Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
(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 889,250 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 (SMW), 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 SMW.
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.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
The COVID-19 Pandemic
The COVID-19 pandemic has caused significant worldwide disruption throughout the course of 2020 and into 2021 and resulted in the imposition of various public and private sector measures to try to contain the virus, on a local, state, national and international level, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns. These measures have temporarily impacted our workforce and operations and some of the operations of our customers, and vendors, suppliers, and partners. The ultimate impact and efficacy of government measures and potential future measures is currently unknown.
There is uncertainty regarding the business impacts from such measures and potential future measures. While we have been able to continue our operations through a combination of work-from-home and social distancing policies implemented to protect employees, these measures have resulted in reduced workforce availability. We resumed operations on May 5, 2020, with the CDC safeguard guidelines in place. Difficulties in communicating with our customers’ employees and delivery delays due to COVID-19 may impact our ability to meet customer demand, and thus decrease revenues into 2021 and negatively impact our financial condition and results of operations.
(2) Summary of Significant Accounting Policies
Basis of Accounting
The accompanying condensed consolidated financial statements have been prepared using the accrual basis of accounting.
The accompanying unaudited interim condensed consolidated financial statements of AmpliTech Group, Inc. (“Group” or the “Company”) have been prepared by management in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for annual audited financial statements. In the opinion of management, all adjustments of a normal recurring nature, considered necessary for a fair presentation have been included.
The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes related thereto for the years ended December 31, 2020 and 2019 included in Form 10-K filed with the SEC.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
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 September 30, 2021, the Company’s cash and cash equivalents were deposited in three financial institutions.
Accounts Receivable
Trade accounts receivable are recorded at the net invoice value and are not interest bearing.
The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change in the future. An allowance of $113,670 and $125,400 has been recorded at September 30, 2021 and December 31, 2020. Subsequent to September 30, 2021, the Company collected $62,560 towards the allowance for doubtful accounts.
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.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
Inventories
Inventories, which consist primarily of raw materials, work in progress and finished goods, is 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.
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
|
|
7 years
|
|
Straight-line
|
|
|
Machinery and equipment
|
|
5 to 10 years
|
|
Straight-line
|
|
|
Computer equipment
|
|
3 to 7 years
|
|
Straight-line
|
|
|
Vehicles
|
|
5 years
|
|
Straight-line
|
|
Long-lived assets
Long lived assets, such as property, plant and equipment are reviewed 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.
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.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
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 significant 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 have an effect on 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 $250,000 of investments without readily determinable fair values at September 30, 2021 (see Note 8). These investments are included in other assets on the condensed consolidated balance sheets. There were no indicators of impairment during the three and nine months ended September 30, 2021.
Goodwill and Intangible Assets
Intangible assets include goodwill, trademarks, intellectual property and customer base acquired through the asset purchase of Specialty Microwave. The Company accounts for Other Intangible Assets under the guidance of ASC 350, “Intangibles-Goodwill and Other.” Under the guidance, other intangible assets with definite lives are amortized over their estimated useful lives. Intangible assets with indefinite lives are tested annually for impairment. Goodwill is not amortized. We test goodwill balances for impairment annually at December 31 or whenever impairment indicators arise.
Leases
On January 1, 2019, we adopted ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet. We adopted this standard using the modified retrospective approach with an effective date as of the beginning of January 2019. Prior year financial statements were not restated under the new standard. 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.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
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. Generally, our contracts with customers do not include multiple performance obligations to be completed over a period.
Our performance obligations generally 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 September 30, 2021 contained a significant financing component. Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, rebates, discounts, and other adjustments. The estimates of variable consideration are based on historical payment experience, historical and projected sales data, and current contract terms. Variable consideration is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.
Allocate the transaction price to performance obligations in the contract. We typically do not have multiple performance obligations in our contracts with customers. As such, we generally recognize revenue upon transfer of the product to the customer's control at contractually stated pricing.
Recognize revenue when or as we satisfy a performance obligation. We generally satisfy performance obligations at a point in time upon either shipment or delivery of goods, in accordance with the terms of each contract with the customer. We do not have significant service revenue.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
Reserves are recorded as a reduction in net sales and are not considered material to our condensed consolidated statements of operations for the nine months ended September 30, 2021 and 2020.
Research and Development
Research and development expenditures are charged to operations as incurred. The major components of research and development costs include consultants, outside service, and supplies. Research and development costs for the nine months ended September 30, 2021 and 2020 were $ 39,142 and $ 41,083.
