Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Nov. 14, 2014 | Feb. 28, 2014 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'PURE CYCLE CORP | ' | ' |
Document Type | '10-K | ' | ' |
Current Fiscal Year End Date | '--08-31 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Central Index Key | '0000276720 | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Filer Category | 'Accelerated Filer | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 24,037,598 | ' |
Entity Public Float | ' | ' | $107,694,594 |
Document Period End Date | 31-Aug-14 | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Current assets: | ' | ' |
Cash and cash equilvalents | $1,749,558 | $2,448,363 |
Trade accounts receivable | 1,626,090 | 584,802 |
Sky Ranch receivable | 50,915 | 57,303 |
Current portion of HP A&M receivable | ' | 6,655,156 |
Land and water held for sale | 699,826 | ' |
Prepaid expenses | 336,867 | 154,345 |
Total current assets | 4,463,256 | 9,899,969 |
Investments in water and water systems, net | 90,823,916 | 88,512,249 |
Land - Sky Ranch | 3,662,754 | 3,768,029 |
Land and water held for sale | 1,500,000 | 5,748,630 |
Note receivable - related party: | ' | ' |
Rangeview Metropolitan District, including accrued interest | 568,022 | 555,983 |
HP A&M receivable, less current portion | 7,069,511 | ' |
Other assets | 86,363 | 133,471 |
Total assets | 108,173,822 | 108,618,331 |
Current liabilities: | ' | ' |
Accounts payable | 1,379,647 | 167,775 |
Current portion mortgages payable, including interest payable of $80,847 and $122,028, respectively | 925,980 | 4,668,943 |
Accrued liabilities | 257,893 | 264,740 |
Deferred revenues | 65,124 | 65,384 |
Deferred oil and gas lease payment | 645,720 | 235,483 |
Total current liabilities | 3,274,364 | 5,402,325 |
Deferred revenues, less current portion | 1,167,095 | 1,232,220 |
Deferred oil and gas lease payment, less current portion | 379,765 | ' |
Mortgages payable, less current portion | 4,032,227 | 3,211,112 |
Participating Interests in Export Water Supply | 354,628 | 1,192,910 |
Tap Participation Fee payable to HP A&M net of $4.1 million and $42.9 million discount respectively | 7,935,262 | 59,807,289 |
Total liabilities | 17,143,341 | 70,845,856 |
Commitments and contingencies | ' | ' |
Preferred stock: | ' | ' |
Series B - par value $.001 per share, 25 milllion shares authorized 432,513 shares issued and outstanding (liquidation perference of $432,513) | 433 | 433 |
Common stock: | ' | ' |
Par value 1/3 of $.01 per share, 40 million shares authorized; 24,037,598 shares issued and outstanding | 80,130 | 80,130 |
Additional paid in capital | 168,794,396 | 115,224,946 |
Accumulated deficit | -77,844,478 | -77,533,034 |
Total shareholders' equity | 91,030,481 | 37,772,475 |
Total liabilities and shareholders' equity | $108,173,822 | $108,618,331 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Interest payable | $80,847 | $122,028 |
Discount of tap participation fee payable to HP A&M | 4,100,000 | 42,900,000 |
Preferred stock; Series B- par value | $0.00 | $0.00 |
Preferred stock; Series B- shares authorized | 25,000,000 | 25,000,000 |
Preferred stock; Series B- shares issued | 432,513 | 432,513 |
Preferred stock; Series B- shares outstanding | 432,513 | 432,513 |
Preferred stock; Series B- liquidation preference | $432,513 | $432,513 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares outstanding | 24,037,598 | 24,037,598 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Revenues: | ' | ' | ' |
Metered water usage | $1,879,495 | $502,668 | $182,802 |
Wastewater treatment fees | 45,400 | 41,697 | 45,778 |
Special facility funding recognized | 41,508 | 41,508 | 41,508 |
Water tap fees recognized | 14,294 | 14,294 | 14,296 |
Farm operations | 1,068,026 | 1,241,882 | ' |
Other income | 42,417 | 15,413 | ' |
Total revenues | 3,091,140 | 1,857,462 | 284,384 |
Expenses: | ' | ' | ' |
Water service operations | -547,562 | -188,309 | -78,144 |
Wastewater service operations | -38,426 | -16,958 | -19,269 |
Farm operations | -88,105 | -96,337 | ' |
Other | -39,421 | -1,199 | -1,995 |
Depletion and depreciation | -149,757 | -90,468 | -88,576 |
Total cost of revenues | -863,271 | -393,271 | -187,984 |
Gross margin | 2,227,869 | 1,464,191 | 96,400 |
General and administrative expenses | -3,356,863 | -2,333,126 | -2,374,106 |
Impairment of land and water rights held for sale | -402,657 | ' | -6,457,760 |
Impairment of water assets | ' | ' | -5,544,022 |
Depreciation | -46,807 | -220,834 | -220,657 |
Operating loss | -1,578,458 | -1,089,769 | -14,500,145 |
Other income (expense): | ' | ' | ' |
Oil and gas lease income, net | 525,438 | 416,048 | 422,999 |
Farm income, net | ' | ' | 71,101 |
Interest income | 26,858 | 34,583 | 53,339 |
Interest expense | -239,200 | -245,503 | ' |
Other | 160,004 | 9,574 | 3,552 |
Gain on sale of land and water assets | 1,407,326 | ' | 1,016 |
Gain on extinguishment of contingent obligations and debt | 832,097 | ' | ' |
Interest imputed on the Tap Participation Fees payable to HP A&M | -1,445,509 | -3,275,378 | -3,470,523 |
Net loss | ($311,444) | ($4,150,445) | ($17,418,661) |
Net loss per common share - basic and diluted | ($0.01) | ($0.17) | ($0.72) |
Weighted average common shares outstanding - basic and diluted | 24,037,598 | 24,037,598 | 24,037,598 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Comprehensive Income (Loss) | Accumulated Deficit | Total |
Balance, beginning at Aug. 31, 2011 | $433 | $80,130 | $103,176,607 | ($2,903) | ($55,963,928) | $47,290,339 |
Balance, beginning shares at Aug. 31, 2011 | 432,513 | 24,037,598 | ' | ' | ' | ' |
Share-based compensation | ' | ' | 54,588 | ' | ' | 54,588 |
Allocation of net revenues to TPF | ' | ' | 189,674 | ' | ' | 189,674 |
Unrealized loss on investments | ' | ' | ' | 1,822 | ' | 1,822 |
Net loss | ' | ' | ' | ' | -17,418,661 | -17,418,661 |
Comprehensive loss | ' | ' | ' | ' | ' | -17,416,839 |
Balance, ending at Aug. 31, 2012 | 433 | 80,130 | 103,420,869 | -1,081 | -73,382,589 | 30,117,762 |
Balance, ending, shares at Aug. 31, 2012 | 432,513 | 24,037,598 | ' | ' | ' | ' |
Share-based compensation | ' | ' | 66,812 | ' | ' | 66,812 |
Reduction in TPF due to remedies under the Arkansas River Agreement | ' | ' | 11,737,265 | ' | ' | 11,737,265 |
Realized gain on investments | ' | ' | ' | 1,081 | ' | 1,081 |
Net loss | ' | ' | ' | ' | -4,150,445 | -4,150,445 |
Comprehensive loss | ' | ' | ' | ' | ' | -4,149,364 |
Balance, ending at Aug. 31, 2013 | 433 | 80,130 | 115,224,946 | ' | -77,533,034 | 37,772,475 |
Balance, ending, shares at Aug. 31, 2013 | 432,513 | 24,037,598 | ' | ' | ' | ' |
Share-based compensation | ' | ' | 251,915 | ' | ' | 251,915 |
Reduction in TPF due to remedies under the Arkansas River Agreement | ' | ' | 53,317,535 | ' | ' | 53,317,535 |
Net loss | ' | ' | ' | ' | -311,444 | -311,444 |
Comprehensive loss | ' | ' | ' | ' | ' | -311,444 |
Balance, ending at Aug. 31, 2014 | $433 | $80,130 | $168,794,396 | ' | ($77,844,478) | $91,030,481 |
Balance, ending, shares at Aug. 31, 2014 | 432,513 | 24,037,598 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Cash flows from operating activities | ' | ' | ' |
Net loss | ($311,444) | ($4,150,445) | ($17,418,661) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' | ' |
Share-based compensation expense | 251,915 | 66,812 | 54,588 |
Depreciation, depletion and other non-cash items | 196,564 | 313,137 | 307,507 |
Investment in Well Enhancement Recovery Systems, LLC | -37,193 | ' | ' |
Imputed interest on Tap Participation Fees payable to HP A&M | 1,445,509 | 3,275,378 | 3,470,523 |
Impairment of water assets | ' | ' | 5,544,022 |
Impairment of land and water rights held for sale | 402,657 | ' | 6,457,760 |
Gain on the sale of land and water rights held for sale | -1,308,392 | ' | ' |
Interest income and other non-cash items | -420 | ' | ' |
Interest added to note receivable - related party Rangeview Metropolitan | -12,039 | -12,038 | -12,072 |
Interest added to construction proceeds receivable | ' | ' | -19,241 |
Gain on sale of fixed assets | ' | ' | -1,016 |
Gain on extinguishment of contingent obligations | -832,097 | ' | ' |
Changes in operating assets and liabilities: | ' | ' | ' |
Trade accounts receivable | -1,041,288 | -449,344 | -36,974 |
Prepaid expenses | -168,795 | 125,437 | -37,782 |
HP A&M Receivable | -414,355 | -519,934 | ' |
Sky Ranch Receivable | 6,388 | -57,303 | ' |
Accounts payable and accrued liabilities | 1,191,298 | 120,527 | 246,034 |
Interest accrued on agriculture land promissory notes | -41,181 | ' | ' |
Deferred revenue | -65,385 | -65,385 | -27,314 |
Deferred income - oil and gas lease | 790,002 | -403,507 | -414,480 |
Net cash provided by (used in) operating activities | 51,744 | -1,756,665 | -1,887,106 |
Cash flows from investing activities: | ' | ' | ' |
Investments in water, water systems and land | -3,864,443 | -378,008 | -132,221 |
Purchases of marketable securities | ' | ' | -1,235,857 |
Sales and maturities of marketable securities | ' | 1,101,367 | 4,724,847 |
Proceeds from sale of land and easments | 192,851 | ' | 1,099 |
Proceeds from sale of farm land | 5,811,265 | ' | ' |
Proceeds from sale of collateral stock | ' | 3,415,000 | ' |
Purchase of property and equipment | -3,370 | -40,300 | -3,894 |
Net cash provided (used) by investing activities | 2,136,303 | 4,098,059 | 3,353,974 |
Cash flows from financing activities | ' | ' | ' |
Arapahoe County construction proceeds | ' | 291,662 | 84,854 |
Payment to contingent liability holders | -6,185 | -16,018 | ' |
Payments made on promissory notes payable | -2,880,667 | -1,792,192 | ' |
Net cash (used in) provided by financing activities | -2,886,852 | -1,516,548 | 84,854 |
Net change in cash and cash equivalents | -698,805 | 824,846 | 1,551,722 |
Cash and cash equivalents - beginning of year | 2,448,363 | 1,623,517 | 71,795 |
Cash and cash equivalents - end of year | 1,749,558 | 2,448,363 | 1,623,517 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES | ' | ' | ' |
Reduction in Tap Participation Fee liability resulting from remedies under the Arkansas River Agreement | 53,317,500 | 11,737,300 | ' |
Mortgage payable and related party receivable recorded upon HP A&M default | ' | ' | 9,550,200 |
Farm revenue allocated against the Tap Participation Fee liability and additional paid in capital thru August 3, 2012 | ' | ' | 189,700 |
Supplement Disclosures of non-cash activities, Total | $53,317,500 | $11,737,300 | $9,739,900 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Aug. 31, 2014 | |
Organization | ' |
ORGANIZATION | ' |
Pure Cycle Corporation (the “Company”) was incorporated in Delaware in 1976 and reincorporated in Colorado in 2008. The Company owns assets in the Denver, Colorado metropolitan area and in Southeast Colorado. The Company is currently using its water assets located in the Denver metropolitan area to provide wholesale water and wastewater services to customers located in the Denver metropolitan area. The Company is leasing its farm land in Southeast Colorado to area farmers. | |
The Company provides a full line of wholesale water and wastewater services which includes designing and constructing water and wastewater systems as well as operating and maintaining such systems. The Company’s business focus is to provide wholesale water and wastewater services, predominately to local governmental entities, which provide services to their end-use customers throughout the Denver metropolitan area as well as along the Colorado Front Range. | |
The Company believes it has sufficient working capital and financing sources to fund its operations for at least the next fiscal year. As of August 31, 2014, the Company had $1.7 million of cash and cash equivalents and $1.2 million of working capital. | |
The Company’s ability to generate working capital from its water and wastewater projects is dependent on its ability to successfully market its water, or in the event it is unsuccessful, to sell the underlying water assets. In the event increased sales are not achieved or the Company is unable to sell its water assets at a sufficient level, the Company may have to issue additional short or long-term debt or seek to sell additional shares of the Company’s common or preferred stock to generate sufficient working capital. There can be no assurance that the Company will be successful in marketing its water on terms that are acceptable to the Company. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Aug. 31, 2014 | ||
Presentation Of Interim Information | ' | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
Principles of Consolidation | ||
The consolidated financial statements of the Company include the accounts of Pure Cycle Corporation and its majority-owned and controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. | ||
Use of Estimates | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||
Cash and Cash Equivalents | ||
Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less. The Company’s cash equivalents are comprised entirely of money market funds maintained at a high quality financial institution in an account which as of August 31, 2014 exceed federally insured limits. At various times during the year ended August 31, 2014, the Company’s main operating account exceeded federally insured limits. | ||
Financial Instruments – Concentration of Credit Risk and Fair Value | ||
