AmpliTech Group, Inc. - FORM 10-K

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - AmpliTech Group, Inc.	Financial_Report.xls
EX-32.2 - CERTIFICATION - AmpliTech Group, Inc.	ampg_ex322.htm
EX-31.2 - CERTIFICATION - AmpliTech Group, Inc.	ampg_ex312.htm
EX-31.1 - CERTIFICATION - AmpliTech Group, Inc.	ampg_ex311.htm
EX-32.1 - CERTIFICATION - AmpliTech Group, Inc.	ampg_ex321.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For The Fiscal Year Ended December 31, 2014

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

Commission File No. 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 No.)

35 Carlough Rd. #3 Bohemia, NY 11716		11716
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (631) 521-7831

Securities registered pursuant to Section 12(b) of the Exchange Act: None.

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

Common stock, par value $0.001 per share.

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required 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 ¨

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 ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	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 ¨ No x

The aggregate market value of the registrant’s common stock, par value $0.001 per share, held by non-affiliates of the registrant, based on the closing price of the common stock as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $365,000.

As of March 24, 2015, the registrant had 46,136,326 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

AMPLITECH GROUP, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page
PART I

ITEM 1.	Business		4
ITEM 1A.	Risk Factors		7
ITEM 1B.	Unresolved Staff Comments		7
ITEM 2.	Properties		7
ITEM 3.	Legal Proceedings		7
ITEM 4.	Mine Safety Disclosures		7

PART II

ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		8
ITEM 6.	Selected Financial Data		8
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk		13
ITEM 8.	Financial Statements and Supplementary Data		F-1
ITEM 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		14
ITEM 9A.	Controls and Procedures		14
ITEM 9B.	Other Information		14

PART III

ITEM 10.	Directors, Executive Officers and Corporate Governance		15
ITEM 11.	Executive Compensation		17
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		18
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence		19
ITEM 14.	Principal Accountant Fees and Services		19

PART IV

ITEM 15.	Exhibits and Financial Statement Schedules		20
	Signatures		21

Use of Certain Defined Terms

Except as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “our Company”, “the Company” or “AmpliTech” are to the combined business of AmpliTech Group, Inc. and its consolidated subsidiary, AmpliTech, Inc.

Forward-Looking Statements

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

We cannot predict all 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 Annual Report on Form 10-K and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. 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 Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report on Form 10-K.

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

PART I

ITEM 1. BUSINESS

Business Overview

We design, engineer and assemble micro-wave component based amplifiers that meet individual customer specifications. Our products consists of RF amplifiers and related subsystems, operating at multiple frequencies from 50kHz to 44GHz, including Low Noise Amplifiers, Medium Power Amplifiers, oscillators, filters, and custom assembly 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.

Our Corporate History and Background

We were incorporated under the laws of the State of Nevada on December 30, 2010. From inception until August 2012, we were organized as a vehicle to investigate and acquire a target company or business that seeks to be a publicly held corporation. During that time, we had no revenue and our operations were limited to capital formation, organization and development of our business plan.

On August 13, 2012, we completed a securities exchange whereby we acquired all of the issued and outstanding common shares of AmpliTech, Inc. in exchange for 16,675,000 shares of our common stock, which constituted approximately 94% of our outstanding shares of common stock on a fully diluted basis as of and immediately after the consummation of the securities exchange. As a result of the exchange, we ceased being a shell company and, through Amplitech, Inc., we now operate as a designer, manufacturer and distributor of microwave amplifiers, RF designs and applications for wireless networks.

Our Products

Our products consist of RF amplifiers and related subsystems, operating at multiple frequencies from 50kHz to 44GHz, including Low Noise Amplifiers, Medium Power Amplifiers, oscillators, filters, and custom assembly designs.

Low Noise Amplifiers

Low Noise Amplifiers, or LNAs, are amplifiers used in receivers of almost every type of communication system (Wi-Fi, Radar, Satellite, Base station, Cell phone, Radio, etc.) to improve signal strength and increase sensitivity and range of receivers.

Medium Power Amplifiers

Medium Power Amplifers, or MPAs, provide increased output power and gain in transceiver chains to increase signal power and maintain dynamic range and linearity in Radars, Base-stations, Wireless networks, and almost every communication system.

Oscillators

Phase Locked Oscillators, or PLOs, and Dielectric Resonator Oscillators, or DROs, are ultra-stable frequency sources and references in transceiver applications that complement the amplifier chain in the transceivers.

Filters

Filters discriminate or block out certain frequencies in communication systems to improve dynamic range and NF response. Our filters are low loss and used on the front-end of the receiver chain that provide low degradation in the NF of the system, thereby maintaining and enhancing the signal clarity.

Our Technology

Our products are supported by hybrid design topologies that create highly linear Radio Frequency (RF) products that amplify and transform signals with minimal addition of noise, achieving high Signal to Noise Ratio (SNR) and increased receiver sensitivity and range, at a low cost and low power consumption. Our hybrid design topologies include:

	·	Discrete Microwave Integrated Circuit (MIC)
	·	Pseudomorphic High Electron Mobility Transistor (PHEMT)
	·	MIC and Low Noise MIC

The discrete topology that we utilize provides various advantages:

	·	Can easily optimize Voltage Standing Wave Ratio (VSWR) and Noise Figure
	·	Flexibility of design; can easily adapt to change of specs, technology, etc.
	·	Low DC power consumption
	·	Can control and optimize and gain flatness due to discrete gain stages
	·	Optimum use of MIC technology and experience
	·	Use of negative bias is not necessary
	·	Better part availability

Our research and development activities are conducted on new product designs to the extent as requested by the customers. The cost of our research and development activities is incorporated into the unit selling prices and, as such, is borne directly by the customers.

Industry and Competition

Market Overview

We operate our business in the industry of high power Radio Frequency (RF) semiconductor. We believe that the RF semiconductor industry has the following features:

High demand for complex, next-generation Wireless signal processing applications;

	·	Mass adoption of Internet and Web-based applications, and other high-band width applications
	·	Ability to combine analog and digital signal processing into more integrated RF solutions
	·	Wide spread application of low-cost, high-performance and functionality wireless networks
	·	Emergence of 4G,WiMAX, satellite and advanced wireless network infrastructure roll-outs

Growing opportunity for advanced RF subsystems, modules and components;

	·	Demand for precise, high-speed signal conditioning interfaces between analog and digital
	·	Combining analog/digital signal processing capabilities into more highly-integrated solutions
	·	Wide spread application of low-cost, high-performance wireless network systems
	·	Convergence of computing, communications, and consumer electronics with state-of-the-art signal processing capability with less power consumption

Complements OEM design, and manufacturing capabilities;

	·	Deliver high quality and feature improvements that service provider require
	·	Lower production costs and shorten product development cycles
	·	Adhere to flexibility, performance, streamlined procurement processes and value requirements

Competition

The markets for the products that we offer are very competitive, are rapidly evolving. Competition may increase in the future, which could require us to reduce prices, increase advertising expenditures or take other actions that may have an adverse effect on our operating results. We believe that we will enjoy the following competitive advantages:

	·	Experienced team
	·	Superior performance products
	·	Proven mature reliable technology
	·	Competitive pricing
	·	Good deliveries

Our Strategy

Our objective is to become a premier designer, manufacturer and distributor of high quality and state-of-the-art cryogenic microwave amplifiers, RF designs and applications for Wireless Networks and the future of Wireless Communication. Key elements of our strategy include the following:

	·	Reorganization to become a reporting company to improve access to capital resources
	·	New product development
	·	Commercializing of existing core technology into specific high volume technology sectors and obtaining patent on such technology

Manufacturing

Our manufacturing facility is located at our corporate office in Bohemia, New York. Our manufacturing process involves the assembly of numerous individual components and precise fine-tuning by production technicians. Our manufacturing facility is estimated to be capable of assembling up 100 amplifiers per month. If we receive larger quantity orders that need to be fulfilled in a short time-frame, or in excess of our capacity at the main facility, we will outsource the assembly by sending kitted raw materials to a qualified contract assembly facility in the local Northeast.

We are currently certified to the ISO 9001:2008 standard. ISO 9001 is a uniform worldwide Quality Management System (QMS) standard.