Income Taxes
The Company’s deferred tax assets and liabilities for the expected future tax consequences of events that 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 September 30, 2021, the Company had no material unrecognized tax benefits.
Earnings Per Share
Basic earnings per share (“EPS”) are determined by dividing the net earnings by the weighted-average number of shares of common shares outstanding during the period. Diluted EPS is determined by dividing net earnings by the weighted average number of common shares used in the basic EPS calculation plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding under the treasury stock method. As of September 30, 2021 and 2020, there were 3,386,442 and 2,005,000, respectively, potentially dilutive shares that need to be considered as common share equivalents.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
The computation of weighted average shares outstanding and the basic and diluted earnings per share consisted of the following:
|
|
|
Net (Loss)
Income
|
|
|
Shares
|
|
|
Per Share
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
(592,845
|
)
|
|
|
9,343,671
|
|
|
$
|
(0.06
|
)
|
|
Effect of dilutive stock options, warrants and series A shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
(592,845
|
)
|
|
|
9,343,671
|
|
|
$
|
(0.06
|
)
|
|
For the three months ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
17,010
|
|
|
|
2,548,212
|
|
|
$
|
0.01
|
|
|
Effect of dilutive stock options, warrants and series A shares
|
|
|
|
|
|
|
2,005,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
17,010
|
|
|
|
4,553,212
|
|
|
$
|
0.00
|
|
|
|
|
Net (Loss)
Income
|
|
|
Shares
|
|
|
Per Share
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
(1,945,471
|
)
|
|
|
7,939,008
|
|
|
$
|
(0.25
|
)
|
|
Effect of dilutive stock options, warrants and series A shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
(1,945,471
|
)
|
|
|
7,939,008
|
|
|
$
|
(0.25
|
)
|
|
For the nine months ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
$
|
(549,219
|
)
|
|
|
2,500,789
|
|
|
$
|
(0.22
|
)
|
|
Effect of dilutive stock options, warrants and series A shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
(549,219
|
)
|
|
|
2,500,789
|
|
|
$
|
(0.22
|
)
|
Fair Value of Assets and Liabilities
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within 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 categories as follows:
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
Level 1. Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Cash and cash equivalents are valued using inputs in Level 1.
Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3. Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.
Fair Value of Marketable Securities
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. 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 divided into the following three categories:
Level 1. Quoted market prices in active markets for identical assets or liabilities.
Level 2. Observable market-based inputs or inputs that are corroborated by market data.
Level 3. Unobservable inputs that are not corroborated by market data.
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from financial instruments and any declines in the value of investments are temporary in nature. Money market funds and certificates of deposits are shown at cost on the balance sheet and their adjusted cost approximates their fair value.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
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. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At September 30, 2021 and December 31, 2020, the Company had $22,447,873 and $0 in excess of the FDIC insured limit, respectively.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. This ASU removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently assessing the impact of this standard on our consolidated financial statements.
On August 5, 2020, FASB issued ASU 2020-06, which is expected to reduce complexity and improve comparability of financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with an early adoption permitted. The adoption of this standard became effective for us on January 1, 2021 and did not have a material impact on our consolidated financial statements.
We do not expect the adoption of these or other recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
(3) Revenues
The following table presents sales disaggregated based on geographic regions and for the three and nine months ended:
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
|
Sept. 30, 2021
|
|
|
Sept. 30, 2020
|
|
|
Sept. 30, 2021
|
|
|
Sept. 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic sales
|
|
$
|
846,577
|
|
|
$
|
1,031,653
|
|
|
$
|
2,106,717
|
|
|
$
|
2,205,324
|
|
|
International sales
|
|
|
210,019
|
|
|
|
119,079
|
|
|
|
447,265
|
|
|
|
362,055
|
|
|
Total sales
|
|
$
|
1,056,596
|
|
|
$
|
1,150,732
|
|
|
$
|
2,553,982
|
|
|
$
|
2,567,379
|
|
(4) Marketable Securities
The following table is a summary of marketable securities at September 30, 2021:
|
|
|
Adjusted Cost
|
|
|
Unrealized Gains
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Level 1 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money Market Funds
|
|
|
782,429
|
|
|
|
|
|
|
|
|
|
782,429
|
|
|
Marketable Equity Securities
|
|
|
4,215,724
|
|
|
|
16,639
|
|
|
|
(79,774
|
)
|
|
|
4,152,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,998,152
|
|
|
$
|
16,639
|
|
|
$
|
(79,774
|
)
|
|
$
|
4,935,017
|
|
Cash and cash equivalents at September 30, 2021 was $782,429.
