9. Contingencies Retail License The Company sells water through its retail operations under a license issued in July 1990 by the Cayman Islands government that grants Cayman Water the exclusive right to provide potable water to customers within its licensed service area. As discussed below, this license was set to expire in July 2010 but has since been extended while negotiations for a new license take place. Pursuant to the license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman, the Seven Mile Beach and West Bay areas. For the three months ended June 30, 2016 and 2015, the Company generated approximately 41 %, and 42 %, respectively, of its consolidated revenues and 56 % and 60 %, respectively, of its consolidated gross profit from the retail water operations conducted pursuant to Cayman Waters exclusive license. For the six months ended June 30, 2016 and 2015, the Company generated approximately 42 % and 42 %, respectively, of its consolidated revenues and 56 % and 58 %, respectively, of its consolidated gross profit from the retail water operations conducted pursuant to Cayman Waters exclusive license. Under the license, Cayman Water pays a royalty to the government of 7.5 % of its gross retail water sales revenues (excluding energy cost adjustments). The selling prices of water sold to its customers are determined by the license and vary depending upon the type and location of the customer and the monthly volume of water purchased. The license provides for an automatic adjustment for inflation or deflation on an annual basis, subject to temporary limited exceptions, and an automatic adjustment for the cost of electricity on a monthly basis. The Water Authority Cayman (the WAC), on behalf of the government, reviews and confirms the calculations of the price adjustments for inflation and electricity costs. If Cayman Water wants to adjust its prices for any reaso