Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - TWO RIVERS WATER & FARMING Co | Financial_Report.xls |
| EX-31.2 - EXHIBIT 31.2 - TWO RIVERS WATER & FARMING Co | exhibit312_ex31z2.htm |
| EX-32.1 - EXHIBIT 32.1 - TWO RIVERS WATER & FARMING Co | exhibit321_ex32z1.htm |
| EX-31.1 - EXHIBIT 31.1 - TWO RIVERS WATER & FARMING Co | exhibit311_ex31z1.htm |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _____________
Commission file number: 000-51139
Two Rivers Water & Farming Company
(Exact Name of Registrant as Specified in Its Charter)
| Colorado |
| 13-4228144 | ||
| (State or Other Jurisdiction or |
| (I.R.S. Employee | ||
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2000 South Colorado Blvd. Denver, Colorado |
| 80222 | |||
(Address of Principal Executive Offices) |
| (Zip Code) | |||
Registrant’s telephone number, including area code: (303) 222-1000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes |X| No |_|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One).
Large accelerated filer | [ ] |
| Accelerated filer | [ ] |
Non-accelerated filer (Do not check if a smaller reporting company) | [ ] |
| Smaller reporting company | [X] |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
As of November7,2014 there were 26,524,538shares outstanding of the registrant's Common Stock.
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1
TABLE OF CONTENTS
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| Page |
PART I – FINANCIAL INFORMATION |
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Item 1. | 3 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 |
Item 3. | 21 | |
Item 4. | 21 | |
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PART II – OTHER INFORMATION |
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Item 1A. | 23 | |
Item 6. | 23 | |
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23 | ||
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| Page |
Financial Statements (Unaudited): |
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Condensed Consolidated Balance Sheets – September 30, 2014 and December 31, 2013 | 4 |
5 | |
Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2014 and 2013 | 6 |
7 |
3
TWO RIVERS WATER & FARMING COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets(In Thousands)
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
5
TWO RIVERS WATER & FARMING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Operations(In Thousands, except Per Share Data)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2014 | 2013 (Restated) | 2014 | 2013 (Restated) |
Revenue |
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Farm revenue | $ 1,062 | $ 946 | $ 1,062 | $ 994 |
Water revenue | - | 40 | - | 40 |
Member assessments & other income | 10 | 9 | 25 | 20 |
Total Revenue | 1,072 | 995 | 1,087 | 1,054 |
Direct cost of revenue | (786) | (598) | (786) | (639) |
Gross Margin | 286 | 397 | 301 | 415 |
Operating Expenses: |
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General and administrative | 702 | 1,377 | 2,546 | 4,723 |
Depreciation | 129 | 123 | 378 | 362 |
Total operating expenses | 831 | 1,500 | 2,924 | 5,085 |
Loss from Operations | (545) | (1,103) | (2,623) | (4,670) |
Other Income (Expense) |
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Interest expense | (216) | (299) | (859) | (670) |
Warrant expense | - | (27) | - | (55) |
Loss on debt extinguishment | - | 80 | - | (793) |
Other income (expense) | (99) | 9 | (159) | 15 |
Total other income (expense) | (315) | (237) | (1,018) | (1,503) |
Net Loss from Continuing Operations before Taxes | (860) | (1,340) | (3,641) | (6,173) |
Income tax (provision) benefit | - | - | - | - |
Net Loss before Preferred Dividends and Non-Controlling Interest | (860) | (1,340) | (3,641) | (6,173) |
Preferred dividends | (483) | - | (1,130) | - |
Net loss (income) attributable to the noncontrolling interest | 4 | (14) | (1) | (6) |
Net Loss Attributable to Common Shareholders | $ (1,339) | $ (1,354) | $ (4,772) | $ (6,179) |
Loss Per Share – Basic and Dilutive: | $ (0.05) | $ (0.05) | $ (0.19) | $ (0.25) |
Weighted Average Shares Outstanding: |
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|
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Basic and dilutive | 26,230 | 24,940 | 25,506 | 24,824 |
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
6
TWO RIVERS WATER & FARMING COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (In Thousands)
(Unaudited)
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| Nine Months Ended September 30, | |
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| 2014 | 2013 (Restated) |
Cash Flows from Operating Activities: |
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| ||
| Net loss | $ (3,641.00) | $ (6,173.00) | |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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| |
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| Depreciation and amortization | 378 | 515 |
|
| Accretion of debt discount | 148 | - |
|
| Assumption of assessments due to purchase of shares of Huerfano-Cucharas Irrigation Company | - | 80 |
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| Stock-based compensation and warrant expense | 296 | 2,158 |
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| Stock and options for services | 340 | 939 |
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| Loss on sale of investments, assets and debt restructuring | 92 | 1,042 |
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| Impairment of asset | 34 | - |
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| Interest expense written off | 38 | - |
| Net change in operating assets and liabilities: |
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| |
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| Increase in advances & accounts receivable | (590) | (211) |
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| Increase in farm product | (745) | (384) |
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| Decrease in deposits, prepaid expenses and other assets | 33 | 34 |
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| Increase (decrease) in accounts payable | 202 | (48) |
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| Increase (decrease) in accrued liabilities and other | (97) | (525) |
Net Cash Used in Operating Activities | (3,512) | (2,573) | ||
Cash Flows from Investing Activities: |
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| Purchase of property, equipment and software | (1,256) | (34) | |
| Purchase of land, water shares, infrastructure | (300) | (1,335) | |
| Proceeds from securities available for resale | (8) | 58 | |
Net Cash Used in Investing Activities | (1,564) | (1,311) | ||
Cash Flows from Financing Activities: |
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| Proceeds from sale of preferred units of TR Capital Partners, LLC | 4,700 | - | |
| Proceeds from issuance of long-term debt | 274 | 2,599 | |
| Proceeds from sale of convertible preferred shares of Dionisio Farms & Produce, Inc. | - | 1,600 | |
| Payment of offering costs | - | (223) | |
| Payment of preferred dividends | (636) | - | |
| Payments on notes payable | (569) | (422) | |
Net Cash Provided by Financing Activities | 3,769 | 3,554 | ||
Net Increase in Cash & Cash Equivalents | (1,307) | (330) | ||
Beginning Cash & Cash Equivalents | 2,069 | 1,340 | ||
Ending Cash & Cash Equivalents | 762 | 1,010 | ||
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Supplemental Disclosure of Cash Flow Information |
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| Cash paid for interest | $ 470 | $ 469 | |
| Accrued dividends | $ 494 | $ - | |
| Stock & warrants for debt issuance costs | $ - | $ 580 | |
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
8
TWO RIVERS WATER & FARMING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended September 30, 2014 and September 30, 2013
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS
Corporate Information
Two Rivers Water & Farming Company (the “Company”) is a Colorado corporation with principal executive offices at 2000 South Colorado Boulevard, Tower 1, Suite 3100, Denver, Colorado, and its telephone number at that address is (303) 222-1000.
