NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE

Accrued liabilities are comprised of the following (in thousands):

	September 30,		December 31,
	2015		2014
Payroll and benefits	$	2,381	$	1,905
Warranty accrual, current portion		1,276		930
Taxes		378		139
Accrued professional services		1,508		1,581
Accrued capital lease payments		142		—
Accrued insurance premium		—		450
Other		217		183
Total accrued liabilities	$	5,902	$	5,188

Changes in the initial product warranty accrual, and the expenses incurred under the Company’s initial and extended warranties, for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Initial warranty accrual, beginning balance	$	1,997		$	1,255		$	1,449		$	1,096
Provision for estimated warranty cost		608			310			1,604			919
Warranty expenditures		(270	)		(199	)		(718	)		(649	)
		2,335			1,366			2,335			1,366
Less warranty accrual, long-term		1,059			367			1,059			367
Total warranty accrual, current portion	$	1,276		$	999		$	1,276		$	999

In June 2014, the Company extended the warranty for WaterLase systems from one year to two years for systems purchased after January 1, 2014.

Current portion of deferred revenue is comprised of the following (in thousands):

	September 30,		December 31,
	2015		2014
Undelivered elements (training, installation, and product and support services)	$	1,526	$	952
Extended warranty contracts		1,458		1,542
Deferred revenue, current portion	$	2,984	$	2,494

In connection with the Company’s initiatives to measure and improve customer satisfaction and concurrent with the launch of WaterLase iPlus 2.0 in February 2015, the Company introduced its exclusive Practice Growth Guarantee, which is a program that essentially guarantees growth in the Company’s clients’ dental practices through training on a select number of clinical procedures and with billing and marketing support for dentists included. Consistent with the Company’s standard terms and conditions applicable to all of its products, the Practice Growth Guarantee does not give the customer the right to return purchased laser systems or receive a refund of any amount of the purchase price. However, the Practice Growth Guarantee does provide for additional training opportunities and certain billing and marketing support activities to the customer. The Company has estimated additional deferred revenue related to the Practice Growth Guarantee for all WaterLase iPlus 2.0 system sales during the nine months ended September 30, 2015 to be approximately $133,000.

During the three months ended September 30, 2014, the Company performed a review of its training service policies and procedures and determined that substantially all of the training service for new customers was used within nine months of the product purchase. Accordingly, and consistent with this information on the exhaustion of training service, the Company changed the period over which deferred training service revenue is being recognized from an estimated period of 24 months to nine months.