Nevada Chemicals (NCEM)

At June 30, 2008, the liabilities of the Company consisted of current liabilities of $1,025,000 and deferred income taxes of $1,025,000.  Current liabilities consisted of trade accounts payable of $23,000, dividends payable of $700,000 and accrued expenses (comprised primarily of accrued income taxes) of $302,000.  These current liabilities compare favorably to total current assets of $19,500,000 at June 30, 2008.  Current assets were comprised primarily of cash and cash equivalents of $19,328,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, certificate of deposits or U.S. Treasuries with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash provided in operating activities for the six months ended June 30, 2008 was $2,295,000 compared to net cash provided in operating activities of $1,684,000 for the six months ended June 30, 2007.  This increase in net cash provided in operations is due primarily to the increase in the equity in earnings of Cyanco, and a decrease in accounts payable and accrued expenses as a result of eliminating the U.S. and Canadian tax liability accruals

Net cash used by investing activities was $0 for the six months ended June 30, 2008 and $93,000 for the six months ended June 30, 2007.  The Company had no investing activities during the period ending June 30, 2008.

Net cash used in financing activities was $1,084,000 for the six months ended June 30, 2008, consisting of the payment of dividends of $1,258,000, offset by the receipt of $174,000 due to the exercise of stock options.  Net cash used in financing activities was $1,187,000 for the six months ended June 30, 2007, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

The Company’s operations have not been, and are not expected to be, materially affected by inflation.

At March 31, 2008, the liabilities of the Company consisted of current liabilities of $1,597,000 and deferred income taxes of $823,000.  Current liabilities consisted of trade accounts payable of $53,000, dividends payable of $629,000 and accrued expenses (comprised primarily of accrued income taxes) of $915,000.  These current liabilities compare favorably to total current assets of $18,676,000 at March 31, 2008.  Current assets were comprised primarily of cash and cash equivalents of $18,521,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash provided in operating activities for the three months ended March 31, 2008 was $33,000 compared to $4,000 for the three months ended March 31, 2007.  This increase in net cash provided in operations is due primarily to the increase in net income and the decrease in deferred income taxes.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities was $1,000,000 for the three months ended March 31, 2008, and 2007, respectively, consisting of distributions from Cyanco.

Net cash used in financing activities was $629,000 and $559,000 for the three months ended March 31, 2008, and 2007, respectively, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.  The Company’s operations have not been, and are not expected to be, materially affected by inflation.

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Liquidity and Capital Resources

        At December 31, 2007, the liabilities of the Company consisted of current liabilities of $1,324,000 and deferred income taxes of $794,000. Current liabilities consisted of trade accounts payable of $30,000, dividends payable of $629,000 and accrued expenses (comprised primarily of accrued income taxes and related interest expense) of $665,000. These current liabilities compare favorably to total current assets of $18,439,000 at December 31, 2007. Current assets were comprised primarily of cash and cash equivalents of $18,117,000.

        The Company's current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less. The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company's business, further investment in Cyanco, the payment of dividends to shareholders. The Board of Directors is also looking at strategic opportunities to leverage our patents and technology related to the manufacturing of sodium cyanide in other strategic potential on-site manufacturing facilities.

        Net cash used in operating activities for the year ended December 31, 2007 was $1,274,000 compared to net cash used in operating activities of $4,862,000 for the year ended December 31, 2006. This decrease in net cash used in operations is due primarily to the increase in net income, and decreased equity in earnings of Cyanco, over the prior year. The increase in net income is primarily a result of the settlement of Winnemucca Chemicals litigation with Evonik (formerly Degussa) Corporation, and the reduction in tax accruals in 2007 as compared to 2006, in which the Company made a payment of $2,300,000 in connection with the audits of the U.S. prior year tax returns. Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

        Net cash provided by investing activities was $5,890,000 for the year ended December 31, 2007, consisting of distributions from Cyanco. Net cash provided by investing activities was $6,000,000 for the year ended December 31, 2006, consisting primarily of distributions from Cyanco. The distributions from Cyanco in the current and prior year are equivalent, with the current year's balance reduced by the purchase of equipment and a life insurance policy.