Organizational Restructuring
On January 29, 2014, the board of directors approved a plan to reorganize the Company’s subsidiaries in a more integrated manner based on functional operations. The Company formed a new company, TR Capital Partners, LLC (“TR Capital”), which issued all of its Common Units to the Company. TR Capital then initiated the transactions described below. Following the completion of those transactions by December 31, 2014, the Company expects that TR Capital and its other direct and indirect subsidiaries (excluding HCIC Holdings, LLC, or “HCIC,” and Huerfano-Cucharas Irrigation Company) (the “Transferring Subsidiaries”) will enter into a series of related transactions as the result of which assets and operations of the Transferring Subsidiaries will be transferred to TR Capital. As a result of those transactions, TR Capital would operate all of the operations formerly conducted by the Transferring Subsidiaries. The following chart shows the expected corporate organization following completion of the anticipated transactions among the Transferring Subsidiaries, as well as the principal operating areas to be managed by TR Capital:
![[turv2014093010q_10q001.jpg]](turv2014093010q_10q001.jpg)
The placement of Preferred Units is being effectuated by either (1) the holders of certain debt or equity securities of the Transferring Subsidiaries exchanging their ownership interest or debt holdings for Preferred Units or (2) the direct investment into TR Capital through the cash purchase of Preferred Units. These debt or equity securities or the cash consideration to purchase Preferred Units are collectively referred to as “Qualified Assets.”
The Qualified Assets are being exchanged into Preferred Units at a rate of $0.70 or $1.00. If new capital (cash) is invested in Preferred Units, for each new $1.00 of new capital, another $1.2988 of Qualified Assets can be converted into Preferred Units at a rate of $0.70. Additionally, the new capital (cash) purchases Preferred Units at a rate of $0.70. All other Qualified Assets are being exchanged into Preferred Units at a rate of $1.00.
9
The Preferred Units provide the member with the following:
·
The ability, upon exchange, to receive one share of the Company’s common stock and a warrant to purchase one-half of one share of the Company’s common stock for each Preferred Unit owned. The warrants will expire on January 31, 2019 and have a strike price of $2.10.
·
A quarterly dividend equal to 2% (8% annually)based on the consideration exchanged or paid for the Preferred Units.
·
An annual distribution based on the Adjusted Gross Profit (as defined) of the Company.
As of September 30, 2014, $24,620,000 of cash and Qualified Assets was converted into 29,849,000 Preferred Units.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements do not include all of the disclosures required by accounting principles generally accepted in the U.S. (“GAAP”), pursuant to the rules and regulations of the SEC. The unaudited consolidated financial statements reflect all adjustments, which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company as of September 30, 2014, and the consolidated results of operations and comprehensive income and cash flows of the Company for the three and ninemonths ended September 30, 2014 and 2013. Due to the seasonality of the agriculture business and other factors, operating results for the three and ninemonths ended September 30, 2014 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.
These accompanying unaudited consolidated financial statements and related notes are condensed and should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Interim disclosures do not necessarily repeat disclosures in the Annual Report.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Two Rivers and its subsidiaries, including TR Capital Partners and HCIC. All significant inter-company balances and transactions have been eliminated in consolidation.
Non-controlling Interest
Non-controlling interest is recorded for equity interests in the Company’s subsidiaries, including shares of HCIC, preferred shares of certain subsidiaries and Preferred Units of TR Capital, held by minority third-party investors. Below is the detail of non-controlling interest shown on the balance sheet:
Entity | September 30, 2014 | December 31, 2013 |
TR Capital | $ 20,472,000 | $ - |
HCIC | 1,364,000 | 1,363,000 |
Two Rivers Farms F-1, Inc. 1 | 29,000 | 1,494,000 |
Two Rivers Farms F-2, Inc.1 | 225,000 | 3,933,000 |
Dionisio Farms & Produce, Inc. (“DFP”)1 | (48,000) | 3,181,000 |
Totals | $ 22,042,000 | $ 9,971,000 |
1It is expected that these entities will be owned by TR Capital after the organizational restructuring detailed in Note 1 is completed.