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash equivalents with high quality financial institutions. At various times throughout the year ended August 31, 2014, cash deposits have exceeded federally insured limits. The Company historically invested its idle cash primarily in certificates of deposit, money market instruments, commercial paper obligations, corporate bonds and US government treasury obligations. To date, the Company has not experienced significant losses on any of these investments. | ||
Mortgages Payable and HP A&M Receivable | ||
In conjunction with HP A&M defaulting on certain promissory notes in fiscal year 2012, the Company has the right to collect from HP A&M any amounts the Company spends to protect its interest from the defaulted notes. Accordingly the Company has recorded the entire amount of the HP A&M notes at default as well as expenses incurred to cure the defaults as a receivable from HP A&M less proceeds received from the sale of shares pledged by HP A&M pursuant to the Asset Purchase Agreement, dated May 10, 2006, between the Company and HP A&M (“The Arkansas River Agreement”). The receivable represents the amount of the defaulted promissory notes payable by HP A&M which were purchased by the Company and with respect to which the Company is pursuing remedies under the Arkansas River Agreement (as described in more detail in Note 4 – Water and Land Assets) over the next 12 months, plus expenses as noted above. | ||
In the fiscal year 2013 the Company began acquiring the defaulted promissory notes that are payable by HP A&M using a combination of cash and promissory notes. The majority of the notes issued by the Company have a five-year term, bear interest at an annual rate of five percent and require semi-annual payments with a straight-line amortization schedule, (see Note 7 – Long Term Debt and Operating Lease). | ||
Cash Flows | ||
The Company paid $239,200 and $245,500 in interest during the fiscal years ended August 31, 2014 and 2013, respectively. The Company did not pay any interest during the fiscal year ended August 31, 2012. | ||
The Company did not pay any income taxes during the fiscal years ended August 31, 2014, 2013 and 2012. | ||
Trade Accounts Receivable | ||
The Company records accounts receivable net of allowances for uncollectible accounts. Included in trade accounts receivable are balances due from farm operations. The Company recorded an allowance for uncollectible accounts in the amounts of $26,300 and $41,100 as of August 31, 2014 and 2013, respectively. The allowance for uncollectible accounts was determined based on specific review of all past due accounts. | ||
Long-Lived Assets | ||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the eventual use of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Based on the Company’s procedures, the Company determined that land and water rights held for sale related to the Arkansas River Assets were impaired as of August 31, 2014, and the Company recorded an impairment of $402,700. The Company determined that no impairment of such assets existed at August 31, 2013. The Company determined that its “Paradise Water Supply” asset (defined in Note 4 below) and land and water rights held for sale related to the Arkansas River Assets were impaired as of August 31, 2012. See further discussion in Note 4 below under sections “Paradise Water Supply” and “Arkansas River Assets”. | ||
Capitalized Costs of Water and Wastewater Systems and Depreciation and Depletion Charges | ||
Costs to construct water and wastewater systems that meet the Company’s capitalization criteria are capitalized as incurred, including interest, and depreciated on a straight-line basis over their estimated useful lives of up to thirty years. The Company capitalizes design and construction costs related to construction activities and it capitalizes certain legal, engineering and permitting costs relating to the adjudication and improvement of its water assets. | ||
The Company depletes its water assets that are being utilized on the basis of units produced (i.e. thousands of gallons sold) divided by the total volume of water adjudicated in the water decrees. | ||
Tap Participation Fee Liability and Imputed Interest Expense | ||
The Tap Participation Fee liability (“TPF”), as described in Note 7 – Long Term Debt and Operating Lease, represents the discounted fair value of the amounts the Company estimates it will pay HP A&M pursuant to the Arkansas River Agreement. The Company imputes interest expense on the unpaid TPF using the effective interest method, over the estimated development period. The Company imputed interest of $1.4 million, $3.3 million and $3.5 million during the years ended August 31, 2014, 2013 and 2012, respectively. | ||
The TPF is due and payable once the Company has sold a water tap and received the consideration due for such water tap. The Company did not sell any water taps during the years ended August 31, 2014, 2013 or 2012. As of August 31, 2014, 2,184 water taps remain subject to the TPF. | ||
Revenue Recognition | ||
The Company generates revenues through two separate lines of businesses. Its revenues are derived through its Wholesale Water and Wastewater business and its Farming Operations, which are described below. | ||
Wholesale Water and Wastewater business – The Company generates revenues through its wholesale water and wastewater segment predominately from three sources: (i) monthly wholesale water usage fees and wastewater service fees, (ii) one time water and wastewater tap fees, and construction fees, and (iii) consulting fees. Because these items are separately delivered, the Company accounts for each of the items separately, as described below. | ||
i) | Monthly wholesale water and wastewater service fees – Monthly wholesale water usage charges are assessed to the Company’s customers based on actual metered usage each month plus a base monthly service fee assessed per single family equivalent (“SFE”) unit served. One SFE is a customer, whether residential, commercial or industrial, that imparts a demand on the Company’s water or wastewater systems similar to the demand of a family of four persons living in a single family house on a standard sized lot. One SFE is assumed to have a water demand of approximately 0.4 acre feet per year and to contribute wastewater flows of approximately 300 gallons per day. Water usage pricing uses a tiered pricing structure. The Company recognizes wholesale water usage revenues upon delivering water to its customers or its governmental customers’ end-use customers, as applicable. The water revenues recognized by the Company are shown net of royalties to the Land Board and, when applicable, amounts retained by the Rangeview Metropolitan District (the “District”). | |
The Company recognizes wastewater processing revenues monthly based on usage. The monthly wastewater service fees are shown net of amounts retained by the District. Amounts recognized for water and wastewater services during the fiscal years ended August 31, 2014, 2013 and 2012, are presented in the statements of operations. Costs of delivering water and providing wastewater service to customers are recognized as incurred. | ||
The Company delivered 190.1 million, 69.2 million and 34.2 million gallons of water to customers during the fiscal years ended August 31, 2014, 2013 and 2012, respectively. | ||
ii) | Water and wastewater tap fees and construction fees – Tap fees, also called system development fees, are received in advance, are non-refundable and are typically used to fund construction of certain facilities and defray the acquisition costs of obtaining water rights. Construction fees are fees used by the Company to construct assets that are typically required to be constructed by developers or home builders. | |
Proceeds from tap fees and construction fees are deferred upon receipt and recognized in income either upon completion of construction of infrastructure or ratably over time, depending on whether the Company owns the infrastructure constructed with the proceeds or a customer owns the infrastructure constructed with the proceeds. | ||
Tap and construction fees derived from agreements in which the Company will not own the assets constructed with the fees are recognized as revenue using the percentage-of-completion method. Costs of construction of the assets when the Company will not own the assets are recorded as construction costs. | ||
Tap and construction fees derived from agreements for which the Company will own the infrastructure are recognized as revenues ratably over the estimated accounting service life of the facilities constructed, starting at completion of construction, which could be in excess of thirty years. Costs of construction of the assets when the Company will own the assets are capitalized and depreciated over their estimated economic lives. | ||
From time to time the Company enters into water service agreements to provide water service to customers. The Company owns the facilities which store, treat, and deliver the water and amortizes the cost of these facilities over their useful lives. In each of the three fiscal years ended August 31, 2014, 2013 and 2012, the Company recognized $14,300 of tap fee revenue. At August 31, 2014, $313,300 of these tap fees are still deferred. The Company recognized $41,500 of “Special Facilities” funding as revenue in each of the three fiscal years ended August 31, 2014, 2013, and 2012 respectively. As of August 31, 2014, the Company has deferred recognition of $1.2 million of tap and construction fee revenue from customer agreements, which will be recognized as revenue ratably through 2016. | ||
In addition to the tap fee revenues and the construction revenues, the Company also recorded interest income from Arapahoe County using the effective interest method. Pursuant to the Arapahoe County agreement, the County made payments to the Company totaling $82,200 per year through 2013 for the construction of the Special Facilities at the Fairgrounds. These payments include interest at 6% per annum. In April 2013 the County paid the balance on the note. The Company recognized $5,500 and $19,200 of interest income from the County during the fiscal years ended August 31, 2013 and 2012, respectively. | ||
In August 2012, the Company entered into an agreement with Front Range Pipeline which grants Front Range Pipeline easement rights for a period of three years to construct a pipeline for total consideration of $28,700. As of August 31, 2014, the Company had $9,300 in deferred revenue from Front Range Pipeline | ||
iii) | Consulting Fees – Consulting fees are fees the Company receives, typically on a monthly basis, from municipalities and area water providers along the I-70 corridor, for system management and maintenance | |
Agricultural Farming Operations – The Company leases its Arkansas River water and land to area farmers who actively farm the properties. Prior to August 3, 2012, pursuant to a property management agreement between HP A&M and the Company (the “Property Management Agreement”), HP A&M received a management fee equal to 100% of the income from the land and water leases. As a result, the Company presented its land and water lease income net of the management fees paid to HP A&M. Effective August 3, 2012, the Company terminated the Property Management Agreement due to a default by HP A&M on certain promissory notes secured by deeds of trust on the land and water purchased by the Company from HP A&M in 2006. Effective August 3, 2012, the Company manages the land and water leases and the income from the land and water leases became payable to the Company. Pursuant to the farm lease agreements, the Company bills the lessees semi-annually in March and November. The lease billings include minimum billings and adjustments based on actual water deliveries by the Fort Lyon Canal Company (“FLCC”) or are based on crop yields. Subsequent to August 3, 2012, the Company records farm lease income ratably each month based on estimated annual lease income the Company anticipates collecting from its land and water leases. The Company recorded these amounts as receivables, less an estimated allowance for uncollectible accounts. The allowance as of August 31, 2014, was determined by the Company’s specific review of all past due accounts. The Company has recorded allowances for doubtful accounts totaling $26,300 and $41,100 as of August 31, 2014 and 2013, respectively. As of August 31, 2014 and 2013 the Company has accrued $256,500 and $397,300, respectively, of farm income related to billings for future periods. The Company manages the farm lease business as a separate line of business from the wholesale water and wastewater business. | ||
Royalty and other obligations | ||
Revenues from the sale of “Export Water” are shown net of royalties payable to the Land Board. Revenues from the sale of water on the “Lowry Range” are shown net of the royalties to the Land Board and the amounts retained by the District. See further description of “Export Water” and the “Lowry Range” in Note 4 under “Rangeview Water Supply and Water System”. | ||
Oil and Gas Lease Payments | ||
