6. Balance Sheet Information

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at invoiced amount with standard net terms that range between 30 and 60 days. The Company extends credit to its customers based on an evaluation of a customer’s financial condition and collateral is generally not required. The Company maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable. The allowance is based on the Company’s assessment of known delinquent accounts, historical experience, and other currently available evidence of the collectability and the aging of accounts receivable. The Company’s allowance for doubtful accounts was $0.3 million each at June 30, 2016 and at December 31, 2015. The provision for doubtful accounts is included in sales and marketing expense in the condensed consolidated statements of operations.

Inventories

Inventories are stated at the lower of cost or market and include material, labor and overhead costs using the first-in, first-out (“FIFO”) method of costing. Inventories as of June 30, 2016 and December 31, 2015 were composed of raw materials, sub-assemblies, finished goods and work-in-process. The Company had consigned inventory with customers of $0.5 million and $0.7 million at June 30, 2016 and December 31, 2015, respectively. The Company records allowances to reduce the value of inventory to the lower of cost or market, including allowances for excess and obsolete inventory. Reserves for excess inventory are calculated based on our estimate of inventory in excess of normal and planned usage. Obsolete reserves are based on our identification of inventory where carrying value is above net realizable value. The allowance for inventory losses was $2.8 million at June 30, 2016 and $2.2 million at December 31, 2015.

Inventories consisted of the following:

	June 30,		December 31,
	2016		2015
Raw materials	$	9,388	$	11,012
Work in process		1,177		917
Finished goods		4,625		5,667
Inventories, net	$	15,190	$	17,596

Prepaid and Other Current Assets

Prepaid assets are stated at cost and are amortized over the useful lives (up to one year) of the assets.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets. The Company depreciates computer equipment over three to five years, office equipment, manufacturing and test equipment, and motor vehicles over five years, furniture and fixtures over seven years, and buildings over 30 years. Leasehold improvements are amortized over the shorter of the corresponding lease term or useful life. Depreciation expense and gains and losses on the disposal of property and equipment are included in cost of sales and operating expenses in the condensed consolidated statements of operations. Maintenance and repairs are expensed as incurred.

Property and equipment consisted of the following:

	June 30,			December 31,
	2016			2015
Building	$	6,227		$	6,227
Computers and office equipment		11,609			10,931
Manufacturing and test equipment		12,952			12,826
Furniture and fixtures		1,230			1,273
Leasehold improvements		1,233			1,001
Motor vehicles		42			42
Total property and equipment		33,293			32,300
Less: Accumulated depreciation and amortization		(21,448	)		(20,231	)
Land		1,770			1,770
Property and equipment, net	$	13,615		$	13,839

Depreciation and amortization expense was approximately $0.8 million for the three months ended June 30, 2016 and 2015, respectively and approximately $1.6 million and $1.5 million for the six months ended June 30, 2016 and 2015, respectively. Amortization for capital leases is included in depreciation and amortization expense. See Note 10 for information related to capital leases.

Liabilities

Accrued liabilities consisted of the following:

	June 30,		December 31,
	2016		2015
Paid time off	$	1,320	$	1,271
Inventory receipts		1,267		1,628
Payroll, bonuses, and other employee benefits		1,196		1,179
Income and sales taxes		478		381
Warranties		303		348
Employee stock purchase plan		257		280
Professional fees and contractors		227		305
Restructuring		208		237
Real estate taxes		150		161
Deferred revenues		105		65
Other		281		335
Total	$	5,792	$	6,190

Long-term liabilities consist of the following:

	June 30,		December 31,
	2016		2015

Deferred rent	$	186	$	250
Long-term obligations under capital leases		182		107
Restructuring		89		0
Deferred revenues		16		31
Total	$	473	$	388