Note 7

Other Accrued Liabilities:

Other accrued liabilities consist of:

	June 30, 2020		December 31, 2019

Accrued warranty, current	$	119	$	170
Accrued compensation, including commissions and vacation		1,000		1,193
Accrued state sales, use and other taxes		3,097		3,193
Accrued professional fees and other accrued liabilities		487		578
Total other accrued liabilities	$	4,703	$	5,134

Accrued State Sales and Use Tax

In the ordinary course of business, the Company is 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 and 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 has made an assessment of $720 from June 2015 through March 2018 plus interest of $171 through April 2020. The Company is currently also in that jurisdiction’s administrative process of appeal. If there is a determination that the true object of the Company’s recurring revenue model is not exempt from sales taxes and is not equivalent to 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 such that if the Company’s arrangements with customers are deemed more likely than not that the Company would not be exempt from sales tax in a particular state the basis for measurement of the state sales and use tax is calculated in accordance with ASC 405, Liabilities, as a transaction tax. If and when the Company is successful in defending itself or in settling the sales tax obligation for a lesser amount, the reversal of this liability is to be recorded in the period the 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 condensed consolidated statements 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, 2020 and, 2019, is summarized as follows:

	Three Months Ended, June 30,						Six Months Ended, June 30,
	2020			2019			2020			2019
Accrual at beginning of period	$	181		$	272		$	232		$	238
Additions charged to warranty expense		6			75			9			143
Expiring warranties/claimed satisfied		(48	)		(56	)		(102	)		(90	)
Total		139			291			139			291
Less: current portion		(119	)		(194	)		(119	)		(194	)
Total long-term accrued warranty costs	$	20		$	97		$	20		$	97