[X]
|
ANNUAL REPORT PURSUANT TO S
|
|
ECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Colorado
|
13-4228144
|
|
State or other jurisdiction of incorporation or organization
|
I.R.S. Employer Identification No.
|
|
2000 South Colorado Boulevard, Tower 1, Suite 3100, Denver, CO 80222
|
||
(Address of principal executive offices) (Zip Code)
|
||
Registrant’s telephone number, including area code:
(303) 222-1000
|
||
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class registered
|
Name of each exchange on which registered
|
|
Not Applicable
|
Not Applicable
|
|
Securities registered pursuant to Section 12(g) of the Act:
|
||
Common Stock
(Title of class)
|
Large accelerated filer
|
[___]
|
Accelerated filer
|
[___]
|
|
Non-accelerated filer
(Do not check if a smaller reporting company)
|
[___]
|
Smaller reporting company
|
[X]
|
PART I
|
|||
Page
|
|||
Business
|
2
|
||
Risk Factors
|
21
|
||
Unresolved Staff Comments
|
31
|
||
Properties
|
31
|
||
Legal Proceedings
|
36
|
||
Mine Safety Disclosures
|
36
|
||
PART II
|
|||
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
37
|
||
Selected Financial Data
|
40
|
||
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
40
|
||
Quantitative and Qualitative Disclosures About Market Risk
|
52
|
||
Financial Statements and Supplementary Data
|
52
|
||
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
52
|
||
Controls and Procedures
|
52
|
||
Other Information
|
55
|
||
PART III
|
|||
Directors, Executive Officers, and Corporate Governance
|
56
|
||
Executive Compensation
|
60
|
||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
66
|
||
Certain Relationships and Related Transactions, and Director Independence
|
67
|
||
Principal Accounting Fees and Services
|
68
|
||
PART IV
|
|||
Exhibits Listing
|
69
|
||
Auditor Opinion
|
71
|
||
Financials
|
72
|
||
70
|
|
Bibliography
|
|
Colorado Foundation for Water Education. (2009).
Citizens Guide to Colorado Water Law.
Denver: Colorado Foundation for Water Education.
|
|
Colorado Springs Utilties . (2009).
Southern Delivery System
. Retrieved Feburary 17, 2012, from http://www.sdswater.org/overview.asp
|
|
Colorado Water Conservation Board. (2011).
Colorado's Water Supply Future.
Denver: Colorado Water Conservation Board.
|
|
Driscoll, G. M. (2011, January 7). Front Range Water Planning Supply Update: Increased Storage, Increased Demands, Incerased Transmountain Diversions. Carbondale: Elk Mountain Consulting. Retrieved February 17, 2012, from http://www.rwapa.org/reports/Front_Range_Water_Supply_Planning_Update_(Final)11011.pdf
|
|
Finley, B. (2012, Feburary 17). The Denver Post.
EPA wants further review of water diversion project to protect the Colorado River
, p. 3.
|
|
Grantham, J. (2011). Time to Wake Up: Days of Abundant Resources and Falling Prices are Over.
GMO, LLC, GMO.com
, 18.
|
|
U.S. Department of the Interior Bureau of Reclamation . (2005, October ). SDS EIS Newsletter.
Southern Delivery System Project
, p. 5.
|
Structure
|
Elevation
|
Priority No.
|
Appropriation Date
|
Consumptive Use
|
Decreed Amount
|
Butte Valley Ditch
|
5,909 ft
|
1
|
5/15/1862
|
360 A.F.
|
1.2 cfs
|
Butte Valley Ditch
|
9
|
5/15/1865
|
1.8 cfs
|
||
Butte Valley Ditch
|
86
|
5/15/1886
|
3.0 cfs
|
||
Butte Valley Ditch
|
111
|
5/15/1886
|
3.0 cfs
|
||
Robert Rice Ditch
|
5,725 ft
|
19
|
3/01/1867
|
131 A.F.
|
3.0 cfs
|
Huerfano Valley Ditch
|
4,894 ft
|
120
|
2/2/1888
|
2,891 A.F.
|
42.0 cfs
|
Huerfano Valley Ditch
|
342
|
5/1/1905
|
18.0 cfs
|
||
Bessemer Irrigation Company
|
4,600 ft
|
2
4
-
16.5
18
-
27
28
33.5
34.5
36
40
41
42.5
55
|
4/1/1861
12/1/1861
5/31/1864
6/1/1866
1/8/1867
5/31/1867
11/1/1870
12/1/1870
9/18/1873
1/1/1876
1/1/1878
5/5/1881
6/20/1881
3/1/1882
5/1/1887
|
62,029 A.F.*
|
2 cfs
20 cfs
3.74 cfs
3 cfs
2.5 cfs
5.13 cfs
1.47 cfs
3.40 cfs
2 cfs
3 cfs
.41 cfs
14 cfs
2 cfs
8 cfs
322 cfs
|
Structure
|
Elevation
|
Priority No.
|
Appropriation Date
|
Average Annual Yield
|
Decreed Amount (A.F.)
|
Operable Storage (A.F.)
|
Huerfano Valley Reservoir
|
4,702 ft
|
6
|
2/2/1888
|
1,424 A.F.
|
2,017
|
1,000
|
Cucharas Valley Reservoir
|
5,570 ft
|
66
|
3/14/1906
|
3,055 A.F.
|
31,956.
|
10,000
|
Cucharas Valley Reservoir*
|
5,705 ft
|
66c
|
3/14/1906
|
34,404
|
||
Bradford Reservoir
|
5,850 ft
|
64.5
|
12/15/1905
|
-
|
6,000
|
-
|
Orlando Reservoir # 2
|
5,911 ft
|
349
|
12/14/1905
|
1,800 A.F.
|
3,110
|
2,400
|
·
|
purchase and redevelop available farmland by deep-plowing the fields, laser-leveling the planting areas (to optimize plant absorption and minimize runoff), installing irrigation facilities, and applying fertilizers,
|
·
|
purchase a suite of water rights (including both diversion rights and storage rights),
|
·
|
refurbish the historic ditch systems and reservoirs to restore and upgrade their efficiency,
|
·
|
re-establish a sustainable and profitable farming enterprise which could achieve the scale required by modern farming methods and which could put the revived water supply to consistent beneficial use,
|
·
|
develop a customer base to consistently buy the farms’ output at prices sufficient to generate profits, and
|
·
|
build a reliable, integrated water supply system capable of flexibly serving both agricultural and urban needs.
|
|
Notes:
|
|
(1) TR Bessemer operated the Dionisio Farm (DFP) for the 2012 growing season. In 2013, these amounts will be reported under DFP. In 2012, the yield per acre was as follows: corn: 203 bushels; cabbage 53,500 pounds; squash 21,000 pounds, and pumpkins 50 bins.
|
|
(2) Butte Valley planted sorghum to maintain the soil and provide some revenue based on the limited water available.
|
|
(3) There was no planting in F-1 due to the severe drought.
|
|
(4) Represents general direct cost that was not assigned to a particular farm
|
·
|
Reimbursement to the Company of $630,000 for the Dionisio first closing in June, 2012, net of bank financing;
|
·
|
Second stage of the Dionisio purchase transaction in November, 2012 of $900,000 which is net of seller carry back;
|
·
|
Purchase of a neighboring farm (36 acres) for $56,000 plus debt assumption and new debt,
|
·
|
Loan to the Company of $1,000,000; and
|
·
|
The remainder of $2,035,000 as working capital and reserves.
|
·
|
conditions in the global economy;
|
·
|
the variability of our operating results between periods and the resulting difficulty in forecasting future results;
|
·
|
the need for increased spending on capital expenditures to improve our infrastructure and pursue growth opportunities;
|
·
|
our ability to compete successfully within our industry;
|
·
|
our substantial farm based operations,
|
·
|
the fact that we have not entered into any water supply contracts with any municipal customers to date;
|
·
|
the volatile nature of farm commodities prices;
|
·
|
our substantial level of indebtedness and the effective restrictions on our operations set forth in documents that govern such indebtedness; and
|
·
|
our ability to build our water-based resources to the point where we may market water made available through rotational fallowing.
|
·
|
Rainfall, runoff, flood control and availability of reservoir storage;
|
·
|
Availability of water in the Arkansas River watersheds;
|
·
|
The amount of useable water stored in reservoirs and groundwater basins;
|
·
|
The amount of water used by our customers and others;
|
·
|
Water quality; and
|
·
|
Legal limitations on production, diversion, storage, conveyance and use.
|
·
|
adversely affect our supply mix, for instance, causing increased reliance upon more expensive water sources; or
|
·
|
adversely affect our operating costs, for instance, by increasing the cost to purchase or lease required water.
