TWO RIVERS WATER & FARMING (TURV) 10-Q 12 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 08, 2013
Document and Entity Information:	'	'
Entity Registrant Name	'TWO RIVERS WATER & FARMING Co	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-13	'
Amendment Flag	'false	'
Entity Central Index Key	'0001302946	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Current Reporting Status	'Yes	'
Entity Voluntary Filers	'No	'
Entity Well-known Seasoned Issuer	'No	'
Document Fiscal Year Focus	'2013	'
Document Fiscal Period Focus	'Q3	'
Entity Common Stock, Shares Outstanding	'	24,889,548

Statement_of_Financial_Positio

Statement of Financial Position (USD $)	Sep. 30, 2013	Dec. 30, 2012
In Thousands, unless otherwise specified
Balance Sheets	'	'
Cash and Cash Equivalents, at Carrying Value	$1,010	$1,340
Accounts Receivable, Net, Current	394	184
Farm Product	433	49
Other Assets, Current	186	74
Assets, Current	2,023	1,647
Property, Plant and Equipment, Gross	1,831	2,397
Land	5,013	3,919
Water assets	31,536	35,388
Intangible assets, net	1,007	1,037
Other Assets, Noncurrent	112	64
Assets, Noncurrent	39,499	42,805
Assets	41,522	44,452
Accounts Payable, Current	250	298
Accrued Liabilities, Current	305	830
Notes Payable, Current	1,509	10,978
Liabilities, Current	2,064	12,106
Other Long-term Debt, Noncurrent	11,829	4,368
Liabilities	13,893	16,474
Preferred Stock, Value, Issued	2,851	2,851
Common Stock, Value, Issued	25	24
Additional Paid in Capital, Common Stock	62,484	56,703
Retained Earnings (Accumulated Deficit)	-47,686	-41,440
Stockholders' Equity Attributable to Noncontrolling Interest	9,955	9,840
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	27,629	27,978
Liabilities and Equity	$41,522	$44,452

Statement_of_Financial_Positio1

Statement of Financial Position - Parenthetical	Sep. 30, 2013	Dec. 30, 2012
In Thousands, unless otherwise specified
Balance Sheets	'	'
Preferred Stock, Shares Authorized	4,000,000	4,000,000
Preferred Stock, Shares Issued	3,794,000	3,794,000
Preferred Stock, Shares Outstanding	3,794,000	3,794,000
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares Issued	24,689,548	24,689,548
Common Stock, Shares Outstanding	24,028,202	24,028,202

Statement_of_Income

Statement of Income (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues	'	'	'	'
Farm Revenue	$946	$381	$994	$381
Water revenue	40	34	40	34
Member Assessments	'	'	11	36
Other Revenue, Net	9	-6	9	5
Revenues	995	409	1,054	456
Cost of Revenue	'	'	'	'
Direct cost of revenue	598	280	639	280
Cost of Revenue	598	280	639	280
Gross Profit	397	129	415	176
Operating Expenses	'	'	'	'
Depreciation, Depletion and Amortization	123	107	362	235
General and Administrative Expense	1,377	2,018	4,723	6,649
Operating Expenses	1,500	2,125	5,085	6,884
Operating Income (Loss)	-1,103	-1,996	-4,670	-6,708
Nonoperating Income (Expense)	'	'	'	'
Other Nonoperating Income (Expense)	9	-45	108	-81
Nonoperating Income (Expense)	9	-45	108	-81
Interest and Debt Expense	'	'	'	'
Interest Expense	299	1,028	670	2,589
Warrant expense	27	18	55	315
Interest and Debt Expense	326	1,046	725	2,904
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest	-1,420	-3,087	-5,287	-9,693
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest	-1,420	-3,087	-5,287	-9,693
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest	-14	8	-6	4
Net Income (Loss) Attributable to Parent	-1,434	-3,079	-5,293	-9,689
ComprehensiveIncomeNetOfTax	($1,434)	($3,079)	($5,293)	($9,689)
Earnings Per Share	'	'	'	'
Weighted Average Number of Shares Outstanding, Basic	24,940	23,910	24,824	23,564
Weighted Average Number of Shares Outstanding, Diluted	24,940	23,910	24,824	23,564

Statement_of_Cash_Flows

Statement of Cash Flows (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Net Cash Provided by (Used in) Operating Activities	'	'
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	($5,287)	($9,689)
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities	'	'
Depreciation	362	235
Amortization	153	1,402
Assumption of assessments due to purchase of HCIC shares	80	'
Loss on disposal of assets	156	'
Stock based compensation and warrants expense	2,158	3,051
Issuance of Stock and Warrants for Services or Claims	939	742
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities	-1,439	-4,259
Increase (Decrease) in Operating Assets	'	'
Decreae (increase) in advances & accounts receivable	-211	-265
Increase in farm products	-384	-421
Increase (Decrease) in Prepaid Expense and Other Assets	34	-91
Increase (Decrease) in Operating Assets	-561	-777
Increase (Decrease) in Operating Liabilities	'	'
Increase (Decrease) in Accounts Payable	-48	-220
Increase (Decrease) in Accrued Liabilities	-525	1,081
Increase (Decrease) in Operating Capital	-573	861
Net Cash Provided by (Used in) Operating Activities	-2,573	-4,175
Net Cash Provided by (Used in) Investing Activities	'	'
Payments to Acquire Property, Plant, and Equipment	-34	-722
Proceeds from Sale of Other Productive Assets	58	68
Purchase of land, watershares, infrastructure	-1,335	-748
Net Cash Provided by (Used in) Investing Activities	-1,311	-1,402
Net Cash Provided by (Used in) Financing Activities	'	'
Proceeds from issuance of bridge loan	'	3,994
Payment of offering costs	-223	-45
Proceeds from (Repayments of) Notes Payable	-422	-38
Proceeds from Issuance of Preferred Stock and Preference Stock	1,600	'
Proceeds from Issuance of Long-term Debt	2,599	1,117
Net Cash Provided by (Used in) Financing Activities	3,554	5,028
Cash and Cash Equivalents, Period Increase (Decrease)	-330	-549
Cash and Cash Equivalents, at Carrying Value	1,340	777
Cash and Cash Equivalents, at Carrying Value	$1,010	$228

