Annual report pursuant to Section 13 and 15(d)

Property and Equipment

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Property and Equipment
 12 Months Ended
Dec. 31, 2023
Property, Plant and Equipment [Abstract]  
Property and Equipment . Property and Equipment
Property and equipment consisted of the following:
Useful
 Life (years)		 December 31, 2023 December 31, 2022
Leasehold improvements 5 $ 796,136  $ 789,839 
Property & equipment
3-5 years
 5,906,859  2,206,004 
Technology hardware equipment
3-5 years
 1,907,770  1,200,504 
Total 8,610,765  4,196,347 
Less accumulated depreciation (2,035,034) (2,003,341)
Construction in progress 9,329,114  12,974,361 
Total property and equipment, net $ 15,904,845  $ 15,167,367 

During the year ended, December 31, 2023 the Company performed a discounted cash flow test to compare the carrying value of its assets with estimated future revenues and concluded that the carrying value of some of its assets were impaired. The Company recorded impairment charges of $25,354,791 relating to property and equipment, primarily arising from impairment of the Aquanaut Mark 2 vehicles, Hydronaut vessels, Drix, Olympic arms and some leasehold improvements. The fair value of the Aquanaut Mark 2 vehicles were determined by considering the value of similar vehicles in the market place, commercial invoices, insurable values and a discounted value of future potential cash generation less an estimate of costs to complete vehicles 1 and 3. The fair value of Hydronaut vessels 2 and 3 was determined based on an offer for sale, which subsequently closed on January 22, 2024 at the same value. The Drix and Hydronaut 1 assets were valued at marketed sales price. Olympic Arms 1 – 3 are fully impaired based on no realizable value, as are the certain leasehold improvements.
During the year ended December 31, 2023 the Company conducted a thorough review of its assets and decided to divest items that no longer aligned with its strategic objectives. This strategic shift aimed to enhance cash flow within the company. Consequently, through an update of its business model, the Company identified and reclassified $2,940,254 worth of property and equipment, including Hydronaut vessels, Drix, and other miscellaneous equipment, as assets held for sale. Subsequently, Hydronaut vessels 2 and 3 were sold on January 22, 2024, for $1,533,610, which matched their impaired carrying value. The Company is actively pursuing the sale of the remaining assets earmarked for sale and anticipates that the majority will be sold by the end of the second quarter of 2024.
The company reported a net loss on disposal of property and equipment of $82,604 and $0 for the years ended December 31, 2023 and 2022, respectively, which is reported on the consolidated statements of operations.