Securities and Exchange Commission
Washington, D.C. 20549
__________________
Form 10-QSB
__________________________
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2000
___ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 0-8814
PURE CYCLE CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 84-0705083
(State of incorporation) (I.R.S. Employer
Identification Number)
8451 Delaware St., Thornton, CO 80260
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (303) 292 - 3456
_______________________________________________________________________
___
____
N/A
(Former name, former address and former fiscal year, if changed since
last
report.)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act
during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common
equity, as of November 30, 2000:
Common Stock, 1/3 of $.01 par Value 77,536,429
(Class) (Number of
Shares)
Transitional Small business Disclosure Format (Check one): Yes [ ]; No [x]
PURE CYCLE CORPORATION
INDEX TO NOVEMBER 30, 2000 FORM 10-QSB
Page
Part I - Financial Information (unaudited)
Balance Sheets - November 30, 2000 and 3
August 31, 2000
Statements of Operations - For the three months 4
ended November 30, 2000 and 1999
Statements of Cash Flows - For the three months 5
ended November 30, 2000 and 1999
Notes to Financial Statements 6
Management's Discussion and Analysis of 7
Results of Operations and Financial Condition
Signature Page 8
"SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Statements that are not historical facts contained in this Quarterly
Report on Form 10-QSB are forward
looking statements that involve risk and uncertainties that could cause
actual
results to differ from projected
results. Factors that could cause actual results to differ materially
include,
among others: general economic
conditions, the market price of water, changes in applicable statutory and
regulatory requirements, changes in
technology, uncertainties in the estimation of water available under decrees
and
timing of development, the
strength and financial resources of the Company's competitors, the Company's
ability to find and retain skilled
personnel, climatic conditions, labor relations, availability and cost of
material and equipment, delays in the
anticipated permit and start-up dates, environmental risks, and the results
of
financing efforts.
2
PURE CYCLE CORPORATION
BALANCE SHEETS
(unaudited)
November 30, August 31,
ASSETS 2000 2000
Current assets:
Cash and cash equivalents $ 608,636 $ 821,124
Trade accounts recievable 10,165 18,619
Accounts receivable - stock subscriptions -- 114,500
Prepaid expenses and other current assets 11,259 11,259
Total current assets 630,060 965,502
Investment in water and systems:
Rangeview water supply 13,444,746 13,422,134
Paradise water supply 5,484,868 5,484,868
Rangeview water system 126,611 126,611
Total investment in water and systems 19,056,225
19,033,613
Note receivable, including accrued interest 353,755 347,162
Other assets 1,441 1,441
$ 20,041,481 $ 20,347,718
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 179,465 6,955
Billings in excess of costs and estimated earnings (Note 2)
197,703
772,500
Accrued liabilities 5,300 21,692
Total current liabilities 382,468 801,147
Long-term debt - related parties, including accrued interest 4,350,171
4,287,251
Participating interests in Rangeview
water rights 11,090,630 11,090,630
Stockholders' equity:
Preferred stock, par value $.001 per
share; authorized - 25,000,000 shares:
Series A1 - 1,600,000 shares issued and outstanding 1,600
1,600
Series B - 432,514 shares issued and outstanding 433
433
Series C - 3,200,000 shares issued and outstanding
3,200 3,200
Series C1 - 500,000 shares issued and outstanding
500 500
Series C2 - 666,667 shares issued and outstanding
667 667
Series C3 - 1,666,667 shares issued and outstanding
1,667 1,667
Common stock, par value 1/3 of $.01 per
share; authorized - 135,000,000 shares;
78,439,763 shares issued and 77,536,429 shares outstanding
261,584
261,584
Additional paid-in capital 24,583,910 24,583,910
Accumulated deficit (20,499,849) (20,549,371)
Treasury stock at cost; 903,334 shares (135,500)
(135,500)
Total stockholders' equity 4,218,212 4,168,690
$ 20,041,481 $ 20,347,718
See Accompanying Notes to the Financial Statements
3
PURE CYCLE CORPORATION
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