|
(1)
|
Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.
|
When evaluating an investment for impairment, the Company reviews factors including the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, changes in market interest rates and whether it is more likely than not the Company will be required to sell the investment before recovery of the investment’s cost basis. As of September 30, 2021, the Company does not consider any of its investments to be impaired.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
(5) Inventories
The inventory value at September 30, 2021 and December 31, 2020 were as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Raw Materials
|
|
$
|
615,618
|
|
|
$
|
325,251
|
|
|
Work-in Progress
|
|
|
155,273
|
|
|
|
129,882
|
|
|
Finished Goods
|
|
|
244,895
|
|
|
|
128,479
|
|
|
Engineering Models
|
|
|
3,726
|
|
|
|
3,726
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$
|
1,019,512
|
|
|
$
|
587,338
|
|
|
Less: Reserve for
|
|
|
|
|
|
|
|
|
|
Obsolescence
|
|
|
(71,000
|
)
|
|
|
(70,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
948,512
|
|
|
$
|
517,338
|
|
(6) Property and Equipment
Property and Equipment consisted of the following at September 30, 2021 and December 31, 2020:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Lab Equipment
|
|
$
|
1,811,486
|
|
|
$
|
865,414
|
|
|
Manufacturing Equipment
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Automobiles
|
|
|
7,335
|
|
|
|
19,527
|
|
|
Furniture and Fixtures
|
|
|
38,217
|
|
|
|
36,165
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
1,882,038
|
|
|
|
946,106
|
|
|
Less: Accumulated Depreciation
|
|
|
(715,449
|
)
|
|
|
(656,855
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,166,589
|
|
|
$
|
289,251
|
|
Depreciation expense for the nine months ended September 30, 2021 and 2020 was $63,597 and $36,802, respectively.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
(7) Intangible Assets
Goodwill
The goodwill is related to the acquisition of Specialty Microwave Corp. on September 12, 2019 and is primarily related to expected improvements and technology performance and functionality, as well sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition. Goodwill is generally not amortizable for tax purposes and is not amortizable for financial statement purposes. As of September 30, 2021 and December 31, 2020, goodwill was valued at $120,136.
Other Intangible Assets
Intangible assets with an estimated useful life of fifteen years consisted of the following at September 30, 2021:
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
|
|
|
Weighted
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Net
|
|
|
Average Life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade name
|
|
$
|
70,233
|
|
|
$
|
-
|
|
|
$
|
70,233
|
|
|
Indefinite
|
|
|
Customer relationships
|
|
|
412,860
|
|
|
|
56,481
|
|
|
|
356,379
|
|
|
|
13.0
|
|
|
Intellectual Property
|
|
|
202,771
|
|
|
|
27,872
|
|
|
|
174,899
|
|
|
|
13.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
685,864
|
|
|
$
|
84,353
|
|
|
$
|
601,511
|
|
|
|
|
|
Amortization expense for the years ended September 30, 2021 and 2020 was $30,698 and $30,876, respectively.
Annual amortization of intangible assets are as follows:
|
2021
|
|
|
10,344
|
|
|
2022
|
|
|
41,042
|
|
|
2023
|
|
|
41,042
|
|
|
2024
|
|
|
41,042
|
|
|
2025
|
|
|
41,042
|
|
|
Thereafter
|
|
|
356,766
|
|
|
|
|
$
|
531,278
|
|
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
(8) Cost Method Investment
On June 10, 2021, the Company entered into a membership interest purchase agreement with SN2N, LLC for an aggregate purchase price of $350,000, to be paid in four tranches. Each tranche represents a 5% membership interest, and in aggregate a 20% membership interest. SN2N plans to design and manufacture an un-hackable communications channel that creates a new security paradigm; a state-of-the art signal amplification secured by intelligence-community-caliber hardware encryption. AmpliTech would serve as exclusive manufacturer for the low noise amplifier product line used with this encryption technology. As of September 30, 2021, the Company has made an investment of $250,000 for a 15% membership interest.
