10-K/A: Ameritek Ventures Files Amended 10-K with Financial Restatements

Ameritek Ventures, Inc. has filed an amended annual report (10-K/A) to correct consolidated financial statements related to the valuation of ZenaTech, Inc. securities and disclose material weaknesses in internal controls.

Summary

• Ameritek Ventures, Inc. has filed an amendment (Amendment No. 3) to its Form 10-K for the fiscal year ended December 31, 2024.
• The amendment corrects consolidated financial statements due to issues with the valuation of ZenaTech, Inc. securities received from the sale of Ecker Capital, LLC.
• Management has concluded that the Company's internal control over financial reporting was not effective as of December 31, 2024, citing material weaknesses in disclosure controls, specifically the lack of a functioning audit committee and inadequate segregation of duties.
• The company is actively working to address these control deficiencies.
• Operating revenue for 2024 was $678,300, a decrease of 29% from $949,438 in 2023, primarily due to the sale of Interactive Systems and interlinkONE.
• Total operating expenses decreased by 44% in 2024 due to the sale of these subsidiaries and the use of proprietary servers from Epazz, Inc.
• Net income for 2024 was $13,518,494, a significant increase from a net loss of $58,910 in 2023, largely driven by a gain on asset disposal from the sale of Ecker Capital.
• Cash flow from operating activities was $331,375 in 2024, an improvement from $(23,009) in 2023.
• The company had no cash as of December 31, 2024, compared to $5,618 in 2023, due to the asset sale to ZenaTech.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the reported decrease in revenue, material weaknesses in internal controls, and lack of cash, despite a reported net income driven by asset disposal.

Positives

• Significant increase in net income to $13,518,494 in 2024 from a net loss of $58,910 in 2023, primarily due to a gain on asset disposal.
• Operating income before other income was $219,332 in 2024, an increase from $126,542 in 2023, driven by expense reductions.
• Total operating expenses decreased by 44% in 2024.
• Cash flow from operating activities improved to $331,375 in 2024 from $(23,009) in 2023.
• The company has a patent for FlexFridge (US patent 9217598B2).

Negatives

• Operating revenue decreased by 29% to $678,300 in 2024 from $949,438 in 2023.
• The company reported material weaknesses in its internal control over financial reporting as of December 31, 2024, including the lack of a functioning audit committee and inadequate segregation of duties.
• Disclosure controls and procedures were deemed not effective.
• The company had no cash as of December 31, 2024.
• Significant debt obligations remain, including substantial amounts due to related parties like Epazz, Inc. and Bozki, Inc.

Risks

• The material weaknesses in internal controls could lead to a misstatement of financial statements.
• The company's reliance on borrowings to finance working capital needs.
• The pending lawsuit filed by Meridian Financial Group, LLC against former owner Clinton L. Stokes, III, concerning fiber optic assets.
• The potential for future litigation arising from the ordinary course of business.
• The company's common stock is trading on the Pink Sheets, indicating limited liquidity and potential volatility.

Future Outlook

The company expects that cash, cash equivalents, and short-term investments, along with other sources of liquidity such as issuing equity or debt securities (subject to market conditions), will be sufficient to meet all foreseeable cash requirements. However, the company continues to rely on borrowings to finance its working capital needs.

Management Comments

• Management concluded that the Company's internal control over financial reporting was not effective as of December 31, 2024, given the material weaknesses in our disclosure controls.
• Management is in the process of addressing these concerns to bring our controls and procedures in compliance with applicable rules.
• Dr. Shaun Passley has served as the Chairman and CEO of the Company since November 2020 and is credited with turning the Company around by bringing in major assets and revenue.

Industry Context

StockSavvy.ai notes that Ameritek Ventures operates in a diverse range of sectors including software, hardware, medical technology, blockchain, augmented reality, and aviation services. The company's recent divestiture of Ecker Capital, LLC, which held subsidiaries Interactive Systems, Inc. and interlinkONE, Inc., signifies a strategic shift, likely focusing its resources on its remaining ventures like DittoMask and its exploration into electric bicycles via Equock, Inc. The reported material weaknesses in internal controls are a significant concern for a company seeking to establish credibility and attract investment in these competitive technology markets.

Comparison to Industry Standards

• The company's revenue of $678,300 for the fiscal year 2024 is significantly lower than many established players in the software and technology sectors, which often report revenues in the tens or hundreds of millions.
• The reported net income of $13.5 million is largely attributable to a gain on asset disposal, rather than sustainable operational profitability, which is a key metric for industry standard valuation.
• The existence of material weaknesses in internal controls is a critical deviation from industry best practices, where robust internal controls are paramount for investor confidence and regulatory compliance.
• The company's stock trading on the Pink Sheets, with low bid prices (e.g., $0.0007 to $0.0022 in 2024), contrasts sharply with major exchanges where companies typically list, indicating a lower market capitalization and investor base compared to industry peers.

Corporate Governance

Legal Proceedings

• Meridian Pacific Holdings, LLC filed a lawsuit for breach of contract and fraud, which was dismissed against Ameritek Ventures, Inc. on October 19, 2023.
• The Company filed a lawsuit against Clinton L. Stokes, III, concerning share ownership and asset encumbrances, which is still pending.

Related Party Transactions

• Sale of Ecker Capital, LLC to ZenaTech, Inc., a related party, on October 1, 2024.
• Significant outstanding debt and loan obligations with related parties, including Epazz, Inc., Bozki, Inc., and VW Win, Inc.
• Management Services Agreement with Epazz, Inc., controlled by CEO Shaun Passley, with minimum annual fees.
• Stock issuances to related parties, including GG Mars Capital, Inc. and Star Financial Corporation, for debt issuance fees.

Stakeholder Impact

• Shareholders: The material weaknesses in internal controls and lack of cash may negatively impact investor confidence and the stock price. The low trading price on the Pink Sheets indicates limited value realization.
• Creditors: The company's reliance on borrowings and significant related party debt may pose risks to creditors.
• Management: Faces the challenge of remediating material weaknesses in internal controls and improving financial reporting reliability.

Next Steps

• Management is in the process of addressing concerns to bring controls and procedures into compliance with applicable rules.
• The company intends to retain future earnings to fund development and growth.
• The company may issue equity or debt securities, subject to market conditions, to meet future cash requirements.

Key Dates

Recommendation

While the company reported a significant net income due to an asset sale, this is overshadowed by a revenue decline, material weaknesses in internal controls, and a lack of cash. The company's future prospects are highly dependent on its ability to rectify these control issues and generate sustainable operational revenue. Given the uncertainties and the current financial state, a 'hold' recommendation is appropriate, pending further clarity on control remediation and operational performance.

Keywords

Ameritek Ventures, 10-K/A, SEC Filing, Financial Statements, Internal Controls, Material Weakness, Ecker Capital, ZenaTech, Revenue, Net Income, Operating Expenses, Related Party Transactions, Nevada