10
Based on Accounting Standards Codification (“ASC”) 815-40-25, the Company classified the TR Capital Preferred Units as permanent equity. Further, pursuant to the ASC 810-10, the Company determined that the TR Capital Preferred Units should be classified as a non-controlling interest in a subsidiary and shown separately within the Equity section of the Company’s Consolidated Balance Sheet.
Pursuant to ASC 470-20, the Company valued the Preferred Units by assessing the fair market value of the preferred units and the warrants and allocating those values to the face value of the Preferred Units.
The Preferred Units were valued based on the number of shares of the Company’s common stock into which the Preferred Units can be exchanged and price of the Company’s common stock on the date the Preferred Units were issued. Pursuant to a purchase agreement entered into as of January 31, 2014, the Qualified Assets were exchanged for Preferred Units on various dates between February 1, 2014 and September 30, 2014. The common stock price during that period ranged from $0.63 to $1.39 per share. In total, the 29,849,000 Preferred Units have a fair market value of $33,454,000 based on those common stock prices.
The fair market value of the warrants underlying the Preferred Units was determined using the Black Scholes model. Assumptions underlying the Black Scholes model were as follows:
Conversion date | 2/1/14 – 8/26/14 |
Stock price | $0.85 - $1.33 |
Exercise price | $2.10 |
Term (in years) | 4.43 - 5 |
Volatility | 59.24 – 74.34% |
Annual rate of Quarterly Dividends | 0% |
Discount rate - Bond Equivalent Yield | 1.44% - 1.74% |
In total, the warrants underlying the Preferred Units have a fair market value of $6,828,000 based on these assumptions.
Reclassification
Certain amounts previously reported have been reclassified to conform to current presentation. Certain labels of accounts/classifications have been changed.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers cash and cash equivalents to include highly liquid investments with original maturities of 90 days or less. Those are readily convertible into cash and not subject to significant risk from fluctuations in interest rates. The recorded amounts for cash equivalents approximate fair value due to the short-term nature of these financial instruments.
11
Farm Product
Farm product represents expenses directly attributed to the planting and cultivation of crop. Upon harvesting, the farm product is reduced in proportion of the revenue generated. The reduction of the farm product is recognized as direct cost of revenue. At the end of each quarter, management determines the lower of cost or market for the farm product available for sale.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally on the straight-line method over the estimated useful life of each type of asset which ranges from three to forty years. Maintenance and repairs are charged to expense as incurred; improvements and betterments are capitalized. Upon retirement or disposition, the related costs and accumulated depreciation are removed from the accounts, and any resulting gains or losses are credited or charged to income.
Below is a summary of premises and equipment:
Asset Type | Life in Years | September 30, 2014 | December 31, 2013 |
Office equipment, furniture, computers | 5 – 7 | $ 11,000 | $ 11,000 |
Computers | 3 | 42,000 | 40,000 |
Vehicles | 5 | 45,000 | 45,000 |
Farm equipment | 10-Jul | 1,648,000 | 1,411,000 |
Irrigation system | 10 | 989,000 | 989,000 |
Buildings | 27.5 | 389,000 | 35,000 |
Website | 3 | 7,000 | 7,000 |
Subtotal |
| 3,131,000 | 2,538,000 |
Less: Accumulated depreciation |
| (864,000) | (646,000) |
Net book value |
| $ 2,267,000 | $ 1,892,000 |
Construction in Progress
The Company currently has active projects related to the construction of greenhouses for GrowCo. It is the Company’s policy to capitalize construction costs as construction in progress. Per ASC 835-20, the cost of acquiring an asset should include the costs of all activities incurred to bring the asset to the condition and location necessary for its intended use. This includes all labor, legal, engineering, architecture, construction management and general construction costs, etc. incurred prior to the asset being placed in service. This same guidance defines activities as being construed broadly, but specifically states that they encompass the physical construction of the asset, administrative and technical activities during the preconstruction stage, and activities to overcome unforeseen obstacles during construction. It is the Company’s policy that capitalization of costs will not begin until the asset is specifically designated to be used for revenue-producing purposes. If an asset does not have this specific designation all costs will be expensed as incurred. The Company will use the issuance of the CO (Certificate of Occupancy) to determine when to stop capitalizing costs related to the specific assets, and, at that point, the Company will transfer the project from construction in progress to a fixed asset account.
12
Land
Land acquired for farming is recorded at cost. Some of the land acquired has not been farmed for many years, if not decades. Therefore, additional expenditures are required to make the land ready for efficient farming. Expenditures for leveling the land are added to the cost of the land. Irrigation is not capitalized in the cost of Land (Property and Equipment above). Land is not depreciated. However, once per year, management will assess the value of land held, and in their opinion, if the land has become impaired, management will establish an impairment against the land.
Water Rights and Infrastructure
Subsequent to purchase of water rights and water infrastructure, management periodically evaluates the carrying value of its assets, and if the carrying value is in excess of fair market value, the Company will establish an impairment. Currently, there are no impairments on the Company’s land and water shares. No amortization or depreciation is taken on the water rights.
Intangibles
The Company recognizes the estimated fair value of water rights acquired by the Company’s purchase of equity interests in HCIC and Orlando Reservoir No. 2 Company, LLC (“Orlando”). These intangible assets will not be amortized because they have an indefinite remaining useful life based on many factors and considerations, including, the historical upward valuation of water rights within Colorado.
