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Pure Cycle Corporation Announces Fiscal 2010 Results

Our general and administrative expenses ("G&A expenses") decreased approximately 7% as a result of cost reduction efforts undertaken by management in light of the weakened economy, particularly in the housing market, and delays in development within our service areas. Specifically, we reduced the level of outside legal and other professional services. More specific details of the decreases in our G&A expenses are included in our Form 10-K which was filed with the Securities and Exchange Commission on November 12, 2010. 

Our Tap Participation Fee ("TPF") expense consists of fees due and payable once we have sold a water tap and received the consideration due for such water tap. The Tap Participation Fee liability, which is included in our summarized statement of financial position below, represents the fair value of the estimated amounts payable to HP A&M as a result of the assets we acquired from HP A&M in 2006. The increase in the liability is due to the imputed interested.  

Our summarized financial position as of August 31, 2010 and 2009 is as follows: 

  August 31, 2010 August 31, 2009 $ Change
Assets      
 Cash, cash equivalents and marketable securities  $ 1,446,100  $ 3,707,300  $ (2,261,200)
 Other current assets  373,500  283,100  90,400
 Total current assets  1,819,600  3,990,400  (2,170,800)
 Investments in water and water systems, net  102,931,300  103,159,600  (228,300)
 Other long-term assets  1,626,900  941,100  685,800
 Total assets  $ 106,377,800  $ 108,091,100  $ (1,713,300)
       
Liabilities and Shareholders' Equity      
 Current liabilities  $ 171,300  $ 138,100  $ 33,200
 Tap participation fee payable to HP A&M  61,141,300  57,521,300  3,620,000
 Other long-term liabilities  2,605,200  2,662,500  (57,300)
 Total liabilities   63,917,800  60,321,900  3,595,900
 Total shareholders' equity   42,460,000  47,769,200  (5,309,200)
 Total liabilities and shareholders' equity  $ 106,377,800  $ 108,091,100  $ (1,713,300)

Levels of cash, cash equivalents and marketable securities have declined due mainly to the use of cash in operations. Our August 31, 2010 cash balance was also impacted by our $700,000 escrow payment related to the Sky Ranch acquisition which was announced on August 4, 2010. Reference is made to the Management's, Discussion and Analysis section of our August 31, 2010 Form 10-K for further information on cash used by operations. Subsequent to August 31, 2010, we completed the sale of approximately $5.5 million of common stock and the issuance of a convertible note with a principal amount of $5.2 million. Approximately $6.3 million of the $10.7 million we raised subsequent to August 31, 2010, was used to complete our acquisition of the Sky Ranch property, which is described in greater detail in our Form 10-K. The remaining $4.4 million will be used for general corporate working capital purposes.   

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