|
Location
|
Legal Description
|
Acreage
|
Pueblo County, CO
|
Lots 2-4 Sec 4-22-62 less Lot 4 by WD#1519965 to Hall formerly #22-000-00-135
|
85.3
|
Pueblo County, CO
|
33-21-62 SE4 Less POR sold in WD#123993 to Cook Formerly 12-000-00-042
|
120
|
Pueblo County, CO
|
E2 35-22-63 320A
|
320
|
Pueblo County, CO
|
N2 SE4 26-22-63 Contg 80A formerly 23-000-00-139
|
80
|
Pueblo County, CO
|
N2 S2 SE4 26-22-63 (40A) formerly 23-000-00-193
|
40
|
Pueblo County, CO
|
36-22-63 All por of sec 36 desc as: comm fr NW cor of sec, N 88 deg 27 min 59 sec E alg N ln of sec A dist of 23304.98 ft, th S 03 deg 53 min 33 sec E a dist of 5270.92 ft to a sandstone marking th S4 of sec 36 th S 89 deg 24 min 00 sec W alg S ln of sec A dist of 2647.27 ft to SW cor of sec th N 00 deg 09 min 46 sec W alg the W ln of sec A dist of 5224.83 ft to pt of beg less 3.2A for ditch formerly #23-000-00-157
|
297.24
|
Pueblo County, CO
|
NW 1/4 31-22-62 150.77A
|
150.77
|
Pueblo County, CO
|
23-22-63 SE4 (160A) contg 320A less POR retained by Disanti formerly #23-000-00-072
|
160
|
Pueblo County, CO
|
35-22-63 That part of Sec 36, lying ely of desc Div Ln; comm fr NW cor of Sec 36 monumented with 3/4: x 30" rebar & 3-1/4" alum cap n 88 deg 27 min 59 sec E alg N Ln of SD sec 36 a dist of 2304.98 ft to pt of beg of sd div ln, sd ln runs S 03 dge 53 min 33 sec E a dist of 5270.92 ft to a sandstone being the S4 cor of SD sec 36 + the pt of terminums of ths div ln formerly #23-000-00-157
|
338.86
|
Pueblo County, CO
|
||
Pueblo County, CO
|
A PAR of land being a POR of the SE4 25-22-63 more part desc as follows: Comm from the NE Cor of the SE4 of SD sec 25, S 00 deg 00Min 00Sec E alg the Eln of SD sec 25, a dist of 1905.92 ft; th N 90 deg 00 Min 00sec W, a dist of 844.0 ft to the true pt of beg, th cont N 90 deg 00 Min 00Sec W a dist of 946.00 ft; th N 12 deg 16 min 49 sec E, a dist of 322.91 ft; th N 04 deg 58 min 28 sec W , a dist of 1543.82 ft to the N ln of undercliff rd (county rd); th N 89 deg 18 min 31 sec E alg the S
|
41
|
Walsenburg, CO
|
TOWNSHIP 28 SOUTH, RANGE 67 WEST OF THE 6TH P.M. Section 19: Part of the SW1I4NW1I4, NW1I4SW1I4, SEI/4NWI/4 being more particularly described as follows: Beginning at the SW comer of the NW1I4SW1/4, thence S 89°41 'E a distance of 1355.7 feet, thence N 0° 33' E a distance of583.3 feet; thence N 45° W a distance of333.3 feet; thence N 10° E a distance of 198 feet; thence N 31 ° 15' E a distance of 174.9 feet, thence N 9°E a distance of 152.7 feet, thence East a distance of 263.8 feet thence N45°E a distance of 149.9 feet, thence N 44°48' W a distance of 443.3 feet; thence N25°35'E a distance of72.6 feet, thence S64°E a distance of 133 feet, thence N9°1 O'E a distance of201.3 feet, thence N43°W a distance of 168.3 feet, thence N28°34'E a distance of 247.5 feet; thence N44°48'W a distance of 475.8; thence S 89°57'W a distance of 1142.7 feet; to the NW comer ofSWl!4NW1I4, thence S0054W a distance of 1306.25 feet to the W1I4 comer of said section 19 and 2612.5 feet to the place of beginning Section 24: SI/2NE1/4NE1I4 less that part conveyed to Huerfano County Hospital District in Book 392, Page 535. Also a tract of land being Part of the SE1I4 and more particularly described as follows: Beginning at the S1I4 comer, thence North 2640 feet, thence East 726 feet; thence south 1996 feet, thence in a Northeasterly direction 75 feet, thence north 1980 feet; thence east 1815 feet, thence south 412 feet; thence in a southwesterly direction along the north right of way of the D&RGW railroad to the point of beginning except that part conveyed to Jesus Maria Lopez in Book 40, Page 78 and Ramon Vigil in Book 33, Page 326 and less that part conveyed to the D&RGW railroad ROW.
|
76.38
|
Huerfano, CO
|
S 1/2 of the NW 1/4 of Section 4, Township 27 South, Range 64 West, Huerfano County, Colorado; The SW 1/4 of Section 4, Township 27 South, Range 64 West, Huerfano County, Colorado; the S 1/2 of the NE 1/4 of Section 5, Township 27 South, Range 64 West
|
320
|
Pueblo County, CO
|
The SE 1/4 of Section 15, Township 22 South, Range 63 Parcel 1: West of the 6th principal meridian, except that portion conveyed in Book 1208 at page 425. Also except a retangular area, being 50 ft by 200 ft and located in the Southwest corner of the SE 1/4 of section 15, described as follows: Beginning at the southwest corner of the SE 1/4 of section 15, township 22 south, range 63 west of the 6th principal meridian, thence north along the west side of the said SE 1/4 of section 15, a distance of 200 ft; thence east 50 feet parallel to the south line of the said section 15: thence south 200 ft to a point on the south line of said section 15; thence west along the south line of said section 15, a distance of 50 feet more or less to the point of beginning .
|
1120
|
Pueblo County, CO
|
Parcel 2: The SE 1/4 of Section 23, Township 22 South, Range 63 West of the 6th Principal Meridian, County of Pueblo, State of Colorado
|
incl
|
Pueblo County, CO
|
Parcel 3: The S 1/2 of Section 24, Township 22 South, Range 63 West of the 6th Principal Meridian, County of Pueblo, State of Colorado
|
incl
|
Pueblo County, CO
|
Parcel 4: The N 1/2 of Section 25, Township 22 South, Range 63 west of the 6th Principal Meridian, except one square acre in the SE corner thereof, County of Pueblo, State of Colorado
|
incl
|
Pueblo County, CO
|
Parcel 5: The SW 1/4 of Section 26, Township 22 South, Range 63 West of the 6th Principal meridian, County of Pueblo, State of Colorado
|
incl
|
Pueblo County, CO
|
SE4 LESS E 30 FT + S 30 FT RD + 50X200 FT TR 15-22-63
|
incl
|
Huerfano, CO
|
Lot 146, Colorado Land & Livestock, Unit F, as filed April 29, 1981, at reception no 282669, Map No 169, according to the records of the clerk and recorder for Huerfano County, CO: 2083 CR 104, Walsenburg, CO 81089
|
42
|
Huerfano, CO
|
Lot 145 Unit F CLL Ranch; 289 Chickasaw Dr, Walsenburg, CO 81089
|
42
|
Huerfano, CO
|
Orlando Properties
|
1500
|
Huerfano, CO
|
A parcel of land located in Sections 17, 18, 19. 20, Township 26 South, Range 66 West of the 6th P.M., also being a portion of Orlando Reservoir No2, per plat of Amended Grant of Easement and Result of Survey Plat recorded April 29, 19811, as Map 170, Pocket 3, Folder 3, (also known as Colorado Land and Grazing Unit "E", being more particularly described as follows: Beginning at the SE corner of the Orlando Reservoir No 2 parcel and northerly
|
incl
|
Pueblo County, CO
|
Parcel A: Beginning at a point on the South line of the N 1/2 SW 1/4 of Section 2, Township 21 South, Range 63 West of the 6th P.M., 1654 feet East of the SW corner of the NW 1/4SW1/4 of said Section 2; Thence East along the said South Line of the N1/2SW1/4 of Section 2, 932.5 feet to a point 16 feet West of the SE corner of the NE1/4SW1/4 of Section 2; Thence North Parallel to and 16 West of the North and South center line of said section 2, 2592.5 feet to an iron bolt set 6ft in the ground; thence North 65degrees10' West Parallel to and about 30 feet up the hill or South of the foot of the bluff, 527 feet, more or less to the south Bank of the Arkansas River; Thence Westerly along the South bank of the Arkansas River 257 ft, more or less to the NW line of the Fort Reynolds military reservation; thence in a Southwesterly direction along the NW line of said Fort Reynolds military reservation 253 ft, more or less to a point which is the NE corner of a tract of land deed to Grace May Cotton, November 16, 1910; thence South 2698 ft to the place of beginning
|
34
|
Pueblo County, CO
|
Parcel B: The SW corner of the NE quarter of Section 10, Township 21 South, Range 63 West of the 6th P.M., County of Pueblo, State of Colorado, Less 1.81 acres for County road except 30 feet in width along the west and south sides for roads
|
38.19
|
Pueblo County, CO
|
Parcel C: The South 35 acres of the SE quarter of the NE quarter of Section 10, Township 21 South, Range 63 West of the 6th P.M., County of Pueblo; Except 30 ft strips along the East side and South side for roads; Also described as the SE 1/4 of the NE 1/4 of Section 10, Township 21 South, Range 63 West of the 6th P.M.; Except the North 5 acres and except the South 5 acres of the North 10 acres and except 30 ft strips along the East side and South side for roads
|
35
|
Pueblo County, CO
|
