AmpliTech Group, Inc. - Quarter Report: 2014 March (Form 10-Q)

ampg_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2014

o 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 000-54355

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)

35 Carlough Rd. #3

Bohemia, NY 11716

(address of principal executive offices) (Zip Code)

631-521-7831

(Registrant’s telephone number, including area code)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

As of May 14, 2014, the registrant had 26,391,043 shares of common stock, par value $0.001 per share, issued and outstanding.

AMPLITECH GROUP, INC.

QUARTERLY REPORT ON FORM 10-Q

March 31, 2014

TABLE OF CONTENTS

		PAGE
PART 1 - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)		4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		18

Item 4.	Controls and Procedures		18

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.		19

Item 1A.	Risk Factors		19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		19

Item 3.	Default Upon Senior Securities		19

Item 4.	Mine Safety Disclosures		19

Item 5.	Other Information		19

Item 6.	Exhibits		20

SIGNATURES			21

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 of 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. In light of 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

As of March 31, 2014 (Unaudited) and December 31, 2013

	March 31,			December 31,
	2014			2013
Assets	(Unaudited)

Current Assets

Cash and Cash Equivalents	$	10,715		$	10,623
Accounts Receivable, Net		145,111			178,813
Inventory, Net		139,238			128,078
Prepaid Expenses		43,600			56,800

Total Current Assets		338,664			374,314

Property and Equipment, Net		138,490			146,038
Deferred Financing Costs, Net		7,563			8,007
Security Deposits		5,375			5,375

Total Assets	$	490,092		$	533,734

Liabilities and Stockholders' Deficit

Current Liabilities

Accounts Payable and
Accrued Expenses	$	232,762		$	191,259
Customer Deposits		28,752			41,957
Payroll Taxes Payable		10,423			7,140
Convertible Notes Payable		147,800			198,000
Notes Payable		27,980			42,338
Factor Financing		92,809			116,384
Current Portion of Capital Leases		64,758			59,385
Current Portion of Loans Payable		43,420			41,748

Total Current Liabilities		648,704			698,211

Long-Term Liabilities

Capital Leases		9,626			23,886
Loans Payable		21,415			31,880

Total Liabilities		679,745			753,977

Commitments and Contingencies

Stockholders' Deficit

Series A Convertible Preferred Stock, par value $.001, 140,000 shares authorized, 0 shares issued and outstanding		-			-
Common Stock, par value $.001, 50,000,000 shares authorized, 23,673,340 and 22,153,904 shares issued and outstanding, respectively		23,673			22,154
Additional Paid-In Capital		685,754			574,573
Accumulated Deficit		(899,080	)		(816,970	)

Total Stockholders' Deficit		(189,653	)		(220,243	)

Total Liabilities and Stockholders' Deficit	$	490,092		$	533,734

See accompanying notes to condensed consolidated financial statements

AmpliTech Group, Inc.

Condensed Consolidated Statements of Operations

For The Three Months Ended March 31, 2014 and 2013

(Unaudited)

	For The Three Months Ended
	March 31,			March 31,
	2014			2013

Sales	$	323,876		$	309,183

Cost of Gools Sold		169,797			121,641

Gross Profit		154,079			187,542

General and Administrative		188,426			156,270

Income (Loss) From Operations		(34,347	)		31,272

Other Income (Expenses);

Interest Expense		(53,343	)		(15,913	)
Gain on Shares Issued for Debt and Accrued Liabilities		5,580			-

Income Before Income Taxes		(82,110	)		15,359

Provision (Credit) For Income Taxes		-			-

Net Income (Loss)		(82,110	)		15,359

Net Income (Loss) Per Share;
Basic	$	(0.00	)	$	0.00
Diluted

Weighted Average Shares Outstanding;
Basic		22,380,909			18,911,377
Diluted

See accompanying notes to condensed consolidated financial statements

Amplitech Group, Inc.

