10-K/A: Ameritek Ventures Reports $4.5 Million Net Income Driven by Asset Sale Amidst Revenue Decline and Critical Internal Control Failures

Sentiment:

Annual Report Amendment 4 June 2025 5:55 PM

Ameritek Ventures, Inc. reported a significant net income of $4.5 million for fiscal year 2024, primarily due to a one-time gain from the sale of Ecker Capital, LLC to a related party, while facing a 29% decline in operating revenue and acknowledging material weaknesses in its internal financial controls.

Delay expectedPayments on certain promissory notes assumed from the Bozki and VW Win mergers with Epazz, Inc. (a related party) have been deferred until January 1, 2028.

Capital raiseThe company continues to rely on borrowings to finance its working capital needs.It has several outstanding loans payable to Epazz, Inc., a related party, with deferred payment terms.The company has issued common stock for debt conversion, including 29,000,000 shares on January 31, 2024, and 30,000,000 shares on April 29, 2024, to Cloud Builder, Inc.The company issued 23,100,000 Series C Preferred Stock for commitment fees related to lines of credit in 2023.The company issued 7,700,000 shares of Preferred Stock, Series C, to related parties (GG Mars Capital, Inc. and Star Financial Corporation) for debt issuance fees.

Worse than expectedOperating revenue declined by 29% due to the sale of core revenue-generating businesses.The reported net income is almost entirely due to a one-time gain on asset disposal, not sustainable operational performance.The company had no cash as of December 31, 2024, indicating severe liquidity issues.Management identified material weaknesses in internal control over financial reporting, including a lack of a functioning audit committee and inadequate segregation of duties, which are critical governance failures.Future operational revenue is now dependent on DittoMask, Inc., which generated less than $1,000 in profit in 2024, indicating a highly constrained future revenue stream.

Summary

Ameritek Ventures, Inc. reported a net income of $4,496,799 for the fiscal year ended December 31, 2024, a substantial improvement from a net loss of $58,910 in 2023.
This net income was primarily driven by a $4,439,550 gain on asset disposal from the sale of Ecker Capital, LLC to ZenaTech, Inc., a related party, on October 1, 2024.
Operating revenue decreased by 29% to $678,300 in 2024 from $949,438 in 2023, largely due to the divestiture of Interactive Systems and interlinkONE.
Total operating expenses decreased significantly by 44%, or $363,928, attributed to the sale of the revenue and expense-generating companies and the use of Epazz, Inc.'s proprietary server.
The company reported $0 cash as of December 31, 2024, compared to $5,618 in 2023, and continues to rely on borrowings to finance working capital needs.
Management concluded that the company's internal control over financial reporting was not effective as of December 31, 2024, citing material weaknesses including a lack of a functioning audit committee and inadequate segregation of duties.
The company's future revenue is now solely dependent on DittoMask, Inc., which generated less than $1,000 in profit in 2024.

Sentiment

Score: 2

Explanation: The company reported a net income driven by a one-time asset sale, but its core operating revenue declined significantly, and it has no cash. Critically, management identified material weaknesses in internal controls, indicating severe governance and financial reporting issues. The heavy reliance on related party transactions and a very limited future revenue base from DittoMask, Inc. (less than $1,000 profit) present substantial concerns for long-term viability and investor confidence.

Positives

Reported a net income of $4,496,799 for 2024, a significant turnaround from a net loss of $58,910 in 2023.
Achieved a positive net operating income of $219,332 in 2024, up from $126,542 in 2023, primarily due to substantial expense reductions.
Total operating expenses decreased by $363,928, or 44%, in 2024, reflecting cost-saving measures such as the sale of certain subsidiaries and utilizing Epazz, Inc.'s proprietary server.
Cash flow provided by operating activities improved to $331,375 in 2024 from a cash outflow of $(23,009) in 2023.
Total stockholders' equity increased substantially to $4,707,697 in 2024 from $155,619 in 2023.

Negatives

Operating revenue declined by 29%, from $949,438 in 2023 to $678,300 in 2024, primarily due to the sale of core revenue-generating businesses.
The company had no cash ($0) as of December 31, 2024, down from $5,618 in 2023, indicating severe liquidity issues.
The reported net income is largely attributable to a one-time gain on asset disposal of $4,439,550, rather than sustainable operational profitability.
Future revenue is now solely dependent on DittoMask, Inc., which generated less than $1,000 in profit in 2024, indicating a very limited operational revenue base.
The company continues to rely on borrowings to finance its working capital needs.
The common stock trades on the Pink Sheets with very low prices, ranging from $0.0005 to $0.0022 in 2024.