Parcel D: NW1/4 of the NE 1/4 of Section 10, Township 21 south, Range 63 West of the 6th P.M., county of Pueblo, State of Colorado, except that portion reserved for road purposees as contained in deed recorded November 1, 1904 in Book 272 at Page 416, County of Pueblo
|
40
|
El Paso County, CO
|
S2SW4SW4SE4 SEC 12-15-63, ex that pt platted to brick house sub plat #10512 5.25 acres vacant land, Drennan Road, Colorado Springs
|
5.25
|
Pueblo County, CO
|
Lot 1 Fort Reynolds subdivision formerly #13-100-00-15
|
|
Pueblo County, CO
|
Sliman Parcel A: A PARCEL OF LAND LOCATED IN SECTIONS 33 AND 34 TOWNSHIP 20 RANGE 63, A PARCEL OF LAND BEING A PORTION OF THE El/2 OF THE NEl/4 OF SEC 33 AND THE Wl/2 OF SECTION 34 TOWNSHIP 23
RANGE 63; BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE SOUTHERLY RIGHT OF WAY LINE OF COLORADO STATE HWY #96 AND THE CENERLINE OF 39TH LANE AS IT EXISTS ON MAY 7,1992 FROM WHICH THE NW CORNER OF SAID SECTION 34 BEARS N 75o 27' 50" W (BEARINGS BASED ON THE LINE OF SAID SECTION 33 MONUMENTED AT THE NE CORNER WITH AN AXLE AND AT THE NW CORNER WITH A 2-1/2 FT ALUMINUM MONUMENT PLS 16128, ASSUMED TO BEAR N 89° 59' 18" W) A DISTANCE OF 2258.14 FT; THENCE S 3° 9' 41" W ALONG SAID THE CENTERLINE OF 39TH LANE A DISTANCE OF 1167.32 FT;THENCE S 23o 20' 50" E A DISTANCE OF 98.06 FEET;THENCE S so 29' 34" W A DISTANCE OF 2001.99 FEET TO A POINT ON THE LINE OF A PARCEL OF LAND DESCRIBED IN BOOK 2417 AT PAGE 977 TO 982 RECORDED OCT 27,19881N THE RECORDS OF THE PUEBLO COUNTY CLERK. RECORDER;THENCE NORTHWESTERLY ALONG SAID LINE THE FOLLOWING NINETEEN (19) COURSES; 1) THENCE S 5 DEG 52 MIN 13 SEC W A DISTANCE OF 46.25 FEET; 2) THENCE N 73 DEG 58 MIN 57 SEC W A DISTANCE OF 674.56 FEET; 3) THENCE N 61DEG 24 MIN 19 SEC W A DISTANCE OF 129.10 FEET; 4) THENCE N 40 DEG 10 MIN 36 SEC W DISTANCE OF 122.59 FEET; 5) THENCE N 62 DEG 45 MIN 31SEC W A DISTANCE OF 95.01FEET; 6) THENCE N 76 DEG 50 MIN 30 SEC W A DISTANCE OF 83.89 FEET; 7) THENCE N 84 DEG 5 MIN 46 SEC W A DISTANCE OF 416.84 FEET; 8) THENCE N 64 DEG 6 MIN 24 SEC W A DISTANCE OF 138.87 FEET; 9) THENCE N 22 DEG 6 MIN 2 SEC W A DISTANCE OF 152.21FEET 10) THENCE N 12 DEG 4 MIN 30 SEC W A DISTANCE OF 235.19 FEET; 11) THENCE N 5 DEG 30 MIN 21SEC W A DISTANCE OF 152.75 FEET, 12) THENCE N 34 DEG 48 MIN 34 SEC W A DISTANCE OF 232.50 FEET; 13) THENCE N 64 DEG 3 MIN 55 SEC W A DISTANCE OF 298.90 FEET; 14) THENCE N 39 DEG 12 MIN 25 SEC W A DISTANCE OF 345.55 FEET; 15) THENCE N 24 DEG 45 MIN 34 SEC W A DISTANCE OF 324.46 FEET; 16) THENCE N 11)DEG 32 MIN 51SEC W A DISTANCE OF 193.75 FEET; 17) THENCE N 17 DEG 32 MlN 19 SEC W A DISTANCE OF 365.33 FEET; 18) THENCE N 28 DEG 1MIN 37 SEC W A DISTANCE OF 115.22 FEET; 19) THENCE N 13 DEG 5 MIN 27 SEC E A DISTANCE OF 1053.25 FEET; MORE OR LESS TO A POINT ON THE SAl D SOUTHERLY RIGHT OF WAY LINE OF COLORADO STATE HWY #96;THENCE S 83° 38' 50" E ALONG SAID SOUTHERLY RIGHT OFWAY LINE A DISTANCE OF 2627.84 FEET MORE OR LESS TO THE POINT OF BEGINNING. SUBJECT TO EASEMENTS AND RIGHTS-OF-WAY OF RECORD AND EASEMENT FOR USE AND REPAIR OF THE PIPELINE LOCATED ON THE PROPERTY. LESS PROPERTY SOLD BY WARRANTY DEED #1206107.
|
325
|
Classification
|
Acres
|
Developed irrigable acres producing
|
333
|
Developed irrigable acres, non-production in 2012
|
680
|
Potential irrigable acres to be developed
|
1,920
|
Strategic water acres
|
724
|
Grazing acres
|
737
|
Non-productive acres
|
817
|
Total
|
5,211
|
Quarter Ended
|
High
|
Low
|
2012
|
||
December 31
st
|
$1.65
|
$0.99
|
September 30
th
|
$1.81
|
$1.50
|
June 30
th
|
$1.80
|
$0.90
|
March 31
st
|
$1.80
|
$1.10
|
2011
|
||
December 31
st
|
$ 2.40
|
$ 1.50
|
September 30
th
|
2.85
|
2.00
|
June 30
th
|
3.05
|
2.37
|
March 31
st
|
2.80
|
1.75
|
For
|
Against
|
Withheld
|
Broker non-votes
|
12,564,000
|
0
|
5,421
|
2,602,245
|
Name
|
FOR
|
WITHHELD
|
John R. McKowen
|
12,563,487
|
5,934
|
John Stroh II
|
12,560,942
|
8,479
|
Dennis Channer
|
12,561,716
|
7,705
|
Gregg Campbell
|
12,561,875
|
7,546
|
Bradley Walker
|
12,563,817
|
5,604
|
For
|
Against
|
Abstain
|
15,170,508
|
161
|
997
|
For
|
Against
|
Abstain
|
14,856,587
|
314,103
|
976
|
·
|
416,666 shares were issued under the 2011 Long-Term Stock Incentive Plan;
|
·
|
626,666 shares issued to consultants;
|
·
|
616,850 shares issued to holders of the Bridge Loan for extension of the Bridge Loan;
|
·
|
50,000 shares issued to the Board of Directors for their service in 2011.
|
·
|
100,000 shares issued from the exercise of warrants.
|
Dionisio (1)
|
Butte Valley (2)
|
Farms F-1 (3)
|
Not Assigned (4)
|
|
Acres in Production
|
353
|
129
|
None
|
None
|
Crops
|
Cabbage, corn, squash, pumpkin
|
Sorghum
|
None
|
None
|
Revenue
|
$ 922
|
$ 57
|
$ -0-
|
$ -0-
|
Direct cost of revenue
|
$ 555
|
$ 113
|
$ 316
|
$ 140
|
Gross Profit
|
$ 367
|
$ (56)
|
$ (316)
|
$ (140)
|
|
Notes:
|
|
(1) TR Bessemer operated the Dionisio Farm (DFP) for the 2012 growing season. In 2013, these amounts will be reported under DFP.
|
|
(2) Butte Valley planted sorghum to maintain the soil and provide some revenue based on the limited water available.
|
|
(3) There were no planting in F-1 due to the severe drought.
|
|
(4) Represents general direct cost that was not assigned to a particular farm.
|
-
|
Equity and debt proceeds through private placements of Company and subsidiaries securities;
|
-
|
Revenue generated from operations;
|
-
|
Loans and lines of credit;
|
-
|
Sales of residential properties acquired through deed-in-lieu of foreclosure actions;
|
-
|
Sales of equity investments, and
|
-
|
Proceeds from the exercise of legacy Navidec Options.
|
|
•
Level 1 –
Fair value based on quoted prices in active markets for identical assets or liabilities.
|
|
•
Level 2
– Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.
|
|
•
Level 3
– Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or liability.
|
Current portion long term debt:
|
12/31/2012
|
|||
HCIC seller carry back
|
$ | 6,587,000 | ||
SW Farms
|
$ | 4,200,000 | ||
CWCB
|
35,000 | |||
FNB
|
27,000 | |||
Equipment loans
|
129,000 | |||
Total
|
$ | 10,978,000 |
Year Ending December 31,
|
Principal Due
|
Interest Due
|
||||||
2013
|
10,978,000 | 499,000 | ||||||
2014
|
793,000 | 188,000 | ||||||
2015
|
1,438,000 | 156,000 | ||||||
2016
|
172,000 | 123,000 | ||||||
2017
|
1,553,000 | 89,000 | ||||||
2018 & beyond
|
412,000 | 173,000 | ||||||
Total
|
$ | 15,346,000 | $ | 1,228,000 |
·
|
On July 24, 2012, management concluded, after consultation with the Audit Committee and external auditors that the Company had not properly accounted for a beneficial conversion feature on its Series B Convertible debentures since August 2011. This error had a material effect on our previously issued consolidated financial statements for the year ended December 31, 2011 and the quarters ended September 30, 2011 and March 31, 2012, which is requiring us to restate the financial statements for such periods.
|
·
|
During the audit conducted for the year ended December 31, 2012, the independent auditors identified material financial entries that were incorrectly made which focused in two areas:
|
o
|
The conversion of Bridge Loan, Series A and Series B debt and the subsequent recording of these transactions and the double booking of interest expense or improper interest expense classification.
|
o
|
Issuance of the Company’s common stock and fully recognizing related expenses offset by entries into additional paid in capital.
|
Name
|
Age
|
Position
|
Term
|
John McKowen
|
63
|
Chief Executive Officer, Chairman of the Board of Directors
|
Annual
|
Wayne Harding
|
58
|
Chief Financial Officer, Corporate Secretary
|
Annual
|
John Stroh II
|
65
|
Director
|
Annual
|
Bradley Walker
|
54
|
Director
|
Annual
|
Dennis Channer
|
62
|
Director
|
Annual
|
Gregg Campbell
|
68
|
Director
|
Annual
|
Name & Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards ($) (11)
|
Option Awards ($)
|
Non-equity incentive plan comp ($)
|
Non-qualified deferred comp earnings ($)
|
All other comp ($)
|
Total ($)
|
||
John McKowen, CEO, Chairman
|
2012(1)
|
175,400
|
50,000
|
- | - | - | - |
31,284
|
256,684
|
||
2011(2)
|
193,042
|
26,660
|
-
|
-
|
-
|
-
|
26,589
|
246,291
|
|||
2010(3)
|
223,158
|
-
|
-
|
-
|
-
|
-
|
14,738
|
237,896
|
|||
Wayne Harding, CFO & Secretary
|
2012(4)
|
116,630
|
- |
255,833
|
- | - | - |
4,800
|
377,263
|
||
2011(4)
|
127,167
|
20,498
|
142,500
|
-
|
-
|
-
|
4,800
|
294,965
|
|||
2010(4)
|
97,750
|
1,833
|
-
|
-
|
-
|
-
|
14,880
|
114,463
|
|||
Gary Barber, COO & Pres.