Suppliers

Our materials consists of purchased component parts used in our assembly process. The following table describes suppler concentration based upon the percentage of materials purchased from each supplier for 2014:

Supplier A	$	61,097	32.89		%
Supplier B		19,539		10.51	%
Supplier C		13,343		7.18	%
Supplier D		8,030		4.32	%
Supplier E		7,014		3.77	%
All other suppliers (approximately 52)		76,710		41.33	%
Total	$	185,733		100	%

Marketing

We employ an aggressive and focused approach to market our products, at various venues including trading shows, strategic partnership and joint ventures, website and trade magazines.

Trade Shows

We attend trade shows such as MTTS (Microwave Theory and Techniques Show), IMS (International Microwave Symposium), European Microwave Symposium, SATCON, MILCOM. We also sponsor in some trade shows to gain recognition and presence.

Strategic Partnership and Joint Ventures

We explore opportunities with global OEMs (Original Equipment Manufacturers) by working strategic partnerships and joint ventures that improve sales and presence in the marketplace.

Website

We maintain a dynamic website to capture more business via worldwide customer searches for our products on the internet. Our website is available at www.amplitechinc.com.

Trade Magazines

We advertise our products in various trade magazines such as Microwave Journal, Microwaves & RF, High Frequency Electronics, etc.

Customers

We rely on our sales representatives or distributors to channel our products to about [15] countries in North America, Europe and Asia. We serve a diverse customer base located primarily in the United States, with an increasing number in Europe, and Asia, across the industries as aerospace, governmental defense, commercial satellite. Our customers include Boeing Aerospace, NASA, Raytheon, Government of Israel, Spectrum Microwave, L3 Integrated Systems, and GS Technology.

The following table sets forth our customers that account for more than 10% of our total revenue for 2014:

Customer A	$	597,433	47.13		%
Customer B	$	71,150		5.61	%
Customer C	$	65,540		5.17	%

Government Regulation

We are subject to a number of laws and regulations that affect companies generally and specifically those conducting business of electronics, many of which are still evolving and could be interpreted in ways that could harm our business. Existing and future laws and regulations may impede our growth. These regulations and laws may cover taxation, pricing, copyrights, distribution, electronic contracts and other communications, consumer protection, web services, and the characteristics and quality of products and services. Unfavorable regulations and laws could diminish the demand for our products and services and increase our cost of doing business.

Environmental Protection

We comply with RoHS requirements. RoHS stands for Restriction of Use of Hazardous Substances regulations, which limit or ban specific substances such as lead, cadmium, polybrominated biphenyl (PBB), mercury, hexavalent chromium, and polybrominated diphenyl ether (PBDE) flame retardants, in new electronic and electric equipment.

Intellectual Property

Except the domain name of “amplitechinc.com”, we currently do not own any intellectual property rights. We rely on contractual restrictions to protect our proprietary rights in products and services. It is our policy to enter into confidentiality and invention assignment agreements with our employees and contractors as well as nondisclosure agreements with our suppliers and strategic partners in order to limit access to and disclosure of our proprietary information. We cannot assure you that these contractual arrangements or the other steps taken by us to protect our intellectual property will prove sufficient to prevent misappropriation of our technology or to deter independent third-party development of similar technologies.

Employees

As of March 2015, we have five full time employees and one part time employee. From time to time, we may hire additional workers on a contract basis as the need arises.

ITEM 1A. RISK FACTORS

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

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

ITEM 2. PROPERTIES

Our principal executive office is located at 35 Carlough Rd. #3, Bohemia, NY 11716. The property at this location is leased by the Company at monthly rental expenses of $2,965, and for a term of one year ending June 30, 2015. The lease automatically renews every year for an additional twelve-month term. We believe that this space is sufficient for our current operations. Our wholly owned subsidiary, AmpliTech, Inc., also operates out of our principal executive office.

ITEM 3. LEGAL PROCEEDINGS

There are no materials pending legal proceedings to which we are a party or of which any of our property is the subject. From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigations are subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time and harm our business.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

On February 20, 2013, the Company received approval by Financial Industry Regulatory Authority (FINRA) for adding the Company’s common stock on the OTC Bulletin Board, effective the next day.

Our common stock has become quoted on the OTC Bulletin Board under the symbol “AMPG” since February 22, 2013.

The quotations of the closing prices reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

Quarters Ended	High		Low
March 31, 2013	$	NA	$	NA
June 30, 2013	$	.39	$	.39
September 30, 2013	$	.18	$	.16
December 31, 2013	$	.12	$	.11
March 31, 2014	$	.08	$	.05
June 30, 2014	$	.03	$	.03
September 30, 2014	$	.02	$	.02
December 31, 2014	$	.02	$	.02

Holders

As of March 24, 2015, there were 51 holders of record of our common stock. This does not reflect the number of persons or entities who held stock in nominee or street name through various brokerage firms.

Dividend Policy

We have never declared or paid dividends on our common stock. We do not anticipate paying any dividends on our common stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. Any future determination to declare dividends will be subject to the discretion of our board of directors and will depend on various factors, including applicable laws, our results of operations, financial condition, future prospects and any other factors deemed relevant by our board of directors.

Recent Sales of Unregistered Securities

There were no sales of unregistered securities during the Company’s fiscal year ended December 31, 2014 which were not previously reported.

ITEM 6. SELECTED FINANCIAL DATA

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

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included in “Item 8. Financial Statements and Supplementary Data.”

Forward-Looking Statements

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors.

Business Overview

Our plans for the next year include new product development, expansion of existing product line and targeting new mergers and acquisitions through direct fund investment.

Results of Operations

Our auditor has indicated in their report on our financial statements for the fiscal years ended December 31, 2014 and 2013 that conditions exist that raise substantial doubt about our ability to continue as a going concern due to our recurring losses from operations, deficit in equity, and the need to raise additional capital to fund operations. A “going concern” opinion could impair our ability to finance our operations through the sale of debt or equity securities.

As of December 31, 2014, the Company had a working capital deficit of $30,145 and an Accumulated Deficit of $1,587,040. Additionally, there was a net loss of $770,070 and $144,494 for the years ended December 31, 2014 and 2013, respectively. These factors raise substantial doubt as to the ability of the Company to continue as a going concern. The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. We hope to improve the Company’s financial condition by raising working capital from the issuance of additional notes with equity convertible features and pursue new customers to improve our operational results. However, there is no assurance that the Company will be successful in accomplishing these objectives. If adequate funds are not available, our business would be jeopardized and we may not be able to continue. If we ceased operations, it is likely that all of our investors would lose their investment.

For Years Ended December 31, 2014 and December 31, 2013

Revenues

Sales increased to $1,276,111 for the year ended December 31, 2014 from $1,222,511 for the year ended December 31, 2013, an increase of $53,600, or approximately 4.4%. This increase results from increased in house production as well as an increase in production from the outsource assembly facility in the local Northeast.

Cost of Goods Sold and Gross Profit

Cost of Goods Sold increased from $579,100 in 2013 to $663,056 in 2014, an increase of $83,956 or approximately 14.5%. This increase was the direct result of outsourcing one of our largest orders that needed to be fulfilled in a short time frame at a lower gross profit margin. As a result, the gross profit was $613,055 for 2014 compared to $643,411 for 2013, a decrease of $30,356 and the gross margin decreased to approximately 48% for 2014 compared to approximately 53% for 2013.

General and Administrative Expenses

General and administrative expenses increased to $683,885 in 2014 to $655,040 in 2013, an increase of $28,845, or approximately 4.4%. This increase was the direct result of investor relations, legal, accounting and consulting fees incurred related to being a public company.

Other Income (Expenses)

Interest expense increased $114,355, or 133.3%, when comparing the year ended December 31, 2014 to the year ended December 31, 2013. This increase results primarily from the interest payable on the convertible notes in 2014. There was also a $2,080 gain that was recognized in 2014 related to shares being issued to satisfy certain debt. On May 8, 2014, the Board issued 140,000 shares of Series A to the principal executive officer and sole director of the Company. As a result, the Company recognized a non cash compensation expense of $501,200 based on the fair-market value of the 100 underlying shares of common stock on the date of issuance, which was $.0358 per common share. On December 23, 2014 the principal officer returned to the Company 139,000 of the 140,000 shares of Series A issued to him on May 8, 2014. The extinguishment of these 139,000 shares has been accounted for in accordance with ASC260-10-599-2 and has been treated in a manner similar to that of dividends. Furthermore, because the company is in an accumulated deficit position, the difference between the carrying amount of the Preferred Stock returned and the value of the consideration given is booked into Additional Paid in Capital.

