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Note 6 - Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2022
Notes |
Note 6 - Commitments and Contingencies | Note 6 – Commitments and Contingencies Purchase Obligations The Company has obligations to purchase raw materials for use in its manufacturing operations. The Company has the right to make changes in, among other things, purchase quantities, delivery schedules and order acceptance. Product Liability The Company is self-insured for product liability risk. “Product liability” is an insurance industry term for the cost of legal defense and damages awarded to patients allegedly injured as a result of use of a company’s product. The Company maintains a reserve to cover product liability litigation expenses and possible damages consistent with its experience going back decades. Although actual product liability litigation expense at $670 was substantially higher in 2022 relative to history, costs during the prior two reporting years were immaterial. There were no product liability damages in any of the three reporting years, which is consistent with the Company’s long-term history. The Company absorbs the costs of clinical training and trouble-shooting in its on-going operating expenses. Warranty Reserve The Company’s published warranty is: “UTMD warrants its products to conform in all material respects to all published product specifications in effect on the date of shipment, and to be free from defects in material and workmanship for a period of thirty (30) days for supplies, or twenty-four (24) months for equipment, from date of shipment. During the warranty period UTMD shall, at its option, replace any products shown to UTMD's reasonable satisfaction to be defective at no expense to the Purchaser or refund the purchase price.” UTMD maintains a warranty reserve to provide for estimated costs which are likely to occur. The amount of this reserve is adjusted, as required, to reflect its actual experience. Based on its analysis of historical warranty claims and its estimate that existing warranty obligations are immaterial, no warranty reserve was made at December 31, 2022 or December 31, 2021. Litigation The Company has been involved in lawsuits which are an expected consequence of its operations and in the ordinary course of a medical device business. Presently, except for the Filshie clip lawsuits by a single U.S. law firm, there is no litigation or threatened litigation. The Company does not expect the outcome of the Filshie clip litigation will be material to consolidated financial results. The Company applies its accounting policy to accrue legal costs that can be reasonably estimated.

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