Property and equipment, net - Note 6

12 Months Ended

Dec. 31, 2017

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,
		2017		2016
Production equipment	$	6,573	$	4,580
Leasehold improvements		601		494
Computer hardware and software/lab equipment		5,515		4,968
Office furniture and equipment		1,304		1,096
		13,993		11,138
Less: Accumulated depreciation		(10,742)		(9,601)
	$	3,251	$	1,537

Depreciation expense was $1.1 million in 2017, $1.1 million in 2016, and $429,000 in 2015. 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, 2017 and 2016.