September 30, 2017 December 31, 2016
Net unrealized gain on available-for-sale investments $ 451
$ 6,736
Foreign currency translation (44 ) (75 )
Accumulated other comprehensive income $ 407
$ 6,661

~~The unrealized gain on available-for-sale investments is net of a deferred income tax liability of $243,000 at September 30, 2017 and $3.6 million at December 31, 2016.~~

~~The following table reports amounts that were reclassified from accumulated other comprehensive income or loss and included in earnings (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Beginning balance $ 788
$ 5,517
$ 6,661
$ 4,961
Unrealized gain reclassified and recognized in net loss, net of tax ⁽¹⁾
(392 ) (95 ) (6,357 ) (181 )
Foreign exchange reclassified and recognized in net loss, net of tax ⁽¹⁾
(1 ) —
1
—
Total reclassified and recognized in net income or loss, net of tax (393 ) (95 ) (6,356 ) (181 )
Unrealized gain on marketable securities, net of tax 5
1,049
72
1,665
Accumulated currency, net of tax 7
31
30
57
Net change in other comprehensive income, net of tax (381 ) 985
(6,254 ) 1,541
Accumulated other comprehensive income $ 407
$ 6,502
$ 407
$ 6,502

⁽¹⁾~~Amounts reclassified from this category are included in other income, net in the condensed consolidated statement of operations and comprehensive income or loss.~~

~~8. Related-Party Transactions~~

~~Deferred Compensation~~

In July 2017, the Company’s board of directors elected to terminate the Company’s deferred compensation plans. Consequently, while participant compensation remains deferred at September 30, 2017, the plan is no longer active. In accordance with applicable regulations, distribution of the remaining assets and settlement of the deferred compensation obligation will be made to the participants no earlier than one year from the date the plans were terminated. The total value of the deferred compensation obligation for all participants at September 30, 2017 and December 31, 2016 was $4.1 million and $27.3 million, respectively. These totals include a fair value of $23,000 and $839,000 of the Company’s common stock, for each of the respective periods, with the balance in various publicly traded equities, bonds, and cash. In conjunction with the termination of the Company’s former CEO, assets with a value of $23.4 million were distributed from the trust accounts in April 2017.

Deferred compensation expense included in general, administrative, and other costs in the accompanying condensed consolidated statements of operations and comprehensive income or loss for the three months ended September 30, 2017 and 2016 was $16,000 and $1.8 million, respectively, and for the nine months ended September 30, 2017 and 2016 was ~~$221,000~~ ~~and~~ ~~$1.1 million, respectively.~~

~~Sale of Oil and Gas Assets~~

During the nine months ended September 30, 2017, the Company sold the majority of its remaining oil and gas lease assets to the service agent the Company had contracted with to operate and manage such oil and gas operations. The Company received book value for the majority of the assets sold resulting in no significant gain or loss on the transaction. The service agent continues to provide management services to the Company in conjunction with exiting the business.

~~9. Segment Reporting~~

PICO is a diversified holding company engaged in the following operating and reportable segments: Water Resource and Water Storage Operations and Corporate. The accounting policies of the reportable segments are the same as those described in the Company’s 2016 Annual Report on Form 10-K filed with the SEC, however, the Company’s real estate segment has been sold and deconsolidated as of August 4, 2017. Prior reported balances of the Company’s real estate segment have been reclassified as discontinued operations in the accompanying condensed consolidated financial statements for all periods presented.

~~Management analyzes segments using the following information:~~

~~Segment assets (in thousands):~~

September 30, 2017 December 31, 2016
Assets:
Water resource and water storage operations $ 173,968
$ 186,055
Corporate 157,968
49,050
Assets held-for-sale

440,689
Total assets $ 331,936
$ 675,794

~~Segment revenues and loss before taxes (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenue and other income:
Water resource and water storage operations $ 347
$ 577
$ 25,766
$ 890
Corporate (142 ) 588
9,266
1,910
Total revenue and other income $ 205
$ 1,165
$ 35,032
$ 2,800

Income (loss) before income taxes:
Water resource and water storage operations $ (965 ) $ (1,004 ) $ 8,664
$ (4,186 )
Corporate (1,852 ) (4,095 ) 3,740
(10,287 )
Income (loss) from continuing operations before income taxes $ (2,817 ) $ (5,099 ) $ 12,404
$ (14,473 )

~~10. Discontinued Operations and Assets and Liabilities Held-for-Sale~~

~~Real Estate:~~

On April 10, 2017, UCP entered into a merger agreement with Century whereby each outstanding share of UCP common stock was converted into $5.32 in cash and 0.2309 of a newly issued share of Century common stock representing 9% of Century’s common stock outstanding. The transaction closed on August 4, 2017 and as a result the Company deconsolidated UCP as of the closing date. In October 2017, the Company sold its entire position of Century common stock for $59.2 million. A loss of $842,000 was realized on the date of sale however such loss was accrued during the three months ended September 30, 2017. Consequently, no additional gain or loss will be recognized in the fourth quarter of 2017.

The assets and liabilities of UCP qualified as held-for-sale and have been classified as discontinued operations as of the earliest period presented. Consequently, prior periods presented have been recast from amounts previously reported in the Company’s real estate segment to reflect the business as discontinued operations. As a result of the merger, the Company recorded a loss on the sale of $9.3 million during the nine months ended September 30, 2017, as calculated in the following table (in thousands, except per share amounts).

Shares and Per Share Amounts Totals
Shares of UCP owned by the Company 10,402

Cash received $ 5.32
$ 55,337
Shares of Century common stock received (0.2309 per share of UCP owned) 2,402

Value of Century common stock on the date received $ 25.00
$ 60,044
Total consideration received at the date of close $ 115,381
Transaction cost paid by the Company $ (284 )
Carrying value of UCP at the date of close adjusted for tax distributions $ (124,408 )
Loss on sale
$ (9,311 )

~~Agribusiness:~~

In February 2017, the Company received the final $6 million that had been held in escrow for general indemnification claims related to the sale of its discontinued agribusiness operations. The Company guaranteed up to $8 million for any indemnification claims in excess of the $6 million general indemnification escrow pursuant to the terms of the sale. This guaranty will remain in force until July 31, 2020. The guaranty has been recorded at estimated fair value that reflects the Company’s expectation that no significant amounts will be paid out under the guaranty. However, any amounts paid by the Company in excess of the estimate will result in additional loss on the sale.

The following table presents the details of the Company’s results from discontinued operations included in the condensed consolidated statement of operations and comprehensive income or loss. The three and nine months ended September 30, 2017 included results ending on August 4, 2017, the date the merger of UCP and Century closed: (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenue and other income from discontinued real estate operations:
Sales of real estate $ 39,462
$ 95,340
$ 247,213
$ 246,403
Other 20
204
506
253
Total revenue and other income 39,482
95,544
247,719
246,656

Cost of sales and expenses from discontinued real estate operations:
Cost of real estate sold 32,221
78,725
200,789
201,841
General, administrative, and other 11,245
4,612
29,618
19,331
Sales and marketing 2,415
4,939
13,784
14,035
Impairment loss on long-lived assets

4,416
102
6,812
Total cost of sales and expenses 45,881
92,692
244,293
242,019
Income (loss) before income taxes (6,399 ) 2,852
3,426
4,637
Benefit (provision) for federal and state income taxes 1,130
(124 ) (360 ) (340 )
Net income (loss) from discontinued real estate operations (5,269 ) 2,728
3,066

4,297
Net loss from discontinued agribusiness operations, net of tax

(18 ) (13 ) (102 )
Net income (loss) from discontinued operations, net of tax (5,269 ) 2,710
3,053

4,195
Gain (loss) on sale of discontinued real estate operations, net of tax⁽¹⁾
2,094

(9,311 )

Income (loss) on sale of discontinued agribusiness operations, net of tax

2
2
(1,858 )
Net income (loss) from discontinued operations, net of tax (3,175 ) 2,712
(6,256 ) 2,337
Net (income) loss from discontinued operations attributable to noncontrolling interests 1,645
(1,043 ) (1,150 ) (1,676 )
Net income (loss) from discontinued operations attributable to PICO Holdings, Inc. $ (1,530 ) $ 1,669
$ (7,406 ) $ 661

⁽¹⁾ Included within the loss on sale of discontinued real estate operations, net of tax for the nine months ended September 30, 2017, is an $11.4 million impairment loss on classification of assets as held-for-sale, which was recorded during the second quarter of 2017. The final loss reported on sale of discontinued real estate operations during the three months ended September 30, 2017 was $9.3 million. The $2.1 million decrease in the loss during the period was primarily due to an increase in the price of Century common stock and a decrease in the carrying value of UCP caused by its reported loss from operations.

~~The following table presents the details of the Company’s assets and liabilities classified as held-for-sale in the condensed consolidated balance sheets (in thousands):~~

December 31, 2016
Real estate assets held-for-sale:
Cash and cash equivalents $ 40,931
Real estate 373,207
Accounts receivable 5,628
Other assets 14,418
Valuation allowance on assets held-for-sale

Real estate assets held-for-sale 434,184
Agribusiness assets held-for-sale 6,505
Total assets held-for-sale $ 440,689

Real estate liabilities held-for-sale:
Debt, net $ 160,994
Account payable and accrued expenses 34,025
Other liabilities 12,271
Real estate liabilities held-for-sale 207,290
Agribusiness liabilities held-for-sale 276
Total liabilities held-for-sale $ 207,566

The following table presents the details of the Company’s condensed consolidated statements of operations and comprehensive income or loss recast to present the results of UCP as a discontinued operation (in thousands, except per share data):

Year Ended December 31,
2016 2015 2014
Revenues and other income:
Sale of real estate and water assets $ 633
$ 3,856
$ 1,220
Impairment loss on investment in unconsolidated affiliate (2,170 ) (20,696 ) (1,078 )
Other income, net 9,471
4,472
1,077
Total revenues and other income 7,934
(12,368 ) 1,219

Cost of sales and expenses:
Cost of real estate and water assets sold 326
1,239
738
General, administrative, and other 32,830
20,027
24,156
Impairment loss on intangible and long-lived assets 201
2,085
10,219
Depreciation and amortization 865
1,660
2,385
Total cost and expenses 34,222
25,011
37,498
Loss from continuing operations before income taxes and equity in loss of unconsolidated affiliates (26,288 ) (37,379 ) (36,279 )
Benefit for federal and state income taxes 1,135
2,961
2,450
Equity in loss of unconsolidated affiliate

(3,422 ) (2,076 )
Loss from continuing operations (25,153 ) (37,840 ) (35,905 )
Income (loss) from discontinued operations, net of tax 13,899
(24,310 ) (23,700 )
Loss on sale or impairment loss on classification of assets as held-for-sale, net of tax (1,775 ) (18,729 )

Net income (loss) from discontinued operations, net of tax 12,124
(43,039 ) (23,700 )
Net loss (13,029 ) (80,879 ) (59,605 )
Net (income) loss attributable to noncontrolling interests (8,836 ) (979 ) 7,180
Net loss attributable to PICO Holdings, Inc. $ (21,865 ) $ (81,858 ) $ (52,425 )

Year Ended December 31,
2016 2015 2014
Other comprehensive income (loss):
Net loss $ (13,029 ) $ (80,879 ) $ (59,605 )
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities, net of deferred income tax and reclassification adjustments 1,671
292
(2,093 )
Foreign currency translation 29
(48 ) 6,578
Total other comprehensive income, net of tax 1,700
244
4,485
Comprehensive loss (11,329 ) (80,635 ) (55,120 )
Comprehensive (income) loss attributable to noncontrolling interests (8,836 ) (979 ) 7,180
Comprehensive loss attributable to PICO Holdings, Inc. $ (20,165 ) $ (81,614 ) $ (47,940 )

Net income (loss) per common share – basic and diluted:
Loss from continuing operations $ (1.09 ) $ (1.76 ) $ (1.34 )
Income (loss) from discontinued operations 0.14
(1.80 ) (0.96 )
Net loss per common share – basic and diluted $ (0.95 ) $ (3.56 ) $ (2.30 )
Weighted average shares outstanding 23,054
23,014
22,802

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read together with the Unaudited Condensed Consolidated Financial Statements and accompanying Notes included elsewhere in this report, and the Consolidated Financial Statements and accompanying Notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Note About “Forward-Looking Statements”

This Quarterly Report on Form 10-Q (including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section) contains “forward-looking statements,” as defined in Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended regarding our business, financial condition, results of operations, and prospects, including, without limitation, statements about our expectations, beliefs, intentions, anticipated developments, and other information concerning future matters. Words such as “may,” “will,” “could,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “target,” “projects,” “contemplates,” “predicts,” “potential,” “continue,” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report on Form 10-Q. Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on current expectations and assumptions. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and the actual results and outcomes could differ materially from what is expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those discussed under the headings “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020, in “Item 1A: Risk Factors” of Part II of this Quarterly Report on Form 10-Q, and in other filings made from time to time with the United States Securities and Exchange Commission (“SEC”) after the date of this Quarterly Report on Form 10-Q. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to (and we expressly disclaim any obligation to) revise or update any forward-looking statement, whether as a result of new information, subsequent events, or otherwise (except as may be required by law), in order to reflect any event or circumstance which may arise after the date of this Quarterly Report on Form 10-Q. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K and other filings with the SEC.