        Net cash used in financing activities was $2,374,000 for the year ended December 31, 2007, consisting of the payment of dividends of $2,374,000. Net cash used in financing activities was $2,047,000 for the year ended December 31, 2006, consisting of the payment of dividends of $2,083,000, reduced by proceeds from the exercise of stock options of $36,000.

        The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

        The Company's operations have not been, and are not expected to be, materially affected by inflation.

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Liquidity and Capital Resources

        At December 31, 2007, the liabilities of the Company consisted of current liabilities of $1,324,000 and deferred income taxes of $794,000. Current
liabilities consisted of trade accounts payable of $30,000, dividends payable of $629,000 and accrued expenses (comprised primarily of accrued income taxes and related interest expense) of $665,000.
These current liabilities compare favorably to total current assets of $18,439,000 at December 31, 2007. Current assets were comprised primarily of cash and cash equivalents of $18,117,000.

        The
Company's current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of
90 days or less. The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results
without exposing the Company to high levels of market risk, diversification of the Company's business, further investment in Cyanco, the payment of dividends to shareholders. The Board of Directors is
also looking at strategic opportunities to leverage our patents and technology related to the manufacturing of sodium cyanide in other strategic potential on-site manufacturing facilities.

        Net
cash used in operating activities for the year ended December 31, 2007 was $1,274,000 compared to net cash used in operating activities of $4,862,000 for the year ended
December 31, 2006. This decrease in net cash used in operations is due primarily to the increase in net income, and decreased equity in
earnings of Cyanco, over the prior year. The increase in net income is primarily a result of the settlement of Winnemucca Chemicals litigation with Evonik (formerly Degussa) Corporation, and the
reduction in tax accruals in 2007 as compared to 2006, in which the Company made a payment of $2,300,000 in connection with the audits of the U.S. prior year tax returns. Because the Company accounts
for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of
cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

        Net
cash provided by investing activities was $5,890,000 for the year ended December 31, 2007, consisting of distributions from Cyanco. Net cash provided by investing activities
was $6,000,000 for the year ended December 31, 2006, consisting primarily of distributions from Cyanco. The distributions from Cyanco in the current and prior year are equivalent, with the
current year's balance reduced by the purchase of equipment and a life insurance policy.

        Net
cash used in financing activities was $2,374,000 for the year ended December 31, 2007, consisting of the payment of dividends of $2,374,000. Net cash used in financing
activities was $2,047,000 for the year ended December 31, 2006, consisting of the payment of dividends of $2,083,000, reduced by proceeds from the exercise of stock options of $36,000.

        The
Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

        The
Company's operations have not been, and are not expected to be, materially affected by inflation.

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At September 30, 2007, the liabilities of the Company consisted of current liabilities of $2,365,000 and deferred income taxes of $515,000.  Current liabilities consisted of trade accounts payable of $19,000, dividends payable of $628,000 and accrued expenses (comprised primarily of accrued income taxes and related interest expense) of $1,718,000.  These current liabilities compare favorably to total current assets of $18,796,000 at September 30, 2007.  Current assets were comprised primarily of cash and cash equivalents of $18,682,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating

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At June 30, 2007, the liabilities of the Company consisted of current liabilities of $1,944,000 and deferred income taxes of $719,000.  Current liabilities consisted of trade accounts payable of $20,000, dividends payable of $628,000 and accrued expenses (comprised primarily of accrued income taxes) of $1,296,000.  These current liabilities compare favorably to total current assets of $16,420,000 at June 30, 2007.  Current assets were comprised primarily of cash and cash equivalents of $16,279,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash used in operating activities for the six months ended June 30, 2007 was $316,000 compared to net cash used in operating activities of $1,545,000 for the six months ended June 30, 2006.  This decrease in net cash used in operations is due primarily to the decrease the equity in earnings of Cyanco, and decreased general and administrative expenses.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities was $1,907,000 for the six months ended June 30, 2007 and $3,000,000 for the six months ended June 30, 2006.  The decrease in Cyanco distributions in the current year is due to the decreased earnings of Cyanco as discussed above.

