Note 5. Property and Equipment

9 Months Ended

Sep. 30, 2015

Notes

Note 5. Property and Equipment

Note 5.  Property and Equipment

Property and equipment consisted of the following:

	September 30, 2015	December 31, 2014
Equipment	$       809,731	$    1,503,845
Furniture and fixtures	78,363	303,226
Construction in progress	113,667	-
Building (held for sale)	-	956,000
Land (held for sale)	-	244,000
Rental equipment	-	58,940
	1,001,761	3,066,011
Less equipment impairment	-	(85,000)
Less accumulated depreciation	(645,527)	(1,840,140)
Property and equipment, net	$       356,234	$    1,140,871

On May 15, 2015 the Company entered into a commercial real estate purchase contract wherein it agreed to sell its primary headquarters and manufacturing facilities located in Salt Lake City, Utah.  Per the terms of the contract, the closing date of the sale took place in August 2015.  The sale resulted in net proceeds to the Company of approximately $949,000 after commissions and closing costs.  The Company paid off the $750,000 principal balance plus accrued interest and early payment penalty on the promissory note issued to Access Business Finance, LLC from the sale proceeds.  After paying off the promissory note, the net proceeds from the sale of the facilities were approximately $183,000.

Following the closing date, the purchaser of the facilities leased the building back to the Company rent free through October 23, 2015.  The Company entered into a sub-lease agreement to rent new facilities in Salt Lake City and took occupancy of the leased facilities effective October 26, 2015.  This sub-lease agreement provides for the Company to lease approximately 10,057 square feet of space that will house its office, production and research operations.  The term of this sub-lease is through December 31, 2019, and requires monthly payments for base rent in the first year of $16,762, with a provision for escalation of 3% per year for subsequent years, and additional payment of $5,100 per month in months 1-20 of the lease to reimburse sub-lessor for costs of tenant improvements paid by the sub-lessor.  The construction in progress at September 30, 2015 includes costs incurred for leasehold improvements and furniture and fixtures for the new facilities.