| Summary of Significant Accounting Policies | (3) Summary of Significant Accounting Policies Basis
of Accounting The
accompanying condensed consolidated financial statements have been prepared using the accrual basis of accounting. Principles
of Consolidation The
accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts
and transactions have been eliminated in consolidation. 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. AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 Cash
and Cash Equivalents The
Company considers deposits that can be redeemed on demand and investments and marketable securities that have original maturities of
less than three months, when purchased, to be cash equivalents. As of March 31, 2024 the Company’s cash and cash equivalents were
deposited in four financial institutions. The
Company’s policy is to place its cash and cash equivalents with high-quality, major financial and investment institutions to limit
the amount of credit exposure. Accounts at each financial institution are insured by the Federal Deposit Insurance Corporation (“FDIC”)
up to $ 250,000 1,594,791 3,170,500 Accounts
Receivable Accounts
receivable consist of trade receivables arising from credit sales to customers in the normal course of business. These receivables are
recorded at the time of sale, net of an allowance for current expected credit losses. In accordance with ASC Topic 326, “ Financial
Instruments – Credit Losses An
allowance of $ 0 AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 Inventories Inventories,
which consist primarily of raw materials, work in progress and finished goods, are stated at the lower of cost (first-in, first-out basis)
or market (net realizable value). Inventory
quantities and related values are analyzed at the end of each fiscal quarter to determine those items that are slow moving and
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. As
of March 31, 2024 and December 31, 2023 the reserve for inventory obsolescence was $ 1,149,000 1,146,000 Property
and Equipment 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. Property
and equipment are depreciated as follows: Schedule of property and equipment depreciated
Description
Useful
Life Method
Office
equipment 3 7 Straight-line
Machinery/shop
equipment 7 15 Straight-line
Computer
equipment/software 1 7 Straight-line
Vehicles
5 Straight-line
Leasehold
improvements 7 Straight-line Intangible
Assets Definite-lived
intangible assets including customer relationships and intellectual property are subject to amortization. Intangible assets are amortized
over their estimated useful life on a straight-line basis. Estimated useful lives are determined considering the period the assets are
expected to contribute to future cash flows. Indefinite-lived intangible assets are not subject to amortization. Intangible
assets are amortized as follows: Schedule
of Intangible Assets
Description Useful
Life Method
Trade
names Indefinite N/A
Customer
relationships 15 20 Straight-line
Intellectual
property 15 Straight-line AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 Long-Lived
Assets The
Company reviews the carrying value of long-lived assets such property and equipment, right-of-use (“ROU”) assets, and definite-lived
intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Circumstances which could trigger a review include, but are not limited to; significant decrease in the market
price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses
combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that
the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. The
recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted
future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future
cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the
asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of
fair value less costs to sell and would no longer be depreciated. The depreciable basis of assets that are impaired and continue in use
is their respective fair values. During the three months ended March 31, 2024 and the year ended December 31, 2023, there were no impairments
of long-lived assets. Goodwill
and Indefinite-Lived Intangible Assets We
follow the acquisition method of accounting to record the assets and liabilities of acquired businesses at their estimated fair value
at the date of acquisition. We initially record goodwill for the amount the consideration transferred exceeds the acquisition-date fair
value of net tangible and identifiable intangible assets acquired. Goodwill
and intangible assets deemed to have indefinite lives are not amortized, but are tested for impairment annually on December 31, or more
frequently when events or circumstances indicate an impairment may have occurred. When assessing the recoverability of goodwill and indefinite-lived
intangible assets, the Company may first assess qualitative factors in determining whether it is more likely than not that the fair value
of a reporting unit, including goodwill, or an indefinite-lived intangible asset is less than its carrying amount. The qualitative assessment
is based on several factors, including the current operating environment, industry and market conditions, and overall financial performance.
The Company may elect to bypass this qualitative assessment for some or all of its reporting units or other indefinite-lived intangible
assets and perform a quantitative assessment, based on management’s judgment. If
we quantitatively test goodwill and indefinite-lived intangible assets for possible impairment, we calculate the fair value for the reporting
unit and indefinite-lived assets and compare the amount to their carrying amount. If the fair value of a reporting unit and indefinite-lived
asset exceeds their carrying amount, the reporting unit and indefinite-lived assets are not considered impaired. If the carrying amount
of the reporting unit and indefinite-lived assets exceed their fair value, the reporting unit and indefinite-lived assets are considered
to be impaired, and an impairment charge is recognized for the difference. AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 We
estimate the fair value of our reporting units and indefinite-lived intangible assets based on the present value of estimated future
cash flows. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate
the future cash flows used to measure fair value. Our estimates of future cash flows consider past performance, current and anticipated
market conditions and internal projections and operating plans. Additional assumptions include forecasted growth rates, estimated discount
rates, and estimated royalty rates for our indefinite-lived intangible assets. During
the three months ended March 31, 2024 and the year ended December 31, 2023, there were no Investment
Policy-Cost Method Investments
consist of non-controlling equity investments in privately held companies. The Company elected the measurement alternative for these
investments without readily determinable fair values and for which the Company does not control or have the ability to exercise considerable
influence over operating and financial policies. These investments are accounted for under the cost method of accounting. Under the cost
method of accounting, the non-marketable equity securities are carried at cost less any impairment, adjusted for observable price changes
of similar investments of the same issuer. Fair value is not estimated for these investments if there are no identified events or changes
in circumstances that may influence the fair value of the investment. Under this method, the Company’s share of the earnings or
losses of such investee companies is not included in the consolidated balance sheet or consolidated statements of operations. The Company
held $ 348,250 Investment
in Digital Assets We
account for all digital assets as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other.
