I understand the warranty, but what AP (and really any business) needs to decide is how much is your reputation worth?
As a new company selling their 1st product, I would do just about anything to avoid negative press.
Heck, my company is 15+ years old and we still do anything in our power to make a customer happy regardless of the cost to us.
Because the reality is - negative press like this will cost you a lot more in the long run.