Revenue Recognition
Farm Revenues
Revenues from farming operations are recognized when sold into the market. All direct expenses related to farming operations are capitalized as farm inventory and recognized as a direct cost of sale upon the sale of the crops. Farm revenues also includes freight charges with the related freight expenses in cost of farming.
Water Revenues
Current water revenues are from the lease of water owned by HCIC to farmers in the HCIC service area and through re-leasing of water from the Pueblo Board of Water lease. Water revenues are recognized when the water is consumed.
Member Assessments
Once per year the HCIC board estimates HCIC’s expenses, less anticipated water revenues, and establishes an annual assessment per ownership share. One-half of the member assessment is recorded in the first quarter of the calendar year and the other one-half of the member assessment is recorded in the third quarter of the calendar year. Assessments paid by the Company to HCIC are eliminated in consolidation of the financial statements.
HCIC does not reserve against any unpaid assessments. Assessments due, but unpaid, are secured by the member’s ownership of HCIC. The value of this ownership is significantly greater than the annual assessments.
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Stock-Based Compensation
Beginning January 1, 2006, the Company adopted the provisions of ASC 718 and accounts for stock-based compensation in accordance with ASC 718. Under the fair value recognition provisions of this standard, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which generally is the vesting period. The Company elected the modified-prospective method, under which prior periods are not revised for comparative purposes. The valuation provisions of ASC 718 apply to new grants and to grants that were outstanding as of the effective date and are subsequently modified.
All options granted prior to the adoption of ASC 718 and outstanding during the periods presented were fully vested at the date of adoption.
In December 2007, the SEC issued Staff Accounting Bulletin (“SAB”) 110 which was issued to express the understanding that the use of a “simplified” method, as discussed in SAB 107 in developing an estimate of expected term of “plain vanilla” share options in accordance with ASC 718 would be acceptable beyond December 31, 2007. The Company adopted SAB 110 beginning January 2008.
Net Income (Loss) per Share
Basic net income per share is computed by dividing net income (loss) attributed to the Company available to common shareholders for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income for the period by the weighted average number of common and potential common shares outstanding during the period.
The dilutive effect of the outstanding 2,455,918 RSUs, 2,014,867 options and 9,890,209 warrants at September 30, 2014, has not been included in the determination of diluted earnings per share since, under ASC 260,they would anti-dilutive.
Recently issued Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification Topic No. 605, “Revenue Recognition,” most industry-specific guidance throughout the industry topics of the accounting standards codification, and some cost guidance related to construction-type and production-type contracts. ASU 2014-09 is effective for public entities for annual periods and interim periods within those annual periods beginning after December 15, 2016. Early adoption is not permitted. Companies may use either a full retrospective or a modified retrospective approach to adopt ASU 2014-09. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.
In June 2014, the FASB issued Accounting Standards Update No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standards Codification Topic No. 718, “Compensation - Stock Compensation” (“ASC 718”), as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.
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Early adoption is permitted. Entities may apply the amendments in ASU 2014-12 either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.
Management does not believe that any other recently issued, but not effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
NOTE 3 – INVESTMENTS AND LONG-LIVED ASSETS
Land
Upon purchasing land, the value is recorded at the purchase price or fair value, whichever is more accurate. Costs incurred to prepare the land for the intended purpose, which is efficient irrigated farming, is also capitalized in the recorded cost of the land. No amortization or depreciation is taken on land. However the land is reviewed by management at least once per year to ascertain if a further analysis is necessary for any potential impairments.
Water Rights and Infrastructure
The Company has acquired both direct flow water rights and water storage rights. It has obtained water rights through the purchase of shares in a mutual ditch company, which it accomplished through its purchase of shares in HCIC, or through the purchase of an entity holding water rights, which it effected through its purchase of a membership interest of Orlando. The Company may also acquire water rights through outright purchase. In all cases, such rights are recognized under decrees of the Colorado water court and administered under the jurisdiction of the Office of the State Engineer.
Upon purchasing water rights, the value is recorded at the purchase price. If a majority interest is acquired in a company holding water assets (potentially with other assets including water delivery infrastructure, right of ways, and land), the Company determines the fair value of the assets. To assist with the valuation, the Company may consider reports from a third-party valuation firm. If the value of the water rights is greater than what the Company paid then a bargain purchase gain is recognized. If the value of the water assets are less than what the Company paid then goodwill is recognized.
Subsequent to purchase, management periodically evaluates the carrying value of its assets, and if the carrying value is in excess of fair market value, the Company will establish an impairment allowance. Currently, there are no impairments on the Company’s land and water shares. No amortization or depreciation is taken on the water rights.
Dam and Water Infrastructure Construction in Progress
The Company has commenced engineering for the reconstruction of the dam owned by the HCIC. In addition the Company is in the process of rehabilitating various outlet gates, pipes and water gates. These costs are capitalized, and not amortized or depreciated until the dam reconstruction is completed in accordance with ASC 360 and 835. The company is also in the process of construction greenhouses for its GrowCo division, and these costs are capitalized as well under the same provisions.