As further described in Note 4 below, on March 10, 2011, the Company entered into a Paid-Up Oil and Gas Lease (the “O&G Lease”) and a Surface Use and Damage Agreement (the “Surface Use Agreement”) with Anadarko E&P Company, L.P. (“Anadarko”), a wholly owned subsidiary of Anadarko Petroleum Company. Pursuant to the O&G Lease on March 10, 2011, the Company received an up-front payment of $1,243,400 from Anadarko for the purpose of exploring for, developing, producing and marketing oil and gas on approximately 634 acres of mineral estate owned by the Company at its Sky Ranch property. In December 2012 the O&G Lease was purchased by a wholly owned subsidiary of ConocoPhillips Company. The Company received an additional payment of $1,243,400 during February 2014 to extend the O&G Lease an additional two years through February 2016, which will be recognized as income on a straight-line basis over two years (the extension term of the O&G Lease). In addition, during the fiscal years ended August 31, 2014 and 2013, the Company received up-front payments of $72,000 and $12,540, respectively, for the purpose of exploring for, developing, producing, and marketing oil and gas on 40 acres of mineral estate the Company owns adjacent to the Lowry Range (the “Rangeview Lease”). The Company recognizes the up-front payments on a straight-line basis over the terms of the respective leases. During the years ended August 31, 2014, 2013 and 2012, the Company recognized $525,400, $416,000, and $423,000, respectively, of income related to the up-front payments received pursuant to these leases. | ||
As of August 31, 2014, the Company has deferred recognition of $1,025,500 of income related to the O&G Lease, which will be recognized into income ratably through July 2017. | ||
Share-based Compensation | ||
The Company maintains a stock option plan for the benefit of its employees and directors. The Company records share-based compensation costs which are measured at the grant date based on the fair value of the award and are recognized as expense over the applicable vesting period of the stock award using the straight-line method. The Company has adopted the alternative transition method for calculating the tax effects of share-based compensation which allows for a simplified method of calculating the tax effects of employee share-based compensation. Because the Company has a full valuation allowance on its deferred tax assets, the granting and exercise of stock options during the fiscal years ended August 31, 2014 and 2013 had no impact on the income tax provisions. | ||
The Company recognized $251,900, $66,800, and $54,600 of share-based compensation expenses during the fiscal years ended August 31, 2014, 2013 and 2012, respectively. | ||
Income Taxes | ||
The Company uses a “more-likely-than-not” threshold for the recognition and de-recognition of tax positions, including any potential interest and penalties relating to tax positions taken by the Company. The Company does not have any significant unrecognized tax benefits as of August 31, 2014. | ||
The Company files income tax returns with the Internal Revenue Service and the State of Colorado. The tax years that remain subject to examination are fiscal 2010 through fiscal 2013. The Company does not believe there will be any material changes in its unrecognized tax positions over the next twelve months. | ||
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At August 31, 2014, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the fiscal years ended August 31, 2014, 2013 or 2012. | ||
Loss per Common Share | ||
Loss per common share is computed by dividing net loss by the weighted average number of shares outstanding during each period. Common stock options and warrants aggregating 315,100, 347,600, and 215,100 common share equivalents as of August 31, 2014, 2013 and 2012, respectively, have been excluded from the calculation of loss per common share as their effect is anti-dilutive. | ||
Recently Issued Accounting Pronouncements | ||
The Company continually assesses any new accounting pronouncements to determine their applicability. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, the Company has not determined whether implementation of such proposed standards would be material to the Company’s financial statements. New pronouncements assessed by the Company recently are discussed below: | ||
In May 2014, FASB issued ASU No. 2014-09 “Revenue from Contracts from Customers,” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to the exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early adoption not permitted. The Company is currently evaluating the new standard. | ||
In August 2014, FASB issued ASU No. 2014-15 “Preparation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.” ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | ||||||||||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The Company uses a fair value hierarchy that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of input to determine fair value. | |||||||||||||||||||||||||
Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. The Company had none of these instruments at August 31, 2014 or 2013. | |||||||||||||||||||||||||
Level 2 — Valuations for assets and liabilities obtained from readily available pricing sources via independent providers for market transactions involving similar assets or liabilities. The Company had no Level 2 assets or liabilities at August 31, 2014 or 2013. | |||||||||||||||||||||||||
Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. The Company had one Level 3 liability at August 31, 2014 and 2013, the Tap Participation Fee liability, which is described in greater detail in Note 2 – Summary of Significant Accounting Policies and Note 7 – Long-Term Debt And Operating Lease. | |||||||||||||||||||||||||
The Company maintains policies and procedures to value instruments using the best and most relevant data available. | |||||||||||||||||||||||||
The Company’s non-financial assets measured at fair value on a non-recurring basis consist entirely of its investments in water and water systems and other long-lived assets held for sale. See Note 4 – Water and Land Assets for impairment of water rights and land with the associated water rights held for sale. | |||||||||||||||||||||||||
Level 3 Liability – Tap Participation Fee. The Company’s Tap Participation Fee liability is the Company’s only financial liability measured on a non-recurring basis. The Tap Participation Fee liability is valued by projecting new home development in the Company’s targeted service area over an estimated development period. Due to the long-term nature of the Tap Participation Fee, the valuation of the Tap Participation Fee is not sensitive to minor changes. See further description of the Tap Participation Fee in Note 7 – Long-Term Debt and Operating Lease. | |||||||||||||||||||||||||
The following table provides information on the assets and liabilities measured at fair value as of August 31, 2014: | |||||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | Total Unrealized Gains and | ||||||||||||||||||||||
Fair Value | Cost / Other Value | (Level 1) | (Level 2) | (Level 3) | (Losses) | ||||||||||||||||||||
Tap Participation Fee | $ | 7,935,300 | $ | 7,935,300 | $ | - | $ | - | $ | 7,935,300 | $ | - | |||||||||||||
Although not required, the Company deems the following table, which presents the changes in the Tap Participation Fee for the year ended August 31, 2014, to be helpful to the users of its financial statements: | |||||||||||||||||||||||||
Gross Estimated Tap Participation Fee Liability | Tap Participation Fee Reported Liability | Discount - to be imputed as interest expense in future periods | |||||||||||||||||||||||
Balance at September 1, 2013 | $ | 102,681,900 | $ | 59,807,300 | $ | 42,874,600 | |||||||||||||||||||
Total gains and losses (realized and unrealized): | |||||||||||||||||||||||||
Imputed interest recorded as "Other Expense" | - | 1,445,500 | (1,445,500 | ) | |||||||||||||||||||||
Purchases, sales, issuances, payments, and settlements | (90,643,600 | ) | (53,317,500 | ) | (37,326,100 | ) | |||||||||||||||||||
Transfers in and/or out of Level 3 | - | - | - | ||||||||||||||||||||||
Balance at August 31, 2014 | $ | 12,038,300 | $ | 7,935,300 | $ | 4,103,000 | |||||||||||||||||||
The methodologies for estimating the fair value of financial assets and liabilities that are measured at fair value are discussed above. The methodologies for other financial assets and liabilities are discussed below. | |||||||||||||||||||||||||
Cash and Cash Equivalents: The Company’s cash and cash equivalents are reported using the values as reported by the financial institution where the funds are held. These securities primarily include balances in the Company’s operating and savings accounts. The carrying amount of cash and cash equivalents approximate fair value. | |||||||||||||||||||||||||
Accounts Receivable and Accounts Payable: The carrying amounts of accounts receivable and accounts payable approximate fair value due to the relatively short period to maturity for these instruments. | |||||||||||||||||||||||||
Long-term Financial Liabilities: The Comprehensive Amendment Agreement No. 1 the “CAA” is comprised of a recorded balance and an off-balance sheet or “contingent” obligation associated with the Company’s acquisition of its “Rangeview Water Supply” (defined in Note 4 below). The amount payable is a fixed amount but is repayable only upon the sale of “Export Water” (defined in Note 4 below). Because of the uncertainty of the sale of Export Water, the Company has determined that the contingent portion of the CAA does not have a determinable fair value. The CAA is described further in Note 5 – Participating Interests in Export Water. | |||||||||||||||||||||||||
The recorded balance of the “Tap Participation Fee” liability (as described below) is its estimated fair value determined by projecting new home development in the Company’s targeted service area over an estimated development period. | |||||||||||||||||||||||||
Notes Receivable – Related Party: The fair value of the Note Receivable – Related Party is not practicable to estimate due to the related party nature of the underlying transactions. | |||||||||||||||||||||||||
Receivable from HP A&M: In conjunction with HP A&M defaulting on certain promissory notes, the Company has the right to collect from HP A&M any amounts the Company spends to cure the defaulted notes. Accordingly the Company has recorded the entire amount of the HP A&M notes as a receivable from HP A&M. Due to the fact that HP A&M was a related party the fair value of the accounts receivable is not practical to determine. As of August 31, 2013 the receivable was deemed current as the notes were in default and considered collectible upon demand. As of August 31, 2014 the notes have been through foreclosure and are now considered long-term as they are subject to litigation as discussed further in Note 12 – Litigation Loss Contingencies. | |||||||||||||||||||||||||
Mortgages Payable: During fiscal 2013, the Company began acquiring the defaulted and non-defaulted promissory notes that are payable by HP A&M in exchange for a combination of cash and promissory notes. The majority of the notes issued by the Company have a five-year term, bear interest at an annual rate of five percent (5%) and require semi-annual payments with a straight-line amortization schedule. The carrying value of the notes payable approximate the fair value as the rates are comparable to market rates. | |||||||||||||||||||||||||
Off-Balance Sheet Instruments: The Company’s off-balance sheet instruments consist entirely of the contingent portion of the CAA. Because repayment of this portion of the CAA is contingent on the sale of Export Water, which is not reasonably estimable, the Company has determined that the contingent portion of the CAA does not have a determinable fair value. See further discussion in Note 5 – Participating Interests In Export Water. |
WATER_AND_LAND_ASSETS
WATER AND LAND ASSETS | 12 Months Ended | ||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||
Investments In Water Water Systems Land And Improvements | ' | ||||||||||||||||
WATER AND LAND ASSETS | ' | ||||||||||||||||
The Company’s water and water systems consist of the following approximate costs and accumulated depreciation and depletion as of August 31: | |||||||||||||||||
31-Aug-14 | 31-Aug-13 | ||||||||||||||||
Costs | Accumulated Depreciation and Depletion | Costs | Accumulated Depreciation and Depletion | ||||||||||||||
Arkansas River assets | $ | 67,746,400 | $ | (1,488,600 | ) | $ | 69,112,300 | $ | (1,487,700 | ) | |||||||
Rangeview water supply | 14,444,600 | (8,400 | ) | 14,667,000 | (7,700 | ) | |||||||||||
Sky Ranch water rights and other costs | 6,004,000 | (93,000 | ) | 3,915,100 | (79,800 | ) | |||||||||||
Fairgrounds water and water system | 2,899,900 | (710,600 | ) | 2,899,900 | (622,600 | ) | |||||||||||
Rangeview water system | 1,148,200 | (77,900 | ) | 167,700 | (72,800 | ) | |||||||||||
Water supply – other | 1,050,200 | (90,900 | ) | 43,200 | (22,400 | ) | |||||||||||
Totals | 93,239,300 | (2,469,400 | ) | 90,805,200 | (2,293,000 | ) | |||||||||||
Net investments in water and water systems | $ | 90,823,900 | $ | 88,512,200 | |||||||||||||
Depletion and Depreciation | |||||||||||||||||
The Company recorded a $4,400 depletion charge during the fiscal year ended August 31, 2014 and a $500 of depletion charge during each of the two fiscal years ended August 31, 2013 and 2012, respectively. During the fiscal year ended August 31, 2014 this related to the Rangeview and Sky Ranch Water supplies (defined below) and during the fiscal years ended August 31, 2013 and 2012, respectively, this related entirely to the Rangeview Water Supply. No depletion is taken against the Arkansas River (defined below) because the water located at this location is not yet being utilized for their intended purpose as of August 31, 2014. | |||||||||||||||||
