Annual report pursuant to Section 13 and 15(d)

Property and equipment, net

Property and equipment, net

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]



5.	Property and equipment, net

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



	Useful Life (Years)	December 31,
Asset Class	Useful Life (Years)	2018			2017

Operational equipment	3-10	$	15,926		$	15,457
Lab equipment	5	698			685
Computer equipment	3	201			174
Office furniture and equipment	3	336			326
Leasehold improvements	5-7	—			1,408
Land	—	1,047			1,047
Building	39	24,820			24,847
Asset retirement cost	20	670			670
Equipment under construction		7,892			4,552
		51,590			49,166
Less: accumulated depreciation		(6,042		)	(3,433		)

		$	45,548		$	45,733

Depreciation expense was $3.2 million, $2.9 million and $0.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. The building is a 136,750 square foot lead acid battery recycling plant being built in McCarran, Nevada. Equipment under construction is primarily AquaRefining modules manufactured by the Company to be used in the McCarran, Nevada 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 $0.5 million and $0.1 million 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, 2018 subject to capital leases is $0.4 million less accumulated depreciation of $0.2 million resulting in net fixed assets under capital lease of $0.2 million. Total lab equipment included in the above table at December 31, 2017 subject to capital leases was $0.4 million less accumulated depreciation of $0.1 million resulted in net fixed assets under capital lease of $0.3 million. These assets are depreciated using the same useful lives as noted above and included in depreciation expense. See Note 12 – Notes Payable for minimum future payments related to these equipment leases.