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Construction costs are as follows:
| Nine Months ended | Year ended |
| September 30, 2014 | December 31, 2013 |
Beginning balance | $ 34,000 | $ 34,000 |
Additions | 791,000 | - |
Written off | 34,000 | - |
Ending Balance | $ 791,000 | $ 34,000 |
NOTE 4 – NOTES PAYABLE
Below is a summary of the Company’s consolidated long term debt:
| September 30, 2014 | December 31, 2013 | |
Note | Principal Balance | Accrued Interest | Principal Balance |
HCIC seller carry back | $7,623,000 | $- | $7,896,000 |
Orlando seller carry back | 188,000 | 40,000 | 188,000 |
Series A convertible debt | - | - | 110,000 |
Series B convertible debt | 125,000 | 13,000 | 405,000 |
CWCB | 1,104,000 | 16,000 | 1,151,000 |
FirstOak Bank - Dionisio Farm | 826,000 | 37,000 | 826,000 |
FirstOak Bank - Dionisio Farm | 176,000 | 4,000 | - |
Seller Carry Back - Dionisio | 590,000 | 27,000 | 590,000 |
FirstOak Bank - Mater | 166,000 | 7,000 | 166,000 |
Seller Carry Back - Mater | 25,000 | - | 25,000 |
McFinney Agri-Finance | 640,000 | - | 645,000 |
Ellicott second mortgage | - | - | 400,000 |
ASF Notes | - | - | 2,036,000 |
Bridge Notes | - | - | 1,300,000 |
Kirby Group | 130,000 | - | 45,000 |
Equipment loans | 543,000 | 19,000 | 485,000 |
Total | 12,136,000 | $163,000 | 16,268,000 |
Less: HCIC discount | (413,000) | - | (548,000) |
Less: Current portion | (864,000) | - | (2,759,000) |
Long term portion | $10,859,000 | $163,000 | $12,961,000 |
NOTE 5 – INFORMATION ON BUSINESS SEGMENTS
The Company organizes its business segments based on the nature of the products and services offered. It focuses on the Water and Farming Business with Two Rivers Water & Farming Company as the parent company. Therefore, it reports segments by these lines of businesses: Farms and Water. The Farms segment contains all of the Farming Business conducted by DFP, Two Rivers Farms F-1, Inc., and Two Rivers Farms F-2, Inc. The Water segment contains the Water Business operated by ASF Project 1, LLC, HCIC and Orlando. The “Parent” category is not a separate reportable operating segment. Segment allocations may differ from those on the face of the income statement.
In the following tables of financial data, the total of the operating results of these business segments is reconciled, as appropriate, to the corresponding consolidated amount. Certain corporate expenses not allocated to the business segments are recorded in “Total Operating Expenses” under Parent.
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Operating results for each of the segments of the Company are as follows (in thousands):
| Nine Months Ended September 30, 2014 |
| Nine Months Ended September 30, 2013 | ||||||
| Parent | Farms | Water | Total |
| Parent | Farms | Water | Total |
Revenue |
|
|
|
|
|
|
|
|
|
Assessments | $ - | $ - | $ 8 | $ 8 |
| $ - | $ - | $ 11 | $ 11 |
Farm revenue | - | 1,062 | - | 1,062 |
| - | 994 | - | 994 |
Water revenue | - | - | - | - |
| - | - | 40 | 40 |
Other & misc. | 6 | 8 | 3 | 17 |
| - | 8 | 1 | 9 |
| 6 | 1,070 | 11 | 1,087 |
| - | 1,002 | 52 | 1,054 |
Less: direct cost of revenue | - | 786 | - | 786 |
| - | 567 | 73 | 639 |
Gross Margin | 6 | 284 | 11 | 301 |
| - | 435 | (21) | 415 |
Total Operating Expenses | 2,096 | 304 | 524 | 2,924 |
| 3,965 | 539 | 580 | 5,085 |
Total Other Expense | 902 | 108 | 8 | 1,018 |
| (89) | 135 | 1,457 | 1,503 |
Net Loss from Operations before Income Taxes | (2,992) | (128) | (521) | (3,641) |
| (3,877) | (238) | (2,058) | (6,173) |
Income Taxes (Expense)/Credit | - | - | - | - |
| - | - | - | - |
Net Loss from Operations | (2,992) | (128) | (521) | (3,641) |
| (3,877) | (238) | (2,058) | (6,173) |
Non-controlling interest | - | - | 1 | 1 |
| - | - | (6) | (6) |
Preferred dividends | 1,130 | - | - | 1,130 |
| - | - | - | - |
Net (Loss) Income | $ (4,122) | $ (128) | $ (522) | $ (4,772) |
| $ (3,877) | $ (238) | $ (2,064) | $ (6,179) |
Segment Assets | $ 2,908 | $ 12,781 | $ 27,324 | $ 43,014 |
| $ 216 | $ 13,306 | $ 28,000 | $ 41,522 |
NOTE 6 – CORRECTION OF SEPTEMBER 30, 2013 FINANCIAL RESULTS
During the fourth quarter of the year ended December 31, 2013, the Company identified certain accounting errors in the calculation of the fair value of the new terms on the HCIC seller carryback notes that were refinanced and initially reported in the Company’s periodic filing of its Form 10-Q as of June 30, 2013. Upon recalculation of the fair value of the new debt, as in accordance with ASC 470-50-40-10 and ASC 820, the fair value of the new debt was adjusted to $7,037,000, which compared to the previously calculated debt fair value of $6,164,000. The newly calculated fair value produced a one-time $873,000 loss, rather than the previously recorded gain in the quarter ended June 30, 2013 of $93,000. Management believes the impact of these items, both individually and in the aggregate, to the year ended December 31, 2013 and to prior interim periods of June 30, 2013 and September 30, 2013 previously presented was not material.