The Company recorded $192,200, $310,800 and $308,700 of depreciation expense in each of the fiscal years ended August 31, 2014, 2013 and 2012, respectively. These figures include depreciation for other equipment not included in the table above. | |||||||||||||||||
Arkansas River Assets | |||||||||||||||||
Arkansas River Water – The Company owns approximately 51,000 acre feet of senior water rights in the Arkansas River and its tributaries in Southeastern Colorado. The Company anticipates that of this, 34,000 acre feet may be available for non-agricultural uses along the front range of Colorado sometime in the future. The Company acquired its Arkansas River assets from HP A&M pursuant to the Arkansas River Agreement entered into on May 10, 2006. | |||||||||||||||||
In order to utilize the Arkansas River water in the Company’s service areas, the Company will be required to convert this water to municipal and industrial uses. Change of water use must be done through the Colorado water court and several conditions must be present prior to the water court granting an application for transfer of a water right. A transfer case would be expected to include the following provisions: | |||||||||||||||||
(i) | a provision of anti-speculation in which the applicant must have contractual obligations to provide water service to customers prior to the water court ruling on the transfer of a water right, | ||||||||||||||||
(ii) | the applicant can only transfer the “consumptive use” portion of its water rights (the Company expects to face opposition to any consumptive use calculation of the historic agricultural uses of its water), | ||||||||||||||||
(iii) | applicants likely would be required to mitigate the loss of tax base in the basin of origin, | ||||||||||||||||
(iv) | applicants would likely have re-vegetation requirements to restore irrigated soils to non-irrigated, and | ||||||||||||||||
(v) | applicants would be required to meet water quality measures which would be included in the cost of transferring the water rights. | ||||||||||||||||
The value of the assets was recorded based on the determined fair value of the consideration paid at the acquisition date, because the value of the consideration was deemed a more reliable criterion of value than the value of the acquired assets. The consideration paid was comprised of equity (3.0 million shares of the Company’s common stock) and the Tap Participation Fee. Because the estimated value of the consideration paid was less than the total estimated fair value of the assets acquired by the Company, the relative values assigned to the assets were ratably reduced. For a discussion of promissory notes owed by HP A&M to third parties which are secured by the Company’s Arkansas River water rights, see “Arkansas River Land” section below, Note 7 – Long Term Debt and Operating Lease, and Note 15 – Subsequent Events. | |||||||||||||||||
Fort Lyon Canal Company (“FLCC”) Shares – The Arkansas River water rights are represented by 18,656 shares of the FLCC, which is a non-profit mutual ditch company established in the late 1800’s that operates and maintains the 110 mile Fort Lyon Canal between La Junta, Colorado and Lamar, Colorado. The shares in the FLCC represent the amount of water the Company owns in the Fort Lyon Canal. | |||||||||||||||||
Pursuant to the Arkansas River Agreement, the Company pledged to HP A&M: (i) one-half of the FLCC shares purchased by the Company, (ii) all shares of FLCC hereafter issued to the Company by means of any dividend or distribution in respect of the shares pledged thereunder together with the shares identified in (i), the “Company’s Pledged Shares”, (iii) the certificates representing the Company’s Pledged Shares, (iv) the land associated with the water represented by the Company’s Pledged Shares, and (v) all rights to money or property which the Company now has or hereafter acquires in respect of the Company’s Pledged Shares. This pledge agreement will terminate upon payment of the Tap Participation Fee. | |||||||||||||||||
Arkansas River Land – The Company owns approximately 14,900 acres of real property which is being used for agricultural purposes and was acquired from HP A&M in 2006 in connection with the water acquisition described above. The land is located in the counties of Bent, Otero and Prowers in southern Colorado. The Company also owns certain contract rights, tangible personal property, mineral rights, and other water interests related to the Arkansas River water and land. | |||||||||||||||||
The land owned by the Company is divided into separate properties, each of which is being leased to area farmers. Most of the operating leases expire on December 31, 2014, while the remaining leases have a variety of expiration dates. Beginning September 1, 2011, until the Property Management Agreement was terminated in 2012, the Company allocated 26.9% (calculated pursuant to the Property Management Agreement based on consideration paid to HP A&M since the signing of the Arkansas River Agreement) of the net revenues paid to HP A&M (which is the lease payments HP A&M retained less expenses for employees, reasonable overhead and actual expenses paid to manage the farm leases) against the Tap Participation Fee liability. | |||||||||||||||||
The Property Management Agreement was terminated on August 3, 2012 due to defaults by HP A&M on certain promissory notes secured by deeds of trust on the Company’s land and water. On July 23, 2012, the Company notified all the farm lessees that HP A&M had defaulted on its obligations. The lessees were informed that all lease payments would be billed directly by and paid directly to the Company from the date of the notice forward. All other terms of the leases remained unchanged. Under the farm lease agreements, the farmers are billed twice a year in November and March. The Company received lease income from farm leases of approximately $1,068,000, $1,241,900 and $71,100 (recorded as revenue for fiscal 2014 and 2013 and other income for fiscal 2012) for the fiscal years ended August 31, 2014, 2013 and 2012, respectively. The allocation of 26.9% of the net revenues against the Tap Participation Fee, the termination of the Property Management and the defaults by HP A&M are described in greater detail in Note 7 – Long-Term Debt and Operating Lease. | |||||||||||||||||
Land and Water Shares Held for Sale | |||||||||||||||||
During fiscal year end 2012, management decided to sell certain farms in order to have the cash flow sufficient to acquire the notes defaulted upon by HP A&M and to meet the future obligations on the promissory notes the Company intended to issue as consideration to purchase the notes owed by HP A&M. Management anticipated selling approximately 1,603 acres of land along with 3,397 FLCC shares associated with this land. The net book value of the assets held for sale prior to being impaired at August 31, 2012 was $12.2 million. The negotiated sales price for these assets was $5.7 million which resulted in a loss of $6.5 million, which was expensed in fiscal 2012. | |||||||||||||||||
Through August 31, 2014, the Company completed sales of approximately 1,886 acres of land and 2,982 FLCC shares associated with the land; and, in November 2014, completed sales of approximately 299 acres of land along with 239 FLCC shares associated with the land. Management believes that the November 2014 sale completes the sales cycle related to the land held for sale. Due to modifications of the actual acreage sold and the number of FLCC shares associated with the land sold, a gain on the trasaction of approximately $1.3 million was recorded during the fourth quarter fiscal 2014. | |||||||||||||||||
In addition, management identified an additional 640 acres of land and 512 FLCC shares associated with the land as held for sale in order to have sufficient cash available to continue to meet future obligations on the promissory notes the Company issued to purchase the defaulted notes owed by HP A&M and to continue to fund water system expansions. The net book value of the assets identified as held for sale was $1.9 million prior to designation as held for sale. The anticipated sales price for these assets is $1.5 million based on recent sales transactions which resulted in a loss of approximately $400,000, which is expensed in fiscal 2014. | |||||||||||||||||
Rangeview Water Supply and Water System | |||||||||||||||||
The “Rangeview Water Supply” consists of 25,050 acre feet and is a combination of tributary surface water and groundwater rights along with certain storage rights associated with the Lowry Range, a 27,000-acre property owned by the Land Board located 16 miles southeast of Denver, Colorado. The $14.4 million on the Company’s balance sheet as of August 31, 2014, represents the costs of assets acquired or facilities constructed to extend water service to customers located on and off the Lowry Range. The recorded costs of the Rangeview Water Supply include payments to the sellers of the Rangeview Water Supply, design and construction costs and certain direct costs related to improvements to the asset including legal and engineering fees. | |||||||||||||||||
The Company acquired the Rangeview Water Supply beginning in 1996 when: | |||||||||||||||||
(i) | The District entered into the 2014 Amended and Restated Lease Agreement with the Land Board, which owns the Lowry Range; | ||||||||||||||||
(ii) | The Company entered into the Agreement for Sale of Export Water with the District, a quasi-municipal political subdivision of the State of Colorado; | ||||||||||||||||
(iii) | The Company entered into the 2014 Amended and Restated Service Agreement with the District for the provision of water service to the Lowry Range; and | ||||||||||||||||
(iv) | In 1997, the Company entered into the Wastewater Service Agreement with the District for the provision of wastewater service to the District’s service area. | ||||||||||||||||
In July 2014 the Company and the District amended the lease and entered into the 2014 Amended and Restated Lease with the Land Board and an Amended and Restated Service Agreement with the District. Collectively, the foregoing agreements, as amended, are referred to as the “Rangeview Water Agreements.” | |||||||||||||||||
Pursuant to the Rangeview Water Agreements, the Company owns 11,650 acre feet groundwater which can be exported off the Lowry Range to serve area users (referred to as “Export Water”). The Company also has the right to exchange an aggregate gross volume of 165,000 acre feet of groundwater for 1,650 acre feet per year of adjudicated surface water and to use this surface water as Export Water. Additionally, the Company has the exclusive right to provide water and wastewater service, through 2081, to all water users on the Lowry Range, and the right to develop an additional 13,400 acre feet of groundwater and 3,300 acre feet of adjudicated surface water (subject to the exchange for Export Water) to serve customers either on or off the Lowry Range. The Rangeview Water Agreements also provide for the Company to use surface reservoir storage capacity in providing water service to customers both on and off the Lowry Range. | |||||||||||||||||
Services on the Lowry Range – Pursuant to the Rangeview Water Agreements, the Company designs, finances, constructs, operates and maintains the District’s water and wastewater systems to provide service to the District’s customers on the Lowry Range. The Company will operate both the water and the wastewater systems during the contract period and the District owns both systems. After 2081, ownership of the water system will revert to the Land Board, with the District retaining ownership of the wastewater system. | |||||||||||||||||
Rates and charges for all water and wastewater services on the Lowry Range, including tap fees and usage or monthly fees, are governed by the terms of the Rangeview Water Agreements. Rates and charges are required to be less than the average of similar rates and charges of three surrounding municipal water and wastewater service providers, which are reassessed annually. Pursuant to the Rangeview Water Agreements the Land Board receives a 10% or 12% of gross revenues from the sale or disposition of the water depending on the purchaser of the water, except that the royalty on tap fees shall be 2%. The Company will also pay the Land Board a minimum annual water production fee, estimated to be approximately $140,000, which is to be credited against future royalties. The District retains 2% of the remaining gross revenues and the Company receives 98% of the remaining gross revenues after the Land Board Royalty. The Land Board does not receive a royalty on wastewater fees. The Company receives 100% of the District’s wastewater tap fees and 90% of the District’s wastewater usage fees (the District retains the other 10%). | |||||||||||||||||
Export Water – The Company owns the Export Water and uses and intends to use it to provide water and wastewater services to customers off the Lowry Range. The Company will own all facilities required to extend water and wastewater services using its Export Water. The Company anticipates contracting with third parties for the construction of these facilities. If the Company sells water, the Company is required to pay royalties to the Land Board ranging from 10% - 12% of gross revenues. | |||||||||||||||||
The County Fairgrounds Water and Water System | |||||||||||||||||
The Company owns 321 acre feet of groundwater purchased pursuant to the County Agreement. The Company plans to use this water in conjunction with its Rangeview Water Rights in providing water to areas outside the Lowry Range. The $2.9 million of capitalized costs includes the costs to construct various Wholesale and Special Facilities, including a new deep water well, a 500,000 gallon water tank and pipelines to transport water to the Fairgrounds. | |||||||||||||||||
