Pure Cycle Corp. (PCYO, Financial) filed Quarterly Report for the period ended 2009-02-28.
PureCycle Corporation is an investor-owned water company providing water and wastewater services including water production storage treatment distribution wastewater collection and treatment irrigation water treatment and distribution construction management billing and collection and emergency response to its customers located in the greater Denver metropolitan area. Pure Cycle Corp. has a market cap of $57.8 million; its shares were traded at around $2.86 with and P/S ratio of 205.
Interest income totaled approximately $22,300 and $70,700 for the three months ended February 28, 2009 and February 29, 2008, respectively. Interest income totaled approximately $57,600 and $197,700 for the six months ended February 28, 2009 and February 29, 2008, respectively. This represents interest earned on the temporary investment of capital, interest accrued on our notes receivable from related parties and interest accrued on the construction proceeds receivable from Arapahoe County. The decrease is due to the continued decline in interest rates both on our invested capital and for the notes receivable from related parties due to lower interest rates. Our temporary investments are invested in overnight money market funds related to treasury obligations and subsequent to February 28, 2009, we invested approximately $3.0 million in certificates of deposit with scheduled maturities and set interest rates, and therefore, our temporary investments are not subject to market risks. Our certificates of deposit are held by various financial institutions in amounts less than federally insured limits.
Imputed interest expense related to the Tap Participation Fee payable to HP A&M totaled approximately $841,000 and $1.1 million for the three months ended February 28, 2009 and February 29, 2008, respectively. Imputed interest expense related to the Tap Participation Fee payable to HP A&M totaled approximately $2.0 million and $2.1 million for the six months ended February 28, 2009 and February 29, 2008, respectively. This represents the expensed portion of the difference between the relative fair value of the liability and the net present value of the liability recognized under the effective interest method. See also Note 1 to the accompanying financial statements for discussion on the revaluation of the Tap Participation Fee and the impact to the February 28, 2009 financial statements.
Cash used by operating activities was approximately $836,500 and $678,600 for the six months ended February 28, 2009 and February 29, 2008, respectively. Despite the decreases in our general and administrative expenses and our net operating losses as described above, cash used by operations increased $157,900 , or 23%, period over period. This is mainly due to a decrease in interest earned on our temporary investments of capital and an increase in professional fees mainly related to the Lowry Range negotiations. In addition, our prepaid expenses increased approximately $60,200 since August 31, 2008, which is a result mainly of annual dues which are paid early in the calendar year and then expensed throughout the fiscal year.
On October 31, 2003 we entered into the Denver Groundwater Purchase Agreement (the DGPA) with the developer of Sky Ranch. The DGPA provides us the right to purchase a total of 223 acre-feet of adjudicated decreed water rights owned by the developer. Under the DGPA, we can acquire 44.6 acre-feet of water per year (or 20% of the total 223 acre-feet) for a payment of $50,000 (acquiring the entire 223 acre-feet requires payments totaling $250,000). On March 26, 2004 and May 26, 2005, we purchased a total of 89.2 acre-feet of Denver aquifer groundwater for payments totaling $100,000. During our fiscal 2007 and fiscal 2006 we made the two required $50,000 payments pursuant to the DGPA, for which we have not received the water rights deeds from the developer, nor has the developer cashed either of the payments. In November, 2007, the developer of Sky Ranch filed for Chapter 11 bankruptcy protection. Because of the bankruptcy and since we have not received our water rights deeds from Sky Ranch, in November 2007 we cancelled the two uncashed checks issued to Sky Ranch and reversed the $100,000 that was included in the Prepaid Expenses account on our Balance Sheet. We will continue to follow the bankruptcy proceedings of Sky Ranch and vigorously seek to enforce our rights under the DGPA and other Sky Ranch agreements.
Financing activities provided approximately $2,400 during the six months ended February 28, 2009, predominately due to approximately $41,100 of construction proceed payments received from Arapahoe County, which were offset by the approximately $37,500 Tap Participation Fee payments made to HP A&M related to the sale of the non-irrigated land. Financing activities used approximately $27,900 during the six months ended February 29, 2008. This was mainly due to the repayment of approximately $26,600 of related party debt.
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PureCycle Corporation is an investor-owned water company providing water and wastewater services including water production storage treatment distribution wastewater collection and treatment irrigation water treatment and distribution construction management billing and collection and emergency response to its customers located in the greater Denver metropolitan area. Pure Cycle Corp. has a market cap of $57.8 million; its shares were traded at around $2.86 with and P/S ratio of 205.
