Note 7

Other Accrued Liabilities:

Other accrued liabilities consist of:

	June 30, 2019		December 31, 2018

Accrued warranty, current	$	194	$	156
Accrued compensation, including commissions and vacation		945		1,275
Accrued state sales, use and other taxes		2,908		2,719
Accrued professional fees and other accrued liabilities		701		350
Total other accrued liabilities	$	4,748	$	4,500

Accrued State Sales and Use Tax

In the ordinary course of business, the Company is, from time to time, subject to audits performed by state taxing authorities. These actions and proceedings are generally based on the position that the arrangements entered into by the Company are subject to sales and use tax rather than exempt from tax under applicable law. The Company uses estimates when accruing its sales and use tax liability. All of the Company’s tax positions are subject to audit. One state has assessed the Company an amount of $801 for the period from March 2014 through August 2017. The Company has declined an informal offer to settle at a substantially lower amount and is currently in that jurisdiction’s administrative process of appeal. A second jurisdiction is also conducting an audit and has not made an assessment. If there is a determination that the Company’s recurring revenue model is not exempt from sales taxes and is not a prescription medicine or the Company does not have other defenses where the Company does not prevail, the Company may be subject to sales taxes in those particular states for previous years and in the future, plus potential interest and penalties for failure to pay such taxes.

The Company believes its state sales and use tax accruals have properly recognized that if the Company’s arrangements with its customers are deemed to be subject to sales tax in a particular state are more likely than not, the basis for measurement of the sales and use tax would be in accordance with ASC 405, Liabilities as a transaction tax. If and when the Company is successful in defending itself in settling the sales tax obligation for a lesser amount, the reversal of this liability is to be recorded in the period settlement is reached. However, the precise scope, timing and time period at issue, as well as the final outcome of any audit and actual settlement remains uncertain.

The Company records state sales tax collected and remitted for its customers on equipment sales on a net basis, excluded from revenue. The Company’s sales tax expense that is not presently being collected and remitted for the recurring revenue business are recorded in general and administrative expenses on the statement of operations.

Accrued Warranty Costs

The Company offers a standard warranty on product sales generally for a one to two-year period, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in other accrued liabilities and other liabilities on the condensed consolidated balance sheet. The activity in the warranty accrual during the three and six months ended June 30, 2019 and 2018, is summarized as follows

	Three Months Ended, June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Accrual at beginning of period	$	272		$	195		$	238		$	178
Additions charged to warranty expense		75			75			143			138
Expiring warranties/claimed satisfied		(56	)		(35	)		(90	)		(81	)
Total		291			235			291			235
Less: current portion		(194	)		(149	)		(194	)		(149	)
Total long-term accrued warranty costs	$	97		$	86		$	97		$	86