CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES

The Company has concentrated credit risk for cash by maintaining deposits in one bank. These balances are insured by the Federal Deposit Insurance Corporation up to $250,000. From time to time during the years ended December 31, 2019 and 2018, the Company’s cash balances exceeded the federally insured limits. No losses have been incurred relating to this concentration.

For the years ended December 31, 2019 and 2018, the Company’s revenues and receivables were comprised of the following customer concentrations:



	2019		2018
	% of Revenues	% of Receivables	% of Revenues	% of Receivables
Customer 1	40%	36%	34%	21%
Customer 2	8%	14%	—%	—%
Customer 3	9%	—%	11%	—%
Customer 4	3%	7%	4%	13%

At December 31, 2019 and 2018, and for the years then ended, the Company's segment revenues were comprised of the following customer concentrations:



	% of Revenue by Segment 2019						% of Revenue by Segment 2018
	Black Oil		Refining		Recovery		Black Oil		Refining		Recovery
Customer 1	47	%	—	%	—	%	43	%	—	%	—	%
Customer 2	10	%	—	%	—	%	—	%	—	%	—	%
Customer 3	10	%	—	%	—	%	14	%	—	%	—	%
Customer 4	4	%	—	%	—	%	5	%	—	%	—	%

The Company had no vendors that represented 10% or more of total purchases or payables for the years ended December 31, 2019 and 2018.

The Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices for petroleum-based products. Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future. A substantial or extended decline in such prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and access to capital and on the quantities of petroleum-based products that the Company can economically produce.

Business commitment:

On June 5, 2016, Vertex Energy and Penthol C.V. (“Penthol”) of the Netherlands aka Penthol LLC (a Penthol subsidiary in the United States) reached an agreement for Vertex Energy to act as Penthol’s exclusive agent to provide marketing, sales, and logistical duties of Group III base oil from the United Arab Emirates to the United States. The start-up date was July 25, 2016, with a 5 year term through 2021 and the product will ship via truck, rail and barge.

Litigation:

The Company, in its normal course of business, is involved in various other claims and legal action. In the opinion of management, the outcome of these claims and actions will not have a material adverse impact upon the financial position of the Company. We are currently party to or have recently resolved, the following material litigation proceedings:

Vertex Refining LA, LLC ("Vertex Refining LA"), the wholly-owned subsidiary of Vertex Operating was named as a defendant, along with numerous other parties, in five lawsuits filed on or about February 12, 2016, in the Second Parish Court for the Parish of Jefferson, State of Louisiana, Case No. 121749, by Russell Doucet et. al., Case No. 121750, by Kendra Cannon et. al., Case No. 121751, by Lashawn Jones et. al., Case No. 121752, by Joan Strauss et. al. and Case No. 121753, by Donna Allen et. al. The suits relate to alleged noxious and harmful emissions from our facility located in Marrero, Louisiana. The suits seek damages for physical and emotional injuries, pain and suffering, medical expenses and deprivation of the use and enjoyment of plaintiffs’ homes. We intend to vigorously defend ourselves and oppose the relief sought in the complaints, provided that at this stage of the litigation, the Company has no basis for determining whether there is any likelihood of material loss associated with the claims and/or the potential and/or the outcome of the litigation.

Related Parties

The Company has a Related Party Transaction committee including at least two independent directors who review and pre-approve all related party transactions.

From time to time, the Company consults with a related party law firm. During the years ended December 31, 2019 and 2018, we paid $100,683 and $40,707, respectively, to such law firm for services rendered.