Highlight of Business Operations:
We did not sell any water taps or wastewater taps during the three or six months ended February 28, 2009 and February 29, 2008. We received approximately $23,400 and $26,100 from the sale of water during the three months ended February 28, 2009 and February 29, 2008, respectively, and we received $56,500 and $65,100, respectively, from the sale of water during the six months ended February 28, 2009 and February 29, 2008, respectively. We received approximately $16,700 from monthly wastewater service fees during both three month periods presented, and approximately $33,500 from monthly wastewater service fees during both six month periods presented. Currently all monthly water and wastewater fees are generated utilizing our Rangeview Water Supply which is defined below. See Critical Accounting Policies below regarding our revenue recognition policies for tap fees and construction fees.Interest income totaled approximately $22,300 and $70,700 for the three months ended February 28, 2009 and February 29, 2008, respectively. Interest income totaled approximately $57,600 and $197,700 for the six months ended February 28, 2009 and February 29, 2008, respectively. This represents interest earned on the temporary investment of capital, interest accrued on our notes receivable from related parties and interest accrued on the construction proceeds receivable from Arapahoe County. The decrease is due to the continued decline in interest rates both on our invested capital and for the notes receivable from related parties due to lower interest rates. Our temporary investments are invested in overnight money market funds related to treasury obligations and subsequent to February 28, 2009, we invested approximately $3.0 million in certificates of deposit with scheduled maturities and set interest rates, and therefore, our temporary investments are not subject to market risks. Our certificates of deposit are held by various financial institutions in amounts less than federally insured limits.
Imputed interest expense related to the Tap Participation Fee payable to HP A&M totaled approximately $841,000 and $1.1 million for the three months ended February 28, 2009 and February 29, 2008, respectively. Imputed interest expense related to the Tap Participation Fee payable to HP A&M totaled approximately $2.0 million and $2.1 million for the six months ended February 28, 2009 and February 29, 2008, respectively. This represents the expensed portion of the difference between the relative fair value of the liability and the net present value of the liability recognized under the effective interest method. See also Note 1 to the accompanying financial statements for discussion on the revaluation of the Tap Participation Fee and the impact to the February 28, 2009 financial statements.
Cash used by operating activities was approximately $836,500 and $678,600 for the six months ended February 28, 2009 and February 29, 2008, respectively. Despite the decreases in our general and administrative expenses and our net operating losses as described above, cash used by operations increased $157,900 , or 23%, period over period. This is mainly due to a decrease in interest earned on our temporary investments of capital and an increase in professional fees mainly related to the Lowry Range negotiations. In addition, our prepaid expenses increased approximately $60,200 since August 31, 2008, which is a result mainly of annual dues which are paid early in the calendar year and then expensed throughout the fiscal year.
On October 31, 2003 we entered into the Denver Groundwater Purchase Agreement (the DGPA) with the developer of Sky Ranch. The DGPA provides us the right to purchase a total of 223 acre-feet of adjudicated decreed water rights owned by the developer. Under the DGPA, we can acquire 44.6 acre-feet of water per year (or 20% of the total 223 acre-feet) for a payment of $50,000 (acquiring the entire 223 acre-feet requires payments totaling $250,000). On March 26, 2004 and May 26, 2005, we purchased a total of 89.2 acre-feet of Denver aquifer groundwater for payments totaling $100,000. During our fiscal 2007 and fiscal 2006 we made the two required $50,000 payments pursuant to the DGPA, for which we have not received the water rights deeds from the developer, nor has the developer cashed either of the payments. In November, 2007, the developer of Sky Ranch filed for Chapter 11 bankruptcy protection. Because of the bankruptcy and since we have not received our water rights deeds from Sky Ranch, in November 2007 we cancelled the two uncashed checks issued to Sky Ranch and reversed the $100,000 that was included in the Prepaid Expenses account on our Balance Sheet. We will continue to follow the bankruptcy proceedings of Sky Ranch and vigorously seek to enforce our rights under the DGPA and other Sky Ranch agreements.
Financing activities provided approximately $2,400 during the six months ended February 28, 2009, predominately due to approximately $41,100 of construction proceed payments received from Arapahoe County, which were offset by the approximately $37,500 Tap Participation Fee payments made to HP A&M related to the sale of the non-irrigated land. Financing activities used approximately $27,900 during the six months ended February 29, 2008. This was mainly due to the repayment of approximately $26,600 of related party debt.
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