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Note 8 - Agreements and Commitments
 9 Months Ended
Sep. 30, 2022
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

NOTE 8 - AGREEMENTS AND COMMITMENTS

 

Contingencies -- From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.

 

The Company has during the third quarter been in dialogue with a former client regarding marine waste-water treatment systems delivered in 2019, regarding potential warranty claims due to corrosion on select parts and component, with a total estimated remediation cost of $ 1.5 million. The Company is disputing the claim in full however a commercial settlement is currently being discussed with expected completion during the fourth quarter or early 2023.

 

Product Warranties -- The Company provides a standard warranty for its systems, generally for a period of one to three years after customer acceptance. The Company estimates the costs that may be incurred under its standard warranty programs and records a liability for such costs at the time product revenue is recognized.

 

In addition, the Company sells an extended warranty for certain systems, which generally provides a warranty for up to four years from the date of commissioning. The specific terms and conditions of the warranties vary depending upon the product sold and the country in which the installation occurred. Revenue received for the sale of extended warranty contracts is deferred and recognized in the same manner as the costs incurred to perform under the warranty contracts.

 

The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Factors that affect the warranty liability include the number of units sold, historical and anticipated rates of warranty claims and the cost per claim.

 

Changes in the Company's warranty obligations included in accrued expenses on the balance sheet, as of September 30, 2022 and December 31, 2021, were as follows:

 

  

September 30,

2022

  

December 31,

2021

 

Balance at January 1

 $962,313  $1,056,613 

Warranty costs charged to cost of goods sold

  52,990   177,302 

Utilization charges against reserve

  (77,720

)

  (191,068

)

Release of accrual related to expired warranties

  -   - 

Foreign currency effect

  (132,653

)

  (80,534

)

Balance at the end of the period

 $804,930  $962,313