Business Strategy and Goals

~~PICO Holdings,~~Vidler Water Resources, Inc. is a ~~diversified~~ holding company. In this Quarterly Report, ~~PICO~~Vidler and its subsidiaries are collectively referred to as ~~“PICO,~~“Vidler,” “the Company,” or by words such as “we” and “our.”

Our business is to source, develop and provide sustainable potable water resources to fast-growing communities throughout the Southwest U.S. that lack, or are running short of, available water resources.

Our objective is to maximize long-term shareholder value. Currently, we believe the highest potential return to shareholders is from a return of capital. As we monetize assets, rather than reinvest the proceeds, we intend to return capital back to shareholders through a stock repurchase program or by other means such as special dividends. Nonetheless, we may, from time to time, reinvest a portion of proceeds from asset monetizations in further development of existing assets, if we believe the returns on such reinvestment outweigh the benefits of a return of capital.

As of September 30, ~~2017, our business was separated into the following segments:~~

•~~Water Resource and Water Storage Operations; and~~

•~~Corporate.~~

~~As of September 30, 2017,~~2021, our major consolidated subsidiary was Vidler Water Company, Inc. ~~(“Vidler”),~~ a water resource and water storage business with assets and operations primarily in the southwestern United States, including Nevada, Arizona, Colorado, and New Mexico.

~~Results of Operations — Three~~ Our revenue and ~~Nine Months Ended September 30, 2017 and 2016~~

~~Overview of Economic Conditions, Other Recent Events, and Impact on Results of Operations~~

The economic environment and housing slow-down in the U.S. between 2007 and 2011 significantly decreased the rate of growth in the Southwest and the demand for our water assets in certain markets. Numerous factors can affect the performance of an individual market. However, we believe that trends in employment, housing inventory, interest rates, and home prices have a particularly significant impact. We expect that these market trends will have an impact on our operating performance. There has been a recovery and improvement in the housing markets from levels seen during the slow-down (with seasonal fluctuations) which has led to increased levels of real estate development activity, and we believe that the continuation of the housing recovery will lead to increased demand for our intangible and tangible water assets. Individual markets continue to experience varying results, as local home inventories, affordability, and employment factors strongly influence each local market and any deterioration in the markets in which we operate has the potential to cause additional impairment losses on our water assets.

~~The focus of our operations is building long-term shareholder value. Our revenues and results of operations fluctuate from period to period. For example, we recognize revenue~~cash generation from the sale of our water resource and real estate assets can vary significantly from quarter to quarter and largely depends on when ~~specific~~actual sale transactions ~~close,~~close. We are unable to predict with any certainty the timing of any future asset sales and ~~as a result, sales~~revenue and cash generation, which could adversely affect our liquidity.

Results of ~~water assets for any individual quarter are not necessarily indicative of revenues for future quarters or the full financial year.~~Operations

~~Significant Transactions During the Nine Months Ended September 30, 2017:~~Shareholders’ Equity (in thousands):


	September 30, 2021		December 31, 2020		Change
Shareholders’ equity	$	175,135	$	178,270	$	(3,135)
Shareholders’ equity per share	$	9.55	$	9.59	$	(0.04)

~~Discontinued Operations:~~

On April 10, 2017, our then majority owned subsidiary, UCP, Inc. (“UCP”), entered into a merger agreement with Century Communities, Inc. (“Century”) whereby each outstanding share of UCP common stock was converted into $5.32 in cash and 0.2309 of a newly issued share of Century common stock. The transaction closed on August 4, 2017. As a result, we received $55.3 million and approximately 9% of the outstanding common stock of Century. However, in October 2017, we sold our entire position of Century common stock for $59.2 million

~~The transaction resulted in a loss on sale of $9.3 million which was recorded~~shareholders’ equity during the nine months ended September 30, ~~2017. See Note 10 “Discontinued Operations” for additional information.~~

~~PICO Holdings, Inc. Shareholders’ Equity (in thousands):~~

September 30, 2017 December 31, 2016 Change
Shareholders’ equity $ 323,960
$ 327,994
$ (4,034 )
Shareholders’ equity per share $ 14.00
$ 14.22
$ (0.22 )

~~The decrease in our shareholders’ equity~~2021, was primarily due to the ~~comprehensive~~repurchase of approximately 253,000 shares of our common stock for $2.4 million.

Income Statement (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change

Revenue and other income	$	457	$	2,072	$	(1,615)	$	5,776	$	6,146	$	(370)
Cost of sales	46		$	518	$	(472)	$	1,276	$	810	$	466
Project and general and administrative expenses	1,535		$	1,702	$	(167)	$	5,266	$	5,431	$	(165)
Net Income (loss) before income taxes	$	(1,124)	$	(148)	$	(976)	$	(766)	$	(95)	$	(671)

Revenue and other income ~~attributable to the Company~~(loss)

The majority of ~~$4,675,000 during~~our revenue recorded for the nine months ended September 30, ~~2017.~~2021 was from the sale of 296 acre-feet of water rights at Dodge Flat, Nevada, for total proceeds of $2.1 million, and 42.7 acre-feet of water at Fish Springs Ranch, Nevada for total proceeds of $1.7 million.

~~Total Assets~~Project and ~~Liabilities (in thousands):~~

September 30, 2017 December 31, 2016 Change
Total assets $ 331,936
$ 675,794
$ (343,858 )
Total liabilities $ 7,976
$ 248,225
$ (240,249 )

~~Total assets~~general and ~~liabilities decreased during~~administrative expenses for the nine months ended September 30, ~~2017 primarily due~~2021 included approximately $400,000 of non–applicable option payments (not applicable to the ~~disposition~~purchase price) for water rights purchases in Lyon County, Nevada (nine months ended September 30, 2020, $310,000) and ~~resulting deconsolidation~~legal fees and other expenses incurred of ~~UCP.~~

~~Total liabilities also decreased during~~approximately $482,000 (nine months ended September 30, 2020, $190,000) in connection with our legal proceedings against the Nevada State Engineer to protect our Kane Springs, Lincoln County, Nevada water rights. These cost increases were offset by reduced year-over-year compensation, rent and consulting costs, and total project and general administrative expenses were $165,000 lower in the nine months ended September 30, ~~2017 primarily due~~2021 compared to the ~~payment of $23.4 million deferred compensation and $10.4 million~~corresponding period in ~~accrued severance in conjunction with the termination of our former CEO.~~2020.

Income Taxes

~~Results of Operations~~

~~The majority of our revenue during the nine months ended September 30, 2017 was from the sale of 100,000 long-term storage credits for $25 million. We also reported realized gains~~Based on the ~~sale~~analysis conducted at December 31, 2020 we reversed a portion of ~~investments of $8.8 million during~~ the nine months ended September 30, 2017. Such realized gains were recognized on the sale of investments from our deferred compensation accounts in conjunction with the distribution of such assets to our former CEO.

During the nine months ended September 30, 2017 we recorded $12.6 million in cost of real estate and water assets sold related to our sale of 100,000 water credits. Additionally, during the three and nine months ended September 30, 2017 we recorded general and administrative costs of $2.9 million and $9.9 million, respectively. General and administrative costs decreased $2.7 million quarter over quarter and $6.2 million year over year from September 30, 2016 to September 30, 2017, respectively, due primarily to decreases in executive compensation, legal expenses, and deferred compensation expense.

~~We continued to record a full~~ valuation allowance on our net deferred tax assets ~~however, as~~of $9.3 million resulting in a ~~result~~deferred tax benefit of ~~recognizing realized gains~~$9.3 million for the year ended December 31, 2020. The effective tax rate differed from our federal corporate income tax rate of 21% due primarily to the valuation allowance changes recorded on ~~the sale of certain investments that were included~~our net deferred tax assets in ~~unrealized gains reported in other comprehensive income in previous periods, we recorded $3.4 million in tax expense during~~2020. For the nine months ended September 30, ~~2017. There were minimal income taxes reported during all other periods presented..~~

~~The results~~2021 and September 30, 2020 the Company has recorded a tax provision of ~~our discontinued operations included income or loss from UCP~~$0. For 2021, the primary difference between the tax provision recorded and the ~~loss~~amount at the federal statutory rate is related to book deductions permanently disallowed for tax.For 2020, the primary difference between the tax provision recorded ~~on the sale of such operations. Our prior estimate of the loss on sale that we recorded during the three months ended June 30, 2017, was $11.4 million,~~ and the ~~loss recorded during~~amount at the three months ended September 30, 2017 was $9.3 million. The $2.1 million decrease in the loss during the period was primarily due to an increase in the Century stock price and a decrease in the carrying value of UCP caused by its reported loss from operations.

We report comprehensive income or loss as well as net income or loss from the condensed consolidated statements of operations and comprehensive income or loss. Comprehensive income measures changes in equity, and includes unrealized items which are not recorded in the condensed consolidated statements of operations.

~~Water Resource and Water Storage Operations~~

Thousands of dollars Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change 2017 2016 Change
Revenue and other income:
Sale of real estate and water assets $ 136
$ 477
$ (341 ) $ 25,276
$ 607
$ 24,669
Other 211
100
111
490
283
207
Total revenue and other income 347
577
(230 ) 25,766
890
24,876

Cost of sales and expenses:
Cost of real estate and water assets sold 55
252
(197 ) 12,604
316
12,288
Depreciation and amortization 21
37
(16 ) 82
316
(234 )
Overhead expense 856
1,040
(184 ) 3,200
3,345
(145 )
Project expense 380
252
128
1,216
1,099
117
Segment total expenses 1,312
1,581
(269 ) 17,102
5,076
12,026
Income (loss) before income taxes $ (965 ) $ (1,004 ) $ 39
$ 8,664
$ (4,186 ) $ 12,850

Historically, our water resource and water storage segment revenue and results have been volatile and infrequent. Since the date a transaction closes generally determines the accounting period in which any sales revenue and cost of sales are recorded, our reported revenue and income in this segment fluctuate from period to period, depending on the dates when specific transactions close. Consequently, revenue in any one yearfederal statutory rate is ~~not necessarily indicative of likely revenue in future years.~~

~~Segment Revenue~~

We recorded the sale of 100,000 long-term storage credits during the nine months ended September 30, 2017 which generated a gross margin of approximately $12.5 million, or 50%. We did not have any significant sales during any other period presented. .

~~Segment Expenses~~

Overhead expenses consisted primarily of salaries and benefits, professional fees, office rent and insurance. Such expenses decreased slightly quarter-over-quarter and year-over-year. Project expenses increased slightly during the period presented during to legal and consulting costs during the quarter related to one of our water development projects in New Mexico.

~~Project expenses consisted of costs~~ related to the ~~ongoing maintenance~~full valuation allowance recorded against our deferred tax assets as of our assets and professional fees. Project costs are expensed as appropriate and fluctuate from period to period depending on activity in our various projects. In general, we expect project costs to decrease year-over-year as our assets are essentially fully developed. However, one-time unexpected costs could be incurred occasionally.

If we fail to generate revenue, incur additional expenses beyond expectations, continue to report operating losses, or if expected prices for our water assets fall, we could be required to record additional impairment losses on our real estate, tangible and intangible water assets owned in this segment.