The Company presents digital assets separately from other intangible assets, recorded as digital assets on the condensed consolidated
balance sheets. The digital assets are initially recorded at cost and are subsequently remeasured at cost, net of any impairment losses
incurred since acquisition. We
performed an analysis this quarter to identify whether events or changes in circumstances, principally decreases in the quoted prices
on active exchanges, indicate that it is more likely than not that our digital assets are impaired. In determining if an impairment has
occurred, we consider the lowest market price of one unit of digital asset quoted on the active exchange since acquiring the digital
asset. When the then current carrying value of a digital asset exceeds the fair value determined each quarter, an impairment loss has
occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the prices determined.
Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital
assets. In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of
the digital assets sold immediately prior to sale. Leases We
lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related
asset and obligation at the present value of lease payments over the lease term. The Company has elected not to separate lease and non-lease
components for all property leases for the purpose of calculating ROU assets and lease liabilities. Many of our leases include rental
escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate.
When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not
provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments
based on information available at lease commencement. The incremental borrowing rate is the rate of interest that a lessee would have
to pay to borrow on a collateralized basis considering such factors as lease term and economic environment risks. AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 Revenue
Recognition We
sell our products through a combination of a direct sales force in the United States and independent sales representatives in international
markets. Revenue is recognized when a customer obtains control of promised goods based on the consideration we expect to receive in exchange
for these goods. This core principle is achieved through the following steps: Identify
the contract with the customer Identify
the performance obligations in the contract Our
performance obligations relate to delivering single-use products to a customer, subject to the shipping terms of the contract. Limited
warranties are provided, under which we typically accept returns and provide either replacement parts or refunds. We
do not have significant returns. We do not typically offer extended warranty or service plans. Determine
the transaction price Allocate
the transaction price to performance obligations in the contract AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 Recognize
revenue when or as we satisfy a performance obligation. Cost
of Sales We
include product costs such material, direct labor, overhead costs, production-related depreciation expense, outside labor and production
supplies in cost of sales. Shipping
and Handling Shipping
and handling charges are generally incurred at the customer’s expense. However, when billed to our customers, shipping and handling
charges are included in net sales for the applicable period, and the corresponding shipping and handling expense is reported in cost
of sales. Research
and Development Research
and development expenditures are charged to operations as incurred. The major components of research and development costs include payroll,
consultants, outside service, and supplies. Research
and development costs for the three months ended March 31, 2024 and 2023 were $ 276,755 348,730 Income
Taxes The
Company’s deferred tax assets and liabilities for the expected future tax consequences of events 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 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. At March 31, 2024
and December 31, 2023, the Company had no material unrecognized tax benefits. AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 Earnings
Per Share Basic
earnings per share (“EPS”) are determined by
dividing the net earnings by the weighted-average number of shares of common shares outstanding during the period. Diluted
EPS is determined by dividing net earnings 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 outstanding under the treasury
stock method. As of March 31, 2024 and 2023, there were 4,600,442 4,234,942 Fair
Value Measurements The
fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities
are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the
quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on
the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined in the following three
categories: Level
1: Unadjusted quoted prices that are available in active markets for identical assets or liabilities at the measurement date. Level
2: Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly
or indirectly. Level
3: Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management
judgment. Cash
and cash equivalents, receivables, inventories, prepaid expenses, accounts payable, accrued expenses, and customer deposits approximate
fair value, due to their short-term nature. The carrying value of notes payable and short and long-term debt also approximates fair value
since these instruments bear market rates of interest. Assets
and liabilities that are measured at fair value on a nonrecurring basis relate primarily to long-lived assets, intangible assets, and
goodwill, which are remeasured when the derived fair value is below carrying value in the consolidated balance sheets. AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 Stock-Based
Compensation The
Company records stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation. All transactions in which goods
or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration
received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees
and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments
issued and are recognized over the employees required service period, which is generally the vesting period. Concentration
of Credit Risk Financial
instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, marketable
securities and accounts receivable. The
Company places its cash and cash equivalents and marketable securities with high-quality, major financial and investment institutions
in order to limit the amount of credit exposure. For accounts receivable, the Company performs ongoing credit evaluations of its customers
and maintains allowances for potential credit losses. Recent
Issued Accounting Pronouncements In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency
and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in
the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve
the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early
adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. We are currently evaluating
the impact this standard will have on our consolidated financial statement disclosures. AmpliTech
Group, Inc. Notes
To Condensed Consolidated Financial Statements For
the Three Months Ended March 31, 2024 and 2023 In
November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires
a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim
periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07
is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,
2024, with early adoption permitted. These amendments are to be applied retrospectively. We are currently evaluating the impact this
standard will have on our consolidated financial statement disclosures. In
August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial
Measurement, which requires a newly-formed joint venture to apply a new basis of accounting to its contributed net assets, resulting
in the joint venture initially measuring its contributed net assets at fair value on the formation date. ASU 2023-05 is effective for
all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. These amendments are to
be applied prospectively, with retrospective application permitted for joint ventures formed before the effective date. We are currently
evaluating the impact this standard will have on our consolidated financial statement disclosures. |