Sky Ranch | |||||||||||||||||
In 2010 the Company purchased approximately 931 acres of undeveloped land known as Sky Ranch. The property includes the rights to 820 acre feet of water. | |||||||||||||||||
Total consideration for the land and water included the $7.0 million purchase price, plus direct costs and fees of $554,100. The Company allocated the total acquisition cost to the land and water rights based on estimates of each asset’s respective fair value. | |||||||||||||||||
At August 31, 2014, Sky Ranch Metropolitan District #5 owed the Company approximately $50,900 for various advances to pay for costs associated with establishing and operating the district. The Company anticipates these costs will be recovered through future revenues from property tax assessments. | |||||||||||||||||
O&G Lease – On March 10, 2011, the Company entered into the O&G Lease and the Surface Use Agreement with Anadarko. Pursuant to the O&G Lease, the Company received an up-front payment of $1,243,400 from Anadarko for the purpose of exploring for, developing, producing and marketing oil and gas on 634 acres of mineral estate owned by the Company at its Sky Ranch property. The Company also received $9,000 in surface use and damage payments. In December of 2012 the O&G Lease was purchased by a wholly owned subsidiary of ConocoPhillips Company. The Company received an additional payment of $1,243,400 during February 2014 to extend the O&G Lease an additional two years through February 2016. | |||||||||||||||||
Paradise Water Supply | |||||||||||||||||
During fiscal 2012 the Company deemed the Paradise Water Supply to be fully impaired and an impairment of $5.5 million was recorded in the fiscal 2012 financial statements. During August 2014 the Company completed the disposition of the Paradise Water Supply. |
PARTICIPATING_INTERESTS_IN_EXP
PARTICIPATING INTERESTS IN EXPORT WATER | 12 Months Ended | ||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||
Participating Interests In Export Water | ' | ||||||||||||||||||||
PARTICIPATING INTERESTS IN EXPORT WATER | ' | ||||||||||||||||||||
The Company acquired its Rangeview Water Supply through various amended agreements entered into in the early 1990’s. The acquisition was consummated with the signing of the CAA in 1996. Upon entering into the CAA, the Company recorded an initial liability of $11.1 million, which represented the cash the Company received from the participating interest holders that was used to purchase the Company’s Export Water (described in greater detail in Note 4 – Water and Land Assets). The Company agreed to remit a total of $31.8 million of proceeds received from the sale of Export Water to the participating interest holders in return for their initial $11.1 million investments. The obligation for the $11.1 million was recorded as debt, and the remaining $20.7 million contingent liability was not reflected on the Company’s balance sheet because the obligation to pay this is contingent on the sale of Export Water, the amounts and timing of which are not reasonably determinable. | |||||||||||||||||||||
The CAA obligation is non-interest bearing, and if the Export Water is not sold, the parties to the CAA have no recourse against the Company. If the Company does not sell the Export Water, the holders of the Series B Preferred Stock are also not entitled to payment of any dividend and have no contractual recourse against the Company. | |||||||||||||||||||||
As the proceeds from the sale of Export Water are received and the amounts are remitted to the external CAA holders, the Company allocates a ratable percentage of this payment to the principal portion (the Participating Interests in Export Water Supply liability account) with the balance of the payment being charged to the contingent obligation portion. Because the original recorded liability, which was $11.1 million, was 35% of the original total liability of $31.8 million, approximately 35% of each payment remitted to the CAA holders is allocated to the recorded liability account. The remaining portion of each payment, or approximately 65%, is allocated to the contingent obligation, which is recorded on a net revenue basis. | |||||||||||||||||||||
From time to time the Company repurchased various portions of the CAA obligations in priority. In July 2014, the Land Board relinquished I’ts approximately $2.4 million of CAA interests to the Company as part of the settlement of the 2011 lawsuit filed by the Company and the District against the Land Board. As a result, during the fourth quarter of fiscal year ended August 31, 2014 the Company recorded a gain on the extinguishment of participating interests of the CAA of approximately $832,100 during July 2014. The Company now has the right to retain an additional $2.4 million of the initial $31.8 million of proceeds from the sale of Export Water. The Company did not make any CAA acquisitions during the fiscal years ended August 31, 2013 or 2012. | |||||||||||||||||||||
As a result of the acquisitions, and due to the sale of Export Water, as detailed in the table below, the remaining potential third party obligation at August 31, 2014, is approximately $1 million: | |||||||||||||||||||||
Export Water Proceeds Received | Initial Export Water Proceeds to Pure Cycle | Total Potential Third party Obligation | Paticipating Interests Liability | Contingency | |||||||||||||||||
Original balances | $ | – | $ | 218,500 | $ | 31,807,700 | $ | 11,090,600 | $ | 20,717,100 | |||||||||||
Activity from inception until August 31, 2012: | |||||||||||||||||||||
Acquisitions | – | 28,077,500 | (28,077,500 | ) | (9,790,000 | ) | (18,287,500 | ) | |||||||||||||
Option payments - Sky Ranch | |||||||||||||||||||||
and The Hills at Sky Ranch | 110,400 | (42,300 | ) | (68,100 | ) | (23,800 | ) | (44,300 | ) | ||||||||||||
Arapahoe County tap fees * | 533,000 | (373,100 | ) | (159,900 | ) | (55,800 | ) | (104,100 | ) | ||||||||||||
Export Water sale payments | 111,300 | (77,900 | ) | (33,400 | ) | (12,100 | ) | (21,300 | ) | ||||||||||||
Balance at August 31, 2012 | 754,700 | 27,802,700 | 3,468,800 | 1,208,900 | 2,259,900 | ||||||||||||||||
Fiscal 2013 activity: | |||||||||||||||||||||
Export Water sale payments | 158,000 | (110,600 | ) | (47,400 | ) | (16,000 | ) | (31,400 | ) | ||||||||||||
Balance at August 31, 2013 | 912,700 | 27,692,100 | 3,421,400 | 1,192,900 | 2,228,500 | ||||||||||||||||
Fiscal 2014 activity: | |||||||||||||||||||||
Export Water sale payments | 91,600 | (73,700 | ) | (17,900 | ) | (6,200 | ) | (11,700 | ) | ||||||||||||
Relinquishment | 2,386,400 | (2,386,400 | ) | (832,100 | ) | (1,554,300 | ) | ||||||||||||||
Balance at August 31, 2014 | $ | 1,004,300 | $ | 30,004,800 | $ | 1,017,100 | $ | 354,600 | $ | 662,500 | |||||||||||
* The Arapahoe County tap fees are less $34,522 in royalties paid to the Land Board. | |||||||||||||||||||||
The CAA includes contractually established priorities which call for payments to CAA holders in order of their priority. This means the first payees receive their full payment before the next priority level receives any payment and so on until full repayment. The Company will receive approximately $6.2 million of the first priority payout (the remaining entire first priority payout totals approximately $7 million as of August 31, 2014). |
ACCRUED_LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Aug. 31, 2014 | |
Accrued Liabilities | ' |
ACCRUED LIABILITIES | ' |
At August 31, 2014, the Company had accrued liabilities of $257,900, of which $99,700 was for estimated property taxes, $59,500 was for professional fees, $22,400 for prepaid farm lease payments and the remaining $76,300 was related to operating payables. | |
At August 31, 2013, the Company had accrued liabilities of $264,700, of which $156,200 was for estimated property taxes, $56,700 was for professional fees, $30,300 for prepaid farm lease payments and the remaining $21,600 was related to operating payables. |
LONGTERM_OBLIGATIONS_AND_OPERA
LONG-TERM OBLIGATIONS AND OPERATING LEASE | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
Long-Term Obligations And Operating Lease | ' | ||||
LONG-TERM OBLIGATIONS AND OPERATING LEASE | ' | ||||
As of August 31, 2014, the Company is subject to mortgages with contractual maturity dates as described below. | |||||
The Participating Interest in Export Water supply and the Tap Participation Fee payable to HP A&M are obligations of the Company that have no scheduled maturity dates. Therefore, these liabilities are not disclosed in tabular format. However, the Participating Interest in Export Water supply is described in Note 5 – Participating Interests in Export Water and the Tap Participation Fee is described below in section “Tap Participation Fee Payable to HP A&M”. | |||||
Tap Participation Fee Payable to HP A&M | |||||
The $7.6 million TPF liability at August 31, 2014, represents the estimated discounted fair value of the Company’s obligation to pay HP A&M 20% of the Company’s gross proceeds, or the equivalent thereof, from the sale of the next 2,184 water taps sold by the Company. | |||||
Initially the obligation was to pay 10% of the Company’s gross proceeds, or the equivalent thereof, from the sale of 40,000 water taps sold after the date of the Arkansas River Agreement. The 40,000 water taps were reduced to 2,184 water taps as a result of (i) sales of Arkansas River Valley land in 2006 and 2009, (ii) the sale of unutilized water rights owned by the Company in the Arkansas River Valley in 2007, (iii) the election made by HP A&M, effective September 1, 2011, pursuant to the Arkansas River Agreement, to increase the TPF percentage from 10% to 20%, and to take a corresponding 50% reduction in the number of taps subject to the TPF, (iv) the allocation of 26.9% of the Net Revenues (defined as all lease and related income received from the farms less employee expenses, direct expenses for managing the leases and a reasonable overhead allocation) received by HP A&M from management of the farm leasing operations from September 1, 2011 to August 3, 2012 prior to termination of the Property Management Agreement, and (v) the reduction of 17,243 taps as the result of foreclosures on certain farms pursuant to the remedies outlined in the Arkansas River Agreement (2,184 in fiscal 2013 and 15,059 in fiscal 2014). | |||||
The fair value of the TPF liability is an estimate prepared by management of the Company. The fair value of the liability is based on discounted estimated cash flows subject to the TPF calculated by projecting future annual water tap sales for the number of taps subject to the TPF at the date of valuation. Future cash flows from water tap sales are estimated by utilizing the following historical information, where available: | |||||
· | New homes constructed in the area known as the 11-county “Front Range” of Colorado from the 1980’s through the valuation date. The Company utilized data for this length of time to provide development information over many economic cycles because the Company anticipates development in its targeted service area to encompass many economic cycles over the development period. | ||||
· | New home construction patterns for large master planned housing developments along the Front Range. The Company utilized this information because these developments are deemed comparable to projects anticipated to be constructed in the Company’s targeted service area (i.e. these master planned communities were located in predominately undeveloped areas on the outskirts of the Front Range). | ||||
· | Population growth rates for Colorado and the Front Range. Population growth rates were utilized to predict anticipated growth along the Front Range, which was used to predict an estimated number of new homes necessary to house the increased population. | ||||
· | The Consumer Price Index since the 1980’s, which was utilized to project estimated future water tap fees. | ||||
Utilizing this historical information, the Company projected an estimated new home development pattern in its targeted service area sufficient to cover the sale of the water taps subject to the TPF at the date of the revaluation, August 31, 2014. The Company revalued the TPF payable as of August 31, 2014 and 2013 due to the reduction of taps subject to the TPF as a result of the exercise of remedies under the Arkansas River Agreement. The estimated proceeds generated from the sale of those water taps resulted in estimated payments to HP A&M over the life of the projected development period of $12 million, which is a decrease of $91.2 million from the previous valuation completed at August 31, 2013 ($102.7 million). The estimated proceeds as of August 31, 2013 was estimated to be $102.7 million, a decrease of $17.9 million from the previous valuation in fiscal 2012. The estimated payments to HP A&M are then discounted to the current valuation date and the difference between the amount reflected on the Company’s balance sheet at the valuation date and the total estimated payments is imputed as interest expense over the estimated development time using the effective interest method. The implied interest rate for the most recent valuation was 6.6%. | |||||
