Note 5 - Accrued expenses and other long-term liabilities

Accrued expenses consist of the following (in thousands):

	January 31, 2018		October 31, 2017

Wages payable	$	935	$	855
Accrued receipts		1,036		695
Earn-out liability		206		236
Other current liabilities		520		456

Totals	$	2,697	$	2,242

Accrued receipts represent purchased inventory for which invoices have not been received.

The Company measures at fair value certain financial assets and liabilities. U. S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the following fair-value hierarchy:

Level 1 - Quoted prices for identical instruments in active markets;

Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The contingent consideration liability represents future earn-out liability that we may be required to pay in conjunction with the acquisition of Rel-Tech and Comnet. The Company estimates the fair value of the earn-out liability using a probability-weighted scenario of estimated qualifying earn-out gross profit related to Rel-Tech and EBITDA related to Comnet calculated at net present value (level 3 of the fair value hierarchy).

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2018 (in thousands):

Description		Level 1			Level 2			Level 3
Earn-out liability		$	-		$	-		$	206

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of October 31, 2017 (in thousands):

Description		Level 1			Level 2			Level 3
Earn-out liability		$	-		$	-		$	236

The following table summarizes the Level 3 transactions for the three months ended January 31, 2018 and for the year ended October 31, 2017 (in thousands):

	Level 3
	January 31, 2018		October 31, 2017
Beginning balance	$	236	$	835
Payments		-		(578)
Change in value		(30)		(21)
Ending Balance	$	206	$	236