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Note 10 - Agreements, Commitments and Contingencies
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

NOTE 10 - AGREEMENTS, COMMITMENTS AND CONTINGENCIES

 

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.

 

In 2022 The Company was in dialogue with a former client regarding marine waste-water treatment systems delivered in 2019, related to a potential warranty claim due to corrosion on certain parts and components, with a total estimated remediation cost of $1.5 million. The Company disputed the claim in full, resulting in a settlement agreement signed in the fourth quarter with expected remediation work in 2023. The cost of any remediation work is expected to be covered in the warranty accrual amount.

 

Product Warranties - The Company provides a standard warranty on 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 Company does business. 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 current and long-term warranty obligations included in accrued expenses on the balance sheet for the fiscal years ended December 31, 2022 and 2021 were as follows:

 

  

2022

  

2021

 

Balance at January 1,

 $962,313  $1,056,613 

Warranty costs charged to cost of goods sold

  86,256   177,302 

Utilization charges against reserve

  (93,653

)

  (191,068

)

Foreign currency effect

  (56,844

)

  (80,534

)

Balance at December 31,

 $898,072  $962,313