Property and equipment, net - Note 6

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Property and equipment, net - Note 6

6. PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

		December 31,
		2016		2015
Production equipment	$	4,580	$	4,150
Leasehold improvements		494		494
Computer hardware and software/lab equipment		4,968		4,618
Office furniture and equipment		1,096		1,087
		11,138		10,349
Less: Accumulated depreciation		(9,601)		(8,680)
	$	1,537	$	1,669

Depreciation expense was $1.1 million in 2016, $429,000 in 2015, and $414,000 in 2014. In the fourth quarter of 2016, we recorded additional depreciation expense of $297,000, as a result of a change in the estimated useful life of production equipment to be replaced in connection with our current business strategy to sell LBS engines directly to ODMs and OEMs.

Capital leases are collateralized by the related assets financed and by security deposits held by the lessors under the lease agreements. The cost and accumulated depreciation of equipment under capital leases was $704,000 in each of the years ended December 31, 2016 and 2015.