Condensed Consolidated Statements of Stockholders' Equity

For The Three Months Ended March 31, 2014

	Common Stock				Series A Convertible Preferred				Additional					Total
	Number of		Par		Number of		Par		Paid-In		Accumulated			Stockholders'
	Shares		Value		Shares		Value		Capital		Deficit			Equity

Balance, December 31, 2013		22,153,904		22,154		-		-		574,573		(816,970	)		(220,243	)

Conversion of convertible promissory note		1,069,436		1,069						59,251					60,320
Note payable and accrued expenses exchanged
for common stock		450,000		450						26,550					27,000
Discount related to the beneficial conversion
feature of a convertible note										25,380					25,380
Net (loss) for the three months ended March 31, 2014												(82,110	)		(82,110	)

Balance, March 31, 2014		23,673,340		23,673		-		-		685,754		(899,080	)		(189,653	)

See accompanying notes to condensed consolidated financial statements

AmpliTech Group, Inc.

Condensed Consolidated Statements of Cash Flows

For The Three Months Ended March 31, 2014 and 2013

(Unaudited)

	March 31,			March 31,
	2014			2013
Cash Flows from Operating Activities:

Net Income (Loss)	$	(82,110	)	$	15,359

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and Amortization		7,992			15,828
Amortization of beneficial conversion discount		25,380			-
Accrued Interest Related to a Convertible Note		7,800
Gain on Shares Issued For Debt and Accrued Expenses		(5,580	)		-
Changes in Operating Assets and Liabilities:
Accounts Receivable		33,702			(101,067	)
Inventory		(11,160	)		(13,714	)
Prepaid Expenses		13,200
Accounts Payable and
Accrued Expenses		64,403			53,966
Customer Deposits		(13,205	)		(74,668	)
Payroll Taxes Payable		3,283			11,454

Total Adjustments		125,815			(108,201	)

Net cash provided by (used in) operating activities		43,705			(92,842	)

Cash Flows from Financing Activities:

Repayment of Convertible Note		-			(6,250	)
Proceeds from Convertible Note		-			50,000
Advances From/(Repayments To) Factor Financing, Net		(23,575	)		54,246
Note and Loan Repayments		(11,151	)		(11,000	)
Capital Lease Financing Repayments		(8,887	)		(8,371	)
Decrease in Due to Officer		-			(4,163	)

Net cash provided by (used in) financing activities		(43,613	)		74,462

Net increase(decrease) in cash and cash equivalents		92			(18,380	)

Cash and Cash Equivalents, Beginning of Period		10,623			27,716

Cash and Cash Equivalents, End of Period	$	10,715		$	9,336

Supplemental disclosures:

Interest and Taxes paid:

Interest Expense	$	16,139		$	15,022
Income Taxes	$	649		$	521

Non-Cash Financing and Investing Activities

Common Shares Issued Related To Convertible Notes	$	60,320		$	211,986
Exchange of Notes Payable For Convertible Note	$	-		$	50,000
Note payable and accrued expenses exchanged for common stock	$	27,000		$	-
Benefical conversion feature	$	25,380		$	-

See accompanying notes to condensed consolidated financial statements

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For The Three Months Ended March 31, 2013 and 2014 (Unaudited)

Basis of Presentation

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 considered necessary for a fair presentation have been included.

The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014. 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, 2012 and 2013 included in Form 10-K filed with the SEC.

Going Concern Uncertainty

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates the Company continuing as a going concern. As of March 31, 2014, the Company had a working capital deficit of $310,040 and a Stockholders’ Deficit of $189,653. Additionally, there was a net loss of $82,110 for the three months ended March 31, 2014 and a net loss of $144,494 for the year ended December 31, 2013. These factors raise substantial doubt as to the Company’s ability of to continue as a going concern. However, the Company plans to improve its financial condition by converting the existing Convertible Promissory Notes to equity by issuing additional shares of common stock as well as raising working capital from the issuance of additional equity or debt instruments. Also, the Company plans to improve operations by pursuing new customers, developing new products and expanding its distribution channels, both domestically and internationally, in order to increase sales and improve cash flow. However, there is no assurance that the Company will be successful in accomplishing these objectives. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Inventory

Inventory, which consists primarily of raw materials and finished goods, is stated at the lower of cost (first-in, first-out basis) or market (net realizable value). The Inventory value at December 31, 2013 and March 31, 2014 was as follows;