November 30, November 30,
2000 1999
Water service revenue
Water construction revenues $ 574,798 $ 312,112
Water usage fees 17,909 6,871
592,707 318,983
Construction costs incurred (Note 2) ( 441,320) (242,066)
Water service operating expense ( 2,219) ( 1,300)
Gross Margin 149,168 75,617
General and administrative expense ( 51,008) ( 55,975)
Other income (expense):
Interest income 14,282 16,496
Interest expense:
Related parties ( 62,920) ( 58,549)
Other -- 15,374
Net income (loss) $49,522 $(7,037)
Basic and diluted net loss per common share $ --* $ --*
Weighted average common shares outstanding 77,536,429
77,536,429
* less than $.01 per share
See Accompanying Notes to the Financial Statements
4
PURE CYCLE CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
Three
Months Ended
November 30, November 30,
2000 1999
Cash flows from operating activities:
Net income (loss) $49,522 $(7,037)
Adjustments to reconcile
net loss to net cash provided by
operating activities:
Disposal of other assets --
21,155
Increase in accrued interest
on note receivable (6,593) (
5,876)
Increase in accrued interest on long
term debt and other non-current
liabilities 62,920 58,549
Changes in operating assets and liabilities:
Accounts receivable 8,454 6,106
Billings in excess of costs and estimated earnings
(574,797) (312,112)
Accounts payable and accrued liabilities 156,118
87,247
Net cash provided by (used in)
operating activities (304,376)
(151,966)
Cash flows from investing activities:
Investments in water supply ( 22,612) (18,453)
Investment in Rangeview water system -
-
--
Net cash used in investing activities
(22,612) (18,453)
Cash flows from financing activities:
Proceeds from sale of common stock 114,500
120,000
Net cash provided by financing activities
114,500 120,000
Net increase (decrease)
in cash and cash
equivalents (212,488) (50,421)
Cash and cash equivalents
beginning of period 821,124
981,025
Cash and cash equivalents
end of period $ 608,636 $ 930,604
See Accompanying Notes to the Financial Statements
5
PURE CYCLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING PRINCIPLES
The balance sheet as of November 30, 2000 and the statements of
operations
for the three months ended
November 30, 2000 and 1999 and the statements of cash flows for the three
months
ended November 30, 2000 and
1999, have been prepared by the Company and have not been audited. In the
opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position,
results of operations and cash flows at November 30, 2000 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's fiscal
year 2000 Annual Report on Form 10-KSB. The results of operations for
interim
periods presented are not
necessarily indicative of the operating results for the full year.
NOTE 2 - CONSTRUCTION DEPOSITS
Pursuant to its Service Agreements, the Company is obligated to provide
water and wastewater service to a
400 acre development which will include the construction of a 500-bed
Academic
Model Juvenile Facility ("Model
Facility"). The Model Facility paid Water System Development and Water
Resources Charges to fund
construction of water and wastewater systems. Pursuant to its Service
Agreements, the Company has received
$1,998,014 of the total charges of $2,013,495 to be paid by the Model
Facility.
Additionally, the Company has
received $154,800 from the State of Colorado for the construction of
additional
facilities related to the wastewater
plant undertaken by the Company on behalf of the State of Colorado. The
Company
has completed construction of
the water facilities and has substantially completed (with the exception of
holding retainage) all of the construction
of wastewater facilities. The Model Facility is projected to open in May
2001.
Projected cost for construction of
the combined water and sewer capital project costs of $1,652,895.
At November 30, 2000, the estimated period to complete the remaining
work
for the wastewater facility is
approximately 2 months, and the Company expects to collect substantially all
related accounts receivable and costs
and estimated earnings in excess of billings on uncompleted contracts as of
November 30, 2000 within one year.
NOTE 3 - STOCKHOLDERS' EQUITY
In August 2000, the Company entered into a Plan of Recapitalization and
a
Stock Purchase Agreement
whereby the Company issued 1,666,667 shares of Series C-3 Preferred Stock to
Mr.
