10.

ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

	June 30,		September 30,
	2019		2018
Payroll and related	$	1,483,678	$	2,041,735
Deferred revenue		490,514		460,086
Customer deposits		917,955		199,596
Accrued contract costs		508,645		197,034
Severance		-		152,730
Warranty reserve		131,618		99,216
Deferred rent		102,771		49,467
Total	$	3,635,181	$	3,199,864

Other liabilities-noncurrent consisted of the following:

	June 30,		September 30,
	2019		2018
Deferred rent	$	1,910,398	$	1,663,058
Deferred extended warranty revenue		600,756		76,372
Total	$	2,511,154	$	1,739,430

Payroll and related

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

Deferred Revenue

Deferred revenue consists primarily of extended warranty obligations and prepayments for software support agreements.

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 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. A new contract was signed with the customer in

May 2019

to continue repair and maintenance services through

May 2024.

These services are being recorded in cost of revenues to correspond with the revenues for these services.

Severance

Severance liability at

September 30, 2018,

consisted

of accrued payments to former employees of Genasys. All payments related to this liability were paid during the period ended

March 31, 2019.

arranty Reserve

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

	June 30,			September 30,
	2019			2018
Beginning balance	$	99,216		$	104,518
Warranty provision		62,689			6,093
Warranty settlements		(30,287	)		(11,395	)
Ending balance	$	131,618		$	99,216

Deferred Rent

Deferred rent liability as of

June 30, 2019

and

September 30, 2018

consists of the difference between the average rental amount charged to expense and amounts payable under the lease for the Company’s office space. Deferred rent also includes cash and leasehold incentives from the landlord in the aggregate amount of

$2,013,169

June 30, 2019

to compensate for costs incurred by the Company to make the office space ready for operation. Leasehold incentives received from a landlord are deferred and recognized on a straight-line basis as a reduction to rent expense over the lease term.

Deferred extended warranty revenue

Deferred extended warranty revenue consists of warranties purchased in excess of the Company’s standard warranty. Extended warranties typically range from

one

two

years.