~~Corporate~~

Thousands of dollars Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change 2017 2016 Change
Revenue:
Deferred compensation and other $ (142 ) $ 588
$ (730 ) $ 9,266
$ 1,910
$ 7,356

Costs and expenses:
Impairment loss on intangible and long-lived assets

201
(201 )

201
(201 )
Stock-based compensation expense 300
442
(142 ) 1,146
1,308
(162 )
Deferred compensation expense 16
1,758
(1,742 ) 221
2,808
(2,587 )
General, administrative, and other 1,394
2,282
(888 ) 4,159
7,880
(3,721 )
Segment total expenses 1,710
4,683
(2,973 ) 5,526
12,197
(6,671 )
Income (loss) before income taxes $ (1,852 ) $ (4,095 ) $ 2,243
$ 3,740
$ (10,287 ) $ 14,027

The corporate segment consists of cash, our investments in Mindjet, Inc. and Synthonics, Inc., the assets and liabilities of the deferred compensation trusts held for the benefit of certain officers, and our oil and gas venture. Revenue includes sales from our oil and gas operations, and realized gains or losses on the sale or impairment of securities and vary considerably from year to year.

The expenses recorded in this segment primarily consist of salaries and benefits for corporate staff and officers, director fees, shareholder costs, rent for our corporate office, stock-based compensation expense, deferred compensation expense, and expenses related to the operations of our oil and gas venture, which consisted primarily of the cost of the administrative service agreement for the management and administration of the oil and gas wells.

Corporate segment results can fluctuate due to one or more individually significant revenue or expense items which occur irregularly or change significantly from period to period, for example, realized gains or losses on the sale of investments. Consequently, the corporate segment results are not typically comparable from year to year.

~~Segment Revenue and Expense~~

~~Deferred Compensation:~~

~~During the nine months ended~~ September 30, 2017, the revenue reported in the segment was primarily from realized gains and other income generated by deferred compensation transactions recognized in conjunction with the liquidation and distribution of such deferred compensation to our former CEO.2020.

In July 2017, the Company’s board of directors elected to terminate our deferred compensation plans. While participants still have assets deferred at September 30, 2017, the deferred compensation plans are no longer active. We expect to distribute the assets to the participants no earlier than one year from the date of termination of the plans. The participants in the deferred compensation plans bear the risk of the investment return on the deferred compensation assets, similar to a defined contribution plan such as a 401(k) plan. The investment income and realized gains or losses from the deferred compensation assets are recorded as revenue in the period that they are earned, and a corresponding and offsetting cost or benefit is recorded as deferred compensation expense or recovery. The change in net unrealized appreciation or depreciation in the deferred compensation assets is charged to compensation expense. Once the deferred compensation has been distributed, over the lifetime of the assets, the revenue and deferred compensation expense equal and there is no net effect on segment results.

General, administrative, and other expenses decreased during the three and nine months ended September 30, 2017 primarily due to decreased salary and benefits from reductions in executive compensation and staffing at the corporate office, director compensation, legal fees and other costs related to general corporate matters and from reduced operating expenses as a result of selling the majority of our oil and gas assets last year. We expect additional decreases in our corporate segment salaries and benefits in future periods due to pay cuts taken by our executive officers, lower employee benefits, and further reduction in our corporate staff headcount implemented during the third quarter of 2017.

~~Discontinued Operations~~

Thousands of dollars Three Months Ended September 30,
Nine Months Ended September 30,

2017⁽¹⁾

2016 Change
2017⁽¹⁾

2016
Change
Real estate revenue and other income:

Sale of real estate $ 39,462
$ 95,340
$ (55,878 )
$ 247,213

$ 246,403

$ 810
Other 20
204
(184 )
506

253

253
Total real estate revenue and other income 39,482
95,544
(56,062 )
247,719

246,656

1,063

Real estate cost of sales and expenses:

Cost of real estate sold 32,221
78,725
(46,504 )
200,789

201,841

(1,052 )
Impairment loss on intangible and long-lived assets

4,414
(4,414 )
102

6,811

(6,709 )
General, administrative, and other 11,245
4,612
6,633

29,618

19,331

10,287
Sales and marketing 2,416
4,939
(2,523 )
13,784

14,035

(251 )
Total real estate cost of sales and expenses 45,882

92,690
(46,808 )
244,293

242,018

2,275
Real estate income before income taxes (6,400 ) 2,854
(9,254 ) 3,426
4,638
(1,212 )
Agribusiness income (loss) before income taxes —
(18 ) 18
(13 ) (102 ) 89
Segment income before income taxes $ (6,400 ) $ 2,836
$ (9,236 ) $ 3,413
$ 4,536
$ (1,123 )

⁽¹⁾~~The three and nine months ended September 30, 2017 include results ending on August 4, 2017, the date the merger of UCP and Century closed.~~

Liquidity and Capital Resources — Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020

~~Cash Flow~~

~~At September 30, 2017,~~A substantial portion of our historical revenue and cash flow has, and is expected in the future, to come from one-time sales of our assets ~~consisted~~that are primarily ~~of tangible and intangible water assets, investments and cash. Our cash is generally held in money market funds. Our primary sources of funds include existing cash, the sale of tangible and intangible~~long-term water resource development projects that we expect to support economic growth in the local markets where those assets ~~loans and debt or equity offerings.~~are located. We ~~are not subject to any debt covenants which limit our ability to obtain additional financing through debt or equity offerings.~~

~~Our cash and available-for-sale investments held in each segment at~~ ~~September 30, 2017~~ ~~were as follows:~~

~~Water resource and water storage operations segment held cash of $1.1 million.~~

Corporate segment held cash of $23.9 million and marketable equity and debt securities with a market value of $131.3 million, $59.2 million of which was the shares we owned in Century, and $4 million was held in deferred compensation rabbi trust accounts, which will be used to pay the related and offsetting deferred compensation liabilities.

~~During October 2017, we sold our entire position in Century common stock for $59.2 million.~~

On October 26, 2017 our board of directors declared a special cash dividend of $5 per share amounting to approximately $115.7 million. The record date is November 6, 2017, payment is expected to be made on or around November 20, 2017, and the ex-dividend date is November 21, 2017. We anticipate that the entire cash distribution will be treated as a return of capital for U.S. federal income tax purposes. Generally, the cash distribution is anticipated to have the effect of reducing the tax basis of a shareholder’s common shares of our shares; however, ifclassify such ~~a distribution is in excess of a shareholder’s tax basis, a portion of the distribution may be treated as a capital gain under current tax law.~~

~~Our cash flows fluctuate depending on the capital requirements of our operating subsidiaries. The sale of~~sales and costs incurred to acquire and develop ~~real estate and~~our water assets ~~are generally classified~~ as operating activities in ~~the condensed~~our consolidated statement of cash flows. ~~The cash flow profiles of our principal operating segments are as follows:~~

~~Water Resource and Water Storage Operations~~

A substantial portion of our revenue in this segment has come from sales of real estate and water assets including the $25 million sale that closed during the nine months ended September 30, 2017. Our assets in this segment are typically long-term water resource development projects to support growth for particular communities in the southwestern U.S. The timing and amount of sales and cash flows depend on a number of factors which are difficult to ~~project,~~predict, and cannot be directly compared from one period to another. ~~A significant portion of project expenses are incurred to maintain~~However, given our ~~assets in good standing.~~

~~Corporate~~

~~In conjunction with terminating the employment of our former CEO, in April 2017, we paid severance, stock-settled the vested RSU, and distributed certain deferred compensation balances valued~~cash balance at ~~approximately $23.4 million to our former CEO.~~

~~We expect to continue to purchase shares of our common stock in the open market at opportunistic prices, utilizing our board approved amount of $50 million.~~

~~Consolidated Cash and Securities~~

~~Currently we have significant working capital reserves. At~~ September 30, ~~2017,~~2021, we had unrestricted and available cash and securities of $91.9 million, which could be used for general corporate purposes. At December 31, 2016, we had unrestricted and available cash and securities of $18.7 million.

At September 30, 2017, we forecasted that our net operating cash burn for continuing operations for the next 12 months was approximately $6.4 million which was comprised of expected expenditures of approximately $7.1 million offset by anticipated recurring revenue and other certain cash receipts of approximately $669,000.

~~Given our current cash balances we~~currently believe that we have sufficient resources to cover our ~~cash needs~~expenses for at least the next 12 months.

Our revenue and cash generation from the sale of our water resource and real estate assets can vary significantly from quarter to quarter, and largely depends on when actual sale transactions close. We are unable to predict with any certainty the impact on the timing of any future asset sales and revenue and cash generation due to the economic contraction in the U.S. as a result of the COVID-19 pandemic. If an economic contraction in the U.S. persists for several quarters, it is likely that future asset sales will be delayed, which could adversely impact our liquidity.

In the long-term, we estimate that ~~existing cash resources and~~ cash from ~~operations~~asset sales will provide us with adequate funding for future operations. However, if additional funding is needed, we ~~could~~may defer significant expenditures (including stock repurchases), sell assets, obtain a line of credit, or complete a debt or equity offering. Any ~~additional~~ equity ~~offerings~~or convertible debt offering may be dilutive to our ~~stockholders~~shareholders, and any ~~additional~~ debt ~~offerings~~offering may include operating covenants that could restrict our business. We are currently not subject to any debt covenants that limit our ability to obtain additional financing through debt or equity offerings.

We expect to continue to repurchase shares of our common stock in the open market at opportunistic prices, up to our current board approved amount of $100 million, subject to maintaining adequate working capital requirements.

Cash ~~Flow~~Flows

Cash Flows From Operating Activities

~~We generated $1.1 million in~~Our operations used $362,000 of cash ~~from continuing operations for~~during the first nine months of ~~2017 primarily~~2021. The principal operating cash inflow was approximately $5.4 million from the ~~$25 million~~ sale of ~~100,000 long term storage credits. We~~various real estate and water rights assets and other income. This was offset by $5.1 million of cash used ~~cash of $8.9 million~~ for overhead and various project expenses and ~~$18.1 million~~$690,000 for ~~payment~~the purchase of ~~severance benefits and deferred compensation payouts related to the termination~~45 acre-feet of ~~our former CEO.~~ water rights in Lyon County, Nevada.

Our ~~discontinued~~ operations ~~generated $246 million~~provided $502,000 of cash during the first nine months of ~~2017~~2020. The principal operating cash inflow was approximately $6.1 million from the sale of ~~residential~~various real estate and ~~lots~~water rights assets and ~~used~~other income. This was offset by $5.6 million of cash ~~of $216.9 million in acquisition and development of real estate and $37 million for overhead.~~

We used ~~$12 million in cash from continuing operations for the first nine months of 2016. The cash outflow primarily related to $11.5 million~~ for overhead and various project expenses. Our discontinued operations generated $243.2 million during the first nine months of 2016 from the sale of residential real estate lots and used cash of $225.4 million in acquisition and development of real estate and $24.3 million for overhead.

Cash Flows From Investing Activities

Our continuing operations used $61.6 million of cash during the nine months ended September 30, 2017, primarily related to the purchase of $139.9 million of U.S. Treasuries, which was offset by $70 million in maturities of U.S. Treasuries and approximately $8.6 million in cash from the sale of various other debt and equity investments. Our discontinued operations generated $47.2 million of net cash during the nine months ended September 30, 2017 which was comprised of the $55.3 million received on the sale of UCP less UCP’s cash balance as of the date of the sale, and $6 million in cash received from the escrow for general indemnification claims related to our discontinued agribusiness operations.

~~We did not have any significant cash flows from investing activities in our continuing operations or discontinued operations for the first nine months of 2016.~~

~~Cash Flows From Financing Activities~~

There were no significant cash flows from ~~financing~~investing activities ~~in our continuing operations~~ during the nine months ended September 30, ~~2017~~2021, and ~~2016. Our discontinued operations received~~September 30, 2020.

Cash Flows From Financing Activities

We used $2.4 million and $8.6 million in cash to repurchase 253,000 and 994,000 shares of ~~$86.7 million~~our common stock during the nine months ended September 30, ~~2017 provided from draws on its debt arrangements, which was used primarily to fund the acquisition~~2021 and ~~development of various real estate projects offset by payments of $96.5 million which was used to repay debt when certain real estate properties were sold.~~2020, respectively.

During the nine months ended September 30, 2016, our discontinued real estate operations did not generate net cash, however, we had borrowings of $106.7 million provided by the debt arrangements, offset by repayments of debt of $105.5 million and UCP purchases of its own stock of $1 million.