Actual new home development in the Company’s service area and actual future tap fees inevitably will vary significantly from the Company’s estimates, which could have a material impact on the Company’s consolidated financial statements. An important component in the Company’s estimate of the value of the TPF, which is based on historical trends, is that the Company reasonably expects water tap fees to continue to increase in the coming years. Tap fees are market based and the continued increase in tap fees reflects, among other things, the increasing costs to acquire and develop new water supplies. Tap fees thus are partially indicative of the increasing value of the Company’s water assets. The Company continues to assess the value of the TPF liability and updates its valuation analysis whenever events or circumstances indicate the assumptions used to estimate the value of the liability have changed materially. The difference between the net present value and the estimated realizable value will be imputed as interest expense using the effective interest method over the estimated development period utilized in the valuation of the TPF. Through August 31, 2014, $27.5 million of interest has been imputed since the acquisition date, recorded using the effective interest method. | |||||
The Company’s agreement with HP A&M provides for a reduction of the number of water taps subject to the TPF payable to HP A&M in the event the farms or water rights are subject to foreclosure proceedings or other risks of loss. During fiscal year 2013, four of the farms and one FLLC certificate representing water rights only, collectively including 1,216 FLCC shares, were foreclosed resulting in a reduction of the number of taps subject to the TPF by 2,233 taps (approximately $11.7 million of TPF), leaving 17,194 taps (approximately $59.8 million of TPF), subject to the TPF. During fiscal year 2014, an additional 31 farms and two FLCC certificate representing water rights only, collectively including 8,230 FLCC shares, were foreclosed resulting in a reduction of the number of taps subject to the TPF by an additional 15,113 taps (approximately $53.3 million of the TPF), leaving 2,184 taps (approximately $7.6 million of TPF), subject to the TPF. The Company recorded the decreases in the TPF payable as an equity transaction due to the related party nature of the original transaction. | |||||
Subsequent to August 31, 2014, an additional 981 FLCC shares, were foreclosed resulting in a reduction of the number of taps subject to the TPF by an additional 1,801 taps (approximately $6.2 million of the TPF), leaving 383 taps (approximately $1.7 million) subject to the TPF. | |||||
Promissory Notes Payable by HP A&M in default | |||||
Approximately 60 of the 80 properties the Company originally acquired from HP A&M were subject to outstanding promissory notes payable to third parties that were secured by deeds of trust on the Company’s properties and water rights, as well as mineral interests. HP A&M has now defaulted on all of the promissory notes and informed the Company that it does not intend to pay any of the amounts owed. HP A&M owed approximately $9.6 million of principal and accrued interest as of September 1, 2012. These promissory notes were secured by approximately 14,000 acres of land and 16,882 FLCC shares representing water rights owned by the Company. | |||||
On July 2, 2012, the Company formally notified HP A&M that its failure to pay the promissory notes constituted an Event of Default under the Seller Pledge Agreement (as defined below) and a default of a material covenant under the Arkansas River Agreement. The Company informed HP A&M that unless such defaults were cured within thirty days, the Property Management Agreement would be terminated and the Company would proceed to exercise certain rights and remedies under the Arkansas River Agreement, the Seller Pledge Agreement, and the Property Management Agreement to protect its assets. The Company’s remedies at law and under the Arkansas River Agreement and related agreements include, but are not limited to, the right to (i) foreclose on 1,500,000 shares of Pure Cycle common stock issued to HP A&M and the proceeds therefrom (the “Pledged Shares”) which were pledged by HP A&M pursuant to a pledge agreement (the “Seller Pledge Agreement”) to secure the payment and performance by HP A&M of the promissory notes described above; (ii) reduce the Tap Participation Fee; (iii) terminate the Property Management Agreement; and (iv) recover damages caused by the defaults, including certain costs and expenses, including attorneys’ fees. | |||||
On August 3, 2012, the Company formally terminated the Property Management Agreement. On September 27, 2012, the Pledged Shares were sold at public auction in a foreclosure sale for $2.35 per share, yielding approximately $3.42 million of proceeds to the Company (net of fees of $110,000). Pursuant to the Arkansas River Agreement, the Company is reducing the Tap Participation Fee and is entitled to recover damages caused by the defaults, including certain costs and expenses, including attorney fees. The Company is currently pursuing its remedies and will continue to pursue such remedies over the next 12 months. | |||||
To protect its land and water interests, during the fiscal years ended August 31, 2014 and 2013, the Company purchased approximately $9.4 million of the $9.6 million notes payable by HP A&M. The remaining note was purchased by and entity controlled by the majority owner of HP A&M. HP A&M continues to be liable for making the required payments on the notes, and the Company is pursuing remedies to recover the costs and expenses, including attorneys’ fees, incurred by the Company in protecting the rights and title to the land and water rights securing the notes payable by HP A&M, including the costs incurred in purchasing the notes defaulted on by HP A&M. The amount owed on the outstanding notes was approximately $4.5 million, including accrued interest of $80,800, approximately $7.9 million, including accrued interest of $122,000, and $9.6 million at August 31, 2014, August 31, 2013 and August 31, 2012, respectively. | |||||
Future Maturities | |||||
Mortgage notes payable, primarily bear interest at 5%, 5 year term; one note in amount of $1.75 million has 20 year term | 4,958,200 | ||||
Less: current portion | (926,000 | ) | |||
Total long-term mortgage payable | $ | 4,032,200 | |||
Future Maturities | |||||
2015 | 926,000 | ||||
2016 | 892,100 | ||||
2017 | 937,600 | ||||
2018 | 615,000 | ||||
2019 | 123,500 | ||||
Post 2019 | 1,464,000 | ||||
Total | $ | 4,958,200 | |||
Subsequent to the Company’s fiscal year-end the Company borrowed approximately $4.4 million as described in Note 15 – Subsequent Events. A portion of this financing will be used to pay down existing mortgages and will result in a change to the future maturities. | |||||
Operating Lease | |||||
Effective January 2013, the Company entered into an operating lease for 1,200 square feet of office space. The lease has a two year term with payments of approximately $1,530 per month and expires in December 2014. |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended | ||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||
Shareholders Equity | ' | ||||||||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||||||||
Preferred Stock | |||||||||||||||||
The Company’s non-voting Series B Preferred Stock has a preference in liquidation of $1.00 per share less any dividends previously paid. Additionally, the Series B Preferred Stock is redeemable at the discretion of the Company for $1.00 per share less any dividends previously paid. In the event that the Company’s proceeds from sale or disposition of Export Water rights exceed $36,026,232, the Series B Preferred Stock holders will receive the next $432,513 of proceeds in the form of a dividend. | |||||||||||||||||
Equity Compensation Plan | |||||||||||||||||
The Company maintains the 2014 Incentive Plan (the “2014 Incentive Plan”), which was approved by shareholders in January 2014 and became effective April 12, 2014. Executives, eligible employees, consultants and non-employee directors are eligible to receive options and stock grants pursuant to the 2014 Incentive Plan. Pursuant to the 2014 Incentive Plan, options to purchase shares of stock and restricted stock awards can be granted with exercise prices, vesting conditions and other performance criteria determined by the Compensation Committee of the Board. The Company has reserved 1.6 million shares of common stock for issuance under the 2014 Incentive Plan. No awards have been made under the 2014 Incentive Plan. Prior to the effective date of the 2014 Incentive Plan, the Company granted stock awards to eligible participants under its 2004 Incentive Plan (the “2004 Equity Plan”), which expired April 11, 2014. No additional awards may be granted pursuant to the 2004 Equity Plan; however, awards outstanding as of April 11, 2014, will continue to vest and expire and may be exercised in accordance with the terms of the 2004 Equity Plan. | |||||||||||||||||
The Company estimates the fair value of share-based payment awards on the date of grant using the Black-Scholes option-pricing model (“Black-Scholes model”). Using the Black-Scholes model, the value of the portion of the award that is ultimately expected to vest is recognized as a period expense over the requisite service period in the statement of operations. Option forfeitures are to be estimated at the time of grant and revised if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company does not expect any forfeiture of its option grants and therefore the compensation expense has not been reduced for estimated forfeitures. During fiscal year 2012, 29,500 options were forfeited by option holders and an additional 48,000 options expired. No options were forfeited during the fiscal years ended August 31, 2013. During fiscal year 2014 65,000 options expired. The Company attributes the value of share-based compensation to expense using the straight-line single option method for all options granted. | |||||||||||||||||
The Company’s determination of the estimated fair value of share-based payment awards on the date of grant is affected by the following variables and assumptions: | |||||||||||||||||
· | The grant date exercise price – is the closing market price of the Company’s common stock on the date of grant; | ||||||||||||||||
· | Estimated option lives – based on historical experience with existing option holders; | ||||||||||||||||
· | Estimated dividend rates – based on historical and anticipated dividends over the life of the option; | ||||||||||||||||
· | Life of the option –based on historical experience option grants have lives between 8 and 10 years; | ||||||||||||||||
· | Risk-free interest rates – with maturities that approximate the expected life of the options granted; | ||||||||||||||||
· | Calculated stock price volatility – calculated over the expected life of the options granted, which is calculated based on the weekly closing price of the Company’s common stock over a period equal to the expected life of the option; and | ||||||||||||||||
· | Option exercise behaviors – based on actual and projected employee stock option exercises and forfeitures. | ||||||||||||||||
In January 2014, the Company granted its non-employee directors options to purchase a combined 32,500 shares of the Company’s common stock pursuant to the 2004 Equity Incentive Plan. The options vest one year from the date of grant and expire ten years from the date of grant. The Company calculated the fair value of these options at $132,900 using the Black-Scholes model with the following variables: weighted average exercise price of $6.08 (which was the closing sales price of the Company’s common stock on the date of the grant); estimated option lives of ten years; estimated dividend rate of 0%; weighted average risk-free interest rate of 1.84%; weighted average stock price volatility 63.6%; and an estimated forfeiture rate of 0%. The $132,900 of stock-based compensation is being expensed monthly over the vesting periods. | |||||||||||||||||
In August 2013, the Company granted management options to purchase 100,000 shares of the Company’s common stock pursuant to the 2004 Equity Incentive Plan. The options vest one-third one year from the date of grant, one-third two years from the date of grant, and one-third three years from date of grant. The options expire ten years from the date of grant. The Company calculated the fair value of these options at $427,100 using the Black-Scholes model with the following variables: weighted average exercise price of $5.88 (which was the closing sales price of the Company’s common stock on the date of the grant); estimated option lives of ten years; estimated dividend rate of 0%; weighted average risk-free interest rate of 2.71%; weighted average stock price volatility 63.6%; and an estimated forfeiture rate of 0%. The $427,100 of stock-based compensation is being expensed monthly over the vesting periods. | |||||||||||||||||
In January 2013, the Company granted its non-employee directors options to purchase a combined 32,500 shares of the Company’s common stock pursuant to the 2004 Equity Incentive Plan. The options vest one year from the date of grant and expire ten years from the date of grant. The Company calculated the fair value of these options at $76,800 using the Black-Scholes model with the following variables: weighted average exercise price of $3.15 (which was the closing sales price of the Company’s common stock on the date of the grant); estimated option lives of ten years; estimated dividend rate of 0%; weighted average risk-free interest rate of 1.84%; weighted average stock price volatility 69.2%; and an estimated forfeiture rate of 0%. The $76,800 of stock-based compensation was expensed monthly over the one year vesting period. | |||||||||||||||||
