Amplitech Group, Inc.

Good day, ladies and gentlemen, and welcome to AmpliTech Group's quarterly investor update call, where the company will discuss its second quarter 2025 financial results. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. As a reminder, today's conference is being recorded. I would now like to turn the call over to AmpliTech's COO, George Flores.

Good afternoon, and thank you for joining today's call to review the progress of AmpliTech's growth initiatives and to answer investor questions. On the call today are AmpliTech's founder and CEO, Fawad Magbul, the company's CFO, Luisa Sanfranello, and the company's COO, Jorge Flores. Following initial management comments, we will open the call to investor questions. An archived replay of today's call will be posted on the investor relationship section of AmpliTech's corporate website. This call is taking place today on Thursday, August 14, 2025. Remarks that follow and answers to questions may include statements that the company believes to be forward-looking within the meaning of the Private Securities Investigation Form Act of 1995. These forward-looking statements generally include words such as anticipate, believe, expect, or words of similar importance. Likewise, statements that describe future plans objectives or goals are also forward-looking. These forward-looking statements are subject to various risks that could cause actual results to be materially different than expected. Such risks include, among others, matters that the company has described in its press releases and in its filings with the Securities and Exchange Commission. Except as described in these filings, the company's claims any obligation to update forward-looking statements, which are made as of today's date. With that, let me turn the call over to our CEO, Mr. Pagano.