Although we cannot accurately predict the effect of inflation on our operations, we do not believe that inflation has had a material impact on our net revenues or results of operations, or is likely to in the foreseeable future.

Off-Balance Sheet Arrangements

As of September 30, ~~2017,~~2021, we had no off-balance sheet arrangements, ~~other than those disclosed in this Form 10-Q,~~ that have, or are reasonably likely to have, a material current or future effect on our consolidated financial condition, revenues or expenses, results of operations, liquidity, capital expenditure, or capital resources.

~~Aggregate Contractual Obligations:~~

~~The following table proves a summary of our contractual cash obligations and other commitments and contingencies as of September 30, 2017 (in thousands):~~

Payments Due by Period
Contractual Obligations Less than 1 year 1-3 years 3-5 years More than 5 years Total
Operating leases $ 86
$ 870
$ 956
Other⁽¹⁾
4,066
4,066
Total $ 4,152
$ 870

$ 5,022

⁽¹⁾~~Amount represents deferred compensation that will be paid to plan participants no sooner than July 2018.~~

~~We had no liabilities or potential interest for unrecognized tax benefits associated with uncertain tax positions at September 30, 2017.~~

~~Item 3. Quantitative and Qualitative Disclosure about Market Risk~~

Our balance sheet includes a significant amount of assets and liabilities whose fair value is subject to market risk. Market risk is the risk of loss arising from adverse changes in market interest rates or prices. We currently have interest rate risk as it relates to investments in debt securities, and equity price risk as it relates to our marketable equity securities. The estimated fair value of our debt is based on cash flow models discounted at the then-current interest rates and an estimate of the then-current spread above those rates at which we could borrow, which are Level 3 inputs in the fair value hierarchy.

At September 30, 2017, we had $70.9 million of marketable debt securities and $60.4 million of marketable equity securities, and at December 31, 2016, we had $4.4 million of debt securities and $20.7 million of marketable equity securities, which were subject to market risk.

Our debt securities principally consist of bonds with short and medium terms to maturity. The deferred compensation accounts have held both investment-grade and below investment-grade bonds. In the deferred compensation accounts, we manage interest rate risk by matching the maturities of the bonds to the participant’s pre-selected payout schedule.

We use two models to report the sensitivity of our assets and liabilities subject to the above risks. For debt securities, we use duration modeling to calculate changes in fair value. The model calculates the price of a fixed maturity assuming a theoretical 100 basis point, or a 1% increase in interest rates and compares that to the current price of the security. At September 30, 2017 and September 30, 2016 the model did not calculate a material loss in fair value. For our marketable equity securities, we use a hypothetical 20% decrease in fair value to analyze the sensitivity. The hypothetical 20% decrease in fair value of our marketable equity securities would produce a loss in fair value of approximately $12.1 million and $4.1 million at September 30, 2017 and 2016, respectively, that would reduce our unrealized appreciation in shareholders’ equity.

Actual results may differ from the hypothetical results assumed in this disclosure due to possible actions we may take to mitigate adverse changes in fair value, and because the fair value of securities may be affected by both factors related to the individual securities (e.g. credit concerns about a bond issuer) and general market conditions.

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision of, and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and ~~15(d)-15(e)~~15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this ~~quarterly report~~Quarterly Report on Form 10-Q.

Although we believe our disclosure controls and procedures and internal control over financial reporting are effective, management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors, misstatements, or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide definitive assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule ~~13a-15(f)~~13a and 15d-15(f) under the Exchange Act) during the quarter ended September 30, ~~2017,~~2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II: Other Information

Item 1: Legal Proceedings

~~None.~~There were no new legal proceedings in the three and nine months ended September 30, 2021.

Item 1A: Risk Factors

The following information sets out factors that could cause our actual results to differ materially from those contained in forward-looking statements we have made in this Quarterly Report on Form 10-Q and those we may make from time to time. ~~You~~Investors evaluating our business and prospects should carefully consider the following risks, together with other matters described in this Quarterly Report on Form 10-Q or incorporated herein by ~~reference in evaluating our business and prospects.~~reference. If any of the following risks ~~occurs,~~occur, our business, financial condition or operating results could be harmed. In such case, the trading price of our securities could decline, in some cases significantly.

~~The risk factors~~1. Asset and Market Concentration Risk

Our water resource and water storage operations are concentrated in a limited number of assets and markets, making the success of our operations highly dependent on the conditions and fluctuations of the local economies where those operations and assets are located.

We anticipate that a significant amount of our water resource and water storage revenue, results of operations, and cash flows will result from a limited number of assets that primarily consist of our water rights in Nevada and our water storage operations in Arizona.Our two most significant assets are our water credits to serve the North Valleys area of Reno, Nevada, and our water storage operations in Arizona.As a result of this ~~report have been revised to incorporate changes to~~geographic concentration, we expect the ultimate return on our ~~risk factors from those included in our Annual Report on Form 10-K for~~invested capital, results of operations, and cash flows will be closely associated with the ~~year ended December 31, 2016. The risk factors set forth below with an asterisk (*) next to~~conditions and fluctuations of the ~~title are new risk factors or risk factors containing changes,~~local economies, including any ~~material~~ changes ~~from the risk factors previously disclosed~~ in ~~Item 1A~~local and regional government land use, zoning, permitting approvals, and other regulatory actions in these regions.Any economic downturn, or additional permitting, zoning or planning regulatory requirements in these markets, would adversely impact our results of operations, cash flows, and our ~~Annual Report on Form 10-K~~financial condition.Any prolonged weak demand or lack of permitting approvals for ~~the year ended December 31, 2016, as filed with the SEC.~~

~~General economic conditions could~~new homes and residential and commercial development would adversely affect our assets in Nevada and Arizona and would have a material adverse effect on our ~~financial~~future revenues, results ~~financial condition~~of operations, cash flows, and the return on our investment from those assets.

Our Fish Springs Ranch project to sell water credits to the North Valleys area of Reno, Nevada could adversely affect our results of operations, if we are unable to sell water credits.

We constructed a pipeline approximately 35 miles long to deliver water from Fish Springs Ranch to the North Valleys area of Reno, Nevada.As of September 30, 2021, the total cost of the pipeline project, including our water credits (net of impairment losses incurred to date), carried on our balance sheet was approximately $81.1 million.To date, we have sold only a small amount of the water credits, and we cannot provide any assurance that the sales prices we may obtain in the future will provide an adequate economic return, if at all.Demand for these water credits is anticipated to come primarily from both local and national developers planning to construct new projects in the North Valleys area of Reno, Nevada. The success of these projects is dependent on numerous factors beyond our control, including local government approvals, employment growth in the greater Reno area, and the ability of the developers to finance these projects.

Our inability to sell all or part of our Arizona Long-Term Storage Credits could adversely affect our profitability.

Our Arizona Recharge Facility is one of the few private sector water storage sites in Arizona.At September 30, 2021, we had approximately 250,682 acre-feet of Long Term Storage Credits stored at the facility.In addition, at September 30, 2021, we had approximately 27,397 acre-feet of Long Term Storage Credits stored in the Phoenix Active Management Area.We have not stored any water on behalf of any customers and, as of September 30, 2021, had not generated any material revenue from the Arizona Recharge Facility.We cannot be certain that we will ultimately be able to sell all of the stored water at a price sufficient to provide an adequate economic return, if at all.

The fair values of our water assets are linked to the rate of growth in the local markets in which our assets are concentrated; we may be unable to realize the value of our water assets in our projected time frame, and the value of those assets may be affected by broader economic issues.

Both the demand for, and fair value of, our water assets are significantly affected by the growth in population and the general state of the local economies where our real estate and water assets are located.The local economies where our real estate and water assets are located, primarily in Arizona and northern Nevada, but also in southern Nevada, Colorado, and New Mexico.One or more of these economies may be adversely affected by factors such as the local level of employment, the availability and cost of financing for real estate development, and the affordability of housing.The unemployment rate in these states, as well as credit market conditions, may result in a slowdown of the local economies where our real estate and water assets are located.These developments, if they occur, could materially and adversely affect the demand for, and the fair value of, our ~~assets.~~

All of our businesses are sensitive to general economic conditions, whether internationally, nationally, regionally, or locally. General poor economic conditions and the resulting effect of non-existent or slow rates of growth in the markets in which we operate could have a material adverse effect on the demand for our water assets. These poor economic conditions include higher unemployment, inflation, deflation, decreases in consumer demand, changes in buying patterns, a weakened dollar, higher consumer debt levels, and higher tax rates and other changes in tax laws or other economic factors that may affect commercial and residential real estate ~~development.~~

~~Specifically, high national, regional, or local unemployment may arrest or delay any significant recovery of the residential real estate markets in which we operate, which could~~and water assets and, consequently, adversely affect ~~the demand for~~ our ~~water assets. Any prolonged lack of demand for our water assets could have a significant adverse effect on our~~growth and revenues, results of operations, cash flows, and the return on our investment from these assets.

*2. Business, Operational and Financial Risks

Our future revenue is uncertain and depends on a number of factors that may make our revenue, profitability, cash flows, and the fair value of our assets volatile.

Our future revenue and profitability ~~related to~~of our water resource and water storage operations will primarily ~~be dependent~~depend on our ability to develop and sell or lease our water assets. ~~In light of the fact that~~Because our water resource and water storage operations represent ~~a large percentage~~almost the entirety of our ~~overall~~ business at present, our long-term profitability and the fair value of the assets related to our water resource and water storage operations ~~will~~could be adversely affected by various factors that may affect our assets, including ~~the~~ drought in the southwest, regulatory approvals and permits associated with ~~such~~those assets, transportation arrangements, and changing technology. We may also encounter unforeseen technical or other difficulties which could result in cost increases ~~with respect to~~for our water resource and water storage development projects. Moreover, our profitability, and the fair value of ~~the assets related to~~ our water resource assets and water storage operations, isare significantly affected by changes in the market price of water. Future sales and prices of water may fluctuate widely, as demand is affected by climatic, economic, demographic, and technological factors, as well as the relative strength of the residential, commercial, financial, and industrial real estate ~~markets.~~markets in the areas where our water assets are located. Additionally, to the extent that we ~~possess~~hold junior or conditional water rights, during extreme climatic conditions, such as periods of low river flow or drought, our water rights could be subordinated to superior water rights holders. The factors described above are not within our control.

One or more of the above factors ~~in one or more of our operating segments~~ could ~~impact~~negatively affect our revenue and profitability, ~~negatively affect~~ our financial condition and cash flows, cause our results of operations to be volatile, and could ~~negatively impact~~adversely affect our rate of return on our water assets and cause us to divest such assets for less than our intended return on our investment.

~~A downturn in the recent improvement that the homebuilding and land development industry has experienced would materially~~The novel coronavirus, or COVID-19, pandemic, or an outbreak of another highly infectious or contagious disease, could adversely affect our business, financial condition, results of operations, and cash flow.

We believe that the ~~demand for~~economic downturn resulting from the COVID-19 pandemic has adversely affected employment, which could negatively affect the pace of residential and ~~the fair value of our assets.~~

The homebuilding industry experienced a significant and sustained downturn in recent years having been impacted by factors that include, but are not limited to, weak general economic and employment growth, a lack of consumer confidence, large supplies of resale and foreclosed homes, a significant number of homeowners whose outstanding principal balance on their mortgage loan exceeds the market value of their home, and tight lending standards and practices for mortgage loans that limit consumers’ ability to qualify for mortgage financing to purchase a home. These factors resulted in an industry-wide weakness in demand for new homes and caused a material adverse effect on the growth of the local economies and the homebuilding industry in the southwestern United States (“U.S.”) markets where a substantial amount of our water assets are located, including the states of Nevada, Arizona, California, Colorado, and New Mexico. However, in 2012, we noted a significant improvement in the housing market which led to increased levels ofcommercial real estate development ~~activity. The continuation of~~in the ~~recent improvement~~regions in which our assets are located. Any downturn in residential and commercial real estate development ~~process and activity is essential for our ability to generate operating income~~ in our ~~water resource and water storage, and land development and homebuilding businesses. We are unable~~markets is likely to predict whether and to what extent this recovery will continue or its timing. Any future slow-down in real estate and homebuilding activity could adversely impact various development projects within the markets in which our real estate and water assets are located and this could materially affect the demand for and the fair value of these assets and our ability to monetize these assets. Declines and weak conditions in the U.S. housing market have reduced our revenues and created losses in our water resource and water storage, and land development and homebuilding businesses in prior years and could do so in the future.

