Note 10 - Accrued Liabilities

3 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Current and Noncurrent Accrued Liabilities [Text Block]

10 . ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

	December 31,		September 30,
	2019		2019
Payroll and related	$	993,089	$	2,050,324
Deferred revenue		369,253		508,522
Customer deposits		4,446,761		5,063,091
Accrued contract costs		391,083		252,833
Warranty reserve		128,032		150,229
Deferred rent		-		109,342
Total	$	6,328,218	$	8,134,341

Other liabilities-noncurrent consisted of the following: 

	December 31,		September 30,
	2019		2019
Deferred rent	$	-	$	1,881,387
Deferred extended warranty revenue		490,794		550,885
Total	$	490,794	$	2,432,272

Payroll and related

Payroll and related consisted primarily of accrued vacation, bonus, sales commissions, and benefits.

Deferred Revenue

Deferred revenue at

December 31, 2019

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

twelve

months ended

December 31, 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.

W

arranty Reserve

Changes in the warranty reserve and extended warranty were as follows:

	December 31,			September 30,
	2019			2019
Beginning balance	$	150,229		$	99,216
Warranty provision		(19,516	)		85,078
Warranty settlements		(2,681	)		(34,065	)
Ending balance	$	128,032		$	150,229

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 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 Topic

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. Upon adoption of Topic

842,

the leasehold incentives were a reduction to the measurement of the operating lease ROU asset. Refer to Note

3,

Recent Accounting Pronouncements and

Note12,

Leases for further detail on the adoption of Topic

842.

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

to

two

years.