Property and Equipment

12 Months Ended

Dec. 31, 2024

Property, Plant and Equipment [Abstract]

Note 3. Property and Equipment

Property and equipment consisted of the following as of:

Schedule of Property and Equipment

	December 31, 2024			December 31, 2023

Land	$	1,778,987		$	1,778,987
Building & Building Improvements		11,523,813			9,146,556
Computer equipment		1,301,700			1,233,989
Furniture and office equipment		349,669			295,208
Machinery and equipment		4,368,752			2,865,014
STEP equipment		2,561,775			2,241,291
Leasehold improvements		336,763			358,584
Construction in Progress		-			2,456,259

Total property and equipment		22,221,459			20,375,888
Less: Accumulated depreciation and amortization		(6,016,796	)		(4,888,875	)

Property and equipment, net	$	16,204,663		$	15,487,013

Depreciation expenses, including STEP depreciation, were $1,127,921 and $908,308 for the years ended December 31, 2024 and 2023, 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.

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-cancellable 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.

Schedule of Purchase Price Allocation

	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

VirTra, Inc 10-K