Risks

Internal Control Weaknesses: Management concluded that internal control over financial reporting was not effective as of December 31, 2024, due to material weaknesses, including a lack of a functioning audit committee and inadequate segregation of duties, which increases the risk of financial misstatement.
Liquidity and Reliance on Borrowings: The company had no cash as of December 31, 2024, and continues to rely on borrowings, indicating a precarious liquidity position.
Dependence on Related Parties: Significant financial transactions, including asset sales, loans, and management agreements, are conducted with related parties (Epazz, Inc., ZenaTech, Inc., and entities controlled by Shaun Passley's family), raising concerns about potential conflicts of interest and fair value of transactions.
Limited Revenue Base: Following the sale of key subsidiaries, the company's revenue is now almost entirely dependent on DittoMask, Inc., which generated minimal profit in 2024, posing a significant risk to future operational sustainability.
Pending Litigation: A lawsuit against the former owner, Clinton L. Stokes, III, regarding fiber optic assets and share ownership is still pending, though not expected to have a material effect.
Convertible Debt and Potential Dilution: The company has various convertible preferred stocks and notes, which could lead to significant dilution of common stock if converted.
Market for Securities: The common stock trades on the Pink Sheets at very low prices, indicating limited market liquidity and investor confidence.

Future Outlook

Management is in the process of addressing material weaknesses in internal controls and procedures to bring them into compliance with applicable rules. The company also plans to develop an electric bicycle through its new business, Equock, Inc.

Management Comments

"Based on management's evaluation of internal controls, 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."
"Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements."
"We are under no duty to update any of the forward-looking statements after the date of this Annual Report to conform these statements to actual results."

Industry Context

Ameritek Ventures is undergoing a significant strategic shift, divesting its established warehouse solutions and SaaS businesses (Interactive Systems, interlinkONE) to a related party. This move concentrates its operational focus on nascent and diverse ventures like DittoMask (medical masks), blockchain, augmented reality, vertical landing aircraft, and electric bicycles. This contrasts with a trend of specialization in many tech sectors, potentially spreading the company's resources thin across unrelated, early-stage projects. The reliance on related party transactions for divestiture and financing also deviates from standard arm's-length industry practices.

Comparison to Industry Standards

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weakness	Material weaknesses in internal control over financial reporting were identified as of December 31, 2024.	2024-12-31	Increases the risk of financial misstatement and indicates ineffective oversight.
Audit Committee Deficiency	Lack of a functioning audit committee for the entire fiscal year, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures.	2024-12-31	Compromises independent oversight of financial reporting and internal controls.
Segregation of Duties Deficiency	Inadequate segregation of duties consistent with control objectives.	2024-12-31	Increases the risk of errors or fraud not being prevented or detected in a timely manner.

Legal Proceedings

Meridian Pacific Holdings, LLC filed a lawsuit for breach of contract and fraud, alleging misrepresentation and failure to deliver fiber optic assets; however, all claims against Ameritek Ventures, Inc. were dismissed on October 19, 2023.
A lawsuit filed by the company in Clark County, Nevada, against Clinton L. Stokes, III (former owner) is pending, seeking to settle matters of share ownership and whether fiber optic assets were purchased free of encumbrance from Meridian Financial Group, LLC, which has a claim on these assets. This litigation is not expected to have a material effect on the company.

Related Party Transactions

Sale of Ecker Capital, LLC (holding company for Interactive Systems, interlinkONE, ESM Software) to ZenaTech, Inc. on October 1, 2024. ZenaTech, Inc. is controlled by Epazz, Inc. and Shaun Passley, PhD (Ameritek's President, CEO, and majority shareholder).
Ameritek Ventures, Inc. assumed several loans from Epazz, Inc. (a related party) through the Bozki and VW Win mergers, with deferred payments until January 1, 2028. These include a $200,000 convertible note, a $572,411 note (converted from a $1,000,000 note), and a $250,000 note.
Ameritek entered into a management agreement with Epazz, Inc., controlled by Shaun Passley, with a minimum annual fee of $350,000. Epazz charged $634,970 for development and support expenses in 2024.
Stock issuances for debt issuance fees to GG Mars Capital, Inc. (President Vivienne Passley, Shaun Passley's aunt) and Star Financial Corporation (President Fay Passley, Shaun Passley's mother).
Shaun Passley, PhD is the Chairman of the Board, Secretary, President, CEO, CFO, COO, and Sole Director of Ameritek Ventures, Inc., and also the majority shareholder of Epazz, Inc., which owns over 95% of Ameritek's voting stock.
Ameritek sold several loans (SBA Interactive Systems loan, SBFC LLC loan, Cloud Builder note) to ZenaTech, Inc. as part of the Ecker Capital sale.

