NOTE 7—ACCRUED LIABILITIES AND DEFERRED REVENUE

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

	June 30,		December 31,
	2016		2015
Payroll and benefits	$	1,962	$	2,303
Warranty accrual, current portion		1,053		1,345
Taxes		531		445
Accrued professional services		773		681
Accrued capital lease and warranty obligations - current		169		167
Accrued insurance premium		147		467
Other		175		498
Total accrued liabilities	$	4,810	$	5,906

Changes in the initial product warranty accrual and the expenses incurred under the Company’s initial and extended warranties for the three and six months ended June 30, 2016 and 2015 are included within accrued liabilities on the Consolidated Balance Sheets and were as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Initial warranty accrual, beginning balance	$	2,060		$	1,667		$	2,188		$	1,449
Provision for estimated warranty cost		36			545			97			996
Warranty expenditures		(177	)		(215	)		(366	)		(448	)
		1,919			1,997			1,919			1,997
Less warranty accrual, long-term		866			868			866			868
Total warranty accrual, current portion	$	1,053		$	1,129		$	1,053		$	1,129

Deferred revenue is comprised of the following (in thousands):

	June 30,		December 31,
	2016		2015
Undelivered elements (training, installation, and product and support services)	$	1,637	$	1,608
Extended warranty contracts		1,405		1,428
Deferred royalties		201		261
Total Deferred Revenue		3,243		3,297
Less long-term amounts:
Deferred royalties		82		142
Total Deferred Revenue - Long-Term		82		142
Total Deferred Revenue - Current	$	3,161	$	3,155

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 to assist with 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 for the six months ending June 30, 2016 and June 30, 2015 to be approximately $132,000 and $94,000, respectively.