|
2012(5)
|
106,976
|
32,500
|
- | - | - | - |
14,800
|
154,276
|
||
2011(6)
|
109,000
|
31,162
|
-
|
-
|
-
|
-
|
33,700
|
173,862
|
|||
2010(7)
|
-
|
-
|
-
|
-
|
-
|
-
|
32,000
|
32,000
|
|||
John Stroh, President
|
2012
|
-
|
-
|
241,666
|
-
|
-
|
-
|
-
|
241,666
|
||
2011(8)
|
-
|
-
|
101,247
|
-
|
-
|
-
|
76,045
|
177,292
|
|||
2010(9)
|
45,260
|
1,125
|
-
|
-
|
-
|
-
|
58,437
|
104,822
|
|||
(1)
|
Other Compensation is the payment of the health insurance benefit by the Company ($13,284) and office allowance ($18,000).
|
||||||||||
(2)
|
Other Compensation is the payment of the health insurance benefit by the Company ($10,089) and office allowance ($16,500).
|
||||||||||
(3)
|
Other Compensation is the payment of the health insurance benefit by the Company ($5,757) and auto allowance ($8,981).
|
||||||||||
(4)
|
Other Compensation is the payment of the health insurance benefit by the Company.
|
||||||||||
(5)
|
Other Compensation is office reimbursement of $10,000, and health insurance benefit of $4,800
|
||||||||||
(6)
|
Other Compensation is the payment of the health insurance benefit by the Company ($3,200), office allowance ($12,000), and consulting fees ($18,500).
|
||||||||||
(7)
|
Mr. Barber was paid as a contract employee during 2010.
|
||||||||||
(8)
|
Mr. Stroh’s Other Compensation is the payment of contract pay.
|
||||||||||
(9)
|
Mr. Stroh’s Other Compensation is the payment of contract pay of $54,666 and health insurance benefit payment by the Company of $3,771.
|
||||||||||
(10)
|
Mr. Stroh became the President of TRWC, Inc. in August, 2009. He is paid via a contract labor agreement. In 2009, Mr. Stroh was paid $61,840 in contract labor and $1,352 in health and dental insurance premiums.
|
||||||||||
(11)
|
Stock award compensation is based on Restricted Stock Units granted, vested and issued during the year. For payroll tax purposes, and as reported here, valuation of the RSU grants that are vested is recorded through payroll at a 25% fair value discount due to large blocks and limitations on selling. This is based on outside executive compensation consultant’s opinion. For financial statement purposes, the full fair value of the grant is recorded, less expected forfeitures.
|
No. of securities underlying exercised options
(#)
|
No. of securities underly-ing unexer-cised options
(#)
|
Equity incentive plan awards: No. of securities underlying unexer-cised unearned options
(#)
|
Option exercise price ($)
|
Option expir-ation date
|
No. of shares or units of stock that have not vested (#)
|
Market Value of shares or units of stock that have not vested
($)
|
Equity incentive plan awards: no. of unearned shares, units or other rights that have not vested
(#)
|
Equity incentive plan awards; Market or payout value of unearned shares, units or other rights that have not vested
($)
|
|
John McKowen, CEO
|
-
|
-
|
-
|
N/A
|
N/A
|
-
|
-
|
-
|
-
|
Wayne Harding, CFO
|
-
|
-
|
-
|
N/A
|
N/A
|
-
|
-
|
-
|
-
|
Name
|
Grant Date
|
Estimated future payouts under non-equity incentive plan awards
|
Estimated future payments under equity incentive plan awards
|
All other stock awards: No. of shares of stock or units (#)
|
All other option awards: Number of securities underlying options (#)
|
Exercise or base price of option awards ($/Sh)
|
Grant date fair value of stock and option awards ($)
|
||||
Threshold ($)
|
Target ($)
|
Maximum ($)
|
Threshold (#)
|
Target (#)
|
Maximum (#)
|
||||||
John McKowen
|
Oct 2010
|
N/A
|
N/A
|
N/A
|
1,480,948
|
2,480,947
|
2,480,947
|
0
|
0
|
N/A
|
4,561,000
|
John McKowen
|
Jan 2012
|
N/A
|
N/A
|
N/A
|
466,667
|
1,400,000
|
1,400,000
|
0
|
0
|
N/A
|
2,218,000
|
Gary Barber (1)
|
Oct 2010
|
N/A
|
N/A
|
N/A
|
0
|
0
|
0
|
0
|
0
|
N/A
|
1,701,000
|
Wayne Harding
|
Oct 2010
|
N/A
|
N/A
|
N/A
|
200,000
|
700,000
|
700,000
|
0
|
0
|
N/A
|
1,292,000
|
Wayne Harding
|
Jan 2012
|
N/A
|
N/A
|
N/A
|
166,667
|
500,000
|
500,000
|
0
|
0
|
N/A
|
792,000
|
Name
|
Fees earned or paid in cash ($)
|
Stock awards ($) (3)
|
Option Awards ($)
|
Non-equity incentive plan compensa-tion ($)
|
Non-Qualified deferred compensation earnings ($)
|
All other compen-sation ($)
|
Total ($)
|
John McKowen (1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
John Stroh II (2)
|
4,500
|
134,933
|
-
|
-
|
-
|
-
|
139,433
|
Bradley Walker
|
4,500
|
34,825
|
-
|
-
|
-
|
-
|
39,325
|
Dennis Channer
|
4,500
|
37,925
|
-
|
-
|
-
|
557
|
42,982
|
Gregg Campbell
|
4,500
|
37,925
|
-
|
-
|
-
|
500
|
42,925
|
|
(1) During the year ended December 31, 2010, 2011 and 2012, Mr. McKowen received compensation as set forth in the Executive Compensation Table on page 61.
|
|
(2) During the year ended December 31, 2010 and 2011, Mr. Stroh also received compensation as set forth in the Executive Compensation Table on page 61.
|
|
(3)
|
Stock awards are granted the first calendar quarter following the calendar year of service.
|
(1)
|
Applicable percentage ownership is based on 26,251,834 shares of common stock issued and outstanding as of December 31, 2011. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of December 31, 2012 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. For the purpose of the Officers and Directors ownership computation, there are 24,028,202 common shares outstanding; 1,661,533 options, and 2,564,281 RSUs for a total dilution pool of 28,255,016 which is used as the denominator is the Percent of Class calculation.
|
(2)
|
Mr. McKowen holds, directly, 2,170,672 shares of the Company’s common stock. He holds RSUs exercisable for 3,880,948 shares of the Company’s common stock, of which 2,147,615 are considered for the beneficial ownership calculation.
|
(3)
|
Mr. Harding directly holds 373,756 shares of the Company’s common stock. He holds RSUs exercisable for 833,334, of which 166,667 shares are considered for the beneficial ownership calculation.
|
(4)
|
Mr. Stroh directly holds 950,357 shares of the Company’s common stock, which all are used in this calculation.
|
(5)
|
Mr. Channer directly owns 25,000 shares of the Company’s common stock. He is granted 25,000 shares of the Company in February 2013 for board service in 2012.
|
(6)
|
Mr. Walker directly owns 25,000 shares of the Company’s common stock. He is granted 22,500 shares of the Company in February 2013 for board service in 2012.
|
(7)
|
Mr. Campbell directly owns 10,000 shares of the Company’s common stock. He is granted 25,000 shares of the Company in February 2013 for board service in 2012.