~~We may not be able to realize the anticipated value of our water assets in our projected time frame, if at all.~~

We expect that the current rate of growth of the economy will continue to have an impact on real estate market fundamentals. Depending on how markets perform both in the short and long-term, the state of the economy, both nationally and locally in the markets where our assets are concentrated, could result in a decline in the value of our existing water assets, or result in our having to retain such assets for longer than we initially expected, which would negatively impact our rate of return on our water assets, cause us to divest such assets for less than our intended return on investment, or cause us to incur impairments on the book values of such assets to estimated fair value. Such events would adversely impact our financial condition, results of operations and cash flows.

*The fair values of our water assets are linked to growth factors concerning the local markets in which our assets are concentrated and may be impacted by broader economic issues.

Both the demand and fair value of our and water assets are significantly affected by the growth in population and the general state of the local economies where our real estate and water assets are located. The local economies where our real estate and water assets are located, primarily in Arizona and northern Nevada, but also in Colorado and New Mexico, may be affected by factors such as the local level of employment and the availability and cost of financing for real estate transactions. The unemployment rate in these states, as well as issues related to the credit markets, may prolong a slowdown of the local economies where our real estate and water assets are located. This could materially and adversely affect the demand for, and ~~the fair~~ value of, our water resources and real estate ~~and water~~ assets, and ~~consequently,~~our ability to sell these assets. The length and effect of any economic downturn is uncertain, but a prolonged downturn could adversely affect our ~~growth~~liquidity, and ~~revenues,~~could limit or entirely curtail the repurchase of our stock. We have observed that governmental precautions taken in response to the COVID-19 pandemic have delayed the permitting process for real estate development and housing permits, potentially delaying our ability to monetize our water assets, particularly in the Reno, Nevada, area. A prolonged recession or market correction resulting from the COVID-19 pandemic or the results of ~~operations, cash flows~~its aftermath could materially and adversely affect our business and value of our common stock. We do not yet know the ~~return~~full extent of potential delays or impacts on our ~~investment~~business or the global economy that may result from ~~these assets.~~the COVID-19 pandemic, but we intend to continue to monitor the situation as more information becomes available.

*The fair values of our water assets may decrease, which could adversely affect our results of operations ~~by impairments~~with losses from asset impairments. The timing and ~~write-downs.~~amount of our water asset sales will affect the value and return we are able to attain on our assets.

The fair value of our water resource and water storage assets depends on market conditions. We have acquired water resources and land for expansion into new markets and for replacement of inventory and expansion within our current markets. The valuation of real estate and water assets is inherently subjective, ~~and~~ based on the individual characteristics of each asset and the demand for that asset. Factors such as changes in regulatory requirements and applicable laws, political conditions, the condition of financial markets, local and national economic conditions, change in efficiencies of water use, the financial condition of customers, potentially adverse tax consequences, and interest and inflation rate fluctuations subject our asset valuations to uncertainties. In addition, our valuations are made on the basis of assumptions that may not prove to reflect economic or demographic reality. If population growth and, as a result, water and/or housing demand in our markets, fails to meet our expectations when we acquired our real estate and water assets, our profitability may be adversely affected, and we may ~~not~~ be ~~able~~unable to recover our costs when we sell our real estate and water assets. We regularly review the value of our water assets. These reviews have resulted in recording significant ~~impairments~~impairment losses in prior years to our water resource assets. Such impairments have adversely affected our results of operations and our financial condition in those years.

If future market conditions, including, without limitation, delays or slowdowns resulting from the COVID-19 pandemic, delays and/or increased prices resulting from labor and supply shortages, and increased prices resulting from such shortages adversely ~~impact~~affect the anticipated timing of and ~~amount~~the volume of sales of our water assets, we may be required to record further significant impairments to the carrying value of our water assets, which would adversely affect our results of operations and our financial condition.

* The majority ofIf our ~~remaining~~ assets decline in value, our financial condition and ~~operations consist of~~the return on our ~~existing water resource~~investment could suffer and ~~water storage operations that are concentrated in a limited number~~our ability to make future dispositions of assets ~~making our cash flows, profitability~~may be limited.

Historically, we have acquired and ~~the~~invested in businesses and assets that we believed were undervalued or that would benefit from additional capital, restructuring of operations, strategic initiatives, or operational efficiencies. If any previously acquired business, investment or asset fails or its fair value declines, we could experience a material adverse effect on our business, financial condition, the results of ~~those assets difficult to predict~~operations, and ~~vulnerable to conditions~~cash flows. If we are not successful in managing our previous acquisitions and ~~fluctuations in a limited number of local economies.~~

~~We anticipate that a significant amount of~~investments, our ~~water resource and water storage segment revenue,~~business, financial condition, results of operations and cash flows ~~will come from a limited number of assets, which primarily consist~~could be materially and adversely affected. Such business failures, declines in the fair value of our ~~water resources~~assets, and/or failure to manage acquisitions or investments, could result in ~~Nevada~~a negative return on equity. We could also lose part or all of our capital in these businesses and ~~Arizona~~experience reductions in our net income, cash flows, assets and equity.

Future dispositions of our ~~water storage~~businesses, assets, operations, and investments, if unsuccessful, could reduce the value of our common stock. Any future asset dispositions may result in ~~Arizona. Our two most~~ significant changes in the composition of our assets ~~are~~and liabilities. Consequently, our ~~water storage operations in Arizona and our water resources to serve the northern valleys of Reno, Nevada. As a result of this concentration, we expect our invested capital and~~financial condition, results of operations ~~will~~and the trading price of our common stock may be ~~vulnerable to~~affected by factors different from those historically affecting our financial condition, results of operations, and trading price at the ~~conditions and fluctuations in these local economies, along with changes in local and regional government land use, zoning, and other regulatory action.~~present time.

Our ~~Arizona Recharge Facility~~plan to monetize assets and return capital to our shareholders may lead to a permanent reduction in our market capitalization and adversely affect the trading volume and liquidity for our stock.

Our current business plan is ~~one of the few private sector water storage sites~~to monetize our assets and return capital to our shareholders through a stock repurchase program or by other means such as special dividends. Currently we have a stock repurchase program in Arizona. At September 30, 2017, we had approximately 251,000 acre-feet of water stored at the facility. In addition, we had approximately 56,400 acre-feet of water stored in the Phoenix Active Management Area at September 30, 2017. We have not stored any water on behalf of any customersplace and as of September 30, ~~2017,~~2021, we had ~~not generated any material revenue from~~used $51.1 million to repurchase approximately 4.9 million of our common shares. As we continue to monetize assets and use the ~~recharge facility. We cannot be certain~~associated sale proceeds for share repurchases or special dividends, it is possible that weour market capitalization will ~~ultimately be able to sell all of~~permanently decline, which could adversely affect the ~~stored water at a price sufficient to provide an adequate economic profit, if at all.~~trading volume and liquidity for our stock.

We constructed a pipeline approximately 35 miles long to deliver water from Fish Springs Ranch to the northern valleys of Reno, Nevada. As of September 30, 2017, the total cost of the pipeline project, including our water credits (net of impairment losses incurred to date) carried on our balance sheet was approximately $83.9 million. To date, we have sold only a small amount of the water credits and we cannot provide any assurance that the sales prices we may ~~obtain~~need additional capital in the future ~~will provide an adequate economic return,~~to fund our business and financing may not be available on favorable terms, if at ~~all.~~all, or without dilution to our shareholders.

We currently anticipate that our available capital resources and operating cash flows will be sufficient to meet our expected working capital and capital expenditure requirements for at least the next 12 months. However, we provide no assurances that our resources will be sufficient to fund our business over longer periods. We may be required to raise additional funds through public or private debt, equity, warrants or hybrid securities financings, including, without limitation, the issuance of securities.

We may experience difficulty in raising necessary capital in view of the recent volatility in the capital markets and increases in the cost of finance, especially for a small capitalization company like ours. Increasingly stringent rating standards could make it more difficult for us to obtain financing. If we raise additional funds through the issuance of equity, warrants or convertible or other debt securities, the ownership of our shareholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing shareholders. Indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. The additional financing we may need may not be available to us, or available on favorable terms. If adequate funds are not available or are not available on acceptable terms, if and when needed, our ability to fund our operations or otherwise execute our business and operating plan would be significantly limited. In any such case, our business, operating results, or financial condition could be materially adversely affected.

Purchasers of our real estate and water assets may default on their obligations to us and adversely affect our results of operations and cash flow.

In certain circumstances, we finance our sales of real estate and water assets, and we secure that financing through deeds of trust on the property, that are only released when we have been fully paid. Purchasers of our real estate and water assets may default on their financing obligations. Any ~~prolonged weak demand for new homes, residential~~defaults may result in enforcement expense and ~~commercial development, and, as a result, for our assets in Nevada and Arizona, would~~ have ~~a material~~an adverse effect on our ~~future revenues,~~business, financial condition, and the results of operations and cash ~~flows,~~flows.

3. Legal and the return on our investment from those assets. Demand for these water credits is anticipated to primarily come from both local and national developers planning to construct new projects in the northern valleys. The success of these projects is dependent on numerous factors beyond our control, including local government approvals, employment growth in the greater Reno area, and the ability of the developers to finance these projects.Regulatory Risks

~~We may suffer uninsured losses or suffer material losses in excess of insurance limits.~~

We could suffer physical damage to any of our assets at one or more of our different businesses and liabilities resulting in losses that may not be fully recoverable by insurance. In addition, certain types of risks, such as personal injury claims, may be, or may become in the future, either uninsurable or not economically insurable, or may not be currently or in the future covered by our insurance policies or otherwise be subject to significant deductibles or limits. Should an uninsured loss or a loss in excess of insured limits occur or be subject to deductibles, we could sustain financial loss or lose capital invested in the affected asset(s) as well as anticipated future income from that asset. In addition, we could be liable to repair damage or meet liabilities caused by risks that are uninsured or subject to deductibles.

We may not receive all of the permitted water rights we expect from the water rights applications we have filed in ~~Nevada and New Mexico.~~Nevada.

We have filed ~~certain~~ water rights applications in ~~Nevada and New Mexico. In Nevada this is~~Nevada. The filings are primarily as part of the water teaming agreement with Lincoln County. We deploy the capital required to enable the filed applications to be converted into permitted water rights over time as and when we deem appropriate, or as otherwise required. We ~~only~~ expend capital in those areas where our initial investigations lead us to believe that we can obtain a sufficient volume of water to provide an adequate economic return on the capital ~~employed~~invested in the project. These capital expenditures largely consist of drilling and engineering costs for water production, costs of monitoring wells, legal and consulting costs for hearings with the relevant State Engineer, and other compliance costs. Until the Nevada State Engineer, or other authority in the relevant state, permits the water rights we are applying for, we cannot provide any assurance that we will be awarded all of the water that we expect based on the results of our drilling and our legal position, and it may be a considerable period of time before we are able to ascertain the final volume of water rights, if any, that will be permitted by the Nevada State ~~Engineers.~~Engineer or other relevant authority. Any significant reduction in the volume of water awarded to us from our original base expectation of the amount of water that ~~may~~could be permitted may result in the write down of capitalized costs ~~which~~that could adversely affect the return on our investment from those assets, our revenues, results of operations, and cash flows.

Variances in physical availability of water, along with environmental and legal restrictions and legal impediments, could ~~impact~~adversely affect profitability.

We value our water assets, in part, based upon the volume (as measured in acre-feet) of water we anticipate from water rights applications and our permitted water rights. ~~The~~Our water and water rights, ~~held by us~~ and the transferability of these rights to other uses, persons, and places of use, are governed by the laws concerning water rights in the states of Arizona, Colorado, Nevada, and New Mexico. The volumes of water actually derived from the water rights applications or permitted rights may vary considerably based upon physical availability and may be further limited by applicable legal ~~restrictions.~~restrictions, including, with limitation, restrictions on transfer of water rights.

As a result, the volume of water anticipated from the water rights applications or permitted rights may not in every case represent a reliable, firm annual yield of water, but in some cases describe the face amount of the water right claims or management’s best estimate of such entitlement. Additionally, we may face legal restrictions on the sale or transfer of some of our water assets, which may adversely affect their commercial value. If the volume of water yielded from our water rights applications is less than our expectations, or we are unable to transfer or sell our water assets, we may ~~lose~~be unable to achieve some or all of our anticipated returns, which may adversely affect our revenues, profitability, and cash flows.

