Note 6. Satellite Network and Other Equipment

Satellite network and other equipment consisted of the following:

	December 31,
	2016			2015
Land	$	381		$	381
Satellite network		231,782			104,088
Capitalized software		30,758			13,201
Computer hardware		4,707			4,027
Other		7,522			6,853
Assets under construction		11,284			147,288
		286,434			275,838
Less: accumulated depreciation and amortization		(70,593	)		(45,868	)
	$	215,841		$	229,970

During the years ended December 31, 2016, 2015 and 2014, the Company capitalized costs attributable to the design and development of internal-use software in the amount of $4,494, $4,958 and $2,777 respectively.

Depreciation and amortization expense for the years ended December 31, 2016, 2015 and 2014 was $30,465, $15,371 and $8,061, respectively. This includes amortization of internal-use software of $3,545, $1,733 and $969 for the years ended December 31, 2016, 2015 and 2014, respectively.

For the years ended December 31, 2016 and 2015, 69% and 68% of depreciation and amortization expense, respectively, relate to cost of services and 10% and 11%, respectively, relate to cost of product sales, as these assets support the Company’s revenue generating activities.

As of December 31, 2016, assets under construction primarily consist of costs associated with acquiring, developing and testing software and hardware for internal and external use that have not yet been placed into service. As of December 31, 2015, assets under construction primarily consist of milestone payments pursuant to procurement agreements, which includes the design, development, launch and other direct costs relating to the construction of the OG2 satellites and upgrades to the Company’s infrastructure and ground component.

In December 2016, the Company lost communication with one of its OG1 Plane D satellites. In the year ended December 31, 2016, the Company removed $137 from satellite network and accumulated depreciation, respectively, representing the fully depreciated value of the satellite.

In August 2016 the Company lost communication with one of its OG2 satellites, launched on July 14, 2014. The Company recorded a non-cash impairment charge of $10,680 on the consolidated statement of operations in the quarter ended September 30, 2016 to write-off the net book value of the satellite. In addition, the Company decreased satellite network and other equipment, net and associated accumulated depreciation by $13,474 and $2,794, respectively.

During the quarter ended March 31, 2016, the Company recorded an impairment loss on one of its leased AIS satellites. Upon abandonment of the satellite, the Company no longer expects future cash flows to be generated from this asset. The impairment loss of $466 was determined based on the net carrying value of the asset at the time of the impairment and was recorded in depreciation and amortization in the consolidated statement of operations for the quarter ended March 31, 2016. In addition, the Company decreased satellite network and other equipment, net and the associated accumulated depreciation on the consolidated balance sheet by $2,374 and $1,908, respectively.

On December 21, 2015, the Company launched the remaining 11 of its OG2 satellites aboard a Space Exploration Technologies Corp. (“SpaceX”) Falcon 9 launch vehicle. On March 1, 2016, following an in-orbit testing period, the Company initiated commercial service for the 11 OG2 satellites. As a result of the 11 OG2 satellites being placed into service, the Company reclassified $137,772 of costs out of assets under construction and into satellite network on March 1, 2016, and began depreciating the satellites over an estimated 10-year life. During the year ended December 31, 2016, 2015 and 2014, the Company recorded $18,376, $6,957 and $2,431 of depreciation, respectively, in connection with its OG2 satellite constellation.

In June 2015, the Company lost communication with one of its in-orbit OG2 satellites. The Company recorded a non-cash impairment charge of $12,748 on the consolidated statement of operations in the quarter ended June 30, 2015 to write off the net book value of the satellite. In addition, the Company decreased satellite network and other equipment and the associated accumulated depreciation on the consolidated balance sheet by $13,788 and $1,040, respectively.

In January 2015, the Company lost communication with one of its OG1 Plane D satellites. In the quarter ended March 31, 2015, the Company removed $137 from satellite network and accumulated depreciation, respectively, representing the fully depreciated value of the satellite. In September 2015, the satellite reestablished communication with the Company’s ground stations. There was no impact on the consolidated balance sheet for the reestablishment of communications with this satellite.

During the year ended December 31, 2014, the Company recorded an impairment loss on one of the Company’s AIS satellites. Upon abandonment of the satellite on December 15, 2014, the Company no longer expects future cash flows to be generated from this asset. The impairment loss of $605 was determined based on the carrying value of the asset at the time of the impairment and was recorded in the statement of operations in the year ended December 31, 2014. As a result, the Company decreased the Satellite network by $1,477 and associated accumulated depreciation by $872 to write off and fully depreciate the asset.

On July 14, 2014, the Company launched six of its OG2 satellites aboard a Space Exploration Technologies Corp. (“SpaceX”) Falcon 9 launch vehicle. On September 15, 2014, following an in-orbit testing period, the Company initiated commercial service for the six OG2 satellites. As a result of the six satellites being placed into service, the Company reclassified $82,725 of costs out of assets under construction and into satellite network on September 15, 2014, and began depreciating the satellites over a 10-year life.