Net Income (Loss)

As a result of the decreased gross profit and the increase in general and administrative and other expenses described above from 2014 to 2013, the Company had a net loss of $770,070 in 2014 compared to a net loss of $144,494 in 2013.

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. The amount due to our officer is unsecured, interest bearing and payable upon demand. During the year, the CEO assumed a note payable of $56,291 of which $10,000 was repaid during 2014. The balance at December 31, 2014 was $46,921.

As of December 31, 2014, we had cash and cash equivalents of $19,162, a working capital deficit of $30,145 and an accumulated deficit of $1,587,040.

The net cash used in operating activities for the year ended December 31, 2014 was $53,811 resulting primarily from an increase in inventory, depreciation expense and the amortization of debt discount from the convertible debt incurred and the repayment of accounts payable and accrued expenses. The net cash used in operating activities for the year ended December 31, 2013 was $188,519, which was primarily the result of an increase in accounts receivable and inventory.

The net cash provided by financing activities for the year ended December 31, 2014 was $62,350 which were funds raised from direct investments and the issuance of convertible notes used to make repayments on existing loans, notes and the capital lease. The net cash provided by financing activities for the year ended December 31, 2013 was $171,426, which results primarily from issuance of additional convertible notes.

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 provide sufficient working capital to fund our operations for the next twelve months.

Financing Activities

Convertible Notes

On August 27, 2013, the Company issued a Convertible Promissory Note for $58,000 with a nine month term. The convertible note accrued interest at 8% per annum and was convertible, in whole or in part, at the sole discretion of the holder beginning after 180 days into shares of Group common stock at 61% of the market price on the date of conversion. The market price was determined based on the average of the lowest three trading days bid price during the ten trading days immediately prior to the date of conversion. Alternatively, the Company could prepay the balance owed, including accrued interest, at its sole discretion at any time within 180 days from the date of issuance. The prepayment was subject to a penalty that increased from 10% to 35% of the amount owed at each 30 day interval during the 180 period. Between February 28, 2014 and March 18, 2014, the holder of the Convertible Promissory Note 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 to the beneficial conversion feature calculated on the number of shares related to the face value of the note which were 877,680 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.03 per share. The discount was recorded as interest expense with a corresponding offset to Paid-in-Capital.

Between September and October 2013, the Company issued two Convertible Promissory Notes to one holder totaling $75,000. Both convertible notes have a nine month term and accrued interest at 8% per annum. They were convertible, in whole or in part, at the sole discretion of the holder beginning after 180 days from the date of issuance into shares of Group common stock at 61% of the market price on the date of conversion. The market price was determined based on the average of the lowest three trading days bid price during the ten trading days immediately prior to the date of conversion. Alternatively, the Company could prepay the balance owed, including accrued interest, in at its sole discretion at any time within 180 days from the date of issuance. The prepayment was subject to a penalty that increased from 10% to 35% of the amount owed at each 30 day interval during the 180 period. 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 $.02 per share. The Company recognized a $35,135 discount related the beneficial conversion feature, the total of which was offset to Paid-in Capital. This discount was calculated based on the number of shares related to the face value of the note, which were 1,194,379 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.03 per share. This discount was being amortized over the exercise period, which was approximately 130 days. Between July 1, 2014 and July 14, 2014, the remaining $27,500 balance, plus accrued interest related thereto of $1,700, was converted into 2,093,261 shares of free trading common stock at a conversion price of approximately $.014 per share. The Company recorded the remaining unamortized discount balance of $3,182 as interest expense. The Company recognized a $20,672 discount resulting from the beneficial conversion feature related to the Convertible Promissory Note dated October 22, 2013 for $32,500, the total of which was offset to Paid-in Capital. This discount was calculated on the number of shares related to the face value of the note, which were 1,596,764 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.013 per share. This discount was being amortized over the remaining life of the note which was due July 24, 2014. Between July 18, 2014 and July 24, 2014 the entire note balance, plus accrued interest related thereto of $1,300, was converted into 2,569,280 shares of free trading common stock at an average conversion price of approximately $.013 per share. The Company recorded the remaining unamortized discount balance of $5,393 as interest expense.

On November 27, 2013, the Company issued a Convertible Promissory Note for $65,000 with a two year term. The note was 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 is the twenty-five trading days immediately prior to the date of conversion. Alternatively, the Company could prepay this note, plus OID interest in the amount of $7,586, at its sole discretion at any time within 90 days from the date of issuance. If the note was not repaid within the 90 day period, a one-time interest charge of 12% would be applied to the face value of the note. Pursuant to the Promissory Note a one-time interest charge of 12%, or $7,800, was added to the $65,000 advance as it was not repaid within the 90 day period from the effective date. As a result, the total value related to this advance was $81,293 including OID interest of $7,586 related thereto. Additionally, the Company recognized a $38,386 discount related the beneficial conversion feature, the total of which was offset to Paid-in Capital. This discount was calculated based on the number of shares related to the total value of the note, which were 4,241,856 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.01 per share. This discount is being amortized over the remaining life of the note which is due November 25, 2015. Between May 27, 2014 and June 12, 2014, the holder converted $15,625 of this balance into 1,250,000 shares of free trading common stock at an average conversion price of $.0125 per share. Between September 9, 2014 and September 29, 2014, an additional $23,346 of this balance was converted into 2,100,000 shares of free trading common stock at an average conversion price of $.011 per share. Between October 14, 2014 and November 19, 2014, the balance of $42,322 was converted into 4,566,076 shares of free trading common stock at an average conversion price of $.0094 per share. The Company recorded the remaining unamortized discount balance as interest expense.

On April 16, 2014, the Company received an additional advance of $40,000 related to the Promissory Note dated November 27, 2013. Pursuant to the terms of this Promissory Note, the additional advance had a two year term from the date of receipt and was 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 could prepay this advance, plus OID interest in the amount of $4,666, at its sole discretion at any time within 90 days from the date of issuance. On July 14, 2014, the Company elected to repay within the 90 day period allowed the additional advance of $40,000. The total amount paid was $44,666, including the OID interest of $4,666.

Critical Accounting Policies, Estimates and Assumptions

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

The discussion and analysis of our financial condition and results of operations is based upon our financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of inventory, 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 recognized 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

As of December 31, 2014, we did not have any off-balance sheet arrangements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AmpliTech Group, Inc.

Index To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets as of December 31, 2014 and 2013	F-3

Consolidated Statements of Operations for the years ended December 31, 2014 and 2013	F-4

Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2014 and 2013	F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013	F-6

Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

AmpliTech Group, Inc.

We have audited the accompanying consolidated balance sheets of AmpliTech Group, Inc. (the Company) as of December 31, 2014 and 2013 and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of AmpliTech Group, Inc. as of December 31, 2014 and 2013, and the results of their operations and cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 16 to the consolidated financial statements, the Company had a working capital deficit of $30,145 and an accumulated deficit of $1,587,040 at December 31, 2014 which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 15. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT

March 27, 2015

F-2

Amplitech Group, Inc.

Consolidated Balance Sheets

As of December 31, 2014 and 2013

				2014			2013
Assets

	Current Assets

		Cash and cash equivalents		$	19,162		$	10,623
		Accounts receivable, net			133,388			178,813
		Inventory, net			163,870			128,078
		Prepaid expenses			6,825			56,800

		Total Current Assets			323,245			374,314

	Property and equipment, net				115,843			146,038
	Deferred financing costs, net				-			8,007
	Security deposits				5,375			5,375

			Total Assets	$	444,463		$	533,734

Liabilities and Stockholders' Equity (Deficit)

	Current Liabilities
		Accounts payable and accrued expenses		$	99,078		$	191,259
		Customer deposits			87,676			41,957
		Payroll taxes payable			665			7,140
		Convertible notes payable			-			198,000
		Notes payable			26,958			42,338
		Factor financing			68,836			116,384
		Current portion of capital leases			23,886			59,385
		Current portion of loans payable			-			41,748
		Due to officer			46,291			-

	Total Current Liabilities				353,390			698,211

	Long-Term Liabilities

		Capital leases			-			23,886
		Loans payable			-			31,880

			Total Liabilities		353,390			753,977

	Commitments and Contingencies				-			-

	Stockholders' Equity (Deficit)

		Series A convertible preferred stock, par value $.001, 401,000 shares authorized, 1,000 and 0 shares issued and outstanding, respectively			1			-
		Common stock, par value $.001, 500,000,000 shares authorized, 46,136,326 and 22,153,904 shares issued and outstanding, respectively			46,136			22,154
		Additional paid-in capital			1,631,976			574,573
		Accumulated deficit			(1,587,040	)		(816,970	)

		Total Stockholders' Equity (Deficit)			91,073			(220,243	)

			Total Liabilities and Stockholders' Equity (Deficit)	$	444,463		$	533,734

See accompanying notes to consolidated financial statements

F-3

Amplitech Group, Inc.