Note_1_Organization_and_Busine

Note 1 - Organization and Business	9 Months Ended
	Sep. 30, 2013
Notes	'
Note 1 - Organization and Business	'
	NOTE 1 – ORGANIZATION AND BUSINESS
	Our Business
	Two Rivershas developed and operates a new farming and water business model suitable for arid regions in the Southwestern United States whereby the Company synergistically integrates high value fruit and vegetable farming and wholesale water distribution into one company, utilizing a practice of rotational farm fallowing.  Rotational farm fallowing, as it applies to water, is a best methods farm practice whereby portions of farm acreage are temporarily fallowedin cyclic rotation to give soil an opportunity to reconstitute itself.  As a result of fallowing, an increment of irrigation water can be made available for municipal use without permanently drying up irrigated farmland.  Collaborative rotational farm fallowing agreements between farmers and municipalities make a portionof irrigation water available for urban use.The Company’s initial area of focus is in the Arkansas River basin and its tributaries on the southern Front Range of Colorado.
	Our Corporate Structure
	Two Rivers Water & Farming Company
	Weconduct our farming and water operations in wholly owned subsidiaries, except for the Huerfano Cucharas Irrigation Company (“HCIC”), of which we own 95%.The Company’s organizational structure is illustrated below:
	Our Farming Operations
	The Company currently owns approximately 7,467 gross acres.  In 2013, we farmed a total of 1,337 acres, of which 820 acres were planted and 517 acres received federal crop insurance due to drought conditions.  For the nine months ended September 30, 2013,Two Rivers generated $946,000 in farm revenues,a 148% increase over 2012.
	Two Rivers’current crop production consists of cabbage, pumpkins and squash. Two Rivers expects to increase the variety of crops we produce as we expand our farming operations.  As a rotation crop to reconstitute the soils and diminish disease and pest pressure, the Company grows animal feed crops, including corn, oats,sorghum and alfalfa.
	Two Riversplans to acquire and develop up to 30,000 acres of high yield fruit and vegetable production on irrigated farmland along the Arkansas River in Colorado over the next ten years.
	Dionisio Farms & Produce, Inc. (“DFP”)
	Two Rivers acquired the properties in DFP in 2012 and conducted its first full year of farm operations in 2013.  In 2013, 230 acres were farmed by DFP, of which 105.5 acres were owned and 124.5 were leased.  DFP’s revenues accounted for 90% of the Company’s overall farm revenues, in 2013.
	DFP’s farmland is located in Pueblo County, Colorado with surface water provided by the Bessemer Irrigating Ditch Company (“Bessemer Ditch”) which has senior water rights on the main stem of the Arkansas River and whose water is stored in the Pueblo Reservoir.  DFP obtains additional water from wells that draw water from the Arkansas River alluvium. We believe that the farmland served by the Bessemer Ditch has the soils, climate and water resources that in combination make this farmland some of the most prolific farm areas in the United States.
	Farmland served by the Bessemer Ditch is underutilized sinceapproximately 90% of the farmland produces fodder crops.  Changing the crop production to fruit and vegetables generates 8 to 10 times more revenue per acre and a similar increase in gross profit margins.  One of Two Rivers’ main goals for the next three to five years is to acquire additional irrigated farmland and work collaboratively with other Bessemer farmers to increase the production and marketing of fruits and vegetables.
	Butte Valley Farm
	In 2012, as part of Two Rivers Farms F-2, Inc. (“F-2”), we purchased the Butte Valley Farm and put 150 fallowed acres in Huerfano County, Colorado back into crop production.  In 2013, the Butte Valley Farm produced corn, sorghum, oats and triticale feed crops.  In 2014, the Company expects to begin fruit and vegetable crop production.
	HCIC Farms
	In 2010 and 2011, Two Rivers purchased land served by the HCIC ditch system.In 2010, Two Rivers tested growing feed corn and found the land to be extremely fertile with the soil composition comparable to farmland served by the Bessemer Ditch.  Based on the average annual diversion of surface stream flow, in 2011, as part of Two Rivers Farms F-1, Inc. (“F-1”), the Company redeveloped approximately 500 acres of HCIC farmland that had lain fallow for over a half century. From 2011 to 2013,only dry land crops were planted due to the exceptional drought in the area.In 2014, we intend to continue irrigated crop production, moving toward fruit and vegetable production in 2016.
	Future Farming Operations
	Two Rivers expects to develop additional irrigated farmland along the Arkansas River and its tributaries.  Prior to redeveloping farmland, the Company assembles water resources that include:
	purchasing a suite of water rights, including both surface flow, augmentation and storage rights;
	refurbishing historic ditch systems and reservoirs to restore and upgrade their efficiency;
	negotiating with appropriate water authorities the necessary agreements to sustain production, and
	providing for rotational farm fallowing.
	When redeveloping farmland, we deploy state-of-the-art methods and equipment with the aim of optimizing product yield, water efficiencies and labor inputs.  This includes:
	deep-plowing fields to loosen soil beds;
	laser-leveling planting areas to optimize water and nutrient absorption and minimize runoff;
	installing state of the art irrigation facilities to increase water efficiencies, and
	applying organic and non-organic fertilizers and soil conditioners to enhance plant growth.
	Redevelopment generally takes two to three years to transform fallow farmland into fruit and vegetable crop production.
	Our Water Operations
	Two Rivers acquires its portfolio of water rights through the acquisition of its farming assets.  In evaluating its farm acquisitions, the most determinant factor in evaluating the farmland acquisition is the water right.
	Water Rights
	The right to water in Colorado is a right that can be developed, managed, purchased or sold much like real property subject to appropriate regulation.  Water rights are judicially decreed and, under Colorado’s application of the Prior Appropriation Doctrine (“first in time, first in right”), senior water right holders are entitled to the beneficial use of water prior to junior holders.  Consequently senior water rights are more consistent, reliable and valuable than junior rights, which may be interrupted, or “called out” in the parlance of Colorado water administration.  Two Rivers will continue to evaluate acquisitions of farmland in light of their associated water rights.
	Rotational Farm Fallowing
	Water is a scarce and extremely valuable natural resource in Colorado and other portions of the southwestern United States.  In Colorado, approximately 86% of all water rights are held by agricultural users as a result of the original water court adjudications occurring during the end of the 19th century when most water use was for growing fodder crops[1].  Today, the majority of Colorado’s population (85%), lives in urban or suburban areas[2].