|
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Audit/review Fees – Schumacher
|
$ | 2,000 | $ | 40,000 | ||||
Audit/review Fees – Eide Bailly
|
92,833 | 20,500 | ||||||
Audit-related Fees
|
- | - | ||||||
Tax Fees
|
- | - | ||||||
All Other Fees
|
- | - | ||||||
Total Fees
|
$ | 94,833 | $ | 60,500 |
Numbe
r
|
Description
|
3.1 | Two Rivers Water & Farming Company Restated Articles of Incorporation | Filed Herewith |
4.5
|
DFP Stock Purchase Agreement
|
Filed Herewith
|
4.6
|
F-1 Conversion Agreement
|
Filed Herewith
|
4.7
|
F-2 Conversion Agreement
|
Filed Herewith
|
4.8
|
Bridge Loan Conversion Agreement
|
Filed Herewith
|
21.1
|
List of Subsidiaries of Two Rivers Water & Farming
|
Filed Herewith
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
|
Filed Herewith
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
|
Filed Herewith
|
32.1
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
|
Filed Herewith
|
32.2
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
|
Filed Herewith
|
Dated: March 25, 2013
|
Two Rivers Water & Farming Company
|
/s/John McKowen
|
|
John McKowen,
Chief Executive Officer and Chairman of the Board
|
|
/s/ Wayne Harding
|
|
Wayne Harding,
Chief Financial Officer and Principal Accounting Officer
|
Dated: March 25, 2013
|
Two Rivers Water & Farming Company
|
/s/John McKowen
|
|
John McKowen, President, Chief Executive Officer and Chairman of the Board
|
|
/s/ John Stroh II
|
|
John Stroh II, Director
|
|
/s/ Brad Walker
|
|
Brad Walker, Director
|
|
/s/Dennis Channer
|
|
Dennis Channer, Director and Chair of the Audit Committee
|
|
/s/ Gregg Campbell
|
|
Gregg Campbell, Director
|
/s/ Eide Bailly LLP
|
|
Greenwood Village, Colorado
|
|
March 20, 2013
|
|
December 31,
|
||||||||
ASSETS:
|
2012
|
2011
|
||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 1,340 | $ | 777 | ||||
Marketable securities, available for sale
|
- | 137 | ||||||
Advances and accounts receivable, net
|
184 | 87 | ||||||
Farm product
|
49 | 43 | ||||||
Deposits and other current assets
|
74 | 20 | ||||||
Total Current Assets
|
1,647 | 1,064 | ||||||
Long Term Assets:
|
||||||||
Property, equipment and software, net
|
2,397 | 1,129 | ||||||
Debt issuance costs
|
- | 663 | ||||||
Land
|
3,919 | 2,968 | ||||||
Water rights and infrastructure
|
35,354 | 28,786 | ||||||
Dam and water infrastructure construction in progress
|
34 | 848 | ||||||
Goodwill and intangible assets, net
|
1,037 | - | ||||||
Other long term assets
|
64 | - | ||||||
Total Long Term Assets
|
42,805 | 34,394 | ||||||
TOTAL ASSETS
|
$ | 44,452 | $ | 35,458 | ||||
LIABILITIES & STOCKHOLDERS' EQUITY:
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 298 | $ | 631 | ||||
Accrued liabilities
|
830 | 495 | ||||||
Current portion of long term debt
|
10,978 | 32 | ||||||
Total Current Liabilities
|
12,106 | 1,158 | ||||||
Long Term Debt
|
4,368 | 12,104 | ||||||
Total Liabilities
|
16,474 | 13,262 | ||||||
Commitments and contingencies (Notes 4, 9 and 11)
|
||||||||
Stockholders' Equity:
|
||||||||
Convertible preferred shares, $0.001 par value, 4,000,000 shares authorized, 3,794,000 shares and -0- issued and outstanding at December 31, 2012 and 2011, respectively (liquidation value $3,794 and $-0-), net
|
2,851 | - | ||||||
Common stock, $0.001 par value, 100,000,000 shares authorized, 24,028,202 and 23,258,494 shares issued and outstanding at December 31, 2012 and 2011, respectively
|
24 | 23 | ||||||
Additional paid-in capital
|
56,703 | 39,847 | ||||||
Accumulated Comprehensive (Loss)
|
- | (51 | ) | |||||
Accumulated (deficit)
|
(41,440 | ) | (19,785 | ) | ||||
Total Two Rivers Water & Farming Company Shareholders' Equity
|
18,138 | 20,034 | ||||||
Noncontrolling interest in subsidiaries
|
9,840 | 2,162 | ||||||
Total Stockholders' Equity
|
27,978 | 22,196 | ||||||
TOTAL LIABILITIES & STOCKHOLD’RS' EQUITY
|
$ | 44,452 | $ | 35,458 |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Revenue
|
||||||||
Farm revenue
|
$ | 979 | $ | - | ||||
Water revenue
|
36 | - | ||||||
Member assessments
|
49 | 102 | ||||||
Other income
|
11 | 3 | ||||||
Total Revenue
|
1,075 | 105 | ||||||
Direct cost of revenue
|
1,116 | 97 | ||||||
Gross Profit (Loss)
|
(41 | ) | 8 | |||||
Operating Expenses:
|
||||||||
General and administrative
|
7,577 | 6,546 | ||||||
Depreciation
|
271 | 102 | ||||||
Total operating expenses
|
7,848 | 6,648 | ||||||
(Loss) from operations
|
(7,889 | ) | (6,640 | ) | ||||
Other income (expense):
|
||||||||
Interest expense
|
(2,869 | ) | (1,298 | ) | ||||
Accretion of debt issuance costs
|
(3,359 | ) | - | |||||
Warrant expense
|
(315 | ) | - | |||||
Gain bargain purchase
|
- | 1,736 | ||||||
Gain (Loss) on extinguishment of notes payable
|
- | 196 | ||||||
Other income (expense)
|
(74 | ) | (9 | ) | ||||
Total other income (expense)
|
(6,617 | ) | 625 | |||||
Net (Loss) from continuing operations before taxes
|
(14,506 | ) | (6,015 | ) | ||||
Income tax (provision) benefit
|
- | - | ||||||
Net (Loss) from continuing operations
|
(14,506 | ) | (6,015 | ) | ||||
Discontinued Operations
|
||||||||
Loss from operations of discontinued real estate and mortgage business
|
- | (132 | ) | |||||
Income tax (provision) benefit from discontinued operations
|
- | - | ||||||
(Loss) on discontinued operations
|
- | (132 | ) | |||||
Net (Loss)
|
(14,506 | ) | (6,147 | ) | ||||
Net (income) attributable to the noncontrolling interest (Note 2)
|
(43 | ) | (51 | ) | ||||
Net (Loss) attributable to Two Rivers Water & Farming Company
|
$ | (14,549 | ) | $ | (6,198 | ) | ||
(Loss) Per Common Stock Share - Basic and Dilutive:
|
||||||||
(Loss) from continuing operations
|
$ | (0.61 | ) | $ | (0.27 | ) | ||
(Loss) from discontinued operations
|
- | - | ||||||
Total
|
$ | (0.61 | ) | $ | (0.27 | ) | ||
Weighted Average Shares Outstanding:
|
||||||||
Basic and Dilutive
|
23,660 | 22,156 |
For the year ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net (Loss)
|
$ | (14,549 | ) | $ | (6,147 | ) | ||
Adjustments to reconcile net income or (loss) to net cash (used in) operating activities:
|
||||||||
Depreciation (including discontinued operations)
|
271 | 102 | ||||||
Amortization of debt issuance costs and pre-paids
|
3,359 | 456 | ||||||
Loss on sale of investments and assets held (discontinued operations)
|
- | 132 | ||||||
(Gain) on extinguishment of notes payables
|
- | (196 | ) | |||||
(Gain) Bargain Purchase Value adjustment
|
- | (1,736 | ) | |||||
Realized loss (gain) of marketable securities
|
72 | (18 | ) | |||||
Beneficial conversion feature of preferred shares
|
1,735 | - | ||||||
Stock based compensation and warrant expense
|
3,434 | 2,678 | ||||||
Stock and options for services
|
1,028 | 1,045 | ||||||
Net change in operating assets and liabilities:
|
||||||||
Decrease (increase) in advances & accounts receivable
|
(96 | ) | (49 | ) | ||||
(Increase) in farm product
|
(6 | ) | (43 | ) | ||||
(Increase) decrease in deposits, prepaid expenses and other assets
|
(55 | ) | (4 | ) | ||||
Increase (decrease) in accounts payable
|
(333 | ) | 168 | |||||
Increase (decrease) in accrued liabilities and other
|
849 | 400 | ||||||
Net Cash (Used in) Operating Activities
|
(4,291 | ) | (3,212 | ) | ||||
Cash Flows from Investing Activities:
|
||||||||
Construction in progress
|
(34 | ) | - | |||||
Marketable securities purchased
|
- | (331 | ) | |||||
Marketable securities sold
|
116 | 162 | ||||||
Purchase of Dionisio Produce & Farms LLC, net
|
(900 | ) | - | |||||
Purchase of property, equipment and software
|
(1,098 | ) | (947 | ) | ||||
Purchase of land, water shares, infrastructure
|
(2,497 | ) | (1,064 | ) | ||||
Dam construction
|
- | (359 | ) | |||||
Net Cash (Used in) Investing Activities
|
(4,413 | ) | (2,539 | ) | ||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from bridge loan
|
3,994 | - | ||||||
Proceeds from issuance of convertible notes
|
- | 7,332 | ||||||
Proceeds from long-term debt
|
2,369 | - | ||||||
Proceeds from sale of convertible preferred shares in DFP
|
3,400 | - | ||||||
Payment of offering costs
|
(281 | ) | (664 | ) | ||||
Payment on notes payable
|
(315 | ) | (1,217 | ) | ||||
Payment for settlement of note payable
|
- | (105 | ) | |||||
Retirement of Stock
|
- | (76 | ) | |||||
Options and warrants exercised
|
100 | 613 | ||||||
Net Cash Provided by Financing Activities
|
9,267 | 5,883 | ||||||
Net Increase in Cash & Cash Equivalents
|
563 | 132 | ||||||
Beginning Cash & Cash Equivalents
|
777 | 645 | ||||||
Ending Cash & Cash Equivalents
|
$ | 1,340 | $ | 777 |
Supplemental Disclosure of Cash Flow Information
|
||||||||
Cash paid for interest
|
$ | 868 | $ | 435 | ||||
Conversion of debt and accrued interest into preferred shares & warrants
|
$ | 11,025 | $ | - | ||||
Common stock issued in conjunction with extinguishment of notes payable
|
$ | - | $ | 1,499 | ||||
Acquisition of Orlando Reservoir for seller financed note payable
|
$ | - | $ | 187 | ||||
Stock issued for partial payment for the purchase of Orlando Reservoir No.2
|
$ | - | $ | 1,557 | ||||
Equipment purchases financed
|
$ | - | $ | 146 | ||||
Fair value of warrants issued with Series B offering
