NOTE D — INVENTORIES

Inventories consist of prime coil, non-standard coil and tubular materials. Prime coil inventory consists primarily of raw materials, non-standard coil inventory consists primarily of raw materials and tubular inventory consists of both raw materials and finished goods. Effective

April 1, 2018,

the Company changed the inventory valuation method of its prime coil inventory from the LIFO method to the average cost method. Prime coil inventory value for both periods presented in the table below are based on average cost valuation. Cost for non-standard coil inventory is determined using the specific identification method. Cost for tubular inventory is determined using the average cost method. All inventories are valued at the lower of cost or net realizable value.

A summary of inventory values by product group follows:

	September 30, 2018		March 31, 2018 As Adjusted
Prime Coil Inventory	$	22,435,760	$	14,185,858
Non-Standard Coil Inventory		3,882,182		2,971,324
Tubular Raw Material		13,018,944		6,734,076
Tubular Finished Goods		15,310,294		21,438,176
	$	54,647,180	$	45,329,434

Tubular raw material inventory consists of hot-rolled steel coils that the Company will manufacture into pipe. Tubular finished goods inventory consists of pipe the Company has manufactured and new mill reject pipe that the Company purchases from U.S. Steel Tubular Products, Inc. At

September 30, 2018,

the Company carried quantities of mill reject pipe on hand that exceeded the sales volume for fiscal year ended

March 31, 2018.

Based on improved market conditions and overall economic conditions as well as recent sales trends, the Company reasonably expects the sales volume for the future

twelve

month period to approximate or at least be a substantial portion of the

September 30, 2018

quantity on hand, hence current classification of this inventory on the Company’s balance sheet. The Company’s projections are subject to significant estimates which

may

be different from actual results.