	As municipal populations have grown and rural populations shrunk in Colorado, a well-documented water supply shortage for municipal users has developed.  To help solve the water supply shortage for municipal water users, irrigation water from fodder crop production is being transferred to municipal use.  However, the people of Colorado have politically and prudently determined that it is bad long term social policy to “buy and dry” the best irrigated farmlands that can grow local higher value fruit and vegetable crops so that municipal users can sprinkle lawns or fill swimming pools.  The people of Colorado have also recognized that fodder crop production is not the best use of a valuable water right[3].
	A better policy has evolved over time that forestalls drying up the best farmland and enables the transfer of water from fodder crop irrigation use to municipal use through rotational farm fallowing.Colorado, through the Governor’s office, the Colorado Legislature and the Colorado Water Conservation Board, are aggressively developing rules and procedures supportingrotational farm fallowing.
	Two Rivers has acquired its farms and associated water rights with a view towards unlocking the true value of water by converting fodder crop production into vegetable crop production.  Two Rivers intends to provide up to 25% of surface water available for municipal and industrial use through rotational farm fallowing.  The Company expects to accomplish this without diminishing the amount or revenue from farming by replacing the surface flow transferred to municipal and industrial users with water Two Rivers pumps from river alluvium.
	The Bessemer Ditch System
	The Bessemer Ditch is a mutual ditch company that operates an irrigation canal which has its headgate in the Pueblo Dam and delivers irrigation water for growing crops from the Pueblo Reservoir to eastern Pueblo County.  Its water rights date back to 1861.  DFP currently owns 183 shares of the Bessemer Ditch.
	The Southern Delivery System
	In 2010, Colorado Springs Utilities (“CSU”) began construction of the Southern Delivery System (“SDS”) which is to be completed in 2016.  The pipeline is expected to cost in excess of $1,000,000,000 and will pump water from the Pueblo Reservoir and deliver the water to CSU’s municipal water system.
	When the SDS is completed, it will enable CSU and other water users in the southern half of the Front Range of Colorado to receive physical water from the Arkansas River that is stored in the Pueblo Reservoir.
	Orlando Water Rights
	The Orlando water rights were purchased through TRW Orlando Water Assets, LLC in 2011 and include the #1 and the #9 water rights which are used to irrigate the Butte Valley Farm.  The assets purchased also included the Orlando Reservoir which has a storage capacity of 3,100 acre-feet on the Huerfano branch of the Huerfano River.  The seniority of the Butte Valley water rights allowed the production of crops during the most recent drought.
	Huerfano Cucharas Irrigation Company
	In 2009, Two Rivers began purchasing the shares of HCIC in anticipation of restoring 20,000 acres of previously highly productive fruit and vegetable irrigated farmland.  The farmland became fallow in the middle of the 20th century when coal mines in Huerfano County, Colorado were shut down.  The coal mines when in production continuously pumped water from the Vermejo/Trinidad Formation, which contained a renewable underground aquifer that is fed by Sangre de Cristo Mountains snowmelt. The Vermejo/Trinidad Formation contains an estimated 30 million acre-feet of relatively untapped, clean and renewable water[4].
	Two Rivers, through HCIC Holdings, LLC, eventually acquired 95% of the ownership of HCIC in 2012.  HCIC owns the Cucharas and Huerfano Valley Reservoirs and two ditch systems located in Pueblo County, Colorado.  The HCIC ditch systems have the right to distribute water over approximately 40,000 acres in Pueblo County, Colorado.
	Augmentation
	Tributary ground water is any underground water that is hydraulically connected to astream system that influences the rate and/or direction of flow on that stream system. Any new ground water diversions that are tributary to an over appropriated stream system require augmentation to off-set out-of-prioritydepletions.[5]  In 2013, as a result of the drought, many well water users on the Arkansas River and its tributaries were unable to use their wells due to a lack of augmentation water.  As a result, Two Rivers was asked by one of the augmentation providers to help build a more efficient and plentiful augmentation supply.   Two Rivers has begun the development of additional augmentation sources in conjunction with that augmentation provider and expects to provide additional supplemental augmentation in 2014.
	Management plans for funding future operations
	As of September 30, 2013 our current assets of $2,023,000 consisting of $1,010,000 in cash, $394,000 in accounts receivable, $433,000 in farm product and $186,000 other current assets.  The current portion of long-term debt is $1,509,000.  The Company plans to raise up to $10,000,000 in additional funds through scheduled and anticipated financings and the sale and lease back of some of its assets to one or more independent investors.  There can be no assurance that the Company will succeed in raising additional capital.
	To assess our ability to fund ongoing operating requirements, we have made assumptions regarding operating cash flow.  Critical sources of funding, and key assumptions and areas of uncertainty include:
	as of November 4, 2013 we had $805,000 in cash and accounts receivable of $957,000;
	additional cash flow from crops stored, but not yet sold, estimated to be in excess of $100,000;
	near term monetization of development projects sold to third parties;
	scheduled sale and lease back, debt and equity financings;
	farm management fees;
	hunting and grazing leases;
	continued support of, and extensions of credit by, our suppliers and lenders, and
	the level of spending necessary to support our planned initiatives, which we estimate for our operations to be less than $1,500,000 of cash expenses until our farm income begins again in 2014.
	Based on these assumptions, we believe our existing cash and cash equivalents, along with the cash generated by our anticipated results from operations, will be sufficient to meet our needs through 2014.We intend to seek additional capital to provide a cash reserve against contingencies, address the seasonal nature of our working capital needs, and to enable us to invest further in trying to increase the scale of our business.  We may seek additional funding through debt and/or equity offerings, or through sale and leaseback transactions.  However, there can be no assurance we will be able to raise this additional capital, that we will be able to increase the scale of our business, or that our existing resources will be sufficient to meet all of our cash requirements.  In such an event we would reduce the scale of our operations and take such actions as are available to us to reduce our cash requirements.  However, there can be no assurance that such actions would be successful.
The Company maintains a website at www.2riverswater.com, which is not incorporated in, and is not a part of, this report.

