10-Q: Ameritek Ventures Reports Steep Losses, Revenue Plunge

Ameritek Ventures, Inc. reported a significant net loss of $7.5 million and a 94% revenue decline for the six months ended June 30, 2025, primarily due to a loss on investment and the divestiture of key subsidiaries.

Summary

• Net loss for the six months ended June 30, 2025, was $7,526,738, a substantial increase from a net income of $16,085 for the same period in 2024.
• Revenue plummeted by 94% to $22,492 for the six months ended June 30, 2025, down from $402,842 in the prior year, following the sale of Ecker Capital, LLC and its subsidiaries.
• Operating income shifted to a loss of $174,861 for the six months ended June 30, 2025, compared to an operating income of $105,217 in the same period of 2024.
• A significant loss on investment of $7,296,262 was recorded for the six months ended June 30, 2025.
• Total assets decreased to $8,904,558 as of June 30, 2025, from $16,207,378 as of December 31, 2024, largely due to the decrease in investment in securities.
• Cash balance stood at $1,138 as of June 30, 2025, a 49% decrease from $2,218 as of June 30, 2024.
• Common shares outstanding increased significantly to 949,226,791 as of June 30, 2025, from 613,226,791 as of December 31, 2024, partly due to stock issued for services and debt conversion.
• The company's only revenue source post-divestiture is DittoMask, Inc., which generated less than $1,000 profit in 2024.

Sentiment

Score: 1

Explanation: The company's financial performance is severely negative, marked by a drastic revenue decline, substantial net losses, and critically low cash reserves. Significant shareholder dilution and ongoing internal control weaknesses further compound the negative outlook. The business model appears to be struggling post-divestiture, with only one minimal revenue stream remaining.

Positives

• General and administrative expenses decreased by 87% to $10,353 for the six months ended June 30, 2025, compared to $80,898 in the prior year, primarily due to the divestiture of subsidiaries.
• Interest expense decreased by 38% to $55,615 for the six months ended June 30, 2025, as the company no longer holds three previously outstanding loans.

Negatives

• Reported a substantial net loss of $7,526,738 for the six months ended June 30, 2025, a significant deterioration from a net income in the prior year.
• Revenue declined by 94% to $22,492 for the six months ended June 30, 2025, indicating a severe reduction in business operations.
• Experienced a significant loss on investment totaling $7,296,262.
• Cash balance is critically low at $1,138, representing a 49% decrease year-over-year.
• Total assets decreased by over 45% from December 31, 2024, primarily due to the decline in investment securities.
• Common stock outstanding increased by over 50% due to stock-based compensation and debt conversions, leading to significant shareholder dilution.
• The company's sole remaining revenue source, DittoMask, Inc., generated minimal profit in the previous year, raising concerns about future revenue generation.

Risks

• The company has identified material weaknesses in its internal control over financial reporting, including a lack of a functioning audit committee and inadequate segregation of duties, which could lead to material misstatements.
• Heavy reliance on related-party transactions for financing and management services, which may not always be at arm's length and could pose conflicts of interest.
• Significant shareholder dilution risk due to the issuance of a large number of common shares for services and debt conversions.
• The company's ability to continue as a going concern is questionable given the substantial net losses, minimal cash, and reliance on future capital raises.
• The ongoing legal proceeding against a former owner regarding shares ownership and fiber optic assets, while not expected to be material, introduces uncertainty.
• The company's business model has significantly narrowed, with DittoMask, Inc. being the only remaining revenue source, which generated less than $1,000 profit in 2024, indicating limited operational scale and diversification.

Future Outlook

Management plans to raise equity capital to finance the company's operating and capital requirements, including further product development, marketing, securing additional property and equipment, and other working capital purposes. The company expects cash, cash equivalents, short-term investments, and other liquidity sources like equity or debt securities to be sufficient to meet foreseeable cash requirements, subject to market conditions.

Management Comments

• "We expect that cash, cash equivalents and short-term investments, and other sources of liquidity, such as issuing equity or debt securities, subject to market conditions, will be available and sufficient to meet all foreseeable cash requirements."

Industry Context

The company's significant divestiture of its warehouse solutions and software subsidiaries (Interactive Systems, interlinkONE, ESM Software) to a related party (ZenaTech, Inc.) drastically narrows its operational scope. This move shifts the company's focus primarily to DittoMask in the medical industry and nascent ventures in electric bicycles (Equock, Inc.), blockchain (WebBeeO, CordTell), and augmented reality (Augmum, Inc.). This contrasts with a broader industry trend towards diversified technology portfolios or specialized focus areas with clear market traction. The substantial revenue decline post-divestiture indicates a significant reduction in market presence and competitive standing in its former core areas.