~~Purchasers of our real estate and water assets may default on their obligations to us and adversely affect our results of operations and cash flow.~~

In certain circumstances, we finance sales of real estate and water assets, and we secure such financing through deeds of trust on the property, which are only released once the financing has been fully paid off. Purchasers of our real estate and water assets may default on their financing obligations. Such defaults may have an adverse effect on our business, financial condition, and the results of operations and cash flows.

* Our sale of water assets may be subject to environmental regulations which would ~~impact our~~adversely affect revenues, profitability, and cash flows.

The quality of the water assets we lease or sell may be subject to regulation by the United States Environmental Protection Agency, acting pursuant to the United States Safe Drinking Water Act, ~~along~~and with other federal, state and local regulations. While environmental regulations may not directly affect us, ~~the~~ regulations regarding the quality of water distributed ~~affects~~affect our intended customers and may, therefore, depending on the quality of our water, ~~impact~~affect the price and terms upon which we may in the future sell our water assets. If we need to reduce the price of our water assets in order to make ~~a sale~~sales to our intended customers, our balance sheet, return on investment, results of operations, and financial condition could suffer.

* Our water assets may be ~~impacted~~adversely affected by legal and political opposition in certain locations.

The water assets we hold, and the transferability of these assets and rights to other uses, persons, or places of use, are governed by the laws and regulations concerning water rights in the states of Arizona, Nevada, Colorado and New Mexico, and may be directly or indirectly affected by other federal, state and local laws and regulations related to water and land use. Our development and sale of water assets is subject to the risks of delay associated with receiving all necessary regulatory approvals and ~~permits.~~permits, or the refusal to issue regulatory approvals or permits, and possible litigation. Additionally, the transfer of water resources from one use to another may affect the economic base or impact other community issues, ~~of a community~~ including development, and will, in some instances, be met with local opposition. Moreover, municipalities who ~~will likely~~may regulate the use of ~~any~~ water we ~~might~~ sell to them in order to manage growth could ~~create~~also impose additional requirements that we must satisfy to sell ~~and convey~~our water assets.

If we are unable to effectively transfer, sell, and convey water resources, our ability to monetize ~~these~~those assets will suffer, and our return on investment, revenues and financial condition would decline.

IfOur water rights are subject to challenge in judicial and administrative proceedings. Adverse outcomes may change our ~~businesses~~water rights priorities or ~~investments otherwise fail or decline in value, our financial condition and the return on our investment could suffer.~~

~~Historically, we have acquired and invested in businesses and assets~~require that we believed were undervalued or that would benefit from additional capital, restructuring of operations, strategic initiatives, or improved competitiveness through operational efficiencies. If any previously acquired business, investment or asset fails or its fair value declines, we could experience a material adverse effect on our business, financial condition, the results of operations and cash flows. If we are not successful managing our previous acquisitions and investments, our business, financial condition, results of operations and cash flows could be materially affected. Such business failures, declines in fair values, and/or failure to manage acquisitions or investments, could result in a negative return on equity. We could also lose part or all of our capital in these businesses and experience reductions in our net income, cash flows, assets and equity.

~~Future dispositions of our businesses, assets, operations and investments, if unsuccessful, could reduce~~impair the value of our ~~common shares. Any future dispositions~~assets.

In all of the states in which we have operations, water rights are subject to a high degree of regulation. As a result, water rights that we have may ~~result~~be subject to challenge in ~~significant changes in~~judicial or administrative proceedings, or we may be required to bring such proceedings to protect our rights. These proceedings can adversely affect the ~~composition~~priority of our ~~assets~~water rights claims or the right to sell or transfer those rights, among many other things. Legal and ~~liabilities. Consequently,~~administrative challenges to our ~~financial condition, results~~water rights claims, or our initiation of ~~operations~~proceeding to defend our claims, may be expensive, and adverse determinations may impair the ~~trading price~~value of our ~~common shares may be affected by factors different from those historically affecting our financial condition, results of operations~~investment and ~~trading price at the present time.~~

~~We may need additional capital in the future to fund our business and financing may not be available on favorable terms, if at all, or without dilution to our shareholders.~~

We currently anticipate that our available capital resources and operating cash flows will be sufficient to meet our expected working capital and capital expenditure requirements for at least the next 12 months. However, we cannot provide any assurance that such resources will be sufficient to fund our business. We may raise additional funds through public or private debt, equity or hybrid securities financings, including, without limitation, through the issuance of securities. We currently have an effective shelf registration statement which allows us to sell up to $400 million of a variety of securities in one or more offerings in the public markets.

We may experience difficulty in raising necessary capital in view of the recent volatility in the capital markets and increases in the cost of finance. Increasingly stringent rating standards could make it more difficult for us to obtain financing. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our shareholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing shareholders. Indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. The additional financing we may need may not be available to us, or on favorable terms. If adequate funds are not available or are not available on acceptable terms, if and when needed,adversely affect our ability to ~~fund~~monetize our ~~operations or otherwise execute our strategic plan would be significantly limited. In any such case, our business, operating results or financial condition could be materially adversely affected.~~investment.

Our ability to utilize net operating loss carryforwards and certain other tax attributes may be limited.

Under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), if ~~our Company undergoes~~we undergo an “ownership change” (generally defined as a greater than ~~50%~~fifty-percent (50%) change ~~(by value)~~ in ~~our equity~~the percentage of stock owned by one or more five percent (5%) or more shareholders (measured by the relative fair market value of that shareholder’s stock compared to the total value of all outstanding stock, excluding changes in ownership attributable to fluctuations in value between different classes of stock)) as of the testing date, measured over a three year ~~period),~~period, or a period beginning with any previous testing date, whichever is shorter, the ability to use our pre-change net operating loss carryforwards (“NOLs”) and other pre-change tax attributes to offset our post-change income may be limited. ~~Notwithstanding our adoption~~The Company’s previous plan to protect NOLs from loss due to ownership changes expired on July 24, 2020. Our Board of Directors adopted a new tax benefit preservation plan ~~it is possible that we~~dated July 24, 2020, which was ratified by our shareholders at our 2021 annual meeting. The Company could experience ownership changes in the future as a result of shifts in our stock ownership. If the new tax benefit preservation plan were triggered by a change in ownership, acquiring shareholders and certain other shareholders could experience substantial dilution. Furthermore, Section 382 (and other tax code and regulatory provisions relating to NOLs) has recently been subject to proposed regulations by the Treasury Department and Internal Revenue Service which, if finalized in their current form, may have the effect of further reducing the value of NOLs, in certain circumstances, of a corporation that undergoes an ownership change. As of ~~September 30, 2017,~~December 31, 2020, we had federal and state net operating loss carryforwards of approximately ~~$187.1~~$155.3 million and ~~$235.5~~$129.1 million, respectively, which, depending on ~~our value at the time of any~~ ownership changes, could be ~~limited.~~limited by Section 382 of the Code.

4. General Economic Risks

General economic conditions could have a material adverse effect on our financial results, financial condition, and the demand for and the fair value of our assets.

Our operations are sensitive to the general economic conditions in the local markets in which our assets are located. International, national, and regional economic conditions may also affect our markets. General weak economic conditions and either slow or nonexistent rates of growth in the markets in which we operate could have a material adverse effect on the demand for and value of our water assets. Weak economic conditions include higher unemployment, inflation, deflation, decreases in consumer demand, changes in buying patterns, a weakened dollar, higher consumer debt levels, higher interest rates, especially higher mortgage rates, higher tax rates, and other changes in tax laws or other economic factors that may affect commercial and residential real estate development.

The performance of real estate markets in the short and long-term and the state of the economy, nationally and locally where our assets are concentrated, could affect the value of our existing water assets; a decline in the market could adversely affect the value of our water assets or cause us to retain these assets longer than we initially expected, which would negatively affect our rate of return on our water assets, cause us to divest such assets for less than our targeted return on investment, or cause us to impair the book values of such assets to estimated fair value.

A downturn in the homebuilding and land development sectors in our markets would materially adversely affect our business, results of operations, and the demand for and the fair value of our assets.

The homebuilding industry experienced a significant and sustained downturn in past years, resulting from factors that include, but are not limited to, weak general economic and employment growth, limited access to capital, a lack of consumer confidence, large supplies of resale and foreclosed homes, a significant number of homeowners whose mortgage loan balances exceeded the market value of their homes, and tight lending standards for mortgage loans that limited consumers’ ability to qualify for mortgage financing to purchase a home. These factors resulted in an industry-wide weakness in demand for new homes and caused a material adverse effect on the growth of the local economies and the homebuilding industry in the southwestern United States (“U.S.”) markets, where all of our water assets are located, including the states of Nevada, Arizona, Colorado, and New Mexico.

The continued the improvement in residential and commercial real estate development activity is essential to our ability to generate revenue and operating income in our water resource and water storage business. We are unable to predict whether and to what extent this improvement will continue. Any future slow-down in real estate and homebuilding activity could adversely affect development projects within the markets in which our water assets are located, and could adversely affect the demand for and the fair value of our assets and our ability to monetize them. Declines and weak conditions in the U.S. housing market in prior years have reduced our revenues and created losses in our water resource and water storage, and land development and homebuilding businesses and could do so in the future. Additionally, the recent tax law changes limiting, among other things, deductibility of mortgage interest and of state and local income taxes may have a negative effect on the national housing market and in the markets in which we operate, although the Nevada market may be less affected due to the lack of a state income tax.

Constricted National and Local Labor Markets and Product Supply Chains May Adversely Affect the Demand for our Assets and Our Ability to Sell Our Assets Timely.

As the COVID-19 pandemic has begun to subside, many national and local labor markets and product supply chains are constrained, resulting in substantial price increases for labor and materials, including the cost of constructing residential and commercial projects. Price increases in the cost of finished products to account for more expensive inputs may result in lower demand for residential and commercial projects, as potential purchasers are priced out of markets, affecting the demand for our water assets that are necessary to support these projects, or may slow the rate at which such projects come onto the market. Product shortages may result in delays in commencing and bringing projects to market and may affect the size of projects that are undertaken. It is unclear how long these conditions may persist, or what the ultimate effect of these developments may have on the Company’s ability to execute its business plan to monetize our water assets.

5. Other General Risks

Our business could be negatively impacted by cyber security threats.

In the ordinary course of our business, we use our data centers and our networks to store and access our proprietary business information. We face various cyber security threats, including without limitation, cyber security attacks to our information technology infrastructure and attempts by others to gain access to our proprietary or sensitive information. The procedures and controls we use to monitor these threats and mitigate our exposure may not be ~~able~~sufficient to ~~retain key management personnel we need~~prevent cyber security incidents. The result of these incidents could include disrupted operations, lost opportunities, misstated financial data, liability for stolen assets or information, increased costs arising from the implementation of additional security protective measures, litigation and reputational damage. Any remedial costs or other liabilities related to ~~succeed, which~~cyber security incidents may not be fully insured or indemnified by other means, and our payment of these costs could adversely affect ~~our ability to successfully operate our businesses.~~

~~To run our day-to-day operations and to successfully manage our businesses we must, among other things, continue to retain key management. We rely on~~ the services of a small team of key executive officers. If they depart, it could have a significant adverse effect upon our business. Also, increased competition for skilled management and staff employees in our businesses could cause us to experience significant increases in operating costs and reduced profitability.

*Analysts and investors may not be able to evaluate us adequately, which may negatively influence the priceresults of our ~~stock.~~operations.

We own assets that are unique, complex in nature, and difficult to understand. In particular, our water resource business is a developing industry in the United States with very little historical and comparable data, very complex valuation issues and a limited following of analysts. Because our assets are unique, analysts and investors may not be able to adequately evaluate our operations and enterprise as a going concern. This could cause analysts and investors to make inaccurate evaluations of our stock, or to overlook PICO in general. As a result, the trading volume and price of our stock could suffer and may be subject to excessive volatility.

* Fluctuations in the market price of our common stock may affect your ability to sell your shares.

