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Property and equipment consist of the following:

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Depreciation expense for the three months ended June 30, 2019 and 2018 was $311 and $228, respectively.  Depreciation expense for the six months ended June 30, 2019 and 2018 was $618 and $439, respectively.  The significant increase in projects in process is related to our Axogen Processing Center (“APC”) facility (See Note 13).

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On September 20, 2018, the Company entered into an agreement (the “Heights Agreement”) with Heights Union, LLC, a Florida limited liability company (“Heights Union”), for the lease of seventy-five thousand square feet of office

space (the “Heights Union Premises”) in Tampa, Florida.  In May 2020, the Company entered into a construction escrow agreement (the “Escrow Agreement”) with Heights Union and Commonwealth Land Title Insurance Company (“Escrow Agent”) which provided for the establishment of a federally insured escrow bank account (the “Escrow Account”) to hold Company fund to be used for tenant improvements in excess of the tenant allowance as provided in the Heights Agreement. The Company deposited $5,828 into the Escrow Account in June 2020 for use in completing construction of the tenant improvements.  The Escrow Agent will disburse the funds upon joint written instructions from Heights Union and the Company.  In June, $1,218 was disbursed from the Escrow Account and recorded in property and equipment account of the balance sheet.  The Company anticipates depleting the Escrow Account by October 2020.  As of June 30, 2020, $4,610 remained in the Escrow Account and is recorded as restricted cash in the condensed consolidated balance sheet.