(9) Line of Credit
On November 20, 2020, AmpliTech entered into a business line of credit for $750,000 maturing on November 1, 2021. The line is evaluated monthly on a borrowing base formula advancing 75% of accounts receivables aged less than 90 days and 50% of inventory raw materials costs. The interest rate shall be based upon the Wall Street Journal Prime Rate, plus 1%. The Company has the option to prepay all or any portion of the amount owed prior to its due date without penalty.
In connection with the loan, the Company granted the lender a security interest in all of its respective assets. In addition, the President and CEO, has agreed to guarantee the loan.
The Company made cash payments of $232,000 and $100,000 during the nine months ended September 30, 2021 and 2020, respectively.
As of September 30, 2021, and December 31, 2020, the outstanding balance on the line of credit was $0 and $200,000, respectively.
(10) Leases
We adopted ASC 842 “Leases” using the modified retrospective approach, electing the practical expedient that allows us not to restate our comparative periods prior to the adoption of the standard on January 1, 2019. As such, the disclosures required under ASC 842 are not presented for periods before the date of adoption.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
The following was included in our balance sheet as of September 30, 2021:
|
Operating leases
|
|
Sept. 30,
2021
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
ROU operating lease assets
|
|
$
|
278,878
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current portion of operating lease
|
|
$
|
88,986
|
|
|
Operating lease, net of current portion
|
|
$
|
199,302
|
|
|
Total operating lease liabilities
|
|
$
|
288,288
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Property and equipment, gross
|
|
$
|
157,184
|
|
|
Accumulated depreciation
|
|
|
(72,978
|
)
|
|
Property and equipment, net
|
|
$
|
84,206
|
|
|
Liabilities
|
|
|
|
|
|
Current portion of financing lease
|
|
$
|
33,280
|
|
|
Finance lease, net of current portion
|
|
|
26,047
|
|
|
Total operating lease liabilities
|
|
$
|
59,327
|
|
The weighted average remaining lease term and weighted average discount rate at September 30, 2021 were as follows:
|
Weighted average remaining lease term (years)
|
|
Sept. 30,
2021
|
|
|
Operating leases
|
|
|
3.00
|
|
|
Finance leases
|
|
|
1.75
|
|
|
Weighted average discount rate
|
|
|
|
|
|
Operating leases
|
|
|
5.96
|
%
|
|
Finance leases
|
|
|
4.89
|
%
|
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
Finance Lease
The Company entered into a 60-month lease agreement to finance certain laboratory equipment in July 2018 with a purchase option of $1. As such, the Company has accounted for this transaction as a finance lease.
The following table reconciles future minimum finance lease payments to the discounted lease liability as of September 30, 2021:
|
2021
|
|
|
9,445
|
|
|
2022
|
|
|
37,778
|
|
|
2023
|
|
|
18,889
|
|
|
Total lease payments
|
|
|
66,112
|
|
|
Less imputed interest
|
|
|
(2,695
|
)
|
|
Less sales tax
|
|
|
(4,090
|
)
|
|
Total lease obligations
|
|
|
59,327
|
|
|
Less current obligations
|
|
|
(33,280
|
)
|
|
Long-term lease obligations
|
|
$
|
26,047
|
|
Operating Leases
On December 4, 2015, the Company entered into a new operating lease agreement to rent office space in Bohemia, NY. This five-year agreement commenced February 1, 2016 with an annual rent of $50,000 and 3.75% increases in each successive lease year. On January 13, 2021, a lease rider was annexed to the original lease whereby the lease term will be extended on a month-by-month basis, commencing on February 1, 2021.
On January 15, 2016, the Company entered into a five-year agreement to lease 2 copiers with and annual payment of $2,985. This lease was terminated on November 16, 2020 and the Company entered into a new five-year agreement to lease 2 copiers with an annual payment of $3,976.
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.
On November 27, 2019, the Company entered a 39-month agreement to lease an automobile with a monthly payment of $420.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
The following table reconciles future minimum operating lease payments to the discounted lease liability as of September 30, 2021:
|
2021
|
|
|
25,428
|
|
|
2022
|
|
|
104,497
|
|
|
2023
|
|
|
102,741
|
|
|
2024
|
|
|
79,948
|
|
|
2025
|
|
|
3,645
|
|
|
Total lease payments
|
|
|
316,259
|
|
|
Less imputed interest
|
|
|
(27,971
|
)
|
|
Total lease obligations
|
|
|
288,288
|
|
|
Less current obligations
|
|
|
(88,986
|
)
|
|
Long-term lease obligations
|
|
$
|
199,302
|
|
(11) Notes Payable
Promissory Note:
On September 12, 2019, AmpliTech Group Inc. acquired Specialty Microwave Corporation (SMW), 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 SMW. 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 September 30, 2021, the balance of this promissory note was $309,868. Principal payments of $59,647 along with interest expense of $14,062 was paid during the nine months ended September 30, 2021. The promissory note is secured by certain assets of the Company.