In January 2012, the Company granted its non-employee directors options to purchase a combined 12,500 shares of the Company’s common stock pursuant to the 2004 Equity Incentive Plan. The options vest one year from the date of grant and expire ten years from the date of grant. The Company calculated the fair value of these options at $15,400 using the Black-Scholes model with the following variables: weighted average exercise price of $1.85 (which was the closing sales price of the Company’s common stock on the date of the grant); estimated option lives of ten years; estimated dividend rate of 0%; weighted average risk-free interest rate of 1.87%; weighted average stock price volatility 73.29%; and an estimated forfeiture rate of 0%. The $15,400 of stock-based compensation was expensed monthly over the one year vesting period. | |||||||||||||||||
No options were exercised during the fiscal years ended August 31, 2014, 2013, or 2012. | |||||||||||||||||
The following table summarizes the stock option activity for the 2004 Equity Incentive Plan for the fiscal year ended August 31, 2014: | |||||||||||||||||
Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Approximate Aggregate Instrinsic Value | ||||||||||||||
Oustanding at beginning of period | 347,500 | $ | 5.62 | ||||||||||||||
Granted | 32,500 | $ | 6.08 | ||||||||||||||
Exercised | - | - | |||||||||||||||
Forfeited or expired | (65,000 | ) | 8.23 | ||||||||||||||
Outstanding at August 31, 2014 | 315,000 | $ | 5.76 | 6.32 | $ | 239,400 | |||||||||||
Options exercisable at August 31, 2014 | 215,833 | $ | 6.47 | 4.59 | $ | 10,792 | |||||||||||
The following table summarizes the activity and value of non-vested options as of and for the fiscal year ended August 31, 2014: | |||||||||||||||||
Number of Options | Weighted-Average Grant Date Fair Value | ||||||||||||||||
Non-vested options oustanding at beginning of period | 132,500 | $ | 3.8 | ||||||||||||||
Granted | 32,500 | 4.09 | |||||||||||||||
Vested | (65,833 | ) | 2.36 | ||||||||||||||
Forfeited | - | - | |||||||||||||||
Non-vested options outstanding at August 31, 2014 | 99,167 | $ | 4.85 | ||||||||||||||
All non-vested options are expected to vest. The total fair value of options vested during the fiscal years ended August 31, 2014, 2013 and 2012 was $219,200, $48,700 and $66,000, respectively. The weighted average grant date fair value of options granted during the fiscal years ended August 31, 2014, 2013 and 2012 was $4.09, $3.80, and $1.23, respectively. | |||||||||||||||||
Share-based compensation expense for the fiscal years ended August 31, 2013, 2012 and 2011, was $251,900, $66,800, and $54,600, respectively. | |||||||||||||||||
At August 31, 2014, the Company had unrecognized expenses relating to non-vested options that are expected to vest totaling $417,700. The weighted-average period over which these options are expected to vest is less than three years. The Company has not recorded any excess tax benefits to additional paid in capital. | |||||||||||||||||
Warrants | |||||||||||||||||
As of August 31, 2014, the Company had outstanding warrants to purchase 92 shares of common stock at an exercise price of $1.80 per share. These warrants expire six months from the earlier of: | |||||||||||||||||
(i) | The date all of the Export Water is sold or otherwise disposed of, | ||||||||||||||||
(ii) | The date the CAA is terminated with respect to the original holder of the warrant, or | ||||||||||||||||
(iii) | The date on which the Company makes the final payment pursuant to Section 2.1(r) of the CAA. | ||||||||||||||||
No warrants were exercised during fiscal 2014, 2013 or 2012. | |||||||||||||||||
Pledged Common Stock Owned by HP A&M | |||||||||||||||||
Pursuant to the Arkansas River Agreement, HP A&M pledged, transferred, assigned and granted to the Company a security interest in and to the Pledged Shares, consisting of 1,500,000 shares of Pure Cycle common stock and the proceeds there from. Due to the HP A&M default the Pledged Shares were sold pursuant to a foreclosure sale for $3.5 million or $2.35 per share during fiscal 2013. |
SIGNIFICANT_CUSTOMERS
SIGNIFICANT CUSTOMERS | 12 Months Ended |
Aug. 31, 2014 | |
Significant Customers | ' |
SIGNIFICANT CUSTOMERS | ' |
The Company sells wholesale water and wastewater services to the District pursuant to the Rangeview Water Agreements. Sales to the District accounted for 9%, 34%, and 86% of the Company’s total revenues for the years ended August 31, 2014, 2013 and 2012, respectively. The District had one significant customer, the Ridgeview Youth Services Center. Pursuant to the Rangeview Water Agreements the Company is providing water and wastewater services to this customer on behalf of the District. The District’s significant customer accounted for 7%, 28%, and 53% of the Company’s total revenues for the years ended August 31, 2014, 2013 and 2012, respectively. | |
Revenues from another Customer directly and indirectly represented approximately 88% and 59% of the Company’s water and wastewater revenues for the fiscal years ended August 31, 2014 and 2013. The Company had no revenues from this customer for the fiscal year ended August 31, 2012. | |
The Company had accounts receivable from the District which accounted for 5% and 14% of the Company’s trade receivables balances at August 31, 2014 and 2013, respectively. Accounts receivable from the District’s largest customer accounted for 4% and 12% of the Company’s trade receivables as of August 31, 2014, and 2013, respectively. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Aug. 31, 2014 | |||||||||||||
Income Taxes | ' | ||||||||||||
INCOME TAXES | ' | ||||||||||||
There is no provision for income taxes, because the Company has incurred operating losses. Deferred income taxes reflect the tax effects of net operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of August 31 are as follows: | |||||||||||||
For the Fiscal Years Ended August 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carryforwards | $ | 7,279,900 | $ | 6,227,200 | |||||||||
Imputed interest on Tap Participation Fee | 10,609,600 | 10,074,200 | |||||||||||
Deferred revenue | 768,400 | 494,600 | |||||||||||
Impairment Charges | 2,360,200 | 2,408,800 | |||||||||||
Depreciation and depletion | 4,695,000 | 4,899,800 | |||||||||||
Other | 26,700 | 43,600 | |||||||||||
Valuation allowance | (25,740,700 | ) | (24,148,200 | ) | |||||||||
Net deferred tax asset | $ | - | $ | - | |||||||||
The Company has not recorded a valuation allowance against the deferred tax assets as the Company is unable to reasonably determine if it is more likely than not that deferred tax assets will ultimately be realized. | |||||||||||||
Income taxes computed using the federal statutory income tax rate differs from our effective tax rate primarily due to the following for the fiscal years ended August 31: | |||||||||||||
For the Fiscal Years Ended August 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected benefit from federal taxes at statutory rate of 34% | $ | (105,900 | ) | $ | (1,411,200 | ) | $ | (5,922,300 | ) | ||||
State taxes, net of federal benefit | (10,300 | ) | (137,000 | ) | (574,800 | ) | |||||||
Expiration of net operating losses | 89,400 | 147,400 | 90,000 | ||||||||||
Permanent and other differences | 4,175,300 | 27,400 | 25,800 | ||||||||||
Change in valuation allowance | (4,148,500 | ) | 1,373,400 | 6,381,300 | |||||||||
Total income tax expense / benefit | $ | - | $ | - | $ | - | |||||||
At August 31, 2014, the Company has $19.5 million of net operating loss carryforwards available for income tax purposes, which expire between fiscal 2015 and 2029. Utilization of these net operating loss carryforwards may be subject to substantial annual ownership change limitations provided by the Internal Revenue Code. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. | |||||||||||||
Net operating loss carryforwards of $239,600, $395,200 and $241,200 expired during the fiscal years ended August 31, 2014, 2013 and 2012, respectively. |
401k_PLAN
401(k) PLAN | 12 Months Ended |
Aug. 31, 2014 | |
K Plan | ' |
401(k) PLAN | ' |
The Company maintains a Pure Cycle Corporation 401(k) Profit Sharing Plan (the “Plan”), a defined contribution retirement plan for the benefit of its employees. The Plan is currently a salary deferral only plan, and at this time the Company does not match employee contributions. The Company pays the annual administrative fees of the Plan, and the Plan participants pay the investment fees. The Plan is open to all employees, age 21 or older, who have been employees of the Company for at least six months. During the fiscal years ended August 31, 2014, 2013 and 2012, the Company paid fees of $3,600, $3,300 and $3,400, respectively, for the administration of the Plan. |
LITIGATION_LOSS_CONTINGENCIES
LITIGATION LOSS CONTINGENCIES | 12 Months Ended |
Aug. 31, 2014 | |
Litigation Loss Contingencies | ' |
LITIGATION LOSS CONTINGENCIES | ' |
The Company is involved in various claims, litigation and other legal proceedings that arise in the ordinary course of its business. The Company records an accrual for a loss contingency when its occurrence is probable and damages can be reasonably estimated based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. The Company makes such estimates based on information known about the claims and experience in contesting, litigating and settling similar claims. Disclosures are also provided for reasonably possible losses that could have a material effect on the Company's financial position, results of operations or cash flows. | |
The Company filed a lawsuit against HP A&M in the District Court, City and County of Denver, State of Colorado on April 4, 2014, alleging HP A&M breached the Arkansas River Agreement, Seller Pledge Agreement and Property Management Agreement, among other ways, by failing to (i) pay, perform and discharge its obligations when due or otherwise pursuant to the Excluded Indebtedness, (ii) cure defaults under the Notes and Deeds of Trust applicable to the Excluded Indebtedness, and (iii) use Net Revenue, pursuant to the Property Management Agreement, to pay Excluded Indebtedness. As a result of these breaches, the Company is claiming damages to be proven at trial, and estimated as of the date of the lawsuit to be not less than $8 million. HP A&M filed its answer on May 30, 2014, asserting affirmative defenses and counterclaims, including, among others, breach of contract and breach of an implied covenant of good faith and fair dealing and requesting damages in an amount to be proven at trial. Because this lawsuit involves complex legal issues and uncertainties, the Company has determined that no accruals for losses related to the lawsuit are reasonably estimable or deemed reasonably likely as of August 31, 2014. | |
During the fiscal years ended August 31, 2014 and 2013, foreclosure proceedings were commenced against 38 of the properties acquired by the Company from HP A&M which are subject to promissory notes defaulted upon by HP A&M and secured by deeds of trust on the Company’s land and water rights. The proceedings were filed on various dates from January 9, 2013 through March 12, 2014, with the Public Trustees of Bent, Otero and Prowers Counties in Colorado and involve claims against HP A&M for its failure to pay the notes. In addition one proceeding was commenced in 2013 and a second proceeding was commenced on May 5, 2014, pursuant to the Colorado Uniform Commercial Code (the “UCC”), in each case to foreclose on one FLCC certificate representing water rights only. As of the date of this filing, PCY Holdings, LLC (“PCY Holdings”), the Company’s wholly owned subsidiary has been the successful bidder in foreclosure sales of 38 of the properties and water rights acquired by the Company from HP A&M (including two completed after the end of the fiscal year). The Company terminated one foreclosure proceeding by curing HP A&M’s default. As of the date of this report one of the Company’s properties remain subject to foreclosure proceedings. This property represent less than 3% of the Company’s FLLC shares and approximately 2% of the Company’s Arkansas River land acquired from HP A&M. | |
Foreclosure sales that were conducted on three of the Company’s farm properties on August 28, 2013, and on a fourth property on September 4, 2013 are currently the subject of litigation. PCY Holding, LLC, was the successful bidder in the foreclosure sales. On September 16, 2013, HP A&M filed a complaint against PCY Holdings and the Public Trustee for the County of Bent, Colorado, in the District Court, County of Bent, Colorado seeking (i) a declaratory judgment that it is entitled to redeem the four properties from the foreclosure sales by paying the amount of the outstanding debt, plus fees, which is the amount PCY Holdings bid in the sales, and (ii) preliminary and permanent injunctions against the Public Trustee preventing the Public Trustee from issuing confirmation deeds for the foreclosure sales to PCY Holdings or anyone other than HP A&M. On November 20, 2013 the complaint was dismissed with prejudice, and judgment was entered in favor of the Public Trustee and PCY Holdings. Responses to motions filed by both PCY Holdings and HP A&M regarding attorney’s fees awards have been stayed pending the outcome of the appeal discussed below. | |
