. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

	June 30,		September 30,
	2018		2017
Payroll and related	$	1,788,948	$	1,870,579
Deferred revenue		1,175,948		268,580
Accrued contract costs		184,508		197,034
Severance		231,676		-
Warranty reserve		148,860		179,101
Deferred rent		-		46,101
Total	$	3,529,940	$	2,561,395

Payroll and related

Payroll and related consists primarily of accrued vacation, bonus, sales commissions, and benefits.

Deferred Revenue

Deferred revenue consists primarily of prepayments from customers in advance of product shipment.

Warranty Reserve

Changes in the warranty reserve and extended warranty were as follows:

	Three months ended						Nine months ended
	June 30,						June 30,
	2018			2017			2018			2017
Beginning balance	$	169,204		$	449,141		$	179,101		$	356,984
Warranty provision		-			(2,761	)		12,361			108,608
Warranty settlements		(20,344	)		(46,201	)		(42,602	)		(65,413	)
Ending balance	$	148,860		$	400,179		$	148,860		$	400,179

Accrued contract costs

The Company has contracted with a

third

-party service provider to administer the required services under the terms of a repair and maintenance agreement with a foreign military. This payment is made in arrears for each contract year ended

March 26.