Note_2_Summary_of_Significant_

Note 2 - Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2013
Notes	'
Note 2 - Summary of Significant Accounting Policies	'
	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, 2013, and the consolidated results of operations and cash flows of the Company for the three and nine months ended September 30, 2013 and 2012. Operating results for the threeand ninemonths ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.
	These unaudited Consolidated Financial Statements 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, 2012.
	Principles of Consolidation
	The accompanying consolidated financial statements include the accounts of Two Rivers and its subsidiaries contained in our Farming and Water Operations.  All significant inter-company balances and transactions have been eliminated in consolidation.
	Non-controlling Interest
	Non-controlling interest is recorded for the ownership of HCIC not owned by the Company and for preferred shares not owned by the Company in the Company’s subsidiaries.   Below is the detail of non-controlling interest shown on the balance sheet:
	Entity	30-Sep-13	31-Dec-12
	HCIC	$1,347,000	$2,205,000
	HCIC farmland	1,494,000	1,494,000
	Butte Valley	3,933,000	3,933,000
	DFP	3,181,000	2,208,000
	Totals	$9,955,000	$9,840,000
	Use of Estimates
	The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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.
	Fair Value of Measurements and Disclosures
	Fair Value of Assets and Liabilities Acquired
	Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards established a three-level hierarchy that distinguishes between (i)market data obtained or developed from independent sources (i.e., observable data inputs) and (ii)a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs:
	•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 Level1 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.
	The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement.Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.
	Recurring Fair Value Measurements
	The carrying value of cash held as demand deposits, money market and certificates of deposit, accounts receivable, short-term borrowings, accounts payable and accrued liabilities approximated their fair value.The fair value of the Company’s long-term debt, including the current portion approximated its carrying value.
	Farm product
	The Company capitalizes all expenditures directly associated with producing crops for sale.  This includes wages of farmers, preparing the soil, soil maintenance, crop insurance, cost of operating and maintaining equipment, seed, fertilizer, water and other direct farming expenses.  Upon sale of the farm product, the respective farm product cost is recognized as direct cost of farm product sold.
	At least once per calendar quarter, management discusses with farming management their opinion on the cost of the farm product versus the expected farm product revenue.  The cost of the farm product includes the investment in the farm product to date plus the anticipated expenses to bring the farm product to market.  If the anticipated cost of the farm product is greater than the anticipated revenue, then an impairment is recorded.
	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 (see Property and Equipment below). 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 impairment.
	Water Rights and Infrastructure
	The Company has acquired both direct flow water rights and water storage rights.  We have obtained water rights through the purchase of shares in a mutual ditch company, which we did with our purchase of shares in HCIC, or through the purchase of an entity holding water rights, which we did with our purchase of the 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 our 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.
	Intangibles
	Two Rivers recognizes the estimated fair value of water rights acquired by the Company’s purchase of stock in HCIC and 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 product and recognized as a direct cost of sale upon the sale of the crops.  As of September 30, 2013, we reserved 3% of our outstanding accounts receivable balance.
	Water Revenues
	Previous water revenues are from the lease of water own by HCIC to farmers in the HCIC service area and through re-leasing of our 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 Two Rivers Water 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.
	Net Income (Loss) per Share
	The Company computes net income (loss) per share of common stock in accordance with Accounting Standards Codification (“ASC”) 260.  ASC 260 requires companies with complex capital structures to present basic and diluted Earnings per Share (“EPS”).  Basic EPS is measured as the income or loss available to common stockholders divided by the weighted average shares of common stock outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common stock (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.  All potentially dilutive securities outstanding have been excluded for the periods presented since their effect would be antidilutive.
	The dilutive effect of the outstanding 6,134,282 RSUs, 1,668,200 options and 9,890,209 warrants at September 30, 2013, have not been included in the determination of diluted earnings per share since, under ASC 260 they would anti-dilutive.
	New Accounting Pronouncements and Effect on the Company
	In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,” which among other things, require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as denoted within the ASU. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. This new guidance will not have a material impact on our financial statements.