Comparison to Industry Standards

• The company's revenue of $22,492 for six months is extremely low compared to established software or medical device companies. For instance, a small, publicly traded SaaS company typically generates millions in quarterly revenue, making Ameritek's current revenue negligible by industry standards.
• The reported net loss of over $7.5 million on such minimal revenue is highly unusual and indicates severe operational inefficiencies or significant non-operating losses, far exceeding typical startup or small-cap company losses relative to their revenue base.
• The cash balance of $1,138 is critically low and falls far short of the working capital requirements for even a small, active business, let alone a publicly traded entity with ongoing development projects. Comparable early-stage tech companies often maintain cash reserves in the hundreds of thousands to millions of dollars to fund operations.
• The substantial increase in common shares outstanding (over 50%) due to stock-based compensation and debt conversion suggests a high rate of dilution, which is significantly higher than what is typically observed in healthy, growing companies that manage dilution carefully to protect shareholder value.
• The identified material weaknesses in internal controls, particularly the lack of a functioning audit committee and inadequate segregation of duties, are severe governance deficiencies that are not standard practice for publicly traded companies and raise significant red flags regarding financial reporting reliability. Well-governed companies prioritize robust internal controls to ensure compliance and investor confidence.

Corporate Governance

Legal Proceedings

• A lawsuit was filed in Clark County, Nevada, against Clinton L. Stokes, III, the former owner, to settle matters of shares ownership and whether Fiber Optic Assets were purchased free and clear of encumbrance from Meridian Financial Group, LLC. The case is pending with no trial date set and is not expected to have a material effect on the company.

Related Party Transactions

• Sale of Ecker Capital, LLC to ZenaTech, Inc. (a related party controlled by Epazz, Inc. and Shaun Passley, PhD) for ZenaTech shares (5,000 Super Voting Shares, 1,000,000 Common Shares, 750,000 Preferred Shares).
• Assumption of $200,000 convertible note from Bozki merger with Epazz, Inc. (related party), with deferred payments until January 1, 2028.
• Assumption of $1,000,000 convertible note from Bozki merger with Epazz, Inc. (related party), converted to a $572,410 note, with deferred payments until January 1, 2028.
• Assumption of $250,000 note from VW Win Century, Inc. merger with Epazz, Inc. (related party), with deferred payments until January 1, 2028.
• Management agreement with Epazz, Inc. (related party) for a minimum annual fee of $350,000.
• Issuance of 66,000,000 common shares to Epazz, Inc. for management fees on April 1, 2025.
• Issuance of 300,000,000 common shares to Shaun Passley, PhD for management fees on April 1, 2025.
• Accounts payable balance of $5,400 due to Epazz, Inc. as of June 30, 2025.
• Short-term advance from affiliate (Epazz, Inc.) of $317,893 as of June 30, 2025.
• Shaun Passley, PhD holds 379,098,457 common shares and 2,000,000 Preferred C shares.
• Epazz, Inc. holds 10,000,000 Preferred B shares and 116,000,000 common shares.
• GG Mars Capital, Inc. (President Vivienne Passley, Shaun Passley's family member) holds 22,159,336 Preferred C shares and 18,103,638 common shares.
• Star Financial Corporation (President Fay Passley, Shaun Passley's family member) holds 22,236,666 Preferred C shares and 18,106,005 common shares.
• Various other family members of Shaun Passley (Vivienne, Fay, Craig, Olga, Lloyd Passley) hold common and/or preferred shares.

Stakeholder Impact

• **Shareholders:** Significant dilution due to massive common stock issuance for services and debt conversion. Substantial decrease in total stockholders' equity. The large net loss and revenue decline negatively impact shareholder value.
• **Creditors:** The company's critically low cash balance and significant losses may raise concerns about its ability to service its debts, although some related-party loans have deferred payments.
• **Employees:** The drastic reduction in revenue and operational scope following the divestiture could imply a smaller workforce or limited growth opportunities, though specific employee impacts are not detailed.
• **Customers:** The divestiture of key software subsidiaries means former customers of Interactive Systems, interlinkONE, and ESM Software are now served by ZenaTech, Inc., potentially impacting service continuity or relationships with Ameritek.
• **Management:** Management's compensation includes significant stock-based awards, aligning their interests with share price, but also contributing to dilution. The CEO/CFO is responsible for internal control weaknesses.

Next Steps

• Management plans to raise equity capital to fund operations and growth initiatives.
• Continue development of electric bicycle with Equock, Inc.
• Continue development of blockchain technology software programs under WebBeeO and CordTell companies.
• Continue exploration of augmented reality technology with Augmum, Inc.
• Continue vertical landing aircraft service from AeroPass, Inc. with ZenaDrone technology.

Key Dates

Recommendation

The company's financial performance is in severe decline, evidenced by a 94% drop in revenue, a massive net loss of over $7.5 million, and critically low cash reserves of just $1,138. The significant loss on investment and the divestiture of core revenue-generating subsidiaries leave the company with a single, minimally profitable revenue stream (DittoMask). Furthermore, the substantial increase in common shares outstanding due to stock-based compensation and debt conversions indicates severe dilution. Persistent material weaknesses in internal controls and extensive related-party transactions raise serious governance concerns. Given the dire financial state, lack of clear path to profitability, and high operational risks, the stock presents a very high risk profile with little to no upside potential in the near to medium term.

Keywords

Ameritek Ventures, 10-Q, Quarterly Report, Financial Results, Net Loss, Revenue Decline, SEC Filing, Related Party Transactions, Share Dilution, Internal Controls, DittoMask, ZenaTech, Ecker Capital, Corporate Governance, Investment Loss