	December 31,			March 31,
	2013			2014

Raw Materials	$	102,768		$	120,955
Work-in Progress		22,696			16,513
Finished Goods		70,630			69,786
Engineering Models		3,726			3,726

Subtotal	$	199,820		$	210,980
Less: Reserve for
Obsolescence		(71,742	)		(71,742	)

Total	$	128,078		$	139,238

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For The Three Months Ended March 31, 2013 and 2014 (Unaudited)

Notes Payable

Notes Payable at March 31, 2014 included demand notes totaling $27,110 from an individual and one corporation, with interest rates ranging from 0% to 12% per annum. Accrued interest related to these notes was $4,124 and interest expense for the three months ended March 31, 2014 was $809.

Notes Payable at March 31, 2014 included $870 related to a bank line of credit that expired prior to 2010. As such, there is no current availability on this facility. The current minimum monthly payment is approximately $375, including interest at prime plus 4.85%. This note is being paid as per the original agreement.

Factor Financing

The outstanding balance owed to the Factor at March 31, 2014 for financed accounts receivable was $92,809. Interest expense and related costs paid to the Factor for the three months ended March 31, 2014 was $9,833.

Convertible Notes Payable

Between February 28, 2014 and March 18, 2014, the holder of the Convertible Promissory Note dated August 21, 2013 for $58,000 converted the entire balance, plus accrued interest related thereto of $2,320, into 1,069,436 shares of free trading common stock at an average conversion price of approximately $.06 per share. The Company recognized a $25,380 discount related the beneficial conversion feature calculated on the number of shares related to the face value of the note, which was 877,680 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date of issuance, or $.03 per share. This discount was recorded as Interest Expense with a corresponding offset to Paid-in Capital.

Pursuant to the Promissory Note dated November 26, 2013, a one-time interest charge of 12%, or $7,800, was added to the $65,000 advance received in November 2013 because it was not repaid within the 90 day period from the effective date of the advance.

Capital Lease

AmpliTech entered into a thirty-six month lease agreement to finance certain lab equipment in May 2012 with a bargain purchase option of $1. As such, the Company has accounted for this transaction as a Capital Lease, assuming an imputed 6% annual interest rate. Future lease payments related to this capital lease as of March 31, 2014 are as follows;

Total rental payments	$	77,584
Less: Discount at 6%		(3,200	)

Principal balance	$	74,384

Future twelve months discounted principal payments as of March 31, 2014 are as follows;

2015	$	64,758
2016		9,626

Total	$	74,384

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For The Three Months Ended March 31, 2013 and 2014 (Unaudited)

Loan Payable

Loan payable at March 31, 2014 consisted of the following;

SBA backed working capital loan at prime plus 2.75% per annum. Current monthly payment, including Interest, is $3,633. The loan matures in September 2015	$	64,835

Less: Current Portion		(43,420	)

Loan Payable, Net of Current Portion	$	21,415

Future twelve month maturities of Loan Payable as of March 31, 2014 are as follows;

2015		43,420
2016		21,415

	$	64,835

Interest expense related to this loan for the three months ended March 31, 2014 was $1,052.

Capital Stock

On March 31, 2014, a note payable due an individual in the amount of $12,000, plus accrued interest of $13,080 related thereto, was exchanged for 350,000 shares of restricted common stock at approximately $.072 per share. The fair market value of the Company’s common stock on this date was $.06 per share. As a result, the Company recognized a gain in the amount of $4,080.

On March 31, 2014, accrued commissions due a sales agent in the amount of $7,500 was exchanged for 100,000 shares of restricted common stock at $.075 per share, the fair market value of the Company’s common stock on the date of issuance. The fair market value of the Company’s common stock on this date was $.06 per share. As a result, the Company recognized a gain in the amount of $1,500.

Earnings (Loss) Per Share

Basic net earnings (loss) per share (“EPS”) is determined by dividing net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by dividing net earnings (loss) 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 March 31, 2013 and 2014 there were no potential dilutive common shares that needed to be considered as common share equivalents and, as such, no computation of diluted EPS was necessary for the three months then ended, respectively.

AmpliTech Group, Inc.