Consolidated Statements of Operations

For The Years Ended December 31, 2014 and 2013

	2014			2013

Sales	$	1,276,111		$	1,222,511

Cost of goods sold		663,056			579,100

Gross Profit		613,055			643,411

General and administrative		683,885			655,040

Loss From Operations		(70,830	)		(11,629	)

Other Income (Expenses)

Interest expense		(200,120	)		(85,765	)

Gain (loss) on shares issued for debt and accrued liabilities, net		2,080			(47,100	)

Compensation related to issuance of Series A convertible preferred		(501,200	)		-

Loss Before Income Taxes		(770,070	)		(144,494	)

Provision for income taxes		-			-

Net Loss		(770,070	)		(144,494	)

Net Loss Per Share - Basic and Diluted	$	(0.02	)	$	(0.01	)

Weighted Average Shares Outstanding
Basic and Diluted		32,028,294			19,880,129
		32,028,294			19,880,129

See accompanying notes to consolidated financial statements

F-4

Amplitech Group, Inc.

Consolidated Statements of Stockholders' Equity

For the years ended December 31, 2014 and 2013

		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, 2012			17,875,000		17,875						115,862		(672,476	)		(538,739	)

	Conversion of convertible promissory notes		3,188,904		3,189						315,701					318,890

	Common stock issued for services		650,000		650						81,850					82,500

	Note payable exchanged for common stock		440,000		440						61,160					61,600

	Net loss for the year ended December 31, 2013												(144,494	)		(144,494	)

Balance, December 31, 2013			22,153,904		22,154		0		0		574,573		(816,970	)		(220,243	)

	Conversion of convertible promissory notes		14,365,756		14,366						205,247					219,613

	Note payable and accrued expenses exchanged for common stock		950,000		950						40,050					41,000

	Discounts related to the beneficial conversion feature of convertible notes										119,572					119,572

	Series A convertible preferred stock issuance						1,000		1		501,200					501,201

	Common stock issued for cash		8,666,666		8,666						191,334					200,000

	Net loss for the year ended December 31, 2014												(770,070	)		(770,070	)

Balance, December 31, 2014			46,136,326		46,136		1,000		1		1,631,976		(1,587,040	)		91,073

See accompanying notes to consolidated financial statements

F-5

Amplitech Group, Inc.
Consolidated Statements of Cash Flows
For The Years Ended December 31, 2014 and 2013

			2014			2013

Cash Flows from Operating Activities:
	Net Loss		$	(770,070	)	$	(144,494	)

	Adjustments to reconcile net loss to net cash used in operating activities:
		Bad debt		-			8,385
		Depreciation and amortization		38,202			63,313
		Amortization of debt discount		119,573			-
		Financing costs related to convertible note		7,800			-
		Loss on settlement of liabilities and notes payable		(2,079	)		-
		Stock based compensation		501,200			60,000
		Expenses Paid		-			16,500
		Loss on shares issued for debt and accrued expenses		-			47,100

	Changes in Operating Assets and Liabilities:
		Accounts receivable		45,425			(141,414	)
		Inventory		(35,792	)		(15,261	)
		Prepaid expenses		49,975			(55,000	)
		Security deposits		-			695
		Accounts payable and accrued expenses		(47,289	)		40,585
		Customer deposits		45,719			(56,996	)
		Payroll taxes payable		(6,475	)		(11,932	)

		Total Adjustments		716,259			(44,025	)

		Net cash used in operating activities		(53,811	)		(188,519	)

Cash Flows from Investing Activities:

		Net cash (used in) investing activities		-			-

Cash Flows from Financing Activities:
	Repayment of convertible note			(40,000	)		(6,250	)
	Proceeds from convertible notes, net			40,000			231,500
	Advances from / (repayments to) factor financing, net			(47,548	)		66,330
	Note and loan repayments, net			(20,717	)		(60,978	)
	Capital lease financing repayments			(59,385	)		(51,503	)
	Decrease in due to officer			(10,000	)		(7,673	)
	Sale of common stock			200,000			-

		Net cash provided by financing activities		62,350			171,426

Net increase (decrease) in cash and cash equivalents				8,539			(17,093	)

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

Cash and Cash Equivalents, End of Period			$	19,162		$	10,623

Supplemental disclosures

	Cash paid for interest			6,859			70,369
	Cash paid for income taxes			649			671

Non-cash financing and investing activities
	Conversion of convertible notes payable			219,613			318,890
	Common shares issued for accounts payable and accrued expenses			20,000			-
	Convertible notes issued in extinguishment of note payable			21,000			-
	Beneficial conversion feature on convertible note			119,573			-
	Assignment of loan payable to officer			56,291			-
	Extinguishment of Series A convertible preferred shares			139			-

See accompanying notes to consolidated financial statements

F-6

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

(1) Organization and Business Description

AmpliTech, Inc. (“AmpliTech” or “the Company”) was incorporated under the laws of the State of New York on October 18, 2002. AmpliTech designs, engineers and assembles micro-wave 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 August 13, 2012 (the “Closing Date”), AmpliTech Group, Inc. (f/k/a Bayview Acquisition Corporation) (“Group”) acquired AmpliTech, by issuing 16,675,000 shares of its Common Stock, constituting 100% of the outstanding shares of AmpliTech. Also pursuant to the Share Exchange Agreement, the shareholders of Group were issued an additional 741,600 shares of Common Stock on the Closing Date. These shares plus the 458,400 Group shares issued and outstanding prior to closing the share exchange on August 13, 2012 total 1,200,000 shares, or 6% on a fully diluted basis. The transaction was accounted for as a reverse acquisition in which AmpliTech is deemed to be the accounting acquirer, and the prior operations of Group are consolidated for accounting purposes. The capital balances have been retroactively adjusted to reflect the reverse acquisition.

(2) Summary of Significant Accounting Policies

Basis of Accounting

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

Principles of Consolidation

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

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. As of December 31, 2014 and 2013 the 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. An allowance of $0 and $8,385 has been recorded at December 31, 2014 and 2013, respectively.

F-7

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

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. 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

Earnings (Loss)Per Share

Basic loss per share (“EPS”) is determined by dividing the net loss by the weighted-average number of shares of common shares outstanding during the period. Diluted EPS is determined by dividing net 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. As of December 31, 2014 and 2013 there were 0 and 0 potential common shares were excluded from the calculation of diluted EPS for the years ended December 31, 2014 and 2013, respectively.

F-8

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

Inventory Obsolescence

Revenue Recognition

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

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying consolidated financial statements.

F-9

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

Fair Value of Assets and Liabilities

The Company’s financial instruments consist of convertible notes payable, loans payable and a derivative liability. The Company believes all of the financial instruments’ recorded values approximate their fair values because of their nature and respective durations.

The Company complies with the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 relates to financial assets and financial liabilities. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.

ASC 820-10 defines fair value 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. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:

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.

F-10

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

Application of Valuation Hierarchy

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. As such, the Company assessed that the fair value of cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses, customer deposits, convertible notes payable, notes payable, factor financing, current portion of capital leases and loans payable and due to officer approximate their carrying values due to their short-term nature.

(3) 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, 2014 and 2013 was as follows;

	2014			2013

Raw Materials	$	129,852		$	102,768
Work-in Progress		33,106			22,696
Finished Goods		75,186			70,630
Engineering Models		3,726			3,726
Subtotal	$	241,870		$	199,820
Less: Reserve for Obsolescence		(78,000	)		(71,742	)
Total	$	163,870		$	128,078

(4) Property and Equipment

Property and Equipment with estimated useful lives of seven and ten years consisted of the following at December 31, 2014 and 2013;

	2014			2013

Lab Equipment	$	544,923		$	544,923
Furniture and Fixtures		11,568			11,568
Subtotal		556,941			556,941
Less: Accumulated Depreciation		(440,648	)		(410,453	)
Total	$	115,843		$	146,038

Depreciation expense for 2014 and 2013 was $30,195 and $52,013, respectively.