Thomas Clark in exchange for
1,666,667 shares of common stock owned by Mr. Clark.
In August 2000, the Company committed to issue, and four accredited
investors committed to purchase, a total
of 763,333 shares of common stock, at $.15 per share. As of August 31, 2000,
the
Company has not issued these
shares, nor received payment from the investors. Payment was received from
these
investors subsequent to year end
as follows: $10,000 on September 28, $4,500 on October 2, $50,000 on October
26, and $50,000 on October 27.
In September 1999, the Company entered into a Plan of Recapitalization
and
a Stock Purchase Agreement
whereby the Company issued 666,667 shares of Series C-2 Preferred Stock to
Mr.
Thomas Clark in exchange for
666,667 shares of common stock owned by Mr. Clark. The Company sold 666,667
shares of the Company's
Common Stock at $.18 per share to three accredited investor. Proceeds to the
Company were $120,000. The
shares were issued under Section 4(2) of the Securities Act of 1933.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
During the three months ended November 30, 2000, the Company generated
water service revenues of
$17,909 compared to $6,871 for the three months ended November 30, 1999 due
primarily to increased water sales
to the Model Facility. During the quarter ended November 30, 2000, the
Company
delivered approximately 12.1
million gallons of water to customers in the Service Area generating revenues
from water sales of $17,909
compared to the delivery of 5.5 million gallon generating revenues of $6,871
during the three months ended
November 30, 1999. The Company incurred water service operating costs of
$2,217
for the three months ending
November 30, 2000 as compared to $1,300 for the three month ending November
30,
1999, due to an increase in
water deliveries. During the three months ended November 30, 2000, the
Company
recognized construction
revenues of $574,798 compared to $312,112 for the three months ended November
30, 1999 based on the
percentage-of-completion of the project for the Model Facility. The Company
incurred construction costs of
$441,320 during the three months ended November 30, 2000 compared to $242,066
during the three months ended
November 30, 1999 and has remaining construction deposits totaling $197,703
as
of November 30, 2000. The
Company recognized revenues from construction based on percentage-of-
completion
methodology. As of
November 30, 2000, construction of the water and wastewater facilities for
the
Model Facility were approximately
91% complete.
General and administrative expenses for the three months ended November
30, 2000 were approximately
$11,000 higher than for the period ended November 30, 1999, primarily because
of
an increase in professional
fees. Net income for the three months ended November 30, 2000 was $49,522
compared to a net loss of $7,037 for
the three month ended November 30, 1999 primarily because of the revenues
recognized pursuant to the
percentage-of-completion of the construction of the water and wastewater
systems
for the Model Facility.
Liquidity and Capital Resources
At November 30, 2000, current assets exceed current liabilities by
$247,592 and, the Company had cash and
cash equivalents of $630,060.
The Company believes it has sufficient working capital and available
credit to fund its operations for the next
year or longer. There can be no assurances, however, that the Company will
be
successful in marketing the water
from its two primary water projects in the near term. In the event sales are
not achieved, the Company may sell
additional participating interests in its water projects, incur additional
short
or long-term debt or seek to sell
additional shares of common or preferred stock or stock purchase warrants, as
deemed necessary by the Company,
to generate working capital.
Development of any of the water rights that the Company has, or is
seeking
to acquire, will require substantial
capital investment by the Company. Any such additional capital for the
development of the water rights is
anticipated to be financed through the sale of water taps and water delivery
charges to a city or municipality. A
water tap charge refers to a charge imposed by a municipality to permit a
water
user to access a water delivery
system (i.e. a single-family home's tap into the municipal water system), and
a
water delivery charge refers to a
water user's monthly water bill generally based on a per 1,000 gallons of
water
consumed.
7
PURE CYCLE CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly authorized.
PURE CYCLE CORPORATION
Date:
January 12, 1999 /S/ Thomas P. Clark
Thomas P. Clark,
President
Date:
January 12, 1999 /S/ Mark W. Harding
Mark W. Harding,
Chief Financial Officer
8