Loan Payable:
On September 12, 2019, the Company entered a $1,000,000 seven-year term loan with amortization based on a ten- year repayment schedule. The loan bears interest at a fixed rate of 6.75% with a monthly repayment amount of $11,533. On May 10, 2021, the Company paid off the balance of the seven-year term loan. In the nine month period, $909,036 of principal payments and interest of $23,999 were paid.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
On April 20, 2020, the Company entered into a Paycheck Protection Program Promissory Note (“PPP Note”) in the principal amount of $232,200 (“PPP Loan”) from BNB Bank (“PPP Loan Lender”). The PPP Loan was obtained pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) administered by the U.S Small Business Administration (“SBA”). The PPP Loan was disbursed by the PPP Loan Lender on April 20, 2020 (the “Disbursement Date).
On April 20, 2021, SBA approved the PPP loan forgiveness of $232,200.
In addition, on September 12, 2019, the Company was approved for a $250,000 equipment leasing facility. The Company has borrowed against the leasing facility as follows:
|
|
·
|
On December 20, 2019, the Company borrowed $58,192 to be paid over a three-year term with monthly payments of $ 1,736 at an interest rate of 5.26%. The balance as of September 30, 2021 was $23,566. Total interest expense paid during the nine months ended September 30, 2021 was $1,178.
|
|
|
|
|
|
|
·
|
On May 14, 2020, the Company borrowed $27,494 to be paid over a three-year term with monthly payments of $815 at an interest rate of 4.268%. The balance as of September 30, 2021 was $14,917. Total interest expense paid during the nine months ended September 30, 2021 was $632.
|
|
|
|
|
|
|
·
|
On June 10, 2020, the Company borrowed $41,015 to be paid over a three-year term with monthly payments of $1,216 at an interest rate of 4.278%. The balance as of September 30, 2021 was $23,382. Total interest expense paid during the nine months ended September 30, 2021 was $983.
|
Future principal payments over the term of the loans as of September 30, 2021 are as follows:
|
|
|
Payments
|
|
|
2021
|
|
|
33,620
|
|
|
2022
|
|
|
137,623
|
|
|
2023
|
|
|
110,894
|
|
|
2024
|
|
|
89,596
|
|
|
|
|
|
|
|
|
Total remaining payments
|
|
$
|
$371,733
|
|
(12) Stockholders’ Equity
The total number of shares of stock this Corporation is authorized to issue shall be five hundred one million (501,000,000) shares, par value $0.001 per share. Our authorized capital stock consists of 500,000,000 shares of common stock and 1,000,000 shares of blank check preferred stock.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
Preferred Stock
On July 10, 2013, the Board of Directors of the Company approved a certificate of amendment to the articles of incorporation and changed the authorized capital stock of the Company to include and authorize 500,000 shares of Preferred Stock, par value $0.001 per share. On October 7, 2020, the Board of Directors of the Company approved a certificate of amendment to the articles of incorporation and changed the total number of authorized shares of Preferred Stock to be 1,000,000 shares, $0.001 per share.
On October 7, 2020, our Board of Directors and our stockholders approved a resolution to amend and restate the certificate of designation of preferences, rights and limitations of Series A Convertible Preferred Stock to restate that there are 401,000 shares of the Company’s blank check Preferred Stock designated as Series A Convertible Preferred Stock. The amended and restated certificate clarifies that the Series A Convertible Preferred Stock convert at a rate of five shares of the Company’s common stock for every share of Series A Convertible Preferred Stock, and also restates that the Series A Convertible Preferred Stock shall be entitled to vote on all matters submitted to shareholders of the Company for each share of Series A Convertible Preferred Stock owned on the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, on the date such vote is taken or any written consent of shareholders is solicited. The number of votes entitled to be cast by the holders of the Series A Convertible Preferred Stock equals that number of votes that, together with votes otherwise entitled to be cast by the holders of the Series A Convertible Preferred Stock at a meeting, whether by virtue of stock ownership, proxies, voting trust agreements or otherwise, entitle the holders to exercise 51% of all votes entitled to be cast to approve any action which Nevada law provides may or must be approved by vote or consent of the holders of common stock entitled to vote.