F-11

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

(5) Deferred Financing Costs

Deferred Financing Costs of $17,792 were incurred directly related to a Small Business Administration (“SBA”) funded loan the Company obtained in 2008 and are being amortized on a straight line basis over ten years. Accumulated amortization as of December 31, 2014 and 2013 was $0 and $8,007, respectively. Amortization expense for 2013 was $1,779. On August 1, 2014, the Chief Executive Officer, paid off $56,291 of the SBA backed working capital loan balance on behalf of the Company (See Note 11). The balance of the deferred financing costs of $8,007 was written off as amortization expense.

(6) Convertible Notes Payable

On February 1, 2013, the holder of two Notes Payable totaling $50,000 exchanged them for a Convertible Promissory Note with a six month term. The convertible note accrued interest at 8% per annum and was convertible, at the sole discretion of the holder, into shares of Group common stock at $.10 per share. The Company determined that the fair market value of the common shares underlying this convertible notes was equal to the estimated fair market of the Company’s common stock on the date of issuance. As such, there is no beneficial conversion feature that needed to be recorded as a discount on the date of issuance. On July 31, 2013, the original maturity date, the Holder and the Company agreed to extend the due date for an additional six months through January 31, 2014 under the same terms and conditions. On December 16, 2013 this convertible note, plus accrued interest related thereto in the amount of $3,496, was converted into 534,959 shares of common stock (See Note 13).

On February 8, 2013 the Company repaid a convertible note holder $6,250, plus accrued interest of $423, which represented the entire principle balance due this holder.

On February 8, 2013, the Company issued a Convertible Promissory Note for $50,000 with a six month term. The convertible note accrued interest at 8% per annum and was convertible, at the sole discretion of the holder, into shares of Group common stock at $.10 per share. The Company determined that the fair market value of the common shares underlying this convertible note was equal to the estimated fair market of the Company’s common stock on the date of issuance. As such, there is no beneficial conversion feature that needed to be recorded as a discount on the date of issuance. On August 7, 2013, the original maturity date, the Holder and the Company agreed to extend the due date for an additional six months through February 7, 2014 under the same terms and conditions. On December 16, 2013 this convertible note, plus accrued interest related thereto in the amount of $3,408, was converted into 534,082 shares of common stock (See Note 13).

F-12

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

On February 15, 2013, the holders of the Convertible Promissory Notes outstanding at December 31, 2012 with a principle balance of $200,000 elected to convert the notes to 2,000,000 shares of Group common stock. The shares underlying these notes were registered in the S-1 filed with the SEC that was declared effective on January 18, 2013. As such, these shares of common stock were issued as free trading. In addition, these notes accrued interest through the date of conversion in the amount of $11,986. Pursuant to the Convertible Promissory Note terms, Group issued an additional 119,863 restricted common shares in full payment of the accrued interest due each note holder (See Note 13).

On August 27, 2013, the Company issued a Convertible Promissory Note for $58,000 with a nine month term. The convertible note accrued interest at 8% per annum and was convertible, in whole or in part, at the sole discretion of the holder beginning after 180 days into shares of Group common stock at 61% of the market price on the date of conversion. The market price was determined based on the average of the lowest three trading days bid price during the ten trading days immediately prior to the date of conversion. Alternatively, the Company could prepay the balance owed, including accrued interest, at its sole discretion at any time within 180 days from the date of issuance. The prepayment was subject to a penalty that increased from 10% to 35% of the amount owed at each 30 day interval during the 180 period. Accrued interest related to this note at December 31, 2013 was $1,602. Between February 28, 2014 and March 18, 2014, the holder of the Convertible Promissory Note 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 to the beneficial conversion feature calculated on the number of shares related to the face value of the note which were 877,680 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.03 per share. The discount was recorded as interest expense with a corresponding offset to Paid-in-Capital (See Note 13).

In October 2013, the Company issued two Convertible Promissory Notes to one holder totaling $75,000. Both convertible notes have a nine month term and accrued interest at 8% per annum. They were convertible, in whole or in part, at the sole discretion of the holder beginning after 180 days from the date of issuance into shares of Group common stock at 61% of the market price on the date of conversion. The market price was determined based on the average of the lowest three trading days bid price during the ten trading days immediately prior to the date of conversion. Alternatively, the Company could prepay the balance owed, including accrued interest, in at its sole discretion at any time within 180 days from the date of issuance. The prepayment was subject to a penalty that increased from 10% to 35% of the amount owed at each 30 day interval during the 180 period. Accrued interest related to these notes at December 31, 2013 was $1,444. 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 $.02 per share.

F-13

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

The Company recognized a $35,135 discount related the beneficial conversion feature, the total of which was offset to Paid-in Capital. This discount was calculated based on the number of shares related to the face value of the note, which were 1,194,379 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.03 per share. This discount was being amortized over the exercise period, which was approximately 130 days. Between July 1, 2014 and July 14, 2014, the remaining $27,500 balance, plus accrued interest related thereto of $1,700, was converted into 2,093,261 shares of free trading common stock at a conversion price of approximately $.014 per share. The Company recorded the remaining unamortized discount balance of $3,182 as interest expense (See Note 13).

The Company recognized a $20,672 discount resulting from the beneficial conversion feature related to the Convertible Promissory Note dated October 22, 2013, the total of which was offset to Paid-in Capital. This discount was calculated on the number of shares related to the $32,500 face value of the note, which were 1,596,764 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.013 per share. This discount was being amortized over the remaining life of the note which was due July 24, 2014. Between July 18, 2014 and July 24, 2014 the entire note balance, plus accrued interest related thereto of $1,300, was converted into 2,569,280 shares of free trading common stock at an average conversion price of approximately $.013 per share. The Company recorded the remaining unamortized discount balance of $5,393 as interest expense (See Note 13).

On November 27, 2013, the Company issued a Convertible Promissory Note for $65,000 with a two year term. The note was 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 is the twenty-five trading days immediately prior to the date of conversion. Alternatively, the Company could prepay this note, plus OID interest in the amount of $7,586, at its sole discretion at any time within 90 days from the date of issuance. If the note was not repaid within the 90 day period, a one-time interest charge of 12% would be applied to the face value of the note. Interest expense related to the OID for the year ended December 31, 2013 was $353. Pursuant to the Promissory Note 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. As a result, the total value related to this advance was $81,293 including OID interest of $7,586 related thereto. Additionally, the Company recognized a $38,386 discount related the beneficial conversion feature, the total of which was offset to Paid-in Capital. This discount was calculated based on the number of shares related to the total value of the note, which were 4,241,856 shares. The calculation was based on the difference between the effective conversion price and the fair market value on the date the note was first exercisable, or approximately $.01 per share. This discount is being amortized over the remaining life of the note which is due November 25, 2015.

F-14

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

Between May 27, 2014 and June 12, 2014, the holder converted $15,625 of this balance into 1,250,000 shares of free trading common stock at an average conversion price of $.0125 per share. Between September 9, 2014 and September 29, 2014, an additional $23,346 of this balance was converted into 2,100,000 shares of free trading common stock at an average conversion price of $.011 per share. Between October 14, 2014 and November 19, 2014, the balance of $42,322 was converted into 4,566,076 shares of free trading common stock at an average conversion price of $.0094 per share. The Company recorded the remaining unamortized discount balance as interest expense (See Note 13).

(7) Notes Payable

Notes Payable at December 31, 2014 and 2013 include demand notes with original principal balances totaling $26,958 and $40,610, respectively, from several individuals and one corporation, with interest rates ranging from 0% to 12% per annum. Accrued interest related to these notes was $5,750 and $16,313 as of December 31, 2014 and 2013, respectively. Interest expense related to these notes for 2014 and 2013 was $2,157 and $3,593, respectively. In February 2013, $50,000 of notes payable to one individual was exchanged for a Convertible Promissory Note (See Note 6). In December 2013, a note payable due an individual in the amount of $20,000, plus accrued interest of $2,000 related thereto, was converted into 440,000 shares of common stock resulting in a gain of $4,080 which has been aggregated with gains and losses from other liabilities settled by issuance of common stock totaling $2,080 on the statement of operations (See Note 13).