Note_3_Notes_Payable

Note 3 - Notes Payable	9 Months Ended
	Sep. 30, 2013
Notes	'
Note 3 - Notes Payable	'
	NOTE 3 – NOTES PAYABLE
	Below is a discussion of our long term debt that has changed since December 31, 2012.  Refer to the Company’s December 31, 2012 Form 10K for a detailed discussion on notes payable.
	HCIC Seller Carry Back
	In June 2013, the Company negotiated an extension on holders representing $6,164,000 of the seller carry back notes.  Previously these amounts were due either August or September, 2013.  The holders of the notes agreed to extend the due date to June 30, 2016.  In exchange for this extension, the Company increased the principal balance by 20% from $6,164,000 to $7,397,000, paid 5.43% against the principal and agreed to begin paying monthly interest and principal at a 20-year amortization rate.
	Holders representing $2,911,000 of the notes held conversion rights into the Company’s common shares at $1.00 to $1.25.  These conversions were cancelled and replaced by 5-year warrants at $3.00 per share.  A total of 1,367,000 warrants were issued.   The warrants issued had a fair value of $580,000 using the Black Scholes method of fair value determination.
	Pursuant to ASC 470-50-40-10, testing was performed by management on whether the new note structure constituted a debt extinguishment and issuance of new debt.  Management determined that this note modification qualified as a debt extinguishment.  Therefore ASC 820 was used to determine the fair value of the new debt issued.  The fair value, using a 10% discount factor for the present value analysis of the new cash flow stream and fair value of the warrants issued determined the fair value of the new debt to be $6,071,000.  Compared to the prior debt value of $6,164,000, the fair value produced a one-time $93,000 gain, recorded in the second quarter of 2013.
	Additionally, a discount on the HCIC debt was recorded in the quarter ended June 30, 2013 for $1,906,000, which will be amortized using an effective interest rate of 10% over the three year term. As of September 30, 2013 the discount was $1,783,000.
	Seller Carry Back – SW Farms
	On December 31, 2012, the Company purchased property from Southwest Farms, Inc. and Southwest Ready-Mix of Pueblo, Inc. (“SW Farms”).   The Company paid $4,300,000 for the acquisition with the seller taking back a $4,200,000 note.  The terms of the SW Farms seller carry back note is 2% per annum and due in full by April 30, 2013 with an extension, at the Company’s option, to May 31, 2013 with no additional funds required.  However, in the three months ended March 31, 2013, the Company paid an additional $100,000 to extend the note to a due date of August 31, 2013.  The $100,000 payment was applied to the principal.
	On August 22, 2013, the Company cancelled its acquisition of the SW Farms and thereby forfeited the $196,000 paid and gave up the rights to all of the SW Farms assets.  This transaction resulted in a non-operating loss of $154,000.
	ASF Note
	In May 2013, ASF began offering, only to accredited investors, 8.0% senior secured notes due 2023.  The Notes are offered to help with funding the further research, engineering, hydrology and permitting for the constructing of gravel pit storage reservoirs just east of the confluence of the Arkansas River and Fountain Creek in Pueblo County, Colorado.  The intention is to collaborate with Colorado Front Range municipal water districts.
	ASF is offering up to $3,000,000 in Notes plus prepaid interest through May 31, 2014 was offered.  Through September 30, 2013, $2,036,000 (including $150,000 prepaid interest) of the Notes was sold.
	The ASF Notes carry a mandatory redemption if a related metropolitan district issues municipal bond obligations.  There is also an optional redemption that can be exercised by ASF or the Company.  If there is an early redemption, there is a make-whole provision whereby ASF or the Company pays the par value of the Notes plus accrued and unpaid interest thereon to the date of redemption plus an amount equal to the present value of all remaining interest payments on the Notes, calculated using a discount rate of 8%.
	ASF and the Company guarantee the Notes fully and unconditionally.
	Below is a summary of the Company’s consolidatedlong-term debt:
	Note		30-Sep-13	Sep 30, 2013 accrued interest	Interest rate	Security
			Principal balance
	HCIC seller carry back		$               8,105,000	$                     -	6%	Shares in the Mutual Ditch Company
	Orlando seller carry back		187,000	27,000	7%	188 acres of land
	Series A convertible debt		110,000	5,000	5-6%	F-1 assets
	Series B convertible debt		405,000	18,000	6%	F-2 assets
	CWCB		1,151,000	22,000	2.50%	Certain Orlando and Farmland assets
	FNB - Dionisio Farm		851,000	38,000	-1	Dionisio farmland and 146.4 shares of Bessemer Irrigating Ditch Company Stock, well permits
	Seller Carry Back - Dionisio		590,000	-	6.00%	Unsecured
	FNB - Mater		169,000	9,000	-1	Secured by Mater assets purchased
	Seller Carry Back - Mater		25,000	-	6.00%	Land from Mater purchase
	McFinney Agri-Finance		647,000	-	6.80%	2,579 acres of pasture land in Ellicott Colorado
	Ellicott second mortgage		400,000	-	12.00%	Second lien on above Ellicott land
	ASF Note holders		2,036,000	-	8.00%	ASF assets
	Equipment loans		445,000	6,000	5 - 8%	Specific equipment
	Total		15,121,000	$         125,000
	Less: HCIC Discount		(1,783,000)
	Less: Current portion		(1,509,000)
	Long Term portion		$             11,829,000
		Notes:
		(1) Prime rate + 1%, but not less than 6%.