On November 20, 2020, the Company issued 2,005,000 shares of common stock to Fawad Maqbool, the Chief Executive Officer of the Company. 5,000 of the shares were issued at par value upon the conversion of 1,000 shares of Preferred Stock. The remaining 2,000,000 of the shares were issued pursuant to the exercise by Mr. Maqbool of options to purchase 400,000 shares of Preferred Series A stock, at an exercise price of $1.03 per share, which were then converted into 2,000,000 shares of Common Stock.
On December 23, 2020, the Company filed amended and restated articles of incorporation to keep the authorized shares of Common Stock at 500,000,000 and set the authorized shares of blank check preferred stock at 1,000,000. On December 23, 2020, the Company filed an amended and restated certificate of designation of preferences, rights and limitations of the Series A Convertible Preferred Stock.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
Common Stock:
The Company originally authorized 50,000,000 shares of common stock with a par value of $0.001. Effective May 20, 2014, the Company increased its authorized shares of common stock from 50,000,000 to 500,000,000.
On December 7, 2020, the Board of Directors approved a reverse stock split of the Company’s common stock, in connection with a potential listing onto NASDAQ in a ratio to be determined by the Board based on market conditions and the Company’s
trading price at the time of such reverse split in the range of 1:20 to 1:200, while the authorized shares of common stock remain at 500,000,000. A reverse stock split of the outstanding common stock at a 1-for-20 ratio became effective February 17, 2021. All per share amounts and number of shares in the condensed consolidated financial statements and related notes have been retroactively restated to reflect the reverse stock split.
On October 15, 2019, the Company engaged Maxim Group LLC (“Maxim”) as its financial advisor to assist the Company in growth strategy to the investment community with the ultimate goal of an up-list and capital raise on NASDAQ.
As consideration for Maxim’s services, Maxim shall be entitled to receive, and the Company agrees to pay Maxim, the following compensation:
|
|
(a)
|
The Company will issue to Maxim or its designees 100,000 shares of the Company’s Common Stock (“Common Stock”) based on the following schedule:
|
|
|
i.
|
27,500 restricted shares of Common Stock upon the execution of the Agreement implying a price per share of $0.10. These shares were valued on October 15, 2019 at $0.054 with a value of $29,920. The full amount of $29,920 was expensed as consulting fees in 2020 and the shares were issued on January 13, 2020.
|
|
|
|
|
|
|
ii.
|
$54,000 payable in 22,500 restricted shares of Common Stock six months from the date of the Agreement implying a price per shares of $0.12. These shares were valued on October 15, 2019 at a price of $0.054 with a value of $24,480 and classified as common stock subscription payable as they had not been issued. On July 9, 2020, Maxim was issued 22,500 shares of common stock in exchange for the common stock subscription payable. The full amount of consulting fees was expensed in 2019.
|
|
|
|
|
|
|
iii.
|
50,000 restricted shares of Common Stock 90 days following the placement agency agreement dated April 15, 2021. These shares were valued on October 15, 2019 at a price of $0.054 with a value of $54,000 and expensed as consulting fees for the three months ended March 31, 2021. These shares were issued on November 10, 2021.
|
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
On July 28, 2020, Wayne Homschek elected to exercise 150,000 of his cashless warrants and 102,632 shares of common stock was issued.
On October 12, 2020, the Company engaged service providers for services related to the NASDAQ up list totaling $100,000. The Company issued 100,000 shares on December 18, 2020 under the Company’s equity incentive plan immediately following the filing of a Registration Statement on Form S-8 and were issued without restrictions. These services have been expensed as of March 31, 2021.
On October 16, 2020, the Company entered into an advisory agreement to assist in product sales and distribution in Asia and the Middle East. The advisor will be paid compensation of 100,000 shares totaling $108,000 over a two- year period. These shares were issued under the Company’s equity incentive plan immediately following the filing of a Registration Statement on Form S-8 and were issued without restrictions. As of September 30, 2021, $51,633 of expense had been recognized and $56,367 remained as a prepaid to be amortized over a two-year period.