Net cash used in financing activities was $1,187,000 for the six months ended June 30, 2007, consisting of the payment of dividends of $1,187,000.  Net cash used in financing activities was $930,000 for the six months ended June 30, 2006, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

The Company’s operations have not been, and are not expected to be, materially affected by inflation.

At March 31, 2007, the liabilities of the Company consisted of current liabilities of $1,619,000 and deferred income taxes of $865,000.  Current liabilities consisted of trade accounts payable of $41,000, dividends payable of $559,000 and accrued expenses (comprised primarily of accrued income taxes) of $1,019,000.  These current liabilities compare favorably to total current assets of $16,437,000 at March 31, 2007.  Current assets were comprised primarily of cash and cash equivalents of $16,320,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash provided in operating activities for the three months ended March 31, 2007 was $4,000 compared to net cash used by operating activities of $(73,000) for the three months ended March 31, 2006.  This increase in net cash provided in operations is due primarily to the decrease in accounts payable and accrued expenses.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities was $1,000,000 for the three months ended March 31, 2007, and 2006, consisting of distributions from Cyanco.

Net cash used in financing activities was $559,000 and $483,000 for the three months ended March 31, 2007, and 2006, respectively, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

The Company’s operations have not been, and are not expected to be, materially affected by inflation.

Liquidity and Capital Resources

At December 31, 2006, the liabilities of the Company consisted of current liabilities of $1,572,000 and deferred income taxes of $980,000.  Current liabilities consisted of trade accounts payable of $69,000, dividends payable of $559,000 and accrued expenses (comprised primarily of accrued income taxes and related interest expense) of $944,000.  These current liabilities compare favorably to total current assets of $16,215,000 at December 31, 2006.  Current assets were comprised primarily of cash and cash equivalents of $15,875,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash used in operating activities for the year ended December 31, 2006 was $4,862,000 compared to net cash used in operating activities of $1,585,000 for the year ended December 31, 2005.  This increase in net cash used in operations is due primarily to the increased equity in earnings of Cyanco, as discussed below, increased general and administrative expenses other than stock-based compensation, as discussed above, and to payments of income taxes, including $2,300,000 paid in the fourth quarter of 2006 in connection with the audits of the Company’s income tax returns.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities was $6,000,000 for the year ended December 31, 2006, consisting of distributions from Cyanco.  Net cash provided by investing activities was $4,186,000 for the year ended December 31, 2005, consisting of distributions from Cyanco of $4,000,000 and the payment of the final notes receivable balance of $186,000 from the sale of the Company’s explosives business in 2001.  The increase in Cyanco distributions in the current year is due to the increased earnings of Cyanco as discussed above.

Net cash used in financing activities was $2,047,000 for the year ended December 31, 2006, consisting of the payment of dividends of $2,083,000, offset by proceeds from the exercise of stock options of $36,000.  Net cash used in financing activities was $1,789,000 for the year ended December 31, 2005, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

The Company’s operations have not been, and are not expected to be, materially affected by inflation.