Ladies and gentlemen, thank you for joining our Q2 2025 review call. Today we will reflect on our performance in the second quarter of 2025 and six-month period ending June 30th, 2025. We will take the opportunity to discuss the company's growth outlook, market opportunities, and provide additional financial guidance. I will now go over our Q2 fiscal year 2025 highlights and strategic progress. Companies achieve record sales in excess of $11 million, which is the highest sales in companies' quarterly history. This Q2 sales number surpasses the total sales number for the entire 2024 fiscal year. While lower than normal gross profit margins were achieved during Q2 2025, the sudden decrease is mainly due to the front-loading of our investment to open doors and get access to the lucrative 5G M&O businesses. Several one-time costs were incurred by the company that contributed to the increase in costs to facilitate these shipments and activate its supply chain according to customer-required delivery demands. Among these one-time costs are license fees, initial production line fees, molding fees, overtime, et cetera, which led to the lower gross margins achieved this quarter. However, let me emphasize that the company believes higher gross margins will be achievable over the next six months As of June 30th, 2025, we had cash and cash equivalents and accounts receivables of $16,423,000 and working capital of $16,163,000 with $0 of long-term debt on our balance sheet. The company's intangible assets, including IP, increased by $8 million on the balance sheet. Our inventory position remains healthy with over $7 million on hand and current backlog hovering around 15 million. During these initial six months of the year, the company has seen multiple purchase orders partially funding the previously announced LOIs with prominent O-RAN 5G players in the industry. Additional orders are expected to continue funding these LOIs. Now let's take a look at the industry context and the strategic outlook. We realized it would be nearly impossible for a company of our size to break into customer bases at the M&O level without a deliberate front-loaded investment approach. Our strategy is to show that we can deliver and be a viable source for stringent requirements of these M&Os. These are multi-billion dollar companies that require precise product development. This builds foundational trust with industry giants and positions our high-performance technology to become the go-to standard in some of the most rapidly expanding communications verticals in the world. We have achieved traction and revenues that can be sustained at the expense of the compression and short-term gross margins for Q2 only. This is part of Amplitech's intentional and calculated investment strategy. By aggressively pursuing the quickest deliveries of products to Tier 1 multinational operators, to secure long-term positions within their critical next-generation infrastructure rollouts. Amphitek's four focus areas, Open RAN, O-RAN 5G networks, quantum computing, and satellite terrestrial high-speed connectivity are each expected to see high growth in the coming years. O-RAN 5G infrastructure, projected growth of 33.4%, reaching over 42 billion globally by 2030. Quantum computing hardware sees market expected to grow at 37.3% combined AGR, exceeding $9 billion by 2032. Satellite and high-speed connectivity equipment estimated to grow 12% CAGR through 2030, driven by LEO networks and the rural broadband demand. AmpliTech's advanced technologies, particularly its true-ORAN radios, and cryogenic low-noise amplifiers are uniquely suited to these high-performance applications. We believe this strategy of accelerated penetration combined with recurring follow-on orders will establish Amplitex products as embedded solutions within the next-generation infrastructure platforms. In addition, increasing demand for secure, domestically-manufactured communications equipment is expected to further accelerate Amplitex growth trajectory. AmpliTech is currently the only U.S.-based company providing complete, vertically integrated, end-to-end commercial and defense-grade networking and connectivity solutions. In contrast to other firms that rely heavily on third-party foreign suppliers, AmpliTech's tightly controlled supply chain offers a trusted alternative for both private and public sector clients, focused on national security, data integrity, and supply chain resilience. These are key advantages that AmpliTech possesses. We believe the company is also well-positioned to benefit from major U.S. government initiatives, including rural broadband funding, U.S. CDA-led global efforts to replace untrusted foreign 5G equipment with secure U.S.-based alternatives, and CHIPS Act incentives to bolster American semiconductor production. These programs are expected to significantly scale operations across FFXIII divisions. The AG TGSS Division's 5G radios serve as the growth engine, addressing urgent needs for open, interoperable, and high-performance O-RAN 5G systems. Currently, AmpliTec's O-RAN 5G radio deployment is the largest of its kind in the world, making AMPG a leader in O-RAN radio products delivered in this industry. AmpliTec's 5G O-RAN radios will integrate MIMIC LNA chips, developed in-house by the AGMDC Division, ensuring superior signal fidelity and noise performance. The chips are then packaged and produced at scale by Amplifex Spectrum Semiconductor Division in Silicon Valley, enabling full control over quality, cost, and delivery timelines. There is a symbiotic relationship between each of these divisions, as I have mentioned in many of my previous calls, and each division can essentially be an independent business unit by design. Beyond internal deployment, AmpliTec's MIMIC LNA modules and LNBs, recognized as among the best in the industry, are expected to see growing demand from other radio and telecom manufacturers in the U.S. and allied nations transitioning away from foreign component suppliers. This horizontal market adoption represents a significant additional revenue stream with strong margin potential. Some forward-looking financial guidance. As AmpliTech transitions from initial deployments to scaled adoption and repeat orders, the company expects growth margins to improve beginning in Q3 and Q4 of 2025. This year, based on executed LOIs and customer feedback, management anticipates the following. Revenue growth already exceeding over 100% year-over-year in fiscal year 2025, driven by public and private 5G orders, The company increases revenue guidance to at least $24 million for fiscal year 2025, representing 140% year-over-year increase. Growth margins getting back to double digits in the last six months of fiscal year 2025 as production costs normalize, one-time costs are reduced, and higher margin follow-on business ramps. Positive cash flow from operations and projected profitability to be achieved in fiscal year 2026. assuming continuation of current order pace and margin recovery. The company maintains a strong cash management discipline and does not anticipate raising capital under unfavorable market and pricing conditions. Any capital deployment will be strategic, measured, and aligned with shareholder value creation. Value shareholders. We are looking ahead with our company having a good backlog in hand of about $15 million, with the expectations of receiving additional orders to continue funding our LOIs, a healthy balance sheet, zero long-term debt, and an expanding portfolio of proprietary 5G and satellite technologies, having cryogenic amplifiers to serve the growing needs of market, having technology on hand to support this artificial intelligence leading pioneer, having global 5G products and product certifications now in place, positions deliver successive quarters of growth, enhanced shareholder value, and significant stronger IP valuation in 2025 and beyond. This trajectory is anticipated because of all the previous investment and development in unique technology that is focused and targeted for these growing technology demands. As such, I thank you for your continuous support. We'll now open the call for questions. Operator, please proceed.