2.Liquidity Risk

Our operations are based on a small number of large sales.  As a result, our cash flow and therefore our current assets and working capital may vary widely during the year based on the timing of those sales.  Virtually all of our sales are under contracts which specify delivery dates, delivery quantities, sales prices and payment dates.  The only exceptions are spot sales which we are currently only making when advantageous. As a result, we are able to perform cash management functions over the course of an entire year and are less reliant on current commodity prices and market conditions. We monitor our cash projections on a weekly basis and have used various techniques to manage our cash flows including the assignment of deliveries, as we did in 2016, negotiating changes in delivery dates, purchasing inventory at favorable prices and raising capital.

In addition, most of our current assets except for prepaid expenses are immediately realizable, if necessary, while our currently liabilities include a substantial portion that is not due for a minimum of three months to over a year which, given the existence of our contracts and set prices, allow us to plan for those payments well in advance and address shortfalls, if any, well in advance.

While our current position as of December 31, 2016 reflects negative working capital, our projected sales for the first quarter of 2017 are sufficient to cover any perceived shortfall as well as any required debt service payments.

It is possible that additional funding might be sought.  Although the Company has been successful in raising debt and equity financing in the past, there can be no guarantee that such funding will be available in the future.