NOTE 4 — PROPERTY AND EQUIPMENT

Property and equipment are recorded on the basis of cost. For financial statement purposes, property, plant and equipment are depreciated using the straight-line method over their estimated useful lives.

Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its property and equipment for impairment in accordance with the guidance for impairment of long-lived assets.

Property and equipment as of September 30, 2019 and December 31, 2018 is summarized as follows:

	September 30, 2019			December 31, 2018
Laboratory and medical equipment	$	5,590		$	5,590
Furniture, fixtures and equipment		125,633			125,633
Computer equipment		49,951			49,951
Equipment under capital lease		624,602			624,602
Leasehold improvements		362,046			362,046
		1,167,822			1,167,822
Less accumulated depreciation and amortization		(1,080,163	)		(925,207	)
	$	87,659		$	242,615

On March 3, 2017, the Company entered into an asset sale and lease agreement (sale/leaseback transaction, the “Asset Sale and Lease Agreement”) with GACP, whereby the Company sold certain lab, medical and other equipment relating to the cell banking business for $400,000 and leased back the sold equipment over a three-year term.

The Company determined that the transaction was a capitalized lease and accordingly recorded the leased assets and liability based on the estimated present value of the minimum lease payments.

Included in net property are assets under capital leases of $624,602, less accumulated depreciation of $533,738 as of September 30, 2018 and $624,602, less accumulated depreciation of $383,559 December 31, 2018, respectively.

In connection with the sale of the lab, medical and other equipment, the Company realized a gain on sale of equipment of $386,535. The gain is recognized ratably over the term of the lease to operations. During the three and nine months ended September 30, 2019, the Company recognized $32,211 and $96,634; and $32,211 and $96,634 during the three and nine months ended September 30, 2018, as the gain on sale of equipment, respectively. As of September 30, 2019, and December 31, 2018, deferred gain on sale of equipment was $53,686 and $150,319, respectively.

As a consequence of the Court Order (see Note 10), the Company resolved to divest itself of certain equipment and other assets (the “Equipment Assets”) used in connection with the Company’s human tissue banking business, but consistent however with the requirements of the Court Order, and to adjust the business plan and operations to accommodate this potential divesture. To facilitate the above, the Company entered into a Termination and Release Agreement and a Letter Agreement intended to divest itself of certain equipment and other assets underlying the related equipment lease transaction (see Note 8).

Property and equipment are recorded based on cost. For financial statement purposes, property, plant and equipment are depreciated using the straight-line method over their estimated useful lives.

Depreciation expense was $51,652 and $154,956 of which $51,652 and $154,956 were included in cost of sales for the three and nine months ended September 30, 2019, respectively.

Depreciation expense was $51,652 and $155,480 of which $51,652 and $154,956 were included in cost of sales for the three and nine months ended September 30, 2018, respectively.