On October 16, 2020, the Company entered into a public relations service agreement whereby the consultant will be paid compensation of 25,000 shares totaling $27,000 over a nine-month period. These shares were issued under the Company’s equity incentive plan immediately following the filing of a Registration Statement on Form S-8 and were issued without restrictions. As of June 30, 2021, $27,000 of expense had been recognized
On November 20, 2020, the Company issued 2,005,000 shares of common stock to Fawad Maqbool, the Chief Executive Officer of the Company. 5,000 of the shares were issued at par value upon the conversion of 1,000 shares of Preferred Stock. The remaining 2,000,000 of the shares were issued pursuant to the exercise by Mr. Maqbool of options to purchase 400,000 shares of Preferred Series A stock, at an exercise price of $1.03 per share, which were then converted into 2,000,000 shares of Common Stock.
On December 18, 2020, the Company issued 30,000 shares of common stock under the Company’s stock option plan as stock compensation totaling $90,000.
On February 17, 2021, Amplitech Group Inc., common stock and warrants under the symbols “AMPG” and “AMPGW”, respectively, commenced trading on NASDAQ. 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. Maxim Group LLC acted as sole book-running manager for the offering. Net proceeds received was $8,119,502.
On February 24, 2021, Maxim Group LLC exercised its overallotment option to purchase an additional 205,714 shares of common stock. Net proceeds received was $1,330,095.
From March 8 to March 12, 2021, 161,800 warrants were exercised at a price of $7.00 and 161,800 shares of common stock were issued. Total cash proceeds received were $1,132,600.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
From April 1 through April 6, 2021, 48,900 warrants were exercised at an exercise price of $7.00 and 48,900 shares of common stock were issued. Gross proceeds received were $342,300.
On April 15, 2021, the Company entered into definitive agreements with certain institutional investors for the sale of 2,715,000 shares of common stock in a registered direct offering priced at-the-market under NASDAQ rules. Concurrently, the Company agreed to issue to the investors, in a private placement, warrants to purchase an aggregate of 1,900,500 shares of common stock at an exercise price of $8.48 per share with a five-year term. Maxim Group LLC acted as the exclusive placement agent for this offering. The shares of common stock as described were offered pursuant to a “shelf” registration statement filed with the SEC on April 1, 2021 and declared effective on April 14, 2021. The aggregate gross proceeds to the Company were approximately $23 million dollars before deducting placement agent’s fees and expenses. The offering closed on April 16, 2021. On April 30, 2021, the Company filed a registration statement providing for the resale of the shares of common stock issuable upon the exercise of the warrants issued in the private placement. The registration statement became effective on May 11, 2021.
2020 Equity Incentive Plan:
In October 2020, the Board of Directors and shareholders adopted the Company's 2020 Equity Incentive Plan (the "2020 Plan"), effective as of December 14, 2020. Under the 2020 Plan, the Company reserved 1,250,000 shares of common stock to grant shares of the Company's common stock to employees and individuals who perform services for the Company. The purpose of the 2020 Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide incentives to individuals who perform services for the Company, and to promote the success of the Company's business. The 2020 Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, and other stock or cash awards as the Board of Directors may determine.
Stock Options:
On June 30, 2021, the Company granted to each of our Board of Directors (Mr. Lee, Mr. Kappers, and Mr. Mazziota) ten-year nonqualified stock options to purchase 12,500 shares of common stock (totaling 37,500) according to the Company's 2020 Plan. The stock options vest in full on the date of the grant, with an exercise price of $4.63 per share. The Company has calculated these options' estimated fair market value at $134,550 using the Black-Scholes model, with the following assumptions: expected term 2.5 years, stock price $4.63, exercise price $4.63, volatility 153.1%, risk-free rate 0.36%, and no forfeiture rate.
On July 26, 2021, the Company granted three employees, a consultant and two advisors to the Board ten-year stock options to purchase shares of common stock (totaling 52,000) according to the Company's 2020 Plan. The stock options vest in equal quarterly installments over three years commencing one year after the grant date, with an exercise price of $3.88 per share. The Company has calculated these options' estimated fair market value at $190,252 using the Black-Scholes model, with the following assumptions:
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
expected term 7.0 years, stock price $3.88, exercise price $3.88, volatility 142.6%, risk-free rate 1.04%, and no forfeiture rate.