The trading price of our common stock has historically been, and we expect will continue to be, subject to fluctuations. The market price of our common stock may be significantly ~~impacted~~affected by:

•quarterly variations in financial performance and condition of our ~~various businesses;~~business;

•shortfalls in revenue or earnings from estimates forecast by securities analysts or others;

•changes in estimates by such analysts;

•the ability to monetize our ~~assets related to our~~ water ~~resource business~~assets for an adequate economic return, including the length of time any such monetization may take;

•our competitors’ announcements of extraordinary events such as acquisitions;

•litigation; ~~and~~

•general economic conditions and other matters described ~~herein.~~herein;

•the number of analysts who follow our stock and their understanding of our business; and

•the volume of trading in our stock.

Our results of operations have been subject to significant fluctuations, particularly on a quarterly basis, and our future results of operations could fluctuate significantly from quarter to quarter and from year to year. Causes of such fluctuations may include ~~the inclusion or exclusion of operating earnings from sold operations,~~ one time transactions and impairment losses. Statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the markets in which we do business or relating to us specifically could result in an immediate and adverse effect on the market price of our common stock. Such fluctuations in the market price of our common stock could affect the value of your investment and your ability to sell your shares.

Litigation may harm our business or otherwise distract our management.

Substantial, complex or extended litigation could cause us to incur large expenditures and distract our management. For example, lawsuits by employees, shareholders or customers could be very costly and substantially disrupt our business. Additionally, from time to time we or our subsidiaries will have disputes with companies, governmental and tribal entities, special interest groups, or individuals which may result in litigation that could necessitate our management’s attention and require us to expend our resources. We may be unable to accurately assess our level of exposure to specific litigation, and we cannot provide any assurance that we will always be able to resolve such disputes out of court or on terms favorable to us. We

may be forced to resolve litigation in a manner not favorable to us, and such resolution could have a material adverse impact on our consolidated financial condition or results of operations.

We may not be able to retain key management personnel we need to succeed, which could adversely affect our ability to successfully operate our businesses.

To run our day-to-day operations and to successfully manage our businesses we must, among other things, continue to retain key management. We rely on the services of a small team of key executive officers. If any key executive departs, it could have a significant adverse effect upon our business. Also, increased competition for skilled management and staff employees in our businesses could cause us to experience significant increases in operating costs and reduced profitability.

We may suffer uninsured losses or suffer material losses in excess of insurance limits.

We could suffer physical damage to our assets and the losses resulting from any damage may not be fully recoverable by insurance. In addition, certain types of risks, such as personal injury claims or other tortious conduct, may be, or may become in the future, either uninsurable or uneconomical to insure, or may not be currently, or in the future, covered by our insurance or subject to significant deductibles or limits. If an uninsured loss, or a loss in excess of insured limits, occurs or is subject to a large deductible, we could sustain financial loss or lose capital invested in the affected asset(s), as well as anticipated future income from that asset. In addition, we could be liable to repair damage or meet liabilities caused by risks that are uninsured or subject to deductibles.

We have been ~~and continue to be,~~ the subject of ~~stockholder~~shareholder activism efforts that could cause a material disruption to our business.

~~Certain~~In the past, certain investors ~~have taken~~took steps to involve themselves in the governance and strategic direction of our Company due to governance and strategic-related disagreements with us. While we have formally settled with certain of ~~such~~those activists, other investors could take steps to involve themselves in the governance and strategic direction of our Company. Such ~~stockholder~~shareholder activism efforts could result in substantial costs and diversion of management’s attention and resources, harming our business and adversely affecting the market price of our common stock.

*Anti-takeover provisions in our charter documents and under Delaware law may make an acquisition of us more complicated and the removal and replacement of our directors and management more difficult.

Provisions of our certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders. These provisions may also make it difficult for stockholders to remove and replace our board of directors and management. For example, these provisions limit who may call a special meeting of stockholders and establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings. In addition, on July 24, ~~2017,~~2020, our board of directors adopted a tax benefits preservation plan designed to preserve our ability to utilize our ~~net operating losses~~NOLs as a result of certain stock ownership changes, which may have the effect of discouraging transactions involving an actual or potential change in our ownership.

Analysts and investors may not be able to evaluate us adequately, which may negatively influence the price of our stock.

We own assets that are unique, complex in nature, and difficult to understand. In particular, our water resource business is a developing industry in the United States with very little historical and comparable data, complex valuation issues, and a limited following of analysts. Because our assets are unique, analysts and investors may be unable to adequately evaluate our operations and enterprise as a going concern. This could cause analysts and investors to make inaccurate evaluations of our stock, or to overlook the Company in general. As a result, the trading volume and price of our stock could suffer and may be subject to excessive volatility.

If equity analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.

The ~~trading~~ market for our common stock will ~~rely~~ in part onbe affected by the research and reports that equity research analysts ~~may~~ publish about us and our business. We do not control these analysts. The price of our stock could decline if one or more equity analysts downgrade our stock, ~~or if those analysts~~ issue other unfavorable commentary, or cease publishing reports about ~~us or our business.~~us.

~~Our business could be negatively impacted by cyber security threats.~~

In the ordinary course of our business, we use our data centers and our networks to store and access our proprietary business information. We face various cyber security threats, including cyber security attacks to our information technology infrastructure and attempts by others to gain access to our proprietary or sensitive information. The procedures and controls we use to monitor these threats and mitigate our exposure may not be sufficient to prevent cyber security incidents. The result of these incidents could include disrupted operations, lost opportunities, misstated financial data, liability for stolen assets or information, increased costs arising from the implementation of additional security protective measures, litigation and reputational damage. Any remedial costs or other liabilities related to cyber security incidents may not be fully insured or indemnified by other means.

THE FOREGOING FACTORS, INDIVIDUALLY OR IN AGGREGATE, COULD MATERIALLY ADVERSELY AFFECT OUR OPERATING RESULTS, ~~AND~~ CASH FLOWS, AND FINANCIAL CONDITION AND COULD MAKE COMPARISON OF HISTORICAL FINANCIAL STATEMENTS, INCLUDING RESULTS OF OPERATIONS, ~~AND~~ CASH FLOWS, AND BALANCES, DIFFICULT OR NOT MEANINGFUL.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes repurchases of our common stock made during the three months ended September 30, ~~2017:~~2021:


Period	Total number of shares of common stock repurchased	Average price paid per share of common stock (including commissions)		Total number of shares of common stock repurchased as part of publicly announced plans or programs	Maximum dollar value of shares of common stock that may yet be repurchased under the plans or programs (in thousands) (1)
July 1 to July 31, 2021	7,036	$	12.36	4,889,788	$	49,025
August 1 to August 31, 2021	556	$	12.49	4,890,344	$	49,018
September 1 to September 30, 2021	8,361	$	11.93	4,898,705	$	48,918
Total	15,953

Period Total number of shares of common stock purchased Average price paid per share of common stock (including commissions) Total number of shares of common stock purchased as part of publicly announced plans of programs
Maximum dollar value of shares of common stock that may yet be purchased under the plans of programs (in thousands) ⁽¹⁾
July 1 to July 31, 2017 $ 49,310
August 1 to August 31, 2017
September 1 to September 30, 2017
Total —
$ —
—
$ 49,310

⁽¹⁾ The stock repurchase program authorization was ~~announced~~amended on ~~March 2, 2017.~~February 1, 2020. Our Board of Directors authorized ~~up to~~an aggregate of $100 million (from an aggregate of $50 million previously authorized) to be used ~~under this~~for the stock repurchase program and there is no set expiration date.

Item 3: Defaults Upon Senior Securities

None

~~None.~~

Item 4: Mine Safety Disclosures

Not applicable

~~Not applicable.~~

Item 5: Other Information

Not applicable

~~None.~~

Item 6. Exhibits



Exhibit Number		Description
~~2.1~~3.1A			~~Asset Purchase Agreement dated July 13, 2015, by and between PICO Northstar Hallock, LLC and CHS Hallock, LLC.~~⁽¹⁾
~~3.1~~	Certificate of Incorporation of PICO Holdings, Inc. (now known as Vidler Water Resources, Inc.)⁽²⁾(1)
~~3.2~~3.1B			~~By laws~~Certificate of Amendment of Certificate of Incorporation of PICO Holdings Inc. (now known as Vidler Water Resources, Inc.) ⁽²⁾(3)
~~3.3~~3.2		Amended and Restated Bylaws of Vidler Water Resources, Inc. (3)
3.3		2020 Amended Certificate of Designation of Series A Junior Participating Preferred Stock of PICO Holdings, Inc. (now known as Vidler Water Resources, Inc.)⁽³⁾(2)
4.1		2020 Section 382 Rights Agreement, dated as of July 24, ~~2017,~~2020, by and between PICO Holdings, Inc (now known as Vidler Water Resources, Inc.). and Computershare Trust Company, N.A.⁽³⁾(2)
4.2		~~PICO Holdings,~~Vidler Water Resources, Inc. Stock Certificate⁽⁴⁾
~~4.3~~31.1		~~PICO Holdings, Inc. Executive Change in Control Bonus Plan~~⁽⁵⁾
~~31.1~~	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
101.INS				XBRL Instance Document
101.SCH				XBRL Taxonomy Extension Schema Document
101.CAL				XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF				XBRL Taxonomy Extension Definition Linkbase Document
101.LAB				XBRL Taxonomy Extension Label Linkbase Document
101.PRE				XBRL Taxonomy Extension Presentation Linkbase Document



⁽¹⁾		Incorporated by reference to the Current Report ~~om Form 8-K filed with the SEC~~ on ~~July 17, 2015.~~
⁽²⁾	~~Incorporated by reference to the Current Report om~~ Form 8-K filed with the SEC on June 1, 2017.
⁽³⁾ (2)		Incorporated by reference to the ~~Current Report om~~Registration Statement on Form 8-A filed with the SEC on July 24, 2020.
(3)		Incorporated by reference to Form 8-K filed with the SEC on ~~July 24, 2017.~~March 8, 2021.
⁽⁴⁾		~~Incorporated by reference to the Quarterly Report on Form 10-Q filed with the SEC on August 9, 2017.~~
⁽⁵⁾	~~Incorporated by reference to the Current Report om Form 8-K filed with the SEC on October 2, 2017.~~

~~PICO HOLDINGS,~~VIDLER WATER RESOURCES, INC. AND SUBSIDIARIES

SIGNATURE

Pursuant to the requirements of the United States Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~PICO HOLDINGS,~~VIDLER WATER RESOURCES, INC.

Date:

November ~~7, 2017~~12, 2021

By: /s/ ~~John T. Perri~~Maxim C.W. Webb

~~John T. Perri~~Maxim C.W. Webb

Chief Financial Officer

(Principal Financial Officer and Authorized Signatory)

3521



Delaware		94-2723335
(State or other jurisdiction of incorporation)	~~94-2723335~~	(IRS Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par Value $0.001	VWTR	Nasdaq Stock Market LLC


					Page No.

