. ACCRUED AND OTHER LIABILITIES—NONCURRENT

Accrued liabilities consisted of the following:

	September 30,
	2017		2016

Payroll and related	$	1,870,579	$	382,845
Deferred revenue		268,580		637,763
Warranty reserve		179,101		285,402
Accrued contract costs		197,034		197,034
Deferred rent		46,101		-
Total	$	2,561,395	$	1,503,044

Other liabilities - noncurrent consisted of the following:

Deferred rent	$	-	$	93,456
Extended warranty		-		71,582
Total	$	-	$	165,038

Payroll and related

Accrued payroll and related consists primarily of accrued

bonus, accrued vacation, accrued sales commissions and benefits at

September

30,

2017

and

2016.

Deferred Revenue

Deferred revenue at

September 30,

201

included prepayments from customers on current orders scheduled for delivery in the year ended

September 30, 2018.

Warranty Reserve

Details of the estimated warranty reserve were as follows:

	Years ended September 30,
	2017			2016
Beginning balance	$	356,984		$	315,618
Warranty provision		(109,925	)		79,954
Warranty settlements		(67,958	)		(38,588	)
Ending balance	$	179,101		$	356,984

	September 30,
	2017		2016
Short-term warranty reserve	$	179,101	$	285,402
Long-term warranty reserve		-		71,582
Total warranty reserve	$	179,101	$	356,984

The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenue is recognized. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period

and in the

fourth

quarter of fiscal

2017

reduced the accrued warranty liability by

$203,000

to an amount equal to estimated warranty expense for products currently under warranty.

Accrued contract costs

Accrued contract costs consist of accrued expenses for contracting a

third

party service provider to fulfill repair and maintenance obligations required under a contract through

2019

with a foreign military for units sold in the year ended

September 30, 2011.

Payments to the service provider will be made annually upon completion of each year of service. These services are being recorded in cost of revenues to correspond with the revenues for these services.