3.         Property and equipment, net

Property and equipment, net, consisted of the following for the dates indicated (in thousands):

Depreciation expense was $687,000 and $89,000 for the years ended December 31, 2016 and 2015, respectively. The Building is a 136,750 square foot lead acid battery recycling plant being built in McCarran, NV. Equipment under construction at December 31, 2016 is primarily AquaRefining modules manufactured by the Company to be used in the McCarran, NV recycling plant.

Certain costs necessary to make the recycling facility ready for its intended use have been capitalized, including interest expense on notes payable. Capitalized interest totaled $508,000 and $98,000 for the years ended December 31, 2016 and 2015, respectively. Capitalization of interest ceased upon completion of the building in early November 2016.

The Company has financed certain of its lab equipment purchases through the use of capital leases. The lease terms are generally between 24 and 36 months with an option to purchase the asset at the end of the lease for $1. Total lab equipment included in the above table at December 31, 2016 subject to capital leases is $392,000 less accumulated depreciation of $36,000 resulting in net fixed assets under capital lease of $356,000. These assets are depreciated using the same useful lives as noted above and included in depreciation expense. See Note 9 – Notes Payable for minimum future payments related to these equipment leases.