Notes Payable at December 31, 2014 and 2013 included $0 and $1,728, respectively, related to two separate bank lines of credit that expired prior to 2010. As such, there is no current availability on either facility. The current minimum monthly payments were approximately $0 and $375, including interest at prime plus 4.85% and prime plus 11.50%, respectively.

F-15

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

(8) Factor Financing

In September 2011, AmpliTech entered into an agreement with a private lender (“the Factor”) to finance 80% of certain accounts receivable, with recourse, plus 50% of domestic sales orders. The total credit facility is $300,000, including a maximum of $60,000 to finance domestic sales orders until such time as they are converted to accounts receivable. The discount fee charged by the Factor to finance the accounts receivable is 2% of the customer invoice for the first thirty days, plus 1% for each fifteen day period thereafter to a maximum of ninety days at which time the invoice is charged back to the Company with full recourse. The discount fee related to the financed sales orders is 2% per each thirty day period until converted to accounts receivable.

The outstanding balances owed to the Factor at December 31, 2014 and 2013 for financed accounts receivable $68,836 and $88,664 respectively. The outstanding balances owed at December 31, 2014 and 2013 for financed domestic sales orders was $0 and $27,720 respectively. Discounts, interest expense and factoring fees related to this facility were $29,695 and $37,331 for the years ended December 31, 2014 and 2013, respectively.

(9) Capital Leases

AmpliTech entered into a thirty-six month lease agreement to finance certain laboratory 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 December 31, 2014 are as follows;

Total rental payments	$	24,245
Less: Discount at 6%		(359	)
Principal balance	$	23,886

Future discounted principal payments over the term of this lease as of December 31, 2014 and 2013 are as follows;

	2014		2013

2014		-		59,385
2015		23,886		23,886
Total	$	23,886	$	83,271

F-16

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

(10) Loans Payable

Loans payable at December 31, 2014 and 2013 consisted of the following;

	2014		2013

SBA- backed working capital loan at prime plus 2.75% per annum. Monthly payments of $3,633, including interest, through September 2015.	$	-	$	70,788

Bank loan payable in equal monthly installments of $1,233, plus interest at prime plus 10.5%, through March 2014.		-		2,840
Total		-		73,628
Less: Current Portion		-		(41,748	)

Loans Payable, Net of Current Portion	$	-	$	31,880

Future maturities of Loans Payable as of December 31, 2014 and 2013 are as follows;

	2014		2013

2014		-	$	41,748
2015		-		31,880
	$	-	$	73,628

Interest expense related to these loans for 2014 and 2013 was approximately $6,859 and $6,725 respectively.

On August 1, 2014, the Chief Executive Officer, paid off $56,291 of the SBA backed working capital loan balance on behalf of the Company (See Note 11).

F-17

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2014

(11) Due to Officer

On August 1, 2014, the Chief Executive Officer, who is also the Company’s majority shareholder, paid off $56,291 of the SBA- backed working capital loan balance of on behalf of the Company. The $56,291 is payable on demand and accrues interest at a rate of 8% per annum. Payments will be made for the amount demanded plus accrued interest on the unpaid balance through the demand date. As of December 31, 2014, the Company repaid $10,000 of principle plus accrued interest of approximately $1,592.

(12) Income Taxes

The provision for (benefit from) income taxes for the years ended December 31, 2014 and 2013 are as follows, assuming a combined effective tax rate of approximately 40%.

	December 31,
	2014			2013

Federal and state taxable income	$	-		$	-

Total current tax provision		-			-

Federal and state loss carryforwards		107,548			57,798
Change in valuation allowance		(107,548	)		(57,798	)

Total deferred tax provision		-			-

Total income tax provision	$	-		$	-

F-18

AmpliTech Group, Inc.

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

The Company had deferred tax income tax assets as of December 31, 2014 and 2013 as follows:

Loss carryforwards	$	434,336		$	326,788
Less: valuation allowance		(434,336	)		(326,788	)
Total net deferred tax assets	$	-		$	-

The Company has maintained a full valuation allowance against the total deferred tax assets for all periods due to the uncertainty of future utilization.

As of December 31, 2014, the Company has net federal and state net operating loss carry forwards of approximately 1,085,840 that expire in various years through 2034.

(13) Capital Stock

Preferred Stock

On July 10, 2013, the board of directors of the company approved a certificate of amendment to the articles of incorporation and changed the authorized capital stock of the Company to include and authorize 500,000 shares of Preferred Stock, par value $0.001 per share.

In July 2013, the Board of Directors of the Company designated 140,000 shares of Preferred Stock as Series A Convertible Preferred Stock (or “Series A”). Furthermore, each share of Series A is convertible into 100 shares of common stock at any time after issuance and the holder of each share of Series A is entitled to 100 votes when the vote of holders of the Company’s common stock is sought. In January 2015, the Board of Directors of the Company increased the number of Series A designated from 140,000 to 401,000.

F-19

AmpliTech Group, Inc

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

On May 8, 2014, the Board issued 140,000 shares of Series A to the principal executive officer and sole director of the Company. Holders of the Series A 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. As a result, the Company recognized a compensation expense of $501,200 based on the fair-market value of the 100 underlying shares of common stock on the date of issuance, which was $.0358 per common share. On December 23, 2014 the principal officer returned to the Company 139,000 of the 140,000 shares of Series A issued to him on May 8, 2014. The Company granted the principal executive of

ficer and sole director of the Company an immediately exercisable option to purchase an aggregate of 400,000 shares of Series A at an exercise price of $0.0206 per share of the underlying common stock. The extinguishment of these 139,000 shares has been accounted for in accordance with ASC 260-10-599-2 and has been treated in a manner similar to that of dividends. Furthermore, because the company is in an accumulated deficit position, the difference between the carrying amount of the preferred stock returned and the value of the consideration given is booked into additional paid in capital.

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. As of December 31, 2014 and 2013 the Company had 46,136,326 and 22,153,904 shares of common stock issued and outstanding, respectively.

On February 15, 2013, the holders of the Convertible Promissory Notes outstanding at December 31, 2012 with a principle balance of $200,000 elected to convert the notes to 2,000,000 shares of Group common stock. The shares underlying these notes were registered in the S-1 filed with the SEC that was declared effective on January 18, 2013. As such, these shares of common stock have been designated as free trading. In addition, these notes accrued interest through the date of conversion in the amount of $11,986. Pursuant to the Convertible Promissory Note terms, Group issued an additional 119,863 restricted common shares in full payment of the accrued interest due each note holder.

On September 10, 2013, The Company issued 150,000 shares of restricted common stock as consideration for $15,000 due to a consultant for services rendered from April through August 2013 at $.10 per share. The fair market value of the Company’s common stock on this date was $.15 per share. As a result, the Company recognized a loss in the amount of $7,500.

F-20

AmpliTech Group, Inc

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

On December 16, 2013, two separate holders of Convertible Notes with a face value of $50,000 each elected to convert their notes into shares of common stock. These convertible notes, plus accrued interest related thereto in the amount of $6,904 were converted into 1,069,041 shares of common stock (See Note 6).

In December 2013, a note payable due an individual in the amount of $20,000, plus accrued interest of $2,000 related thereto, was sold by the holder to an unrelated third party and then immediately converted the total balance into 440,000 shares of free trading common stock at $.05 per share. The fair market value of the Company’s common stock on the date of issuance was $.14 per share. As a result, the Company recognized a loss in the amount of $39,600. This same unrelated third party was also issued 500,000 shares of restricted common stock as compensation for to a one year service agreement valued at $60,000, of which $55,000 has been recorded as a prepaid asset. The fair market value of the Company’s common stock on the contact date was $.12 per share.

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.

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 to 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 this date was $.06 per share. As a result, the Company recognized a gain in the amount of $1,500.

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 $.02 per share.

F-21

AmpliTech Group, Inc

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

Between May 27, 2014 and June 12, 2014, the holder of the Convertible Promissory Note dated November 27, 2013, with a total value of $80,360 related to the first advance, converted an additional $15,625 of this balance into 1,250,000 shares of free trading common stock at an average conversion price of $.0125 per share.

On May 29, 2014, an accrued professional fee to a consultant in the amount of $10,500 was exchanged for 500,000 shares of restricted common stock at $.021 per share. The fair market value of the Company’s common stock on this date was $.03 per share. As a result, the Company recognized a loss in the amount of $3,500.