Below is a table summarizing the changes in stock options outstanding during the nine-month period ended September 30, 2021:
|
|
|
Number of
|
|
|
Weighted Average
|
|
|
|
|
Options
|
|
|
Exercise Price ($)
|
|
|
Outstanding at December 31, 2020
|
|
|
-
|
|
|
|
-
|
|
|
Granted
|
|
|
89,500
|
|
|
$
|
4.19
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding at September 30, 2021
|
|
|
89,500
|
|
|
$
|
4.19
|
|
|
Exercisable at September 30, 2021
|
|
|
37,500
|
|
|
$
|
4.63
|
|
As of September 30, 2021, all outstanding stock options were issued according to the Company's 2020 Plan, and there remain 1,160,500 shares of common stock available for future issuance under the 2020 Plan.
Stock-based compensation expense related to stock options of $143,661 and $0 was recorded in the nine months ended September 30, 2021 and September 30, 2020, respectively. As of September 30, 2021, the remaining unrecognized compensation cost related to non-vested stock options is $181,658 and is expected to be recognized over 3.82 years. The outstanding stock options have a weighted average remaining contractual life of 7.70 years and a total intrinsic value of $0.
Warrants:
Effective February 19, 2021, Amplitech Group Inc., common stock and warrants under the symbols "AMPG" and "AMPGW," respectively, commenced trading on NASDAQ. In connection with the public offering, 1,371,428 units sold at an offering price of $7.00 per unit. Each unit issued in the offering consisted of one share of common stock and one warrant. Maxim Group LLC acted as sole book-running manager for the offering and partially exercised its overallotment option to purchase 205,714 warrants at the public offering price. The warrants expire ten years from the date of issuance.
Effective April 16, 2021, the Company entered into definitive agreements with certain institutional investors to sell 2,715,000 shares of common stock in a registered direct offering priced at the market under NASDAQ rules. Concurrently, the Company agreed to issue to the investors, in a private placement, warrants to purchase an aggregate of 1,900,500 shares of common stock at an exercise price of $8.48 per share with a five-year term.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
On July 20, 2021, in connection with a product development agreement with an unrelated party, the Company issued warrants to purchase 30,000 shares of common stock. The warrants vest in one year from issuance, with an exercise price of $5.00 per share. The Company has calculated these warrants estimated fair market value at $88,803 using the Black-Scholes model, with the following assumptions: expected term 3.0 years, stock price $3.80, exercise price $5.00, volatility 149.8%, risk-free rate 0.37%, and no forfeiture rate.
From March 8 through April 6, 2021, 210,700 warrants were exercised at $7.00, resulting in the issuance of 210,700 shares of common stock.
|
|
|
Number of
|
|
|
Weighted Average
|
|
|
|
|
Warrants
|
|
|
Exercise Price ($)
|
|
|
Outstanding at December 31, 2020
|
|
|
-
|
|
|
|
-
|
|
|
Granted
|
|
|
3,507,642
|
|
|
$
|
7.78
|
|
|
Exercised
|
|
|
(210,700
|
)
|
|
$
|
7.00
|
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
|
Outstanding at September 30, 2021
|
|
|
3,296,942
|
|
|
$
|
7.83
|
|
|
Exercisable at September 30, 2021
|
|
|
3,266,942
|
|
|
$
|
7.86
|
|
Stock-based compensation expense related to warrants of $17,517 was recorded in the nine months ended September 30, 2021 and September 30, 2020, respectively. As of September 30, 2021, the remaining unrecognized compensation cost related to non-vested warrants is $0. The outstanding warrants have a weighted average remaining contractual life of 6.56 years and a total intrinsic value of $0.
(13) Commitments and Contingencies: None applicable
(14) Subsequent events
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report.
On October 15, 2021, the Company entered into a new lease for a 20,000 square foot facility on Long Island, 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 expects to be fully operational at the new manufacturing and headquarters facility in the first quarter of 2022.
AmpliTech Group, Inc.
Notes To Condensed Consolidated Financial Statements
For The Nine Months Ended September 30, 2021 and 2020
On November 1, 2021, the Company opened its MMIC Design Center (AGMDC) in Texas and expects the facility to be fully operational by year-end 2021. The MMIC design center is expected to integrate the Company’s low noise figures into more compact packages that will allow for integration into a larger range of consumer applications.
On November 10, 2021, Maxim was issued 50,000 restricted shares of Common Stock as per the placement agency agreement dated April 15, 2021.