Notes To Condensed Consolidated Financial Statements

For The Three Months Ended March 31, 2013 and 2014 (Unaudited)

Subsequent Events

On April 15, 2014, the holder of the Convertible Promissory Note dated September 26, 2013 for $42,500 converted $15,000 of this balance into 717,703 shares of free trading common stock at a conversion price of approximately $.021 per share.

On April 16, 2014, the Company received an additional advance of $40,000 related to the Promissory Note dated November 26, 2013. Pursuant to the terms of this Promissory Note, the additional advance has a two year term from the date of receipt and is convertible, in whole or in part, at the sole discretion of the holder beginning after 180 days into shares of Group common stock at the lesser of $.15 or 60% of the lowest trading price in the twenty-five trading days immediately prior to the date of conversion. Alternatively, the Company can prepay this advance, plus OID interest in the amount of $4,680, at its sole discretion at any time within 90 days from the date of issuance. If this advance is not repaid within the 90 day period, a one-time interest charge of 12% per annum shall be applied to face value of the advance. Additional advance requests by the Company under this Promissory Note are subject to the approval of the holder in their sole discretion.

On May 8, 2014, the Board issued 140,000 shares of Series A Convertible Stock to the principal executive officer and sole director of the Company. The holder of the Series A Convertible Stock shall vote together as a single class with the holders of our common stock, with the holders of Series A being entitled to fifty one percent (51%) of the total votes on all such matters. Each outstanding share of Series A is convertible at the option of the holder into one hundred (100) shares of the Company’s common stock.

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

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

Business Overview

We design, engineer and assemble micro-wave component based amplifiers that meet individual customer’s specifications. Our products consists of Radio Frequency (RF) amplifiers and related subsystems, operating at multiple frequencies from 50kHz to 44GHz, including Low Noise Amplifiers, Medium Power Amplifiers, oscillators, filters, and custom assemblies designs. We also offer non-recurring engineering services on a project-by-project basis, for a predetermined fixed contractual amount, or on a time plus material basis.

Recent Developments

Convertible Notes

Asher Enterprises, Inc (“Asher), which was the holder of the Convertible Promissory Note dated August 21, 2013 for $58,000, converted the entire balance, plus accrued interest, between February 28, 2014 and March 18, 2014 into 1,069,436 shares of free trading common stock at an average conversion price of approximately $.06 per share.

Asher, which is the holder of the Convertible Promissory Note dated September 26, 2013 for $42,500 converted $15,000 of this balance on April 15, 2014 into 717,703 shares of free trading common stock at a conversion price of approximately $.021 per share. The balance of this Note can be exercised, in whole or in part, at the sole discretion of the Asher through June 25, 2014 at which time any remaining balance, plus accrued interest, is due and payable to Asher.

On April 16, 2014, the Company received an additional advance of $40,000 pursuant to the terms of the Promissory Note with JMJ Financial (“JMJ”) dated November 26, 2013 for $300,000. Pursuant to the terms of this Promissory Note, the additional advance has a two year term from the date of receipt and is convertible, in whole or in part, at the sole discretion of JMJ beginning after 180 days into shares of our common stock at the lesser of $.15 or 60% of the lowest trading price in the twenty-five trading days immediately prior to the date of conversion. Alternatively, the Company can prepay this advance, plus original interest discount interest in the amount of $4,680, at its sole discretion at any time within 90 days from the date of issuance. If this advance is not repaid within the 90 day period, a one-time interest charge of 12% per annum shall be applied to face value of the advance. Additional advance requests by the Company under this Promissory Note are subject to the approval of JMJ in its sole discretion.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation.

Under the JOBS Act, we will remain an “emerging growth company” until the earliest of:

• the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more;

• the last day of the fiscal year following the fifth anniversary of the completion of this offering;

• the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and

• the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, or the Exchange Act. We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our non-affiliates and (ii) been public for at least 12 months. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.

The Section 107 of the JOBS Act provides that we may elect to utilize the extended transition period for complying with new or revised accounting standards and such election is irrevocable if made. As such, we have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

Results of Operations

For The Three Months Ended March 31, 2014 and March 31, 2013

Revenues

Sales increased by $14,693, or approximately 5%, when comparing sales for the three months ended March 31, 2014 of $323,876 to sales for the three months ended March 31, 2013 of $309,183. This increase was directly related to outsourcing the assembly function for certain sales orders to a third party provider in the local Northeast that began in the fourth quarter of 2012. Product sales for both periods were substantially from the sale of Low Noise Amplifiers (“LNA”).