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Below is a summary of the correction on our condensed consolidated balance sheet as of September 30, 2013:
|
| As Reported |
| Adjustments |
| As Corrected | |||
Total Assets |
| $ | 41,522,000 |
| $ | - |
| $ | 41,522,000 |
Total Liabilities |
| $ | 13,893,000 |
| $ | 1,190,000 |
| $ | 15,083,000 |
Total Shareholders’ Equity |
| $ | 27,629,000 |
| $ | (1,190,000) |
| $ | 26,439,000 |
|
|
|
|
|
|
|
|
|
|
Below is a summary of the correction on our condensed consolidated statement of operations for the three and nine months ended September 30, 2013:
|
| As of September 30, 2013 |
| |||||
|
| Three Months Ended |
|
| Nine Months Ended |
| ||
|
|
|
|
|
|
| ||
Net Loss As Reported |
| $ | (1,434,000 | ) |
| $ | (5,293,000 | ) |
Adjustments: |
|
|
|
|
|
|
|
|
Previously reported gain on debt extinguishment |
| $ | - |
|
| $ | 94,000 |
|
Corrected amount of loss on debt extinguishment |
|
| - |
|
|
| (872,000 | ) |
Previously reported Accretion Expense |
|
| 124,000 |
|
|
| 124,000 |
|
Corrected Accretion Expense |
|
| 44,000 |
|
|
| 44,000 |
|
Total adjustment |
|
| 80,000 |
|
|
| (886,000 | ) |
Corrected net loss |
| $ | (1,354,000 | ) |
| $ | (6,179,000 | ) |
Loss per share as initially reported |
| $ | (0.06 | ) |
| $ | (0.21 | ) |
Corrected loss per share |
| $ | (0.05 | ) |
| $ | (0.25 | ) |
Variance |
| $ | 0.01 |
|
| $ | (0.04 | ) |
NOTE 7– EQUITY TRANSACTIONS
Common Stock
During the nine months ended September 30, 2013, the Company had the following common stock transactions:
·
In February, the Company issued 179,348 shares of common stock to a consultant for work performed in 2012.
·
In February, the Company issued 85,000 shares of common stock to the independent members of the Board of Directors in exchange for Board services rendered in 2012.
·
In March, the Company issued 200,000 shares of common stock to a consultant for investor relations work performed in first quarter, 2013.
·
In March, the Company issued 100,000 shares of common stock to an independent member of the DFP Board of Directors in exchange for Board services rendered in 2012.
·
In April, the Company issued 400,000 of our common stock to an investor relations firm for services.
·
In June, the Company returned 3,002 of our common stock from a profit sharing plan that was no longer in effect to our authorized but unissued common stock.
·
In July, we retired 100,000 shares of our common stock that we received from a settlement of a legal action.
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During the nine months ended September 30, 2014, the Company had the following common stock transactions:
·
In May, the Company issued the following common stock:
o
30,000 shares to a prior employee under our stock plan; and
o
50,000 shares to a consultant for work performed in 2014.
·
In June, the Company issued the following common stock:
o
833,334 shares under our stock plan; and
o
142,500 shares to the independent members of the Board of Directors in exchange for Board services rendered in 2013.
·
In July, the Company issued the following common stock:
o
237,440 shares as a conversion from F-2 Preferred Shares;
o
166,667 shares to an employee under an RSU grant; and
o
4,000 shares to a consultant.
·
In August, the Company issued 121,688 shares as a conversion from F-2 Preferred Shares.
·
In September, the Company issued 59,360 shares as a conversion from F-2 Preferred Shares.
NOTE 8 – SUBSEQUENT EVENTS
None.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context requires otherwise, references in this Form 10-Q to “we,” “our,” “us” and similar terms refer to Two Rivers Water & Farming Company and its subsidiaries.
Note about Forward-Looking Statements
This Form 10-Q contains forward-looking statements, such as statements relating to our financial condition, results of operations, plans, objectives, future performance and business operations. These statements relate to expectations concerning matters that are not historical facts. These forward-looking statements reflect our current views and expectations based largely upon the information currently available to us and are subject to inherent risks and uncertainties. Although we believe our expectations are based on reasonable assumptions, they are not guarantees of future performance and there are a number of important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. By making these forward-looking statements, we do not undertake to update them in any manner except as may be required by our disclosure obligations in filings we make with the Securities and Exchange Commission under the Federal securities laws. Our actual results may differ materially from our forward-looking statements.
Overview
There is a water shortage in the arid regions of the southwestern United States. There is a municipal water shortage in Colorado (see CWCB study). The Colorado municipal water shortage has created a price differential, an arbitrage, of 5-10 to 1 increase in the price of municipal water over irrigation water. In the late 1800s, 85% of all water rights in Colorado were granted to and still are primarily held by agriculture. Since then, populations have increased and people have moved to the city.
First generation western water business models attempted to capture the water arbitrage by “buying and drying” the most productive irrigated farmland and moving the water to the cities, which decimated some agricultural communities. The buy and dry model has become politically, economically and legally untenable and is no longer capable of capturing the water arbitrage (see ). Two Rivers has built a new business model that reinvigorates, rather than ruins, agricultural communities and captures the water arbitrage in multiple stages through market transactions.
In the initial acquisition stage, Two Rivers acquires water rights through the purchase of irrigated farmland used for feed crop production and converts the farmland into fruit and vegetable crop production, which generate six times more revenue with better profit margins. In later stages, Two Rivers creates additional value for its shareholders by partnering with other economic activities in need of water resources. Those activities are as varied as the economy itself and presently include water augmentation programs to replace out of priority diversions, greenhouse development and leasing for licensed marijuana growers and establishing Metropolitan Districts to provide water to under-served communities.