Stakeholder Impact

Shareholders: Experience significant dilution from debt conversions to common stock, face risks from severe internal control weaknesses, and are exposed to the company's reliance on related party transactions. The common stock trades at very low prices, indicating minimal market value.
Employees: The sale of Interactive Systems and interlinkONE to ZenaTech, Inc. likely impacted employees of those subsidiaries, though specific details are not provided.
Creditors: Some related-party loans have deferred payment terms until 2028, potentially impacting the timing of repayment for those creditors.
Customers: The divestiture of core software businesses (warehouse solutions, SaaS) to a related party could impact existing customer relationships and service continuity, though the document does not elaborate.

Next Steps

Management is in the process of addressing material weaknesses in internal controls and procedures to achieve compliance with applicable rules.
The company plans to develop an electric bicycle through its new business, Equock, Inc.

Key Dates

Date	Description
2010-12-27	Company organized as ATVROCKN.
2017-06-20	Company changed corporate name to Ameritek Ventures, Inc.
2019-05-06	Meridian Pacific Holdings, LLC filed a lawsuit against the company and certain directors/officers.
2020-11-10	Company merged with VW Win Century, Inc. (formerly FlexFridge, Inc.).
2020-11-12	Ameritek entered into a management agreement with Epazz, Inc.
2020-11-13	Ameritek merged with Bozki, Inc.
2020-12-01	Ameritek and Epazz agreed to defer payments on certain notes until January 1, 2028.
2021-05-13	Ameritek issued a $185,000 non-convertible promissory note to Cloud Builder, Inc.
2021-05-14	Ecker Capital, LLC purchased Interactive Systems, Inc.
2021-05-15	Company assumed a loan from Reading Coop with the acquisition of interlinkOne.
2021-08-05	Cloud Builder, Inc. note converted.
2021-09-09	Ameritek issued 30,000,000 shares to Cloud Builder, Inc.
2021-09-15	Ameritek and Epazz agreed to convert $500,000 of Bozki debt into common stock and a nine-year note.
2021-10-01	Ecker Capital, LLC purchased interlinkONE, Inc.
2021-10-31	Company received a $500,000 SBA loan for Interactive Systems.
2023-03-06	Company filed a lawsuit against Clinton L. Stokes, III.
2023-09-30	SBFC LLC loan principal increased by $28,313.
2023-10-01	Cloud Builder, Inc. note reinstated via settlement agreement.
2023-10-02	Ameritek issued 20,000,000 common shares for debt conversion.
2023-10-02	Ameritek issued 7,700,000 Series C Preferred Stock to GG Mars Capital and Star Financial Corporation.
2023-10-19	Claims against Ameritek Ventures, Inc. in Meridian Pacific lawsuit dismissed.
2023-10-26	Ameritek issued 20,000,000 common shares for debt conversion.
2023-12-31	Fiscal year ended.
2024-01-31	Company and Cloud Builder, Inc. agreed to convert $32,480 debt into 29,000,000 Class A common stock.
2024-04-29	Company and Cloud Builder, Inc. agreed to convert $22,800 debt into 30,000,000 Class A common stock.
2024-10-01	Effective date of sale of Ecker Capital, LLC to ZenaTech, Inc.
2024-10-01	Ameritek sold SBA loan for Interactive Systems to ZenaTech.
2024-10-01	Ameritek sold SBFC LLC loan to ZenaTech.
2024-10-01	Ameritek sold Cloud Builder note to ZenaTech.
2024-10-14	Ameritek entered into selling agreement with ZenaTech, Inc. for Ecker Capital, LLC.
2024-12-31	Fiscal year ended.
2025-03-31	Date of auditor's report and board approval.
2025-05-09	Certification date for CEO/CFO.
2025-12-29	Maturity date for VW Win Century, Inc. note.
2028-01-01	Deferred payment commencement date for certain Bozki and VW Win Epazz loans.
2051-09-25	Maturity date for SBA loan of $500,000 for Interactive Systems (sold to ZenaTech).

Recommendation

strong sell

Keywords

Ameritek Ventures, ATVK, SEC filing, 10-K/A, financial results, internal controls, asset sale, ZenaTech, Epazz, DittoMask, software, inventory management, blockchain, augmented reality, electric bicycle, corporate governance, related party transactions

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