On July 9, 2014, the Company executed a Securities Purchase Agreement pursuant to which it agreed to sell an aggregate of 13,000,000 shares of restricted common stock to an unrelated corporation in three equal installments for a total purchase price of $300,000. The first installment of $100,000 for 4,333,333 shares was consummated on July 10, 2014. The second installment of $100,000 for 4,333,333 shares was completed on August 15, 2014, and the last installment of $100,000 for 4,333,334 shares was to be completed on September 15, 2014. At the request of the purchaser, the Company granted an extension until November 15, 2014 to complete the third installment.

In the event that the final payment of $100,000 was not made on or before the November 15, 2014, that portion of the stock purchase shall no longer be part of the Agreement an there will be no further obligation on the part of the Company to engage in any further sales of its securities to purchaser. The third installment of $100,000 due on November 15, 2014 was not completed. Until the earlier of two years or when the purchaser no longer has any shares in the Company, if the Company issues stock or options, warrants or other securities convertible or exercisable for shares of common stock at a purchase price of $0.023 per share or less, the purchaser has full ratchet anti-dilution provisions, other than with respect to certain securities issuances.

Between July 1, 2014 and July 14, 2014, the holder of the Convertible Promissory Note dated September 26, 2013 for $42,500 converted the remaining $27,500 balance, plus accrued interest related thereto of $1,700, into 2,093,261 shares of free trading common stock at a conversion price of approximately $.014 per share.

Between July 18, 2014 and July 24, the holder of the Convertible Promissory Note dated October 22, 2013 for $32,500 converted the entire balance, plus accrued interest related thereto of $1,300, into 2,569,280 shares of free trading common stock at an average conversion price of approximately $.013 per share.

F-22

AmpliTech Group, Inc

Notes To Consolidated Financial Statements

For The Years Ended December 31, 2014 and 2013

Between September 9, 2014 and September 29, 2014, the holder of the Convertible Promissory Note dated November 26, 2013, with a total value of $80,360 related to the first advance, converted an additional $23,346 of this balance into 2,100,000 shares of free trading common stock at an average conversion price of approximately $.011 per share.

Between October 14, 2014 and November 19, 2014, the holder of the Convertible Promissory Note dated November 26, 2013, with a total value of $80,360 related to the first advance, converted the final balance of $42,322 into 4,566,076 shares of free trading common stock at an average conversion price of $.0094 per share.

(14) Commitments and Contingencies:

The Company rents office space under a non-cancelable operating lease agreement that commenced in July 2011 and automatically renews annually with similar terms for an additional twelve months. The future monthly rental payments required under this operating lease agreement from July 1, 2014 through June 30, 2015 is $35,580.

(15) 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 December 31, 2014, the Company had a working capital deficit of $30,145 and an accumulated deficit of $1,587,040. Additionally, there was a net loss of $770,070 and $144,494 for the years ended December 31, 2014 and 2013, respectively. These and other factors raise substantial doubt as to the ability of the Company to continue as a going concern. However, the Company plans to improve its financial condition by raising working capital from the issuance of 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.

(16) Subsequent events

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report. There are no material subsequent events to report.

F-23

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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 December 31, 2014, for the reasons set forth below, 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.

Management's Annual Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to, in general, provide reasonable assurance to our management and the Board of Directors regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Our chief executive officer and chief financial officer evaluated the effectiveness of our internal control over financial reporting as of December 31, 2014, and based on that evaluation they concluded that our internal control over financial reporting was effective.

The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that re-evaluation due to material weakness identified below, our management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective as of December 31, 2012 to ensure that information required to be disclosed in our Exchange Act reports was (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure, because of material weaknesses in our internal controls over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

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.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our executive officers and sole director are as follows:

Name	Age	Position

Fawad Maqbool (1)	54	Chairman, President, Chief Executive Officer, and Treasurer

Louisa Sanfratello (2)	49	Chief Financial Officer and Secretary

(1)	Mr. Maqbool was appointed as our Chairman, President, Chief Executive Officer, Treasurer and Secretary on August 13, 2012 upon the closing of the Share Exchange. On August 22, 2012, Mr. Maqbool resigned as the Company’s Secretary.

(2)	Ms. Sanfratello was appointed as our Chief Financial Officer on August 13, 2012 upon the closing of the Share Exchange. On August 22, 2012, Ms. Sanfratello was appointed as the Company’s Secretary.

A brief description of the background and business experience of our sole executive officer and director for the past five years is as follows:

Fawad Maqbool, age 54, has served as the President, Chief Executive Officer and Chairman of the Board of Directors since founding Amplitech, Inc. 2002. He has also been the majority shareholder of the Company since its inception. Prior to founding Amplitech, Inc., Mr. Maqbool was the President of Aeroflex Amplicomm, Inc. for 2000 and 2001. His duties included, among other things, overseeing the design and development of amplifiers specifically for fiber optic communication applications. Mr. Maqbool was with MITEQ, Inc. from 1987 through 1999 where he began as an Engineering Group Leader and ultimately held the title of Department Head responsible for a staff of thirty-two consisting of engineers, technicians, assemblers and support personnel. His professional career began with the Hazeltine Corporation in 1983 where he was a Microwave Design Engineer through 1986. Mr. Maqbool received bachelor degrees in electrical engineering (major in microwaves and RF) and biomedical engineering from the City College of New York. He subsequently earned a master’s degree in electrical engineering (major in microwaves and RF) from Polytechnic University.

Through his prior service, Mr. Maqbool possesses the knowledge and experience in microwaves and RF electrical engineering that aids him in efficiently and effectively identifying and executing the Company’s strategic priorities.

Louisa Sanfratello, CPA, age 49, has been a self-employed independent accountant servicing numerous clients in various industries since 1998. One of her clients was the local chapter of Make a Wish Foundation. Ms. Sanfratello was the Controller of The New Interdisciplinary School from 1991 through 1997 where she was responsible for the preparation of financial statements and coordination of all outside audits, reporting directly to the executive director. Her duties included the day-to-day financial management of the organization including projection of cash flow requirements. She currently serves as the Treasurer of the Down Syndrome Advocacy Foundation. Ms. Sanfratello began her professional career in 1987 with the public accounting firm of Holtz Rubenstein & Company where she was a member of the audit staff until 1990. Ms. Sanfratello received a bachelor degree (magna cum laude) in business administration – accounting from Dowling College.

Term of Office

Our sole director is appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and holds office until removed by the Board of Directors.

There are no agreements or understandings between Mr. Maqbool and any other person pursuant to which Mr. Maqbool was selected as a director or executive officer.

Family Relationships

There are no family relationships between any of our directors or executive officers.

Involvement in Legal Proceedings

To our knowledge, there have been no material legal proceedings that would require disclosure under the federal securities laws that are material to an evaluation of the ability of our director or executive officers.

Potential Conflicts of Interest

We are not aware of any current or potential conflicts of interest with our director or executive officers.

Board Committees

We have not formed an Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report. Our Board of Directors performs the principal functions of an Audit Committee. We currently do not have an audit committee financial expert on our Board of Directors. We believe that an audit committee financial expert is not required because the cost of hiring an audit committee financial expert to act as one of our directors and to be a member of an Audit Committee outweighs the benefits of having an audit committee financial expert at this time.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, officers and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and are required to furnish us with copies of these reports. Based solely on our review of the reports filed with the SEC, we believe that all persons subject to Section 16(a) of the Exchange Act timely filed all required reports in 2014 other than as set forth below.

Name

Number of

Late Reports

Transactions

Not Timely Reported

Known Failures

to File a

Required Form

Fawad Maqbool

Louisa Sanfratello

Code of Ethics

We currently do not have a code of ethics that applies to our officers, employees and director, including our Chief Executive Officer, however, we are in the process of formulating a code of ethics and intend to adopt one in the near future.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to, the named persons, during the years ended December 31, 2014 and 2013 as our only named executive officer:

Summary Compensation of Named Executive Officers

Name and Principal Position	Fiscal Year		Salary ($)		Bonus ($)		Stock Awards ($)		All Other Compensation ($)		Total ($)

Fawad Maqbool (1)		2014		131,538		-		501,200		40,415		673,153
Chairman, President and Chief Executive Officer		2013		111,539		-		-		31,482		143,021

Louisa Sanfratello (2)		2014		38,550		-		-		-		38,550
Chief Financial Officer		2013		34,195		-		-		-		34,195

(1)	Represents Mr. Maqbool’s compensation from AmpliTech, Inc. for 2014 and 2013.

