Warranty Reserve

12 Months Ended

Dec. 31, 2013

Warranty Reserve:

Warranty Reserve

16.   Warranty Reserve

Our GenDrive products are generally sold with a one to two-year product warranty that commences on the product installation date. The Company currently estimates the costs of satisfying warranty claims based on an analysis of past experience and provide for future claims in the period the revenue is recognized.  Factors that affect the warranty liability include the number of installed units, estimated material costs, estimated travel, and labor costs. During the year ended December 31, 2012, the Company adjusted the reserve for additional warranty claims arising from GenDrive component quality issues that were identified during the year. These were isolated quality issues that were identified in GenDrive units that are currently being used at customer sites.  These units are in the process of being retro-fitted with replacement components that will improve the reliability of the GenDrive products for customers.

The following table summarizes product warranty activity recorded during the year ended December 31, 2013 and 2012:

	December 31, 2013		December 31, 2012
Beginning balance - January 1	$	2,671,409	$	1,210,909
Additions for current year deliveries	970,775		996,439
Reductions for payments made	(2,034,053)		(2,809,263)
Reserve Adjustment	-		3,273,324
Ending balance - December 31	$	1,608,131	$	2,671,409