	)
Property and equipment, net	$	62,968

Liabilities
Current portion of financing lease	$	17,208
Financing lease, net of current portion	$	23,829
Total financing lease liabilities	$	41,037

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

The weighted average remaining lease term and weighted average discount rate at June 30, 2024 are as follows:

Weighted average remaining lease term (years)	June 30, 2024
Operating leases		9.22
Financing leases		2.51
Weighted average discount rate
Operating leases		4.47	%
Financing leases		4.70	%

Financing Lease

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

The following table reconciles future minimum financing lease payments to the discounted lease liability as of June 30, 2024:


2024-remaining		9,384
2025		18,195
2026		11,982
2027		3,994
Total lease payments		43,555
Less imputed interest		(2,518	)
Total lease obligations		41,037
Less current obligations		(17,208	)
Long-term lease obligations	$	23,829

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

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

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

On August 9, 2023, the Company entered a 39-month agreement for $20,880 to lease an automobile with a monthly payment of $605.

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. As of June 30, 2024, the new MMIC division facility lease had not yet commenced, as the Company did not have the right to obtain substantially all the economic benefits from the use of the asset or the right to direct the use of the asset. The Company moved into the new facility on August 1, 2024.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

The following table reconciles future minimum operating lease payments to the discounted lease liability as of June 30, 2024:


2024 remaining		349,808
2025		407,581
2026		389,397
2027		393,899
2028		404,721
Thereafter		2,313,460
Total lease payments		4,258,866
Less imputed interest		(811,322	)
Total lease obligations		3,447,544
Less current obligations		(421,803	)
Long-term lease obligations	$	3,025,741

(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 June 30, 2024, the balance of this promissory note was $36,388. Principal payments of $44,453 along with interest expense of $1,615 were paid during the six months ended June 30, 2024.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2024 and 2023

Loan Payable:

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

●

On May 14, 2020, the Company borrowed $27,494 to be paid over a three-year term with monthly payments of $815 at an interest rate of 4.27%.

SEC Form 10-Q filed by Amplitech Group Inc.