Note_4_Information_On_Business

Note 4 - Information On Business Segments	9 Months Ended
	Sep. 30, 2013
Notes	'
Note 4 - Information On Business Segments	'
	NOTE 4 – Information on Business Segments
	We organize our business segments based on the nature of the products and services offered. We focus on the Water and Farming Business with Two Rivers Water & Farming Company as the parent company.  Therefore, we report our segments by these lines of businesses: Farms and Water.  The Farms segment contains all of our Farming Business.  The Water segment contains our Water Business. Our “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.  There are some corporate expenses that were not allocated to the business segments, and these expenses are contained in the “Total Operating Expenses” under Parent.
	Operating results for each of the segments of the Company are as follows (in thousands):
			For the nine months ended Sep 30, 2013				For the nine months ended Sep 30, 2012
			Parent	Farms	Water	Total	Parent	Farms	Water	Total
	Revenue
		Assessments	$                   -	-	11	$              11	$              -	-	-	$              -
		Farm revenue	-	994	-	994	-	381	-	381
		Water revenue	-		40	40	-	-	75	75
		Other & misc.	-	8	1	9	-	-	-	-
			-	1,002	52	1,054	-	381	75	456
		Less: direct cost of revenue	-	567	73	639	-	280	-	280
	Gross Margin		-	435	(21)	415	-	101	75	176
	Total Operating Expenses		3,965	539	580	5,085	5,494	676	714	6,884
	Total Other Income/(Expense)		(102)	135	584	617	(1,645)	(1,009)	(331)	(2,985)
	Net (Loss) Income from continuing operations before income taxes		(3,864)	(238)	(1,185)	(5,287)	(7,139)	(1,584)	(970)	(9,693)
	Income Taxes (Expense)/Credit		-	-	-	-	-	-	-	-
	Net Income (Loss) from continuing operations		-3,864	(238)	(1,185)	(5,287)	(7,139)	-1,584	(970)	(9,693)
	Non-controlling interest		-	-	(6)	(6)	-	-	4	4
	Net (Loss) Income		$         (3,864)	(238)	(1,191)	$        (5,293)	$     (7,139)	-1,584	(966)	$     (9,689)
	Segment assets		$              216	13,306	28,000	$       41,522	$         711	9,791	27,201	$     37,703

Note_5_Equity_Transactions

Note 5- Equity Transactions	9 Months Ended
	Sep. 30, 2013
Notes	'
Note 5- Equity Transactions	'
	NOTE 5– EQUITY TRANSACTIONS
	Common Stock
	During the nine months ended September 30, 2012, the Company had the following equity transactions:
	·         In January 2012, we issued 50,000 shares of our common stockto the independent members of the Board in exchange for Board of Director services rendered in 2011.
	·         In January 2012, we issued 125,000 shares of our common stock upon vesting of outstanding Restricted Stock Units (“RSUs”) to a non-executive employee under the Two Rivers Water Company 2011 Long-Term Stock Incentive Plan (the “2011 Plan”); the underlying RSUs were previously issued in exchange for the employee’s surrender of 250,000 options (strike price of $2.00/share) under the 2005 Navidec Financial Services, Inc. (“Navidec”) 2005Stock Option Plan. Navidec was a predecessor company.
	·         In January 2012, we issued 100,000 shares of common stock to our Chief Financial Officer (“CFO”) upon vesting of a portion of 700,000 RSUs that were previously granted to the CFO pursuant to his employment agreement and the 2011 Plan.
	·         In January 2012, 200,000 shares of common stock, as part of an overall grant of 400,000 shares, were issued to a former member of the Board of Directors.
	·         In February 2012, we issued 83,330 shares of common stock to our investor relations consultants as partial payment for their services.
	·         In March 2012, we issued 400,000 shares of common stock to participating lenders in consideration of the Bridge Loan.
	·         In April 2012, the Company issued 25,000 shares of common stock upon vesting of outstanding RSUs to the estate of a previous employee under our 2011 Plan.
	·         In June 2012, the Company issued 166,666 shares of common stock to our CFO upon vesting of a portion of 700,000 RSUs that were previously granted to the CFO pursuant to his employment agreement and the 2011 Plan.
	·         In June 2012, the Company issued 200,000 shares of common stock to complete a grant of 400,000 shares to a former member of the Board of Directors.
	·         In June 2012, we issued 50,000 shares of common stock to a key vendor, as partial payment for services performed.
	·         In June 2012, we issued 166,666 shares of common stock upon vesting of RSUs that were previously granted to a board member for consulting services performed from April 1, 2012 through June 30, 2012.
	·         In June 2012, we issued 100,000 shares of common stock through the exercise of warrants.
	·         In September 2012, the Company issued 50,000 shares to a key vendor, as partial payment for services performed.
	During the nine months ended September 30, 2013, the Company had the following common stock transactions:
	·         In February 2013, we issued 179,348 shares of common stockto a consultant for work performed in 2012.
	·         In February 2013, we issued 85,000 shares of common stockto the independent members of the Boardof Directors in exchange for Board services rendered in 2012.
	·         In March 2013, we issued 200,000 shares of common stock to a consultant for investor relations work performed in first quarter, 2013.
	·         In March 2013, we 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 2013, we issued 200,000 shares of our common stock to an investor relations firm for services.
	·         In June 2013, we returned 3,002 shares of our common stock from a profit sharing plan that was no longer in effect to our authorized but unissued common stock.
	·         In July 2013, we retired 100,000 shares of our common stock that we received from a settlement of a legal action.
	During the nine months ended September 30, 2013 and September 30, 2012, the Company recognized non-cash expense of granting of options, warrants and restrictive stock units of $2,161,000 and $3,051,000, respectively.

Note_6subsequent_Events

Note 6-subsequent Events	9 Months Ended
	Sep. 30, 2013
Notes	'
Note 6-subsequent Events	'
	NOTE 6–SUBSEQUENT EVENTS
	None.

Note_2_Summary_of_Significant_1

Note 2 - Summary of Significant Accounting Policies: Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Basis of Presentation	'
	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, 2013, and the consolidated results of operations and cash flows of the Company for the three and nine months ended September 30, 2013 and 2012. Operating results for the threeand ninemonths ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.
	These unaudited Consolidated Financial Statements 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, 2012.

Note_2_Summary_of_Significant_2

Note 2 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Principles of Consolidation	'
	Principles of Consolidation
	The accompanying consolidated financial statements include the accounts of Two Rivers and its subsidiaries contained in our Farming and Water Operations.  All significant inter-company balances and transactions have been eliminated in consolidation.