|
$ | - | $ | 1,675 | ||||
Stock & warrants for debt issuance costs
|
$ | - | $ | 369 | ||||
Seller finance for the purchase of Dionisio Produce & Farms, LLC
|
$ | 600 | $ | - | ||||
Value of beneficial conversion with Series B offering
|
$ | - | $ | 1,490 | ||||
Seller finance for the purchase of Southwest Farms, LLC
|
$ | 4,200 | $ | - |
Accumulated Other Comprehensive Income (Expense)
|
||||||||||
Preferred Shares
|
Voting Common Stock
|
Additional Paid-in Capital
|
Non-
|
|||||||
Accumulated (Deficit)
|
Controlling
|
Stockholders'
|
||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Interest
|
Equity
|
|||||
Balances, December 31, 2010
|
-
|
-
|
19,782
|
$ 20
|
$ 28,949
|
$ -
|
$ (13,587)
|
$ 2,111
|
$ 17,493
|
|
2011 Activity:
|
||||||||||
Net Income (Loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,198)
|
51
|
(6,147)
|
|
Stock-based compensation expense
|
-
|
-
|
2
|
-
|
2,678
|
-
|
-
|
-
|
2,678
|
|
Options Exercised
|
-
|
-
|
452
|
-
|
563
|
-
|
-
|
-
|
563
|
|
Warrants Exercised
|
-
|
-
|
50
|
-
|
50
|
-
|
-
|
-
|
50
|
|
Warrants issued
|
-
|
-
|
-
|
-
|
1,805
|
-
|
-
|
-
|
1,805
|
|
Options issued for services
|
-
|
-
|
-
|
-
|
107
|
-
|
-
|
-
|
107
|
|
RSUs issued
|
-
|
-
|
1,148
|
1
|
(1)
|
-
|
-
|
-
|
-
|
|
Stock issued in exchange for debt
|
-
|
-
|
1,372
|
2
|
3,330
|
-
|
-
|
-
|
3,332
|
|
Stock issued for services
|
-
|
-
|
490
|
-
|
938
|
-
|
-
|
-
|
938
|
|
Unrealized gain (loss) on securities available for sale
|
-
|
-
|
-
|
-
|
-
|
(51)
|
-
|
-
|
(51)
|
|
Retirement of Stock - open market purchases
|
-
|
-
|
(37)
|
-
|
(62)
|
-
|
-
|
-
|
(62)
|
|
Fair value of warrants and beneficial conversion feature associated with Series B convertible debt
|
-
|
-
|
-
|
-
|
1,490
|
-
|
-
|
-
|
1,490
|
|
Balances, December 31, 2011
|
-
|
-
|
23,259
|
$ 23
|
$ 39,847
|
$ (51)
|
$ (19,785)
|
$ 2,162
|
$ 22,196
|
Accumulated Other Comprehen-sive Income (Expense)
|
||||||||||
Preferred Shares
|
Voting Common Stock
|
Additional Paid-in Capital
|
Non-
|
|||||||
Accumulated (Deficit)
|
Controlling
|
Stockholders'
|
||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Interest
|
Equity
|
Balances, December 31, 2011
|
-
|
$ -
|
23,259
|
$ 23
|
$ 39,847
|
$ (51)
|
$ (19,785)
|
$ 2,162
|
$22,196
|
|
Net Income (Loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
(14,549)
|
43
|
(14,506)
|
|
Stock-based compensation expense
|
-
|
-
|
-
|
-
|
3,434
|
-
|
-
|
-
|
3,434
|
|
RSUs issued and returned to Plan
|
-
|
-
|
(624)
|
-
|
(3)
|
-
|
-
|
-
|
(3)
|
|
Options issued for services
|
-
|
-
|
-
|
-
|
183
|
-
|
-
|
-
|
183
|
|
Warrants exercised
|
-
|
-
|
100
|
-
|
100
|
-
|
-
|
-
|
100
|
|
Warrants issued
|
-
|
-
|
-
|
-
|
407
|
-
|
-
|
-
|
407
|
|
Shares issued for Bridge Loan extension
|
-
|
-
|
617
|
1
|
996
|
-
|
-
|
-
|
997
|
|
Issuance of convertible preferred shares for conversion of the Bridge Loan
|
3,794
|
2,851
|
-
|
-
|
2,645
|
-
|
(1,702)
|
-
|
3,794
|
|
Issuance of convertible preferred shares in F-1 for conversion of holders of Series A debt
|
-
|
-
|
-
|
-
|
1,376
|
-
|
(882)
|
1,494
|
1,988
|
|
Issuance of convertible preferred shares in F-2 for conversion of holders of Series B debt
|
-
|
-
|
-
|
-
|
3,648
|
-
|
(2,346)
|
3,933
|
5,235
|
|
Issuance of convertible preferred shares in DFP subsidiary, net of $281 in offering costs
|
-
|
-
|
-
|
-
|
3,042
|
-
|
(2,176)
|
2,208
|
3,074
|
|
Stock issued for services
|
-
|
-
|
676
|
-
|
1,028
|
-
|
-
|
-
|
1,028
|
|
Reclassification adjustment related to securities available for sale
|
-
|
-
|
-
|
-
|
-
|
51
|
-
|
-
|
51
|
|
Balances, December 31, 2012
|
3,794
|
$ 2,851
|
24,028
|
$ 24
|
$ 56,703
|
$ -
|
$ (41,440)
|
$ 9,840
|
$ 27,978
|
·
|
purchase and redevelop available farmland by deep-plowing the fields, laser-leveling the planting areas (to optimize plant absorption and minimize runoff), installing irrigation facilities, and applying fertilizers,
|
·
|
purchase a suite of water rights (including both diversion rights and storage rights),
|
·
|
refurbish the historic ditch systems and reservoirs to restore and upgrade their efficiency,
|
·
|
re-establish a sustainable and profitable farming enterprise which could achieve the scale required by modern farming methods and which could put the revived water supply to consistent beneficial use,
|
·
|
develop a customer base to consistently buy the farms’ output at prices sufficient to generate profits, and
|
·
|
build a reliable, integrated water supply system capable of flexibly serving both agricultural and urban needs.
|
|
Notes:
|
|
(1) TR Bessemer operated the Dionisio Farm (DFP) for the 2012 growing season. In 2013, these amounts will be reported under DFP. In 2012, the yield per acre was as follows: corn: 203 bushels; cabbage 53,500 pounds; squash 21,000 pounds, and pumpkins 50 bins.
|
|
(2) Butte Valley planted sorghum to maintain the soil and provide some revenue based on the limited water available.
|
|
(3) There was no planting in F-1 due to the severe drought.
|
|
(4) Represents general direct cost that was not assigned to a particular farm.
|
·
|
Reimbursement to the Company of $630,000 for the Dionisio first closing in June, 2012, net of bank financing;
|
·
|
Second stage of the Dionisio purchase transaction in November, 2012 of $900,000 which is net of seller carry back;
|
·
|
Purchase of a neighboring farm for $56,000 plus assumption and new debt,
|
·
|
Loan to the Company of $1,000,000; and
|
·
|
The remainder of $2,035,000 as working capital and reserves.
|
Entity
|
Year ended
December 31, 2012
|
Year ended
December 31, 2011
|
||||||||
HCIC
|
$ | 2,205,000 | $ | 2,162,000 | ||||||
F-1 | $ | 1,494,000 | - | |||||||
F-2 | $ | 3,933,000 | - | |||||||
DFP
|
$ | 2,208,000 | - | |||||||
Totals
|
$ | 9,840,000 | $ | 2,162,000 |
Entity
|
Year ended
December 31, 2012
|
Year ended
December 31, 2011
|
HCIC (1)
|
$ 43,000
|
$ 51,000
|
F-1 (2)
|
-
|
-
|
F-2 (2)
|
-
|
-
|
DFP (2)
|
-
|
-
|
Totals
|
$ 43,000
|
$ 51,000
|
|
(2) The terms of the preferred shares in each subsidiary allows for a participatory additional preferred share dividend of 25% of the profits derived from the assets held by the subsidiary. This participatory dividend, if any, will be recorded as a non-controlling share of the income.
|
|
•
Level 1 –
Fair value based on quoted prices in active markets for identical assets or liabilities.
|
|
•
Level 2
– Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.
|
|
•
Level 3
– Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or liability.
|
Acquisition
|
Date
|
Price paid*
|
Fair Value
|
Gain/(Loss)
|
HCIC
|
2010, Qtr 1
|
$24,196,000
|
$24,196,000
|
-
|
Orlando
|
2011, Qtr 3
|
$3,459,000
|
$5,195,000
|
$1,736,000
|
Asset Type
|
Life in Years
|
December 31, 2012
|
December 31, 2011
|
|||||||||
Office equipment, furniture & computers
|
3 – 7 | $ | 109,000 | $ | 91,000 | |||||||
Vehicles
|
5 | 361,000 | 119,000 | |||||||||
Farm equipment
|
7 - 10 | 1,286,000 | 299,000 | |||||||||
Irrigation system
|
10 | 1,039,000 | 822,000 | |||||||||
Website
|
3 | 7,000 | 7,000 | |||||||||
Subtotal
|
2,802,000 | 1,338,000 | ||||||||||
Less Accumulated Depreciation
|
405,000 | 209,000 | ||||||||||
Net Book Value
|
$ | 2,397,000 | $ | 1,129,000 |
Year ended
|
||||||||
Dec 31 2012
|
Dec 31, 2011
|
|||||||
Beginning balance
|
$ | 848,000 | $ | 489,000 | ||||
Additions
|
567,000 | 359,000 | ||||||
Completed, transferred
|
(1,381,000 | ) | - | |||||
Ending Balance
|
$ | 34,000 | $ | 848,000 |
Produce business
|
$ | 1,037,000 | ||
Equipment
|
836,000 | |||
Prepaid interest
|
30,000 | |||
Ending Balance
|
$ | 1,903,000 |
Customer list
|
$ | 580,000 | ||
Tradename
|
220,000 | |||
Residual goodwill
|
237,000 | |||
Ending Balance
|
$ | 1,037,000 |
Beginning discount balance
|
2011 discount accretion
|
2012 discount accretion
|
Dec 31, 2012 conversion to preferred shares
|
Net
|
|
Face
|
$ 5,332,000
|
(5,107,000)
|
$ 225,000
|
||
Warrant fair value
|
(1,675,000)
|
245,000
|
951,000
|
1,969,000
|
-
|
Beneficial conversion
|
(1,490,000)
|
||||
Net
|
$ 2,167,000
|
245,000
|
951,000
|
3,138,000
|
$ 225,000
|
Current portion long term debt:
|
12/31/2012
|
|||
HCIC seller carry back
|
$ | 6,587,000 | ||
SW Farms
|
4,200,000 | |||
CWCB
|
35,000 | |||
FNB
|
27,000 | |||
Equipment loans
|
129,000 | |||
Total
|
$ | 10,978,000 |
Year Ending December 31,
|
Principal Due
|
|||
2013
|
$ | 10,978,000 | ||
2014
|
793,000 | |||
2015
|
1,438,000 | |||
2016
|
172,000 | |||
2017
|
1,553,000 | |||
2018 & beyond
|
412,000 | |||
Total
|
$ | 15,346,000 |
For the year ended December 31, 2012
|
For the year ended December 31, 2011
|
|||||||||||||||||||||||||||||||||||||||
Parent
|
Farms
|
Water
|
Discontinued Operations
|
Total
|
Parent
|
Farms
|
Water
|
Discontinued Operations
|
Total
|
|||||||||||||||||||||||||||||||
Revenue
|
||||||||||||||||||||||||||||||||||||||||
Assessments
|
$ | - | - | 49 | - | 49 | $ | - | - | 97 | - | 97 | ||||||||||||||||||||||||||||
Farm revenue
|
- | 979 | - | - | 979 | - | - | - | - | - | ||||||||||||||||||||||||||||||
Water revenue
|
- | - | 36 | - | 36 | - | - | - | - | - | ||||||||||||||||||||||||||||||
Other & misc.