Cost of Goods Sold and Gross Profit

Cost of Goods Sold, as a percentage of Sales increased by $48,156, or14%, when comparing $169,797, or 53%, for the three months ended March 31, 2014 to $121,641, or 39%, for the three months ended March 31, 2013. This increase resulted primarily from an additional $40,932 of outsource assembly costs related to a large sales order from one customer with a lower gross profit margin in the first quarter of 2014.

This also resulted in a corresponding decrease of $33,463, or 18%, in Gross Profit as a percentage of Sales when comparing the Gross Profit of $154,079, or 47%, for the first quarter of 2014 to the Gross Profit of $187,542, or 61%, for the first quarter of 2013.

General and Administrative Expenses

General and administrative expenses increased from $156,270 for the first quarter of 2013 compared to $188,426 for the first quarter of 2014, an increase of $32,156, or approximately 21%. This resulted primarily from a $28,917 increase in general overhead expenses in the operating subsidiary relating to payroll and payroll related costs.

Other Income (Expenses)

Interest Expense increased by $37,430 when comparing the three months ended March 31, 2013 to the three months ended March 31, 2014. This resulted primarily from recognizing, as interest expense, a non-cash $25,380 discount from the beneficial conversion feature related to a convertible note that was fully converted during the first quarter of 2014. There was also a $5,580 gain that was recognized in the first quarter of 2014 resulting from certain debt that was exchanged for common shares above fair market value.

Net Income (Loss)

As a result of the above, the Company had Net Income of $15,359 for the three months ended March 31, 2013 compared to a Net Loss of $82,110 for the three months ended March 31, 2014, an overall decrease of $97,469, or approximately 635%.

Liquidity and Capital Resources

We have historically financed our operations through debt from third party lenders, notes issued to various private individuals and personal funds advanced from time to time by the majority shareholder, who is also the President and Chief Executive Officer of the Company.

As of March 31, 2014, we had $10,715 in cash and cash equivalents compared to $10,623 in cash and cash equivalents as of December 31, 2013. As of December 31, 2013 and March 31, 2014 we had a working capital deficit of $323,897 and $310,040, respectively, and a stockholders’ deficit of $220,243 and $189,653, respectively.

Net cash provided by operating activities was $43,705 for the three months ended March 31, 2014. The net cash used in financing activities for three months ended March 31, 2013 was $43,613, which results primarily from the repayment of the factor purchase order financing balance, notes and loans, as well as the financed capital lease.

We intend to finance our internal growth with cash on hand, cash provided from operations, borrowings, debt or equity offerings, or some combination thereof. We believe that our cash provided from operations and cash on hand will not provide sufficient working capital to fund our operations for the next twelve months as we estimate that we need an additional $100,000 for such period

Going Concern Uncertainty

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates the Company continuing as a going concern. As of March 31, 2014, the Company had a working capital deficit of $310,040 and a Stockholders’ Deficit of $189,653. Additionally, there was a net loss of $82,110 for the three months ended March 31, 2014 and a net loss of $144,494 for the year ended December 31, 2013. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. However, the Company hopes to improve its financial condition by the existing Convertible Promissory Note holders electing to convert their notes to equity by issuing additional shares of common stock as well as raising working capital from the issuance of additional equity or debt instruments. Also, the Company plans to improve operations by pursuing new customers, developing new products and expanding its distribution channels, both domestically and internationally, in order to increase sales and improve cash flow. However, there is no assurance that the Company will be successful in accomplishing these objectives. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Critical Accounting Policies, Estimates and Assumptions

The SEC defines critical accounting policies as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates.

The discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

Basis of Accounting

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

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months, when purchased, to be cash equivalents. Company’s cash and cash equivalents were deposited primarily in one financial institution.

Allowance for Doubtful Accounts

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.

Depreciation and Amortization

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. The Company uses other depreciation methods (generally, accelerated depreciation methods) for tax purposes where appropriate. 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.

