. ACCRUED AND OTHER LIABILITIES

Accrued liabilities consisted of the following:

	September 30,
	2019		2018
Payroll and related	$	2,050,324	$	2,041,735
Deferred revenue		508,522		460,086
Customer deposits		5,063,091		199,596
Accrued contract costs		252,833		197,034
Severance		-		152,730
Warranty reserve		150,229		99,216
Deferred rent		109,342		49,467
Total	$	8,134,341	$	3,199,864

Other liabilities - noncurrent consisted of the following:

	September 30,
	2019		2018
Deferred rent	$	1,881,387	$	1,663,058
Deferred extended warranty revenue		550,885		76,372
Total	$	2,432,272	$	1,739,430

Payroll and related

Accrued payroll and related consisted primarily of accrued bonus, accrued vacation, accrued sales commissions and benefits at

September

30,

2019

and

2018.

Deferred Revenue

Deferred revenue at

September 30, 2019

included prepayments from customers for services, including extended warranty, scheduled to be performed in the year ended

September 30, 2020.

Customer Deposits

Customer deposits represent amounts paid by customers as a down payment on hardware orders to be delivered during the year ended

September 30, 2020.

Accrued contract costs

Accrued contract costs consist of accrued expenses for contracting a

third

-party service provider to fulfill repair and maintenance obligations required under a contract with a foreign military for units sold in the year ended

September 30, 2011.

Payments to the service provider will be made annually upon completion of each year of service. A new contract was signed with the customer in

May 2019

to continue repair and maintenance services through

May 2024.

These services are being recorded in cost of revenues to correspond with the revenues for these services.

Severance

Severance liability at

September 30, 2018

consisted

of accrued payments to former employees of Genasys Spain that was paid during the year ended

September 30, 2019.

Deferred Rent

Deferred rent liability as of

September 30, 2019

consists of the difference between the average rental amount charged to expense and amounts payable under the lease for the Company’s operating facility. Deferred rent also includes cash and leasehold incentives from the landlord in the aggregate amount of

$1,990,729

as of

September 30, 2019

to compensate for costs incurred by the Company to make the office space ready for operation (leasehold incentives). Prior to the adoption of ASC

842,

leasehold incentives received from a landlord are deferred and recognized on a straight-line basis as a reduction to rent expense over the lease term. Refer to Note

Recent Accounting Pronouncements for further detail on the adoption of ASC

842.

Warranty Reserve

Details of the estimated warranty reserve were as follows:

	September 30,
	2019			2018
Beginning balance	$	99,216		$	104,518
Warranty provision		85,078			6,093
Warranty settlements		(34,065	)		(11,395	)
Ending balance	$	150,229		$	99,216

The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenue is recognized. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period and adjusts the accrued warranty liability to an amount equal to estimated warranty expense for products currently under warranty.

Deferred extended warranty revenue

Deferred extended warranty revenue consists of warranties purchased in excess of the Company’s standard warranty. Extended warranties typically range from

one

two

years.