Note_2_Summary_of_Significant_3

Note 2 - Summary of Significant Accounting Policies: Non-controlling Interest (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Non-controlling Interest	'
	Non-controlling Interest
	Non-controlling interest is recorded for the ownership of HCIC not owned by the Company and for preferred shares not owned by the Company in the Company’s subsidiaries.   Below is the detail of non-controlling interest shown on the balance sheet:
	Entity	30-Sep-13	31-Dec-12
	HCIC	$1,347,000	$2,205,000
	HCIC farmland	1,494,000	1,494,000
	Butte Valley	3,933,000	3,933,000
	DFP	3,181,000	2,208,000
	Totals	$9,955,000	$9,840,000

Note_2_Summary_of_Significant_4

Note 2 - Summary of Significant Accounting Policies: Use of Estimates (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Use of Estimates	'
	Use of Estimates
	The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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.

Note_2_Summary_of_Significant_5

Note 2 - Summary of Significant Accounting Policies: Fair Value of Measurements and Disclosures (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Fair Value of Measurements and Disclosures	'
	Fair Value of Measurements and Disclosures
	Fair Value of Assets and Liabilities Acquired
	Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards established a three-level hierarchy that distinguishes between (i)market data obtained or developed from independent sources (i.e., observable data inputs) and (ii)a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs:
	•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 Level1 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.
	The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement.Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs.
	Recurring Fair Value Measurements
	The carrying value of cash held as demand deposits, money market and certificates of deposit, accounts receivable, short-term borrowings, accounts payable and accrued liabilities approximated their fair value.The fair value of the Company’s long-term debt, including the current portion approximated its carrying value.

Note_2_Summary_of_Significant_6

Note 2 - Summary of Significant Accounting Policies: Farm Product & Water Rights (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Farm Product & Water Rights	'
	Farm product
	The Company capitalizes all expenditures directly associated with producing crops for sale.  This includes wages of farmers, preparing the soil, soil maintenance, crop insurance, cost of operating and maintaining equipment, seed, fertilizer, water and other direct farming expenses.  Upon sale of the farm product, the respective farm product cost is recognized as direct cost of farm product sold.
	At least once per calendar quarter, management discusses with farming management their opinion on the cost of the farm product versus the expected farm product revenue.  The cost of the farm product includes the investment in the farm product to date plus the anticipated expenses to bring the farm product to market.  If the anticipated cost of the farm product is greater than the anticipated revenue, then an impairment is recorded.
	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 (see Property and Equipment below). 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 impairment.
	Water Rights and Infrastructure
	The Company has acquired both direct flow water rights and water storage rights.  We have obtained water rights through the purchase of shares in a mutual ditch company, which we did with our purchase of shares in HCIC, or through the purchase of an entity holding water rights, which we did with our purchase of the 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 our 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.

Note_2_Summary_of_Significant_7

Note 2 - Summary of Significant Accounting Policies: Intangibles (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Intangibles	'
	Intangibles
	Two Rivers recognizes the estimated fair value of water rights acquired by the Company’s purchase of stock in HCIC and 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.

Note_2_Summary_of_Significant_8

Note 2 - Summary of Significant Accounting Policies: Revenue Recognition (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Revenue Recognition	'
	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 product and recognized as a direct cost of sale upon the sale of the crops.  As of September 30, 2013, we reserved 3% of our outstanding accounts receivable balance.
	Water Revenues
	Previous water revenues are from the lease of water own by HCIC to farmers in the HCIC service area and through re-leasing of our 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 Two Rivers Water 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.

Note_2_Summary_of_Significant_9

Note 2 - Summary of Significant Accounting Policies: Net Income (loss) Per Share (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
Net Income (loss) Per Share	'
	Net Income (Loss) per Share
	The Company computes net income (loss) per share of common stock in accordance with Accounting Standards Codification (“ASC”) 260.  ASC 260 requires companies with complex capital structures to present basic and diluted Earnings per Share (“EPS”).  Basic EPS is measured as the income or loss available to common stockholders divided by the weighted average shares of common stock outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common stock (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented. Potential shares of common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.  All potentially dilutive securities outstanding have been excluded for the periods presented since their effect would be antidilutive.
	The dilutive effect of the outstanding 6,134,282 RSUs, 1,668,200 options and 9,890,209 warrants at September 30, 2013, have not been included in the determination of diluted earnings per share since, under ASC 260 they would anti-dilutive.

Recovered_Sheet1

Note 2 - Summary of Significant Accounting Policies: New Accounting Pronouncements and Effect On The Company (Policies)	9 Months Ended
	Sep. 30, 2013
Policies	'
New Accounting Pronouncements and Effect On The Company	'
	New Accounting Pronouncements and Effect on the Company
	In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,” which among other things, require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as denoted within the ASU. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. This new guidance will not have a material impact on our financial statements.

