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 90 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 at March 31, 2017 and at December 31, 2016. 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 March 31, 2017 and December 31, 2016 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 $0.4 million at March 31, 2017 and December 31, 2016, 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 $3.0 million at March 31, 2017 and $2.9 million at December 31, 2016.

Inventories consisted of the following:

	March 31,		December 31,
	2017		2016
Raw materials	$	7,651	$	8,718
Work in process		1,211		1,486
Finished goods		3,830		4,238
Inventories, net	$	12,692	$	14,442

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:

	March 31,			December 31,
	2017			2016
Building	$	6,351		$	6,351
Computers and office equipment		12,393			11,577
Manufacturing and test equipment		13,160			12,940
Furniture and fixtures		1,258			1,239
Leasehold improvements		1,254			1,191
Motor vehicles		19			20
Total property and equipment		34,435			33,318
Less: Accumulated depreciation and amortization		(23,146	)		(22,479	)
Land		1,770			1,770
Property and equipment, net	$	13,059		$	12,609

Depreciation and amortization expense was approximately $0.7 million and $0.8 million for the three months ended March 31, 2017 and 2016, respectively. Amortization for capital leases is included in depreciation and amortization expense. See Note 9 for information related to capital leases.

Liabilities

Accrued liabilities consisted of the following:

	March 31,		December 31,
	2017		2016
Payroll, bonuses, and other employee benefits	$	1,263	$	2,029
Paid time off		1,242		1,230
Inventory receipts		1,163		1,622
Warranties		420		394
Income and sales taxes		410		546
Professional fees and contractors		191		320
Real estate taxes		190		152
Customer prepayments		129		164
Employee stock purchase plan		124		300
Deferred revenues		93		104
Restructuring		77		126
Other		319		190
Total	$	5,621	$	7,177

Long-term liabilities consisted of the following:

	March 31,		December 31,
	2017		2016
Long-term obligations under capital leases	$	244	$	157
Deferred rent		141		156
Restructuring		86		70
Deferred revenues		18		8
Total	$	489	$	391