(2)	Represents Ms. Sanfratello’s compensation from AmpliTech, Inc. for 2014 and 2013.

Outstanding Equity Awards at Fiscal Year End

Except as indicated in the above table, none of our executive officers received any equity awards, including, options, restricted stock or other equity incentives during the fiscal year ended December 31, 2014 and 2013.

Compensation of Our President and Chief Executive Officer

Fawad Maqbool, as our sole director, has authority and discretion to determine his own compensation for serving as the Company’s President and Chief Executive Officer.

Compensation of Directors

During the year ended December 31, 2014 and 2013, our sole director Fawad Maqbool did not receive any compensation solely for service as a director. It is our current policy that our director is reimbursed for reasonable out-of-pocket expenses incurred in attending each board of directors meeting or meeting of a committee of the board of directors.

Compensation Committee Interlocks and Insider Participation

During the fiscal years of 2014 and 2013, we did not have a standing compensation committee. Our board of directors was responsible for the functions that would otherwise be handled by the compensation committee. The sole director conducted deliberations concerning executive officer compensation, including directors who were also executive officers. Fawad Maqbool, as our sole director, has authority and discretion to determine his own compensation for serving as the Company’s President and Chief Executive Officer.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) each director and named executive officer, (ii) all executive officers and directors as a group; and (iii) each shareholder known to be the beneficial owner of 5% or more of the outstanding common stock of the Company as of March 24, 2015. Beneficial ownership is determined in accordance with the rules of the SEC. Generally, a person is considered to beneficially own securities: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, and (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days (such as through exercise of stock options or warrants). For purposes of computing the percentage of outstanding shares held by each person or group of persons, any shares that such person or persons has the right to acquire within 60 days of March 24, 2015 are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. Unless otherwise indicated below, the address of each person listed in the table below is c/o 35 Carlough Rd. #3, Bohemia, NY 11716.

	Amount and Nature of Beneficial Ownership Common Stock (1)
Name and Address of Beneficial Owner Directors and Officers	No. of Shares		% of Class

Fawad Maqbool,(2) Chairman, President, and Chief Executive Officer		11,780,280		60.16	%
Louisa Sanfratello, Chief Financial Officer		200,000		0.23	%
All officers and directors as a group (2 persons)		11,980,280		60.39	%

5% Security Holders

Microphase Corporation 587 Connecticut Aveunue Norwalk, CT 06854		8,666,666		10.04	%

Harry B. Webster 8702 Sea Ash Circle Round Rock, TX 78681		4,738,829		5.49	%

(1)	Based on 46,136,326 shares of common stock issued and outstanding as of March 24, 2015.
(2)	Excludes (i) 100,000 shares of Common Stock underlying Series A Preferred Stock and (ii) 40,000,000 shares of Common Stock underlying options to purchase Series A Preferred Stock.

ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The following sets forth a summary of transactions since the beginning of the fiscal year of 2012, or any currently proposed transaction, in which the Company was to be a participant and the amount involved exceeded or exceeds $120,000 and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

On May 8, 2014, the Board issued 140,000 shares of Series A to Fawad Maqbool, the principal executive officer and sole director of the Company. As a result, the Company recognized a non cash compensation expense of $501,200 based on the fair-market value of the 100 underlying shares of common stock on the date of issuance, which was $.0358 per common share.

On December 23, 2014, Fawad Maqbool, President, Chief Executive Officer and the sole director of the Company, returned to the Company, 139,000 of the 140,000 shares of the Company’s Series A Preferred Stock, par value $0.001 per share (“Preferred Stock”) issued to him on May 7, 2014 for services provided to the Company.

Also on December 23, 2014, the Company granted Mr. Maqbool an immediately exercisable option to purchase an aggregate of 400,000 shares of Preferred Stock at an exercise price of $0.0206 per share. Each share of Preferred Stock is convertible at the option of the holder into 100 shares of common stock of the Company. The holder of the Preferred Stock votes together as a single class with the holders of the Company’s common stock, with the holder of the Preferred Stock being entitled to 51% of the total votes on all such matters.

Our officer and sole director, Fawad Maqbool, advanced monies to the Company for working capital. The amount due was unsecured, interest bearing and payable upon demand. The highest principal amount was $56,291 of which $10,000 was repaid during 2014. The balance at December 31, 2014 was $46,921.

Director Independence

Fawad Maqbool, the sole member of our Board of Directors, is not independent using the definition of independence under NASDAQ Listing Rule 5605(a)(2) and the standards established by the SEC.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table shows the aggregate fees we paid for professional services provided to us for 2014 and 2013:

	2014		2013
Audit Fees	$	39,125	$	26,500
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0

Total	$	39,125	$	26,500

Audit Fees

For the year ended December 31, 2014 and 2013, we paid $39,125 and $26,500, respectively for professional services rendered for the audit and review of our financial statements.

Audit Related Fees

For the fiscal years ended December 31, 2014 and 2013, we paid approximately $0 and $0, respectively, for audit related services.

Tax Fees

For our fiscal years ended December 31, 2014 and 2013, we paid $0 and $0 respectively, for professional services rendered for tax compliance, tax advice, and tax planning.

All Other Fees

We did not incur any other fees related to services rendered by our independent registered public accounting firm for the fiscal years ended December 31, 2014 and 2013.

The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our Audit Committee or (ii) entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided that the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management.

We do not have an Audit Committee. Our Board of Directors pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees during 2012 were pre-approved by our Board of Directors. We do not have a record of the percentage of the above fees that were pre-approved in 2011. However, all of the above services in 2011 were reviewed and approved by our Board of Directors either before or after the respective services were rendered.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Documents filed as part of this Annual Report.

	1.	Report of Independent Registered Public Accounting Firm

		Consolidated Balance Sheets as of December 31, 2014 and 2013
		Consolidated Statements of Operations for the years ended December 31, 2014 and 2013
		Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2014 and 2013
		Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013
		Notes to Consolidated Financial Statements

Financial Statement Schedules

Exhibits:

*Exhibit No.*		*Description*

2.1		Share Exchange Agreement, dated August 13, 2012, by and among AmpliTech Group, Inc., AmpliTech, Inc., and AmpliTech Shareholders, incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1 filed on August 13, 2012.
3.1		Articles of Incorporation, incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 filed on April 19, 2011, as subsequently amended.
3.2		Certificate of Amendment to Articles of Incorporation dated July 31, 2012, incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed on August 13, 2012.
3.4		By-laws, incorporated herein by reference to Exhibit 3.2 the Company’s Registration Statement on Form 10 filed on April 19, 2011, as subsequently amended.
4.1		Form of Convertible Note dated August 13, 2012 incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 filed on August 13, 2012.
4.2		Convertible Promissory Note dated August 21, 2013 issued to Asher Enterprises, Inc. in the original principal amount of $58,000
4.3		Note dated November 27, 2013 issued to JMJ Financial in the principal sum of $335,000, as amended on February 14, 2014
10.1		Master Factoring Agreement dated August 16, 2011, incorporated by reference to Exhibit 10.1 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed on December 11, 2012.
10.2		First Addendum to Master Factoring Agreement dated August 16, 2011, incorporated by reference to Exhibit 10.2 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed on December 11, 2012.
10.3		Second Addendum to Master Factoring Agreement dated August 16, 2011, incorporated by reference to Exhibit 10.3 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed on December 11, 2012.
10.4		Third Addendum to Master Factoring Agreement dated December 6, 2011, incorporated by reference to Exhibit 10.4 to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed on December 11, 2012.
10.5		Form of Assignment and Assumption Agreement dated August 13, 2012 incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 filed on August 13, 2012.
21.1		List of Subsidiaries, incorporated by reference to Exhibit 21.1 to the Company’s Registration Statement on Form S-1 filed on August 13, 2012.
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

________________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AmpliTech Group, Inc.

Date: March 30, 2015	By:	/s/ Fawad Maqbool
		Fawad Maqbool
		President and Chief Executive Officer (principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date

/s/ Fawad Maqbool	President, Chief Executive Officer and	March 30, 2015
Fawad Maqbool	Chairman of the Board of Directors (principal executive officer)

/s/ Louisa Sanfratello	Chief Financial Officer and Secretary	March 30, 2015
Louisa Sanfratello	(principal financial and accounting officer)

AmpliTech Group, Inc. - FORM 10-K - March 30, 2015

Attached files

AmpliTech Group, Inc. Reports