Recovered_Sheet2

Note 2 - Summary of Significant Accounting Policies: Non-controlling Interest: Value of non-controlling interest (Tables)	9 Months Ended
	Sep. 30, 2013
Tables/Schedules	'
Value of non-controlling interest	'
	Entity	30-Sep-13	31-Dec-12
	HCIC	$1,347,000	$2,205,000
	HCIC farmland	1,494,000	1,494,000
	Butte Valley	3,933,000	3,933,000
	DFP	3,181,000	2,208,000
	Totals	$9,955,000	$9,840,000

Note_3_Notes_Payable_Schedule_

Note 3 - Notes Payable: Schedule of Long-term Debt (Tables)	9 Months Ended
	Sep. 30, 2013
Tables/Schedules	'
Schedule of Long-term Debt	'
	Note		30-Sep-13	Sep 30, 2013 accrued interest	Interest rate	Security
			Principal balance
	HCIC seller carry back		$               8,105,000	$                     -	6%	Shares in the Mutual Ditch Company
	Orlando seller carry back		187,000	27,000	7%	188 acres of land
	Series A convertible debt		110,000	5,000	5-6%	F-1 assets
	Series B convertible debt		405,000	18,000	6%	F-2 assets
	CWCB		1,151,000	22,000	2.50%	Certain Orlando and Farmland assets
	FNB - Dionisio Farm		851,000	38,000	-1	Dionisio farmland and 146.4 shares of Bessemer Irrigating Ditch Company Stock, well permits
	Seller Carry Back - Dionisio		590,000	-	6.00%	Unsecured
	FNB - Mater		169,000	9,000	-1	Secured by Mater assets purchased
	Seller Carry Back - Mater		25,000	-	6.00%	Land from Mater purchase
	McFinney Agri-Finance		647,000	-	6.80%	2,579 acres of pasture land in Ellicott Colorado
	Ellicott second mortgage		400,000	-	12.00%	Second lien on above Ellicott land
	ASF Note holders		2,036,000	-	8.00%	ASF assets
	Equipment loans		445,000	6,000	5 - 8%	Specific equipment
	Total		15,121,000	$         125,000
	Less: HCIC Discount		(1,783,000)
	Less: Current portion		(1,509,000)
	Long Term portion		$             11,829,000
		Notes:
		(1) Prime rate + 1%, but not less than 6%.

Note_4_Information_On_Business1

Note 4 - Information On Business Segments: Operation results of each business segment (Tables)	9 Months Ended
	Sep. 30, 2013
Tables/Schedules	'
Operation results of each business segment	'
			For the nine months ended Sep 30, 2013				For the nine months ended Sep 30, 2012
			Parent	Farms	Water	Total	Parent	Farms	Water	Total
	Revenue
		Assessments	$                   -	-	11	$              11	$              -	-	-	$              -
		Farm revenue	-	994	-	994	-	381	-	381
		Water revenue	-		40	40	-	-	75	75
		Other & misc.	-	8	1	9	-	-	-	-
			-	1,002	52	1,054	-	381	75	456
		Less: direct cost of revenue	-	567	73	639	-	280	-	280
	Gross Margin		-	435	(21)	415	-	101	75	176
	Total Operating Expenses		3,965	539	580	5,085	5,494	676	714	6,884
	Total Other Income/(Expense)		(102)	135	584	617	(1,645)	(1,009)	(331)	(2,985)
	Net (Loss) Income from continuing operations before income taxes		(3,864)	(238)	(1,185)	(5,287)	(7,139)	(1,584)	(970)	(9,693)
	Income Taxes (Expense)/Credit		-	-	-	-	-	-	-	-
	Net Income (Loss) from continuing operations		-3,864	(238)	(1,185)	(5,287)	(7,139)	-1,584	(970)	(9,693)
	Non-controlling interest		-	-	(6)	(6)	-	-	4	4
	Net (Loss) Income		$         (3,864)	(238)	(1,191)	$        (5,293)	$     (7,139)	-1,584	(966)	$     (9,689)
	Segment assets		$              216	13,306	28,000	$       41,522	$         711	9,791	27,201	$     37,703

Recovered_Sheet3

Note 2 - Summary of Significant Accounting Policies: Non-controlling Interest: Value of non-controlling interest (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Details	'	'
HCIC farmland	$1,494,000	$1,494,000
Butte Valley	3,933,000	3,933,000
DFP	3,181,000	2,208,000
Totals	$9,955,000	$9,840,000

Recovered_Sheet4

Note 2 - Summary of Significant Accounting Policies: Net Income (loss) Per Share (Details)	Sep. 30, 2013
Details	'
Restricted stock units outstanding	6,134,282
Options Outstanding	1,668,200
Warrants outstanding	9,890,209

Note_3_Notes_Payable_Schedule_1

Note 3 - Notes Payable: Schedule of Long-term Debt (Details) (USD $)	Sep. 30, 2013
Details	'
HCIC seller carry back	$8,105,000
Orlando seller carry back	187,000
Series A convertible debt	110,000
Series B convertible debt	405,000
CWCB	1,151,000
FNB - Dionisio Farm	851,000
Seller Carry Back - Dionisio	590,000
FNB - Mater	169,000
Seller Carry Back - Mater	25,000
McFinney Agri-Finance	647,000
Ellicott second mortgage	400,000
ASF Note holders	2,036,000
Equipment loans	445,000
Loans Payable Current Total	15,121,000
Less: HCIC Discount	-1,783,000
Less: Current portion	-1,509,000
Long Term Portion Total	$11,829,000

Note_4_Information_On_Business2

Note 4 - Information On Business Segments: Operation results of each business segment (Details) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Details	'	'
Assessments	$11	'
Farm revenue	994	381
Water revenue	40	75
Other & misc.	9	'
Total Revenue	$1,054	$456

Note_5_Equity_Transactions_Det

Note 5- Equity Transactions (Details) (USD $)	1 Months Ended					9 Months Ended
	Jul. 31, 2013	Jun. 30, 2013	Apr. 30, 2013	Mar. 31, 2013	Feb. 28, 2013	Sep. 30, 2013	Sep. 30, 2012
Details	'	'	'	'	'	'	'
Common Stock Issued for Services	'	'	200,000	200,000	179,348	'	'
Common Stock Issued to Board Members	'	'	'	'	85,000	'	'
Common Stock Issued to Board Members	'	'	'	100,000	'	'	'
Common stock returned	'	3,002	'	'	'	'	'
Common stock retired	100,000	'	'	'	'	'	'
Other Noncash Expense	'	'	'	'	'	$2,161,000	$3,051,000