PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets and consist of the following (in thousands):



	At December 31,
	2018			2017

Equipment (useful life 3 - 15 years)	$	1,511		$	1,557
Tooling (useful life 2 - 5 years)	371			371
Vehicles (useful life 5 years)	47			47
Furniture and fixtures (useful life 5 years)	137			137
Computer software (useful life 3 years)	1,043			1,043
Leasehold improvements (the shorter of useful life or lease life)	211			201
Construction in progress	55			55
Property and equipment at cost	3,375			3,411
Less: accumulated depreciation	(2,765		)	(2,314		)
Property and equipment, net	$	610		$	1,097

Depreciation expense was $0.5 million, $0.7 million, and $0.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.

During 2015 and early 2016, the Company invested in certain equipment and software to be used to increase our capabilities and reduce the cost of components used in our domestic manufacturing processes, as many of our sales opportunities were with respect to products made in the U.S. or meeting “Buy American” standards. These opportunities included our military maritime product line, as well as products for use in government-funded facilities, such as military bases, which must comply with certain domestic preference standards. As a result of the decline in 2016 sales as well as our expectation of limited sales of our military Intellitube^® product going forward due to new competition for retrofit products for the U.S. Navy, coupled with the current cost of procuring components from our suppliers for such products, versus manufacturing them at a low volume, at December 31, 2016, we re-evaluated the economics of manufacturing versus purchasing such components from our suppliers. We concluded that we would no longer use the equipment and software previously purchased to conduct this manufacturing and evaluated the carrying value of the equipment and software compared to its fair value and determined that the equipment and software were impaired. Accordingly, we recorded an impairment loss of $0.9 million, to adjust the carrying value of the equipment and software to its net realizable value as of December 31, 2016. Due to the specialized nature of this equipment we were not able to find a buyer for this equipment in 2017. As a result, we re-evaluated the carrying of the equipment and software compared to its fair value and recorded an additional impairment loss of $0.2 million as of December 31, 2017. We classified the net carrying value of this equipment as “Assets held for sale” in the accompanying Consolidated Balance Sheets as of December 31, 2017.

We completed the sale of this equipment in the first quarter of 2018, recognizing net proceeds of approximately $0.2 million and a gain of approximately $15 thousand on the sale. The gain on the sale is classified on our Consolidated Statements of Operations under the caption, “Other expenses.”