NOTE 5 - Property and Equipment

As of June 30, 2019 and December 31, 2018, the balances of property and equipment were as follows:

As of June 30, 2019, the balance of construction in progress was $0 after the Company transferred $416,231 (unaudited) to R&D expenses and $895,014 (unaudited) to inventories. The Company also transferred $54,625 (unaudited) of prepayment for equipment to inventory.

On May 1, 2018, the Company and Aerkomm Taiwan entered into a binding memorandum of understanding with Tsai Ming-Yin (the "Seller") with respect to the acquisition by Aerkomm Taiwan of a parcel of land located in Taiwan. The land is expected to be used to build a satellite ground station and data center. On July 10, 2018, the Company, Aerkomm Taiwan and the Seller entered into a certain real estate sales contract regarding this acquisition. Pursuant to the terms of the contract, and subsequent amendments on July 30, 2018, September 4, 2018, November 2, 2018 and January 3, 2019, the Company paid to the seller in installments refundable prepayment of $33.85 million as of December 31, 2018. On July 2, 2019, the Company paid the remaining purchase price of $624,462. As of June 30, 2019, the estimated commission payable for the land purchase in the amount of $1,362,525 (unaudited) was recorded to the cost of land and the payment to be paid after the full payment of the Land acquisition price until no later than December 31, 2020.

Depreciation expense was $135,622 (unaudited) and $24,945 (unaudited) for the three-month periods ended June 30, 2019 and 2018 and $273,308 (unaudited) and $44,135 (unaudited) for the six-month periods ended June 30, 2019 and 2018, respectively.