Results of Operations
Our Consolidated Operations
For the three Months Ended September 30, 2014 Compared to the three Months Ended September 30, 2013
During the three months ended September 30, 2014 and 2013 we recognized revenues of $1,072,000 compared to $995,000, in the three-month period ended September 30, 2013. Our primary revenue source is from the sale of agriculture products grown by us. The sale of these products is highly seasonal and occurs primarily in the third and fourth quarter of the year. The increase of $76,000 is primarily due to additional freight revenue earned in the third quarter of 2014being shown in revenue, while in 2013, net freight was shown as a reduction in the direct cost of revenue.
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Our direct cost of revenue was $786,000 compared to $598,000 for the three months ended September 30, 2014 and 2013, respectively. This produced a gross margin $286,000 compared to $397,000 for the three months ended September 30, 2014 and 2013, respectively. The decrease in gross margin is due to management’s lowering of the target gross margin of farm production. This is an estimate, which will be finalized by the year ending December 31, 2014.
Operating expenses during the three months ended September 30, 2014 and 2013were $831,000 and $1,500,000, respectively. The decrease of $669,000 is primarily due to a reduction of stock-based compensation of $583,000, a reduction in professional fees of $184,000 offset byan increase in labor expenses of $122,000 due to a workforce expansion. Therefore, for operations, during the three months ended September 30, 2014 and 2013, we recognized a net loss of $545,000 and $1,103,000, respectively.
Our non-operating expenses increased from $237,000 to $315,000 for the three months ended September 30, 2013 and 2014, respectively. The increase of $78,000 is primarily due to a $110,000 decrease of interest and warrant expense offset by a $108,000 increase in other income/expense and an $80,000 gain on debt extinguishment in 2013. The decrease of interest expense is due to the conversion of debt to preferred shares and the decrease in other income is due to a gain recognized on the recovery of an asset in the third quarter of 2013.
For the Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013
During the nine months ended September 30, 2014, we recognized revenues from continuing operations of $1,087,000, as compared to $1,054,000 in revenues during the nine months ended September 30, 2013. Our primary revenue source is from the sale of agriculture products grown by us. The sale of these products is highly seasonal and occurs primarily in the third and fourth quarter of the year. The increase of $33,000 is primarily due to additional freight income earned in 2014being shown in revenue, while in 2013, net freight was shown as a reduction in the direct cost of revenue.
Our direct cost of revenue was $786,000 compared to $639,000 for the nine months ended September 30, 2014 and 2013, respectively. This produced a gross margin $301,000 compared to $415,000 for the nine months ended September 30, 2014 and 2013, respectively.
Operating expenses from operations during the nine months ended September 30, 2014 and 2013 were $2,924,000 and $5,085,000, respectively. The decrease of $2,161,000 is primarily due to: a $1,705,000 decrease in stock-based compensation expenses due to the cancellation of certain awards; a $577,000 decrease in professional fees due to investor relations and legal fees, and offset by a $125,000 increase in labor expenses due to workforce expansion. Therefore, for operations, during the nine months ended September 30, 2014 and 2013, we recognized a net loss of $2,623,000 and $4,670,000, respectively.
For the nine months ended September 30, 2014 and 2013, we recognized a net loss of $4,772,000 and$6,179,000, respectively. The decreased loss of $1,407,000 is due to the factors mentioned above and partially offset by an increase of preferred dividends of $1,130,000.
Liquidity and Capital Resources
To date, we have funded our operations primarily from the following sources:
-
Equity proceeds through private placements of securities of Two Rivers Water & Farming Company and certain of its direct and indirect subsidiaries;
-
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 options.
21
As of September 30, 2014, we had no available line or letters of credit and do not intend to seek any such financing in the foreseeable future.
Cash flow from operations has not historically been sufficient to sustain our operations without the above additional sources of capital. As of September 30, 2014, we had cash and cash equivalents of $762,000. Cash flow consumed by our operating activities totaled $3.5 million for the nine months ended September 30, 2014, compared to operating activities consuming $2.6million for the ninemonths ended September 30, 2013. The increase in the cash consumed by our operating activities was largely due to greater cash expenses in operations, an increase in accounts receivable and farm product, partially offset by increase in payables and accrued liabilities.
Cash used in investing activities was $1.6 million for the nine months ended September 30, 2014 compared to use of cash of $1.3 million for the nine months ended September 30, 2013. During the nine months ended September 30, 2014, we purchased $300,000 of land, water shares and infrastructure, added $1,256,000 of equipment and added investments of $8,000. During the nine months ended September 30, 2013, we purchased $1.3 million of land, water shares and infrastructure, added $34,000 of equipment and sold equipment for $58,000.
Cash flows generated by our financing activities for the nine months ended September 30, 2014, were $3.7 million compared to $3.6 million for the nine months ended September 30, 2013. During the nine months ended September 30, 2014, we received gross proceeds of $4.7 million from sales of preferred units of our subsidiary TR Capital Partners, LLC and we incurred additional long termindebtedness of $274,000 in connection with land purchases. During that period, we paid $636,000 in preferred dividends and applied $569,000 to pay amounts due under certain notes.