Part I: Financial Information

Item 1:			Condensed Consolidated Financial Statements (Unaudited)		1

			~~Page No.~~

~~Part I: Financial Information~~

~~Item 1:~~	~~Condensed Consolidated Financial Statements (Unaudited)~~			1

	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020	1

			Condensed Consolidated Statements of Operations ~~and Comprehensive Income or Loss~~ for the Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020		2

			Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020		43

			Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020		65

			Notes to the Condensed Consolidated Financial Statements		76

Item 2:			Management’s Discussion and Analysis of Financial Condition and Results of Operations		198

Item 3:4:			~~Quantitative and Qualitative Disclosure About Market Risk~~		26

~~Item 4:~~	Controls and Procedures	2611

Part II: Other Information

Item 1:			Legal Proceedings		2711

Item 1A:			Risk Factors		2711

Item 2:			Unregistered Sales of Equity Securities and Use of Proceeds		3319

Item 3:			Defaults Upon Senior Securities		3319

Item 4:			Mine Safety Disclosures		3319

Item 5:			Other Information		3319

Item 6:			Exhibits		3420

Signatures					3521

PICO Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets - Unaudited (In thousands, except par value)

	September 30, 2017			December 31, 2016
Assets
Cash and cash equivalents	$	25,000		$	19,611
Investments ($131,260 and $25,071 measured at fair value at September 30, 2017 and December 31, 2016, respectively)	132,571			26,383
Real estate and tangible water assets, net	45,166			57,691
Intangible assets	126,907			126,796
Other assets	2,292			4,624
Assets held-for-sale				440,689
Total assets	$	331,936		$	675,794

Liabilities and equity
Deferred compensation	$	4,066		$	27,322
Other liabilities	2,266			12,322
Accounts payable and accrued expenses	1,644			1,015
Liabilities held-for-sale				207,566
Total liabilities	7,976			248,225

Commitments and contingencies

Preferred stock, $0.001 par value; authorized 10,000 shares, none issued
Common stock, $0.001 par value; authorized 100,000 shares, 23,148 issued and 23,147 outstanding at September 30, 2017, and 23,125 issued and 23,070 outstanding at December 31, 2016	23			23
Additional paid-in capital	495,207			495,468
Accumulated deficit	(171,652		)	(173,231		)
Accumulated other comprehensive income	407			6,661
Treasury stock, at cost (common shares: 1 and 55 at September 30, 2017 and December 31, 2016, respectively)	(25		)	(927		)
Total PICO Holdings, Inc. shareholders’ equity	323,960			327,994
Noncontrolling interest in subsidiaries				99,575
Total equity	323,960			427,569
Total liabilities and equity	$	331,936		$	675,794


	September 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	6,586	$	9,388

Real estate and tangible water assets, net	38,917		39,374

Intangible assets	120,316		120,445
Right of use assets, net	279		396
Deferred income tax asset	9,340		9,340
Other assets	1,580		1,503
Total assets	$	177,018	$	180,446

Liabilities and equity

Lease liabilities	$	279	396
Other liabilities	1,165		1,516
Accounts payable and accrued expenses	439		264

Total liabilities	1,883		2,176

Commitments and contingencies (Note 4)	0		0

Preferred stock, $0.001 par value; authorized 10,000 shares, none issued	0		0
Common stock, $0.001 par value; authorized 100,000 shares, 18,333 issued and 18,331 outstanding at September 30, 2021, and 18,586 issued and 18,583 outstanding at December 31, 2020	18		19
Additional paid-in capital	329,910		332,290
Accumulated deficit	(154,775)		(154,009)

Treasury stock, at cost (common shares:2 at September 30, 2021 and 3 at December 31, 2020)	(18)		(30)


Total shareholders’ equity	175,135		178,270
Total liabilities and shareholders’ equity	$	177,018	$	180,446


	Shares of Common Stock Issued	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Shares of Treasury Stock	Treasury Stock, at Cost		Total
Beginning balance, December 31, 2020	18,586	$	19	$	332,290	$	(154,009)	3	$	(30)	$	178,270
Stock-based compensation expense				42							42





Purchases of treasury stock								107	(986)		(986)
Retirement of treasury stock	(104)	(1)		(959)				(104)	959		(1)


Net income						532					532


Ending balance, March 31, 2021	18,482	$	18	$	331,373	$	(153,477)	6	$	(57)	$	177,857
Stock-based compensation expense				22							22
Exercise of restricted stock units	1										—
Withholding taxes paid on vested restricted stock units				(6)							(6)



Purchases of treasury stock								130	(1,177)		(1,177)
Retirement of treasury stock	(136)			(1,234)				(136)	1,234		—

Net income (loss)						(278)					(278)


Ending balance, June 30, 2021	18,347	$	18	$	330,155	$	(153,755)	—	$	—	$	176,418
Stock-based compensation expense				22							22




Distribution to noncontrolling interest				(91)							(91)
Purchases of treasury stock								16	(194)		(194)
Retirement of treasury stock	(14)			(176)				(14)	176		—


Net loss						(1,020)					(1,020)
Ending balance, September 30, 2021	18,333	$	18	$	329,910	$	(154,775)	2	$	(18)	$	175,135

PICO Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows - Unaudited (In thousands)

	Nine Months Ended September 30,
	2017			2016
Operating activities:
Cash provided by (used in) operating activities - continuing operations	$	1,094		$	(11,966	)
Cash used in operating activities - discontinued operations	(9,728		)	(6,340		)
Net cash used in operating activities	(8,634		)	(18,306		)

Investing activities:
Purchases of investments	(140,464		)	(1,136		)
Proceeds from sale of investments	8,598			623
Proceeds from maturity of investments	69,963			18
Purchases of property, plant and equipment	(5		)	(132		)
Proceeds from sale of property, plant and equipment	283			7
Other investing activities, net				661
Cash provided by (used in) investing activities - continuing operations	(61,625		)	41
Cash provided by (used in) investing activities - discontinued operations	47,172			(760		)
Net cash used in investing activities	(14,453		)	(719		)

Financing activities:
Payment of withholding taxes on exercise of restricted stock units	(565		)
Purchases of treasury stock	(690		)
Cash used in financing activities - continuing operations	(1,255		)	—
Cash provided by (used in) financing activities - discontinued operations	(11,638		)	16
Net cash provided by (used in) financing activities	(12,893		)	16

Decrease in cash and cash equivalents	(35,980		)	(19,009		)
Cash and cash equivalents, beginning of the period	60,980			57,400
Cash and cash equivalents, end of the period	25,000			38,391
Less cash and cash equivalents of discontinued operations at the end of the period	—			28,024
Cash and cash equivalents of continuing operations, end of the period	$	25,000		$	10,367

Supplemental cash flow information:
Payments of federal and state income taxes	$	968		$	187
Non-cash investing and financing activities:
Fair value of common stock of Century received in the sale of UCP, Inc.	$	60,043
Non-cash distribution of debt and equity securities to deferred compensation plan participant	$	15,709		$	856
Issuance of common stock for vested restricted stock units	$	2,571		$	274



			Page No.
1. Basis of Presentation and Summary of Significant Accounting Policies			76
2. Tangible Water Assets and Real Estate, ~~and Tangible Water Assets~~Net			86
3. Intangible Assets			97
4. ~~Investments~~Commitments and Contingencies			97
5. ~~Disclosures About Fair Value~~Subsequent Events			107
~~6. Commitments and Contingencies~~		12
~~7. Accumulated Other Comprehensive Income~~		12
~~8. Related-Party Transactions~~		13
~~9. Segment Reporting~~		14
~~10. Discontinued Operations and Assets and Liabilities Held-for-Sale~~	14


	September 30, 2021		December 31, 2020
Real estate and improvements held and used, net of accumulated depreciation of $12,003 at each of September 30, 2021, and December 31, 2020	$	9,469	$	9,469
Other real estate inventories	3,359		3,359
Tangible water assets	26,089		26,546
Total real estate and tangible water assets	$	38,917	$	39,374


	September 30, 2021		December 31, 2020
Pipeline rights and water credits at Fish Springs Ranch	$	81,126	$	81,574
Pipeline rights and water rights at Carson-Lyon	26,322		25,643
Other	12,868		13,228
Total intangible assets	$	120,316	$	120,445



September 30, 2017	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Carrying Value
Debt securities: corporate bonds and U.S. Treasuries	$	70,850	$	42	$	(12	)	$	70,880
Marketable equity securities	59,716		671		(7		)	60,380
Total	$	130,566	$	713	$	(19	)	$	131,260



	September 30, 2017				December 31, 2016
	Amortized Cost		Carrying Value		Amortized Cost		Carrying Value
Due in one year or less	$	70,228	$	70,260	$	182	$	183
Due after one year through five years	622		620		4,124		4,199
Total	$	70,850	$	70,880	$	4,306	$	4,382



	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Balance at September 30, 2017
Assets
Available-for-sale equity securities⁽¹⁾	$	60,136	$	244		$	60,380
Available-for-sale debt securities⁽¹⁾	70,880					70,880
Total	$	131,016	$	244		$	131,260



Asset Description	Quoted Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Loss
Oil and gas wells ⁽¹⁾			$	—	$	201
Investments in unconsolidated affiliates ⁽²⁾			$	—	$	2,170



Year ended December 31,
2017	$	86
2018	348
2019	356
2020	166
2021	—
Thereafter	—
Total	$	956



	September 30, 2017			December 31, 2016
Net unrealized gain on available-for-sale investments	$	451		$	6,736
Foreign currency translation	(44		)	(75		)
Accumulated other comprehensive income	$	407		$	6,661



	September 30, 2017		December 31, 2016
Assets:
Water resource and water storage operations	$	173,968	$	186,055
Corporate	157,968		49,050
Assets held-for-sale			440,689
Total assets	$	331,936	$	675,794



	Shares and Per Share Amounts		Totals
Shares of UCP owned by the Company	10,402
Cash received	$	5.32	$	55,337
Shares of Century common stock received (0.2309 per share of UCP owned)	2,402
Value of Century common stock on the date received	$	25.00	$	60,044
Total consideration received at the date of close			$	115,381
Transaction cost paid by the Company			$	(284	)
Carrying value of UCP at the date of close adjusted for tax distributions			$	(124,408	)
Loss on sale			$	(9,311	)



	December 31, 2016
Real estate assets held-for-sale:
Cash and cash equivalents	$	40,931
Real estate	373,207
Accounts receivable	5,628
Other assets	14,418
Valuation allowance on assets held-for-sale
Real estate assets held-for-sale	434,184
Agribusiness assets held-for-sale	6,505
Total assets held-for-sale	$	440,689

Real estate liabilities held-for-sale:
Debt, net	$	160,994
Account payable and accrued expenses	34,025
Other liabilities	12,271
Real estate liabilities held-for-sale	207,290
Agribusiness liabilities held-for-sale	276
Total liabilities held-for-sale	$	207,566



	Year Ended December 31,
	2016			2015			2014
Revenues and other income:
Sale of real estate and water assets	$	633		$	3,856		$	1,220
Impairment loss on investment in unconsolidated affiliate	(2,170		)	(20,696		)	(1,078		)
Other income, net	9,471			4,472			1,077
Total revenues and other income	7,934			(12,368		)	1,219

Cost of sales and expenses:
Cost of real estate and water assets sold	326			1,239			738
General, administrative, and other	32,830			20,027			24,156
Impairment loss on intangible and long-lived assets	201			2,085			10,219
Depreciation and amortization	865			1,660			2,385
Total cost and expenses	34,222			25,011			37,498
Loss from continuing operations before income taxes and equity in loss of unconsolidated affiliates	(26,288		)	(37,379		)	(36,279		)
Benefit for federal and state income taxes	1,135			2,961			2,450
Equity in loss of unconsolidated affiliate				(3,422		)	(2,076		)
Loss from continuing operations	(25,153		)	(37,840		)	(35,905		)
Income (loss) from discontinued operations, net of tax	13,899			(24,310		)	(23,700		)
Loss on sale or impairment loss on classification of assets as held-for-sale, net of tax	(1,775		)	(18,729		)
Net income (loss) from discontinued operations, net of tax	12,124			(43,039		)	(23,700		)
Net loss	(13,029		)	(80,879		)	(59,605		)
Net (income) loss attributable to noncontrolling interests	(8,836		)	(979		)	7,180
Net loss attributable to PICO Holdings, Inc.	$	(21,865	)	$	(81,858	)	$	(52,425	)



Thousands of dollars	Three Months Ended September 30,									Nine Months Ended September 30,
	2017			2016			Change			2017		2016			Change
Revenue and other income:
Sale of real estate and water assets	$	136		$	477		$	(341	)	$	25,276	$	607		$	24,669
Other	211			100			111			490		283			207
Total revenue and other income	347			577			(230		)	25,766		890			24,876

Cost of sales and expenses:
Cost of real estate and water assets sold	55			252			(197		)	12,604		316			12,288
Depreciation and amortization	21			37			(16		)	82		316			(234		)
Overhead expense	856			1,040			(184		)	3,200		3,345			(145		)
Project expense	380			252			128			1,216		1,099			117
Segment total expenses	1,312			1,581			(269		)	17,102		5,076			12,026
Income (loss) before income taxes	$	(965	)	$	(1,004	)	$	39		$	8,664	$	(4,186	)	$	12,850



	Payments Due by Period
Contractual Obligations	Less than 1 year		1-3 years		3-5 years	More than 5 years	Total
Operating leases	$	86	$	870			$	956
Other⁽¹⁾	4,066						4,066
Total	$	4,152	$	870			$	5,022



Period	Total number of shares of common stock purchased	Average price paid per share of common stock (including commissions)		Total number of shares of common stock purchased as part of publicly announced plans of programs	Maximum dollar value of shares of common stock that may yet be purchased under the plans of programs (in thousands) ⁽¹⁾
July 1 to July 31, 2017					$	49,310
August 1 to August 31, 2017
September 1 to September 30, 2017
Total	—	$	—	—	$	49,310