At September 30, 2006, the liabilities of the Company consisted of current liabilities of $4,191,000 and deferred income taxes of $790,000.  Current liabilities consisted of trade accounts payable of $12,000, dividends payable of $559,000 and accrued expenses (comprised primarily of accrued income taxes and related interest expense) of $3,620,000.  These current liabilities compare favorably to total current assets of $18,323,000 at September 30, 2006.  Current assets were comprised primarily of cash and cash equivalents of $18,232,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash used in operating activities for the nine months ended September 30, 2006 was $2,064,000 compared to net

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cash used in operating activities of $804,000 for the nine months ended September 30, 2005.  This increase in net cash used in operations is due primarily to the increased equity in earnings of Cyanco, as discussed below, increased general and administrative expenses other than stock-based compensation, as discussed above, and to payments of estimated income taxes during the first nine months of 2006.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities was $5,000,000 for the nine months ended September 30, 2006, consisting of distributions from Cyanco.  Net cash provided by investing activities was $3,186,000 for the nine months ended September 30, 2005, consisting of distributions from Cyanco of $3,000,000 and the payment of the final notes receivable balance of $186,000 from the sale of the Company’s explosives business in 2001.  The increase in Cyanco distributions in the current year is due to the increased earnings of Cyanco as discussed above.

Net cash used in financing activities was $1,488,000 for the nine months ended September 30, 2006, consisting of the payment of dividends of $1,524,000 offset by proceeds from the exercise of stock options of $36,000.  Net cash used in financing activities was $1,305,000 for the nine months ended September 30, 2005, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

The Company’s operations have not been, and are not expected to be, materially affected by inflation.

At June 30, 2006, the liabilities of the Company consisted of current liabilities of $4,273,000 and deferred income taxes of $477,000.  Current liabilities consisted of trade accounts payable of $19,000, dividends payable of $559,000 and accrued expenses (comprised primarily of accrued income taxes) of $3,695,000.  These current liabilities compare favorably to total current assets of $17,451,000 at June 30, 2006.  Current assets were comprised primarily of cash and cash equivalents of $17,309,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash used in operating activities for the six months ended June 30, 2006 was $1,545,000 compared to net cash used in operating activities of $193,000 for the six months ended June 30, 2005.  This increase in net cash used in operations is due primarily to the increased general and administrative expenses other than stock-based compensation, as discussed above and to payments of estimated income taxes during the first six months of 2006.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities was $3,000,000 for the six months ended June 30, 2006 and $2,000,000 for the six months ended June 30, 2005, consisting of distributions from Cyanco.  The increase in Cyanco distributions in the current year is due to the increased earnings of Cyanco as discussed above.

Net cash used in financing activities was $930,000 for the six months ended June 30, 2006, consisting of the payment of dividends of $966,000 offset by proceeds from the exercise of stock options of $36,000.  Net cash used in financing activities was $1,305,000 for the six months ended June 30, 2005, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

The Company’s operations have not been, and are not expected to be, materially effected by inflation.

At March 31, 2006, the liabilities of the Company consisted of current liabilities of $4,234,000 and deferred income taxes of $826,000.  Current liabilities consisted of trade accounts payable of $64,000, dividends payable of $483,000 and accrued expenses (comprised primarily of accrued income taxes) of $3,687,000.  These current liabilities compare favorably to total current assets of $17,385,000 at March 31, 2006.  Current assets were comprised primarily of cash and cash equivalents of $17,228,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash used in operating activities for the three months ended March 31, 2006 was $(73,000) compared to net cash provided by operating activities of $53,000 for the three months ended March 31, 2005.  This increase in net cash used in operations is due primarily to the increase general and administrative expenses, as discussed above.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities was $1,000,000 for the three months ended March 31, 2006 and the three months ended March 31, 2005, consisting of distributions from Cyanco.

Net cash used in financing activities was $(483,000) and $(408,000) for the three months ended March 31, 2006 and the three months ended March 31, 2005, respectively, consisting of the payment of dividends.

The Company considers its cash resources sufficient to meet the operating needs of its current level of business for the next twelve months.

The Company’s operations have not been, and are not expected to be, materially effected by inflation.