We currently expect that our cash expenditures will increase for the foreseeable future, as we seek to further expand our farmland business and to initiate operations of GrowCo. As a result, our existing cash and cash equivalents and other working capital may not be sufficient to meet all of the projected cash needs contemplated by our business strategies for the remainder of 2014 and for 2015. To the extent our cash and cash equivalents and other working capital are insufficient to fund our planned activities, we may need to either slow our growth initiatives or raise additional funds through public or private equity or debt financings. We also may need to raise additional funds in the event we determine in the future to effect one or more acquisitions of businesses, technologies and products. If additional funding is required, we cannot assure you that we will be able to effect an equity or debt financing on terms acceptable to us or at all.
Critical Accounting Policies
We have identified the policies below as critical to our business operations and the understanding of our results from operations. The impact and any associated risks related to these policies on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Conditions and Results of Operations where such policies affect our reported and expected financial results. For a detailed discussion of the application of these and other accounting policies, see Note 2 of the notes to consolidated financial statements included elsewhere in this Form 10-Q. Our preparation of such consolidated financial statements and this Form 10-Q requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.
Revenue Recognition
We follow specific and detailed guidelines in measuring revenue; however, certain judgments may affect the application of our revenue policy. Revenue results are difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause our operating results to vary significantly from quarter to quarter and could result in future operating losses.
22
Goodwill and Intangible Assets
We have acquired water shares in Huerfano-Cucharas Irrigation Company, which is considered an intangible asset and shown on our balance sheet as part of “Water assets”. Currently, these shares are recorded at purchase price less our pro rata share of the negative net worth in HCIC Holdings, LLC. Management evaluates the carrying value, and if necessary, will establish an impairment of value to reflect current fair market value. Currently, there are no impairments on the water shares.
In 2012, we acquired a produce business, which is considered an intangible asset and shown on our balance sheet as “Intangible assets, net.” Management evaluated the purchase price of $1.0 million and allocated this price to customer list, trade name and goodwill. For a detailed allocation, please see Note 3 of the Notes to Consolidated Financial Statements included elsewhere in the Form 10-Q.
Capitalization of Certain Interest Expenses
As part of our GrowCo development operations, which began in July, the Company began to incur large construction costs which are capitalized. The related interest expenses incurred related to these expenditures can be capitalized as well per ASC 720-15. This guidance states that interest should be capitalized in relation to the following assets: (i) assets that are constructed or otherwise produced for an entity’s own use, (ii) assets intended for sale or lease that are constructed or otherwise produced as discrete projects, and (iii) investments accounted for by the equity method while the investee has activities in progress necessary to commence its planned principal operations. As the GrowCo assets classify under the second point, the Company began the process of calculating interest costs to be capitalized each quarter. Interest capitalization begins when the expenditures begin and interest is being incurred. Management independently determines the start point for each individual project when it commences. At the end of each quarter, management will then take the average accumulated expenditures for each project, multiplied by the interest rate on the associated debt (or the weighted average rate on all debt if no debt is specifically associated) to arrive at a capitalized interest amount. This amount will be booked as an adjustment to interest expense each quarter. Once the construction process ends and the asset is deemed ready for use, capitalization of interest will cease.
Impairment Policy
At least once every year, management examines all of our assets for proper valuation and to determine if an impairment is necessary. In terms of real estate owned, this impairment examination also includes the accumulated depreciation. Management examines market valuations and if an additional impairment is necessary for lower of cost or market, then an impairment charge is recorded.
Inflation
We do not believe that inflation will have a material negative impact on our operations in the foreseeable future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to the impact of interest rate changes and change in the market values of our real estate properties and water assets. Because we had no market risk sensitive instruments outstanding as of September 30, 2014, it was determined that there was no material market risk exposure to our consolidated financial position, results of operations, or cash flows as of such date. We do not enter into derivatives or other financial instruments for trading or speculative purposes.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September30, 2014. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2014, and due to the material weakness in our internal control over financial reporting described in our Management's Annual Report on Internal Control over Financial Reporting accompanying our Annual Report on Form 10-K for the year ended December 31, 2013, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures over financial reporting were not effective during reporting periods ended December 31, 2013 and September 30, 2014 as discussed below.
Changes in Internal Control over Financial Reporting and Remediation Efforts
During the nine months ended September 30, 2014, no changes other than those in conjunction with certain remediation efforts described below, were identified to our internal control over financial reporting that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
In the nine months ended September 30, 2014, we continued to implement the following measures that we initiated in fiscal 2013 to improve our internal control over the financial reporting process.
· We engaged an outside review team in 2014 to review and evaluate our on-going accounting processes, from the recording of transactions through the publishing of our financial statements
· We have hired a part time controller who will be responsible for, among other things, overseeing our internal control processes.
We plan to perform another formal assessment of our internal control over financial reporting by no later than December 31, 2014. In addition, we will continue to monitor the effectiveness of our internal control over financial reporting and will seek to employ any additional tools and resources deemed necessary to ensure that our financial statements are fairly stated in all material respects.
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PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
The risks described in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2013, could materially and adversely affect our business, financial condition and results of operations. Those risk factors do not identify all risks that we face, and operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.
ITEM 6. EXHIBITS
The following exhibits are being filed as part of this Form 10Q:
Exhibit |
|
|
31.1 |
| Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
31.2 |
| Certification of Principal Financial Officer pursuant to the Section 302 of the Sarbanes-Oxley Act |
32.1 |
| Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act |
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| TWO RIVERS WATER & FARMING COMPANY | ||
Date: November 12, 2014 |
| By: |
| /s/ Wayne Harding |
|
|
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| Wayne Harding |
|
|
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| Chief Financial Officer |
25
EXHIBIT INDEX
26