Amplitech Group, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Unaudited consolidated results include AmpliTech’s microwave businesses and Spectrum Semiconductor Materials, among other divisions.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $4.07 million | $4.58 million | $8.19 million | $9.68 million |
| Gross profit / margin | $1.92 million / 47.17% | $2.04 million / 44.45% | $3.78 million / 46.23% | $4.36 million / 45.04% |
| Operating loss | $508,110 | $359,902 | $1.13 million | $350,917 |
| Net loss | $472,761 | $369,540 | $1.05 million | $365,915 |
| Net loss per share | $0.05 | $0.04 | $0.11 | $0.04 |
- Cash flow: Six-month operating cash use was $1.26 million, versus $3.18 million in 2022. Investing cash use was $3.55 million, including $2.77 million net purchases of marketable securities and $776,507 of equipment. Financing cash use was $2.29 million, principally including a $2.18 million revenue earnout payment.
- Liquidity: June 30 cash and equivalents were $6.20 million; marketable securities were reported at $3.06 million. Working capital was $16.72 million, down from $18.15 million at December 31, 2022.
- Debt and liabilities: Notes payable totaled $153,659; financing lease obligations were $57,438. Operating lease liabilities were $3.95 million. Total liabilities were $6.47 million.
- Balance sheet: Total assets were $34.30 million and stockholders’ equity was $27.83 million. Inventory was $6.90 million, including a $1.13 million obsolescence reserve.
Material changes and management commentary
- Q2 revenue fell 11.1% year over year; first-half revenue fell 15.5%. Management attributed the decline mainly to Spectrum, whose sales fell as international demand for IC packaging eased after pandemic-era supply constraints subsided.
- AmpliTech’s amplifier and related components revenue increased 22.7% in Q2 and 19.2% for the first half, largely due to telecom applications. Spectrum sales declined 26.6% and 27.6%, respectively.
- Gross margin improved in both periods, which management attributed to fulfilling large, higher-margin orders. However, higher R&D spending—up 297% in Q2 and 107% for the first half—contributed to operating losses. Spending supported MMIC design releases and cryogenic amplifiers for quantum computing.
- Management stated that cash on hand and cash generated from operations should fund operations for the next 12 months. The company also said it may use borrowings or debt or equity offerings to finance growth. No quantified revenue or earnings guidance was provided.
Risks, contingencies, and unusual items
- Management concluded disclosure controls and procedures were not effective as of June 30, 2023. It reported no period changes that materially affected, or were reasonably likely to materially affect, internal control over financial reporting.
- Cash declined by $7.09 million during the first half, reflecting operating and investing outflows, the earnout payment, and repayments. The company also held $3.06 million in marketable equity securities subject to market fluctuations.
- Cash deposits exceeded FDIC insurance limits by $5.20 million at June 30, 2023. The company reported no pending legal proceedings and no off-balance-sheet transactions.
- The filing says there were no indicators of impairment for goodwill, intangible assets, or long-lived assets during the first half. No material unrecognized tax benefits were reported.
Key facts for investors to verify
- Whether AmpliTech’s growth in amplifier and telecom-related sales can offset continued weakness in Spectrum’s international business.
- Whether R&D investment, including MMIC and quantum-computing products, translates into commercial sales while losses persist.
- Cash runway assumptions and the expected timing of operating cash-flow improvement, given the first-half cash decline and planned growth spending.
- The status of remediation for ineffective disclosure controls and procedures.
- The composition, liquidity, and market exposure of marketable securities, as well as the concentration of uninsured cash deposits.