|
- | - | 11 | - | 11 | - | 3 | 5 | - | 8 | ||||||||||||||||||||||||||||||
- | 979 | 96 | - | 1,075 | - | 3 | 102 | - | 105 | |||||||||||||||||||||||||||||||
Less: direct cost of revenue
|
- | 1,116 | - | - | 1,116 | - | 97 | - | - | 97 | ||||||||||||||||||||||||||||||
Gross Margin
|
- | (137 | ) | 96 | - | (41 | ) | - | (94 | ) | 102 | - | 8 | |||||||||||||||||||||||||||
Operating Expenses
|
||||||||||||||||||||||||||||||||||||||||
General & administrative
|
(6,353 | ) | (899 | ) | (325 | ) | - | (7,577 | ) | (5,402 | ) | (514 | ) | (630 | ) | - | (6,546 | ) | ||||||||||||||||||||||
Depreciation
|
(14 | ) | (170 | ) | (87 | ) | - | (271 | ) | (17 | ) | (75 | ) | (10 | ) | - | (102 | ) | ||||||||||||||||||||||
Income (Loss) from operations
|
(6,367 | ) | (1,206 | ) | (316 | ) | - | (7,889 | ) | (5,419 | ) | (683 | ) | (538 | ) | - | (6,640 | ) | ||||||||||||||||||||||
Other Income (Expenses)
|
||||||||||||||||||||||||||||||||||||||||
Interest expense
|
(1,000 | ) | (1,426 | ) | (443 | ) | - | (2,869 | ) | (282 | ) | (467 | ) | (464 | ) | - | (1,213 | ) | ||||||||||||||||||||||
Recapture debt issue costs
|
(997 | ) | (2,362 | ) | - | - | (3,359 | ) | - | - | - | - | - | |||||||||||||||||||||||||||
Warrant expense
|
(315 | ) | - | - | - | (315 | ) | - | - | - | - | - | ||||||||||||||||||||||||||||
Gain from bargain purchase
|
- | - | - | - | - | - | 1,736 | - | - | 1,736 | ||||||||||||||||||||||||||||||
Gain (Loss) on debt retirement
|
- | - | - | - | - | - | 384 | (188 | ) | - | 196 | |||||||||||||||||||||||||||||
Other & misc.
|
(83 | ) | - | 9 | - | (74 | ) | (7 | ) | (2 | ) | 1 | - | (8 | ) | |||||||||||||||||||||||||
Total Other Income (Expense)
|
(2,395 | ) | (3,788 | ) | (434 | ) | - | (6,617 | ) | (289 | ) | 1,651 | (651 | ) | - | 711 | ||||||||||||||||||||||||
Net (Loss) Income from continuing operations before income taxes
|
(8,761 | ) | (4,995 | ) | (750 | ) | - | (14,506 | ) | (5,708 | ) | 968 | (1,189 | ) | - | (5,929 | ) |
Income Taxes (Expense)/Credit
|
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Net Income (Loss) from continuing operations
|
(8,761 | ) | (4,995 | ) | (750 | ) | - | (14,506 | ) | (5,708 | ) | 968 | (1,189 | ) | - | (5,929 | ) | |||||||||||||||||||||||
Discontinued operations:
|
||||||||||||||||||||||||||||||||||||||||
(Loss) from operations of discontinued real estate and mortgage business
|
- | - | - | - | - | - | - | - | (132 | ) | (132 | ) | ||||||||||||||||||||||||||||
Income tax benefit
|
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Loss on discontinued operations
|
- | - | - | - | - | - | - | - | (132 | ) | (132 | ) | ||||||||||||||||||||||||||||
Non-controlling interest
|
- | - | (43 | ) | - | (43 | ) | - | - | (51 | ) | - | (51 | ) | ||||||||||||||||||||||||||
$ | (8,761 | ) | (4,995 | ) | (793 | ) | - | (14,549 | ) | $ | (5,708 | ) | 968 | (1,240 | ) | (132 | ) | (6,112 | ) | |||||||||||||||||||||
Segment assets
|
$ | 116 | 12,582 | 31,754 | - | 44,452 | $ | 1,563 | 7,127 | 26,763 | 5 | 35,458 |
·
|
RSUs to employees:
|
o
|
1,140,474, net RSU shares were returned to the Plan
|
o
|
516,666 RSU shares were exercised.
|
o
|
The above represents a net return of 623,808 shares
|
·
|
616,850 unregistered common shares were issued to holders of our Bridge Loan for two Bridge Loan extensions
|
·
|
676,666 common stock issued for services as follows:
|
o
|
50,000 shares of our common stock with a value of $111,000 were issued to our Board for service in 2011;
|
o
|
83,330 shares with a value of $122,000 were issued in exchange for consulting services;
|
o
|
216,666 shares with a value of $314,000 were issued in exchange for consulting services;
|
o
|
we issued 50,000 shares with a value of $85,000 for consulting services;
|
o
|
we issued 70,000 shares with a value of $123,000 as an exchange for legacy options held by a past employee;
|
o
|
we issued 190,000 shares with a value of $256,000 for consulting services, and
|
o
|
we issued 16,670 shares with a value of $17,000 for consulting services.
|
·
|
We issued 100,000 unregistered common shares due to the exercise of warrants.
|
·
|
During February 70,000 shares of our common stock, valued at $85,000 were issued in exchange for consulting services.
|
·
|
In March, a total of 722,000 shares valued at $1,847,000 were issued to a creditor of the Company, as payment in full for the debt in the amount of $1,575,000. At the time of the transaction, the fair value of the Company’s common stock exceeded the amount of debt retired, which resulted in a loss from debt retirement of $272,000.
|
·
|
During April, we issued 100,000 shares of our common stock valued at $238,000 in exchange for consulting services.
|
·
|
In July and September, we issued 650,000 shares of our common stock valued at $1,557,000 in partial payment for the purchase the Orlando.
|
·
|
During September, we issued 120,000 shares of our common stock valued at $192,000 in exchange for consulting services.
|
·
|
During December, 200,000 shares of our common stock valued at $380,000 in exchange for consulting services.
|
·
|
During 2011, we issued 1,148,000 shares under our 2011 Plan which was subsequently returned.
|
·
|
During 2011, 452,000 options and 50,000 warrants were exercised.
|
2012
|
2011
|
|
Expected stock price volatility
|
78%
|
122%
|
Risk-free interest rate
|
2.64%
|
2.64%
|
Expected option life (years)
|
2.2
|
3.2 to 5.2
|
Expected annual dividend yield
|
0%
|
0%
|
RSU Shares
|
|
Outstanding, January 1, 2011
|
5,713,088
|
Granted
|
50,000
|
Cancelled
|
(500,000)
|
Expired
|
-
|
Exercised
|
(1,147,614)
|
Outstanding, December 31, 2011
|
4,115,474
|
Granted
|
4,700,237
|
Cancelled
|
(3,185,000)
|
Returned
|
(1,140,474)
|
Expired
|
-
|
Exercised
|
(636,903)
|
Outstanding, December 31, 2012
|
6,134,282
|
RSUs Exercisable , December 31, 2012
|
2,564,281
|
Grantee
|
Company Relationship
|
RSUs issued
|
Date of Grant
|
Vesting Date
|
Performance Requirement
|
Exercised to Date
|
John McKowen
|
Chairman/CEO
|
2,480,948
|
Oct 2010
|
(1)
|
(2)
|
-
|
1,400,000
|
Jan 2012
|
(1)
|
(3)
|
-
|
||
Wayne Harding
|
CFO
|
700,000
|
Oct 2010
|
(1)
|
(2)
|
366,666
|
500,000
|
Jan 2012
|
(1)
|
(3)
|
-
|
||
John Stroh
|
Director
|
220,237
|
Oct 2010
|
Jan 2011
|
n/a
|
220,237
|
Jolee Henry
|
Prior Director
|
400,000
|
Oct 2010
|
Jan 2011
|
n/a
|
-
|
Employees (5)
|
Past & Present Employees
|
1,223,570
|
Various
|
(1)
|
(4)
|
203,570
|
6,924,755
|
790,473
|
Notes:
|
Above table does not show those shares that were cancelled or returned.