Income Taxes

The Company accounts for income taxes under the provisions of Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Tax”. ASC 740 requires the recognition of 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 Company has adopted the provisions of FASB ASC 740-10-05 “Accounting for Uncertainty in Income Taxes”. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. 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.

Earnings (Loss)Per Share

Basic earnings (loss) per share (“EPS”) is determined by dividing the net earnings (loss) by the weighted-average number of shares of common shares outstanding during the period. Diluted EPS is determined by dividing net earnings (loss) 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(such as stock options and convertible securities) outstanding under the treasury stock method. There were no dilutive financial instruments issued or outstanding for the periods presented.

Inventory Obsolescence

Inventory quantities and related values are analyzed at the end of each fiscal quarter to determine those items that are slow moving or 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.

Revenue Recognition

Revenues and costs of revenues are recognized during the period in which the products are shipped. The Company applies the provisions of FASB Accounting Standards Codification (“ASC”) 605-10, Revenue Recognition in Financial Statements ASC 605-10, which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. ASC 605-10 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue for sale of products when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) the collectability is reasonably assured.

The Company’s sources of revenue are from the sale of various component amplifiers. Revenue is recognizes upon shipment of such products. The Company offers a 100% satisfaction guarantee against defects for 90 days after the sale of their product except for a few circumstances. There are no maintenance or service contracts related to any product sale.

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.

Off Balance Sheet Transactions

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies are not required to provide the information required by this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based on the evaluation as of March 31, 2014, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes that have affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the period covered by this report.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

To the best of our knowledge, there are no material pending legal proceedings to which we are a party or of which any of our property is the subject.

Item 1A. Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.

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

On March 31, 2014, a note payable due an individual in the amount of $12,000, plus accrued interest of $13,080 related thereto, was exchanged for 350,000 shares of restricted common stock. The issuance of these shares was exempt from the registration requirements of the Securities Act, pursuant to Section 4(2) thereof as a transaction by an issuer not involving a public offering.

On March 31, 2014, accrued commissions due a sales agent in the amount of $7,500 was exchanged for 100,000 shares of restricted common stock. The issuance of these shares was exempt from the registration requirements of the Securities Act, pursuant to Section 4(2) thereof as a transaction by an issuer not involving a public offering.

On May 8, 2014, the Board issued 140,000 shares of Series A Convertible Stock to Fawad Maqbool, the principal executive officer and sole director of the Company. The holder of the Series A Convertible Stock shall vote together as a single class with the holders of our common stock, with the holders of Series A being entitled to fifty one percent (51%) of the total votes on all such matters. Each outstanding share of Series A is convertible at the option of the holder into one hundred (100) shares of the Company’s common stock. The issuance of these shares was exempt from the registration requirements of the Securities Act, pursuant to Section 4(2) thereof as a transaction by an issuer not involving a public offering.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

See the issuance of the 140,000 shares of Series A Convertible Preferred Stock to Fawad Maqbool described above in “Unregistered Sales of Equity Securities and Use of Proceeds.”

Item 6. Exhibits.

(a) Exhibits

Exhibit No.		Description

3.3		Certificate of Designation for Series A Convertible Preferred Stock

31.1		Rule 13a-14(a)/ 15d-14(a) Certification of Principal Executive Officer
31.2		Rule 13a-14(a)/ 15d-14(a) Certification of Principal Financial Officer
32.1		Section 1350 Certification of Principal Executive Officer
32.2		Section 1350 Certification of Principal Financial Officer
101. INS		XBRL Instance Document
101. SCH		XBRL Taxonomy Extension Schema Document
101. CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101. DEF		XBRL Taxonomy Extension Definition Linkbase Document
101. LAB		XBRL Taxonomy Extension Label Linkbase Document
101. PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AmpliTech Group, Inc.

Date: May 14, 2014	By:	/s/ Fawad Maqbool
		Fawad Maqbool
		President and Chief Executive Officer (Principal Executive Officer)

Dated: May 14, 2014	By:	/s/ Louisa Sanfratello
		Louisa Sanfratello Chief Financial Officer (Principal Financial Officer)