Liquidity and Capital Resources

At December 31, 2005, the liabilities of the Company consisted of current liabilities and deferred income taxes.  Current liabilities at December 31, 2005 were comprised of accounts payable and accrued expenses totaling $3,559,000 and deferred income taxes payable of $1,068,000.  Current liabilities at December 31, 2005 consisted of trade accounts payable of $109,000, dividends payable of $483,000 and accrued expenses (comprised primarily of accrued income taxes) of $2,967,000.  These current liabilities compare favorably to total current assets of $16,926,000 at December 31, 2005.  Current assets were comprised primarily of cash and cash equivalents of $16,784,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The board of directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash used in operating activities for 2005 was $(1,585,000) compared to net cash provided by operating activities of $211,000 for 2004.  This increase in net cash used in operations is due primarily to income tax payments of $1,881,000 in 2005 compared to income tax payments of $153,000 in 2004.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the consolidated statements of cash flows, with cash distributions from Cyanco included in cash flows from investing activities.

Net cash provided by investing activities for 2005 was $4,186,000 compared to net cash provided by investing activities of $10,837,000 for 2004.  Of the decrease, $5,616,000 is attributable to the change in classification in 2004 of the Company’s investments to cash and cash equivalents from short-term investments because of the overall reduction in the maturities of the short-term investments to 90 days or less.  In 2005, the Company received $4,000,000 in distributions from Cyanco and net collections of notes receivable of $186,000.  In 2004, the Company received $5,000,000 in distributions from

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Liquidity and Capital Resources

At December 31, 2004, the liabilities of the Company consisted of current liabilities and deferred income taxes.  Current liabilities at December 31, 2004 were comprised of accounts payable and accrued

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At September 30, 2005, the liabilities of the Company consisted of current liabilities of $4,135,000 and deferred income taxes of $1,106,000.  Current liabilities consisted of trade accounts payable and accrued operating expenses of $16,000 and other accrued expenses of $4,119,000, comprised of dividends payable of $483,000 and of accrued foreign and United States income taxes of $3,636,000.  These current liabilities compare favorably to total current assets of $17,154,000 at September 30, 2005.  Current assets were comprised primarily of cash and cash equivalents of $17,049,000.

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At March 31, 2005, the liabilities of the Company consisted of current liabilities of $4,395,000 and deferred income taxes of $1,337,000.  Current liabilities consisted of trade accounts payable of $18,000, dividends payable of $414,000 and accrued expenses (comprised primarily of accrued income taxes) of $3,963,000.  These current liabilities compare favorably to total current assets of $16,934,000 at March 31, 2005.  Current assets were comprised primarily of cash and cash equivalents of $16,617,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash provided by operating activities for the three months ended March 31, 2005 was $53,000 compared to net cash used in operating activities of $(24,000) for the three months ended March 31, 2004.  This increase in net cash provided by operations is due primarily to the increase in net income in the first quarter of 2005 compared to the same period last year.  Because the Company accounts for its investment in Cyanco using the equity method, equity in earnings of Cyanco, a non-cash item, is eliminated from operating activities in the condensed consolidated

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At June 30, 2005, the liabilities of the Company consisted of current liabilities of $4,031,000 and deferred income taxes of $1,222,000.  Current liabilities consisted of trade accounts payable of $28,000 and accrued expenses (comprised primarily of accrued foreign income taxes) of $4,003,000.  These current liabilities compare favorably to total current assets of $16,801,000 at June 30, 2005.  Current assets were comprised primarily of cash and cash equivalents of $16,474,000.

The Company’s current strategy is to invest cash in excess of short-term operating needs in highly liquid, variable interest rate investments with maturities of 90 days or less.  The Board of Directors of the Company is currently evaluating alternative uses for the cash of the Company, including optimizing short-term investment results without exposing the Company to high levels of market risk, diversification of the Company’s business, further investment in Cyanco, the payment of dividends to shareholders and other strategies.

Net cash used in operating activities for the six months ended June 30, 2005 was $(193,000) compared to net cash used in operating activities of $(197,000) for the six months

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