|
(1) Vests 1/3 at the end of each 12 months from Date of Grant
|
(2) Subject to employer deferral and employment agreement, if applicable
|
(3) Vests 1/3 when the Company's common stock is listed on a National Exchange and attains closing bid of $3 per share, a second 1/3 when the share price attains $6 per share, and the final 1/3 when the share price attains $9 per share, respectively
|
(4) Satisfactory employee performance during vesting period
|
(5) A total of 15 current and past employees are in this group
|
Grantee
|
Company Relationship
|
Shares
|
Date of Grant
|
Vesting Date
|
Expiration Date
|
Exercise Price
|
Broker Dealer Series B Debt
|
Placement Agents
|
170,624
|
Aug 2011
|
Aug 2011
|
Sep 2014
|
$ 2.50
|
Holders of Series B Debt
|
Investors
|
90,000
|
Aug 2011
|
Aug 2011
|
Sep 2014
|
$ 2.50
|
Boenning Scattergood
|
Financial Advisor
|
250,000
|
May 2011
|
May 2011
|
May 2016
|
$ 2.00
|
Investor Group
|
Investors
|
300,000
|
Feb 2012
|
Mar 2012
|
(1)
|
(1)
|
Wedbush Securities
|
Financial Advisor
|
200,000
|
Jun 2012
|
Jun 2012
|
Jun 2017
|
$ 1.20
|
Dionisio Farms & Produce, Inc.
|
Investors in subsidiary
|
1,700,000
|
Dec 2012
|
Dec 2012
|
Dec 2017
|
$ 3.00
|
Two Rivers Farms F-1
|
Investors in subsidiary
|
994,375
|
Dec 2012
|
Dec 2012
|
Dec 2017
|
$ 3.00
|
Two Rivers Farms F-2
|
Investors in subsidiary
|
2,696,210
|
Dec 2012
|
Dec 2012
|
Dec 2017
|
$ 3.00
|
Two Rivers Farms F-2
|
Remaining debt holders
|
225,000
|
Aug 2011 | Aug 2011 | Dec 2012 | $ 2.50 |
Bridge Loan conversion
|
Investors
|
1,897,000
|
Dec 2012
|
Dec 2012
|
Dec 2017
|
$ 3.00
|
8,523,209
|
Grantee
|
Company Relationship
|
Shares
|
Date of Grant
|
Vesting Date
|
Expiration Date
|
Exercise Price
|
||
HCIC Debt holders
|
Creditors
|
2,336,731
|
2010
|
2010
|
(1)
|
(1)
|
||
Two Rivers Farms F-1
|
Creditors
|
10,000
|
Feb 2011
|
Feb 2011
|
Mar 2014
|
$2.50
|
||
Two Rivers Farms F-2
|
Creditors
|
90,000
|
Aug 2011
|
Aug 2011
|
June 2014
|
$2.50
|
||
(1) Expiration is when the note is due which is between January and October 2013. Exercise price is from $1.00 to $1.25/share. If the note is extended then the conversion date is extended to the new due date of the note.
|
December 31,
|
||||||||
Years ended
|
2012
|
2011
|
||||||
Federal statutory rate
|
34.00 | % | 34.00 | % | ||||
Effect of:
|
||||||||
State taxes, net of federal tax benefit
|
3.06 | % | 3.06 | % | ||||
Permanent differences
|
.60 | % | .60 | % | ||||
Valuation allowance
|
(37.66 | %) | (37.66 | %) | ||||
Effective income tax rate
|
- | % | - | % |
2012
|
||||
Book loss
|
$ | (14,549 | ) | |
Tax adjustments:
|
||||
Stock based Comp
|
3,434 | |||
Stock comp exercised
|
(256 | ) | ||
Entertainment
|
8 | |||
Donations
|
10 | |||
Depreciation
|
37 | |||
Amortization
|
(20 | ) | ||
Estimate of taxable income
|
$ | (11,336 | ) |
(in thousands)
|
2012
|
2011
|
||||||
Current expense (benefit)
|
||||||||
Federal
|
||||||||
State
|
||||||||
Total current
|
||||||||
Deferred expense (benefit)
|
||||||||
Federal
|
$ | (6,111 | ) | $ | (2,461 | ) | ||
State
|
(550 | ) | (221 | ) | ||||
Total deferred
|
(6,661 | ) | (2,682 | ) | ||||
Less: Valuation allowance
|
6,661 | 2,682 | ||||||
Total
|
$ | - | $ | - |
(in thousands)
|
2012
|
2011
|
||||||
Current deferred tax asset:
|
$ | - | $ | - | ||||
Net operating loss carryforwards
|
(9,260 | ) | (4,216 | ) | ||||
Capital loss
|
(34 | ) | - | |||||
Bargain purchase
|
643 | (643 | ) | |||||
RSU & stock option expense
|
(2,171 | ) | 993 | |||||
Property, equipment and intangibles
|
305 | - | ||||||
Other items
|
(3 | ) | 7 | |||||
Total current deferred tax assets
|
(10,520 | ) | (3,859 | ) | ||||
Valuation allowance
|
10,520 | 3,859 | ||||||
Effective income tax asset
|
$ | - | $ | - |
(in thousands)
|
Federal
|
Colorado
|
Total projected tax carryforward into 2013 and beyond
|
$ (24,935)
|
(19,578)
|
Period
|
Amount Due
|
2013
|
$ 43,200
|
2014
|
$ 43,200
|
2015
|
$ 21,600
|
-
|
The Company completed the DFP offering at the full subscription amount of $5,000,000.
|
-
|
The Company reached a separation agreement with its past Chief Operating Officer that included a Company payment of $25,000 in exchange for the cancellation of all currently vested RSUs.
|
-
|
On March 15, 2013, the Company paid an additional $100,000 to extend the SW Farms note due date until August 31, 2013.
|
(b)
|
Series BL Convertible Preferred Stock.
|
(a)
|
The corporation shall indemnify its directors, officers, employees, fiduciaries, and agents to the full extent permitted by Colorado law.
|
(b)
|
The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, and any procedure provided for by any of the foregoing, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, fiduciary or agent and shall inure to the benefit of heirs, executors, and administrators of such a person.
|
(c)
|
The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, fiduciary or agent of the Corporation or who is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under provisions of this Article.
|
(d)
|
To the fullest extent provided in the Colorado Business Corporation Act, the officers, directors, fiduciaries, and agents of the company shall not be liable to the Corporation or its shareholders for monetary damages.
|
(a)
|
The fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves, or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors;
|
(b)
|
The fact of such relationship or interest in disclosed or known to the shareholders entitled to vote and they authorize, approve, or ratify such contract or transaction by vote or written consent; or
|
(c)
|
The contract or transaction is fair and reasonable to the Corporation.
|
(a)
|
The management of the business and the conduct of the affairs or the Corporation shall be vested in its Board of Directors;
|
(b)
|
The Board of Directors may from time to time make, amend, supplement or repeal the bylaws; provided, however, that the stockholders may change or repeal any bylaw adopted by the Board of Directors by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation; and, provided further, that no amendment or supplement to the bylaws adopted by the Board of Directors shall vary or conflict with any amendment or supplement thus adopted by the stockholders; The directors of the Corporation need not be elected by written ballot unless the bylaws so provide; and
|
(c)
|
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all right conferred upon the stockholders herein are granted subject to this right.
|
TWO RIVERS FARMS F-1, LLC
By: _____________________________
Name: ___________________________
Title: ____________________________
|
(INVESTOR)
(Name of Investor)
(Signature)
(Title of signatory, if applicable)
|
TWO RIVERS WATER & FARMING COMPANY, a Colorado Corporation
By: ______________________________
Name: ____________________________
Title: _____________________________
|
TWO RIVERS FARMS F-2, LLC
By: _____________________________
Name: ___________________________
Title: ____________________________
|
(INVESTOR)
(Name of Investor)
(Signature)
(Title of signatory, if applicable)
|
TWO RIVERS WATER & FARMING COMPANY, a Colorado Corporation
By: ______________________________
Name: ____________________________
Title: _____________________________
|
TWO RIVERS WATER & FARMING COMPANY
By: _____________________________
Name: ___________________________
Title: ____________________________
|
(INVESTOR)
(Name of Investor)
(Signature)
(Title of signatory, if applicable)
|
Company
|
State of Organization
|
Ultimate Parent
|
Immediate Parent
|
% Ownership
|
Two Rivers Water & Farming Company
|
CO
|
|||
HCIC Holdings, LLC
|
CO
|
Two Rivers Water & Farming Company
|
TRWC, Inc.
|
100
|
Huerfano-Cucharas Irrigation Company
|
CO
|
Two Rivers Water & Farming Company
|
HCIC Holdings
|
91
|
Two Rivers Water LLC
|
CO
|
Two Rivers Water & Farming Company
|
Two Rivers Water & Farming Company
|
100
|
Orlando Reservoir No. 2 Company, LLC
|
CO
|
Two Rivers Water LLC
|
Two Rivers Water & Farming Company
|
|
Two Rivers Farms LLC
|
CO
|
Two Rivers Water & Farming Company
|
Two Rivers Water & Farming Company
|
100
|
Two Rivers Farms F-1, Inc.
|
CO
|
Two Rivers Water & Farming Company
|
Two Rivers Farms LLC
|
100
|
Two Rivers Farms F-2, Inc.
|
CO
|
Two Rivers Water Company
|
Two Rivers Farms LLC
|
100
|
Dionisio Farms & Produce, Inc.
|
CO
|
Two Rivers Water & Farming Company
|
Two Rivers Farms LLC
|
100
|
Dated: March 25, 2013
|
By: /s/ John McKowen
|
Chief Executive Officer and Chairman of the Board
|
Dated: March 25, 2013
|
By: /s/ Wayne Harding
|
Chief Financial Officer & Principal Accounting Officer
|
Dated: March 25, 2013
|
By: /s/ John McKowen
|
Chief Executive Officer and Chairman of the Board
|
Dated: March 25, 2013
|
By: /s/ Wayne Harding
|
Chief Financial Officer & Principal Accounting Officer
|