Property and Equipment

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 3. Property and Equipment

Property and equipment consisted of the following as of:

	December 31, 2023			December 31, 2022
Land	$	1,778,987		$	1,778,987
Building & Building Improvements		9,146,556			9,129,364
Computer equipment		1,236,989			1,210,021
Furniture and office equipment		295,208			289,379
Machinery and equipment		2,865,014			2,788,803
STEP equipment		2,241,291			1,954,430
Leasehold improvements		358,584			347,384
Construction in Progress		2,456,259			1,749,332
Total property and equipment		20,375,888			19,247,700
Less: Accumulated depreciation and amortization		(4,888,876	)		(3,980,567	)
Property and equipment, net	$	15,487,012		$	15,267,133

Depreciation expenses, including STEP depreciation, were $908,308 and $818,816 for the years ended December 31, 2023, and 2022, respectively.

On August 25, 2021, the Company completed the purchase of real property located in Chandler, Arizona (the “Property”) for $10,800,000, paid with cash and proceeds from a mortgage loan from Arizona Bank & Trust in the amount of $8,600,000 (Note 7). The Property consists of approximately 4.3 acres and an industrial building of approximately 76,650 square feet. The Company moved all of its operations and headquarters to the Property during 2022. Approximately 15,000 square feet of the building is dedicated to two pre-existing tenants with multi-year rent agreements.

Under the provision of ASC 805, the Company determined this acquisition was an asset acquisition. This determination was based on substantially all of the fair value of the gross assets acquired was concentrated in the similarly identifiable assets of the Property. The fair value was allocated to the land, building, and acquired leases based upon their relative fair values at the date of acquisition in accordance with ASC 805-50-30-3.

The fair value of the in-place leases is the estimated cost to replace the leases (including loss of rent, estimated commissions and legal fees paid in similar leases). The capitalized in-place leases are amortized over the remaining term of the leases as amortization expense. The fair value of the above or below market lease is the present value of the difference between the contractual amount to be paid pursuant to the in-place lease and the estimated current market lease rate expected over the remaining non-cancelable life of the lease. The capitalized above or below market lease values are amortized as a decrease or increase to the rental income over the remaining term of the lease.

Upon closing, the Company assumed interest in two in-place leases. The first tenant took occupancy in November 2006 and is paying the annual Triple Net rate of $11.34 per square foot. The rate increased to $11.68 per square foot on November 1, 2021, increasing to $12.03 on November 1, 2022, the tenant was given notice in December 2022 and the lease expired on May 1, 2023.

	December 31, 2021
Land	$	1,778,987
Building and building improvements		8,937,050
Acquired Lease Intangible Assets		83,963
Total Purchase Price	$	10,800,000