On January 3, 2014 HP A&M filed a notice of appeal of the judgment with the Colorado Court of Appeals. If HP A&M wins on appeal, the Company could lose these four properties, subject to its remedies under the Arkansas River Agreement. The Company intends to vigorously defend any appeal of this ruling and to pursue the remedies against HP A&M for the defaults. Because the timing and outcome of the appeal is uncertain, the Company has determined that accruals for losses related to the appeal are not reasonably estimable or deemed reasonably likely at this time. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 12 Months Ended | ||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
SEGMENT INFORMATION | ' | ||||||||||||||||
The Company operates primarily in two lines of business: (i) the wholesale water and wastewater business; and (ii) the agricultural farming business. The Company provides wholesale water and wastewater services to customers using water rights owned by the Company and develops infrastructure to divert, treat and distribute that water and collect, treat and reuse wastewater. The Company’s agricultural business consists of the Company leasing its Arkansas River Valley land and water to area farmers under cash leases or in certain cases crop share leases. The following tables show information by operating segment for the fiscal years ended August 31, 2014 and 2013: | |||||||||||||||||
Fiscal Year Ended August 31, 2014 | |||||||||||||||||
Business segments | |||||||||||||||||
Wholesale | |||||||||||||||||
water and | |||||||||||||||||
wastewater | Agricultural | All Other | Total | ||||||||||||||
Revenues | $ | 1,924,900 | $ | 1,068,000 | $ | 98,200 | $ | 3,091,100 | |||||||||
Gross profit | 1,189,200 | 979,900 | 58,800 | 2,227,900 | |||||||||||||
Depletion and depreciation | 196,600 | - | - | 196,600 | |||||||||||||
Other significant noncash items: | |||||||||||||||||
Stock-based compensation | - | - | 251,900 | 251,900 | |||||||||||||
TPF interest expense | 1,445,500 | - | - | 1,445,500 | |||||||||||||
Impairment of land and water rights held for sale | 402,700 | - | 402,700 | ||||||||||||||
Gain in extinquishment of contingent obligations | 832,100 | - | 832,100 | ||||||||||||||
Gain on sale of land and water rights held for sale | 1,308,400 | - | 1,308,400 | ||||||||||||||
Segment assets | 98,851,900 | 7,354,100 | 1,967,800 | 108,173,800 | |||||||||||||
Expenditures for segment assets | 3,878,100 | - | - | 3,878,100 | |||||||||||||
Fiscal Year Ended August 31, 2013 | |||||||||||||||||
Business segments | |||||||||||||||||
Wholesale | |||||||||||||||||
water and | |||||||||||||||||
wastewater | Agricultural | All Other | Total | ||||||||||||||
Revenues | $ | 544,400 | $ | 1,241,900 | $ | 71,200 | $ | 1,857,500 | |||||||||
Gross profit | 248,600 | 1,145,600 | 70,000 | 1,464,200 | |||||||||||||
Depletion and depreciation | 311,300 | - | - | 311,300 | |||||||||||||
Other significant noncash items: | |||||||||||||||||
Stock-based compensation | - | - | 66,800 | 66,800 | |||||||||||||
TPF interest expense | 3,275,400 | - | - | 3,275,400 | |||||||||||||
Segment assets | 93,522,800 | 6,697,500 | 8,398,000 | 108,618,300 | |||||||||||||
Expenditures for segment assets | 378,000 | - | - | 378,000 | |||||||||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Aug. 31, 2014 | |
Related Party Transactions | ' |
RELATED PARTY TRANSACTIONS | ' |
On December 16, 2009, the Company entered into a Participation Agreement with the District, whereby the Company agreed to provide funding to the District in connection with the District joining the South Metro Water Supply Authority (“SMWSA”). The Company provided funding of $114,900, $139,500, and $115,500 for the fiscal years ended August 31, 2014, 2013, and 2012, respectively. The funding was expensed in the general and administrative expenses line in the accompanying statements of operations for the years ended August 31, 2014, 2013, and 2012, respectively. Through our funding agreement with the District and subsequent to fiscal year end, we made payments of $535,200 to purchase certain rights to use existing water transmission and related infrastructure acquired by the WISE project. We anticipate will be investing approximately $1.2 million per year for the next 5 years for additional payments for the water transmission line and additional facilities, water and related assets for the WISE project. | |
In 1995, the Company extended a loan to the District, a related party. The loan provided for borrowings of up to $250,000, is unsecured, bears interest based on the prevailing prime rate plus 2% (5.25% at August 31, 2014) and matures on December 31, 2015. The $568,000 balance of the note receivable at August 31, 2014 includes borrowings of $229,300 and accrued interest of $338,700. The $556,000 balance of the note receivable at August 31, 2013 includes borrowings of $229,300 and accrued interest of $326,700. The Company extended the due date to December 31, 2015, and accordingly the note has been classified as non-current. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Aug. 31, 2014 | |
Subsequent Events | ' |
SUBSEQUENT EVENTS | ' |
Subsequent to our fiscal year end an additional two farms and 981 FLCC shares have been obtained through the foreclosure proceedings resulting in a reduction of the number of taps subject to the TPF by 1,801 taps and a corresponding reduction to the TPF payable of $6.2 million. | |
Subsequent to the Company’s fiscal year-end, the Company borrowed $4,450,000. The note has a 20 year term, requires semi-annual payments, and carries a 5.27% per annum rate. The note is secured by a total of 3,596.8 acres, 3,282 FLCC shares, and an assignment of two HP A&M notes and deeds of trust with balances due of approximately $843,400, which are secured by 1,087.4 FLCC shares. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Aug. 31, 2014 | ||
Presentation Of Interim Information Policies | ' | |
Principles of Consolidation | ' | |
Principles of Consolidation | ||
The consolidated financial statements of the Company include the accounts of Pure Cycle Corporation and its majority-owned and controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. | ||
Use of Estimates | ' | |
Use of Estimates | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||
Cash and Cash Equivalents | ' | |
Cash and Cash Equivalents | ||
Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less. The Company’s cash equivalents are comprised entirely of money market funds maintained at a high quality financial institution in an account which as of August 31, 2014 exceed federally insured limits. At various times during the year ended August 31, 2014, the Company’s main operating account exceeded federally insured limits. | ||
Financial Instruments - Concentration of Credit Risk and Fair Value | ' | |
Financial Instruments – Concentration of Credit Risk and Fair Value | ||
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash equivalents with high quality financial institutions. At various times throughout the year ended August 31, 2014, cash deposits have exceeded federally insured limits. The Company historically invested its idle cash primarily in certificates of deposit, money market instruments, commercial paper obligations, corporate bonds and US government treasury obligations. To date, the Company has not experienced significant losses on any of these investments. | ||
Mortgages Payable and HP A&M Receivable | ' | |
Mortgages Payable and HP A&M Receivable | ||
In conjunction with HP A&M defaulting on certain promissory notes in fiscal year 2012, the Company has the right to collect from HP A&M any amounts the Company spends to protect its interest from the defaulted notes. Accordingly the Company has recorded the entire amount of the HP A&M notes at default as well as expenses incurred to cure the defaults as a receivable from HP A&M less proceeds received from the sale of shares pledged by HP A&M pursuant to the Asset Purchase Agreement, dated May 10, 2006, between the Company and HP A&M (“The Arkansas River Agreement”). The receivable represents the amount of the defaulted promissory notes payable by HP A&M which were purchased by the Company and with respect to which the Company is pursuing remedies under the Arkansas River Agreement (as described in more detail in Note 4 – Water and Land Assets) over the next 12 months, plus expenses as noted above. | ||
In the fiscal year 2013 the Company began acquiring the defaulted promissory notes that are payable by HP A&M using a combination of cash and promissory notes. The majority of the notes issued by the Company have a five-year term, bear interest at an annual rate of five percent and require semi-annual payments with a straight-line amortization schedule, (see Note 7 – Long Term Debt and Operating Lease). | ||
Cash Flows | ' | |
Cash Flows | ||
The Company paid $239,200 and $245,500 in interest during the fiscal years ended August 31, 2014 and 2013, respectively. The Company did not pay any interest during the fiscal year ended August 31, 2012. | ||
The Company did not pay any income taxes during the fiscal years ended August 31, 2014, 2013 and 2012. | ||
Trade Accounts Receivable | ' | |
Trade Accounts Receivable | ||
The Company records accounts receivable net of allowances for uncollectible accounts. Included in trade accounts receivable are balances due from farm operations. The Company recorded an allowance for uncollectible accounts in the amounts of $26,300 and $41,100 as of August 31, 2014 and 2013, respectively. The allowance for uncollectible accounts was determined based on specific review of all past due accounts. | ||
Long-Lived Assets | ' | |
Long-Lived Assets | ||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the eventual use of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Based on the Company’s procedures, the Company determined that land and water rights held for sale related to the Arkansas River Assets were impaired as of August 31, 2014 and the Company recorded impairment of $402,700. . The Company determined that no impairment of such assets existed at August 31, 2013. The Company determined that its “Paradise Water Supply” asset (defined in Note 4 below) and land and water rights held for sale related to the Arkansas River Assets were impaired as of August 31, 2012. See further discussion in Note 4 below under sections “Paradise Water Supply” and “Arkansas River Assets”. | ||
Capitalized Costs of Water and Wastewater Systems and Depletion and Depreciation of Water Assets | ' | |
Capitalized Costs of Water and Wastewater Systems and Depreciation and Depletion Charges | ||
Costs to construct water and wastewater systems that meet the Company’s capitalization criteria are capitalized as incurred, including interest, and depreciated on a straight-line basis over their estimated useful lives of up to thirty years. The Company capitalizes design and construction costs related to construction activities and it capitalizes certain legal, engineering and permitting costs relating to the adjudication and improvement of its water assets. | ||
The Company depletes its water assets that are being utilized on the basis of units produced (i.e. thousands of gallons sold) divided by the total volume of water adjudicated in the water decrees. | ||
Tap Participation Fee Liability and Imputed Interest Expense | ' | |
Tap Participation Fee Liability and Imputed Interest Expense | ||
The Tap Participation Fee liability (“TPF”), as described in Note 7 – Long Term Debt and Operating Lease, represents the discounted fair value of the amounts the Company estimates it will pay HP A&M pursuant to the Arkansas River Agreement. The Company imputes interest expense on the unpaid TPF using the effective interest method, over the estimated development period. The Company imputed interest of $1.4 million, $3.3 million and $3.5 million during the years ended August 31, 2014, 2013 and 2012, respectively. | ||
The TPF is due and payable once the Company has sold a water tap and received the consideration due for such water tap. The Company did not sell any water taps during the years ended August 31, 2014, 2013 or 2012. As of August 31, 2014 2,184 water taps remain subject to the TPF. | ||
Revenue Recognition | ' | |
Revenue Recognition | ||
The Company generates revenues through two separate lines of businesses. Its revenues are derived through its Wholesale Water and Wastewater business and its Farming Operations, which are described below. | ||
Wholesale Water and Wastewater business – The Company generates revenues through its wholesale water and wastewater segment predominately from three sources: (i) monthly wholesale water usage fees and wastewater service fees, (ii) one time water and wastewater tap fees, and construction fees, and (iii) consulting fees. Because these items are separately delivered, the Company accounts for each of the items separately, as described below. | ||
i) | Monthly wholesale water and wastewater service fees – Monthly wholesale water usage charges are assessed to the Company’s customers based on actual metered usage each month plus a base monthly service fee assessed per single family equivalent (“SFE”) unit served. One SFE is a customer, whether residential, commercial or industrial, that imparts a demand on the Company’s water or wastewater systems similar to the demand of a family of four persons living in a single family house on a standard sized lot. One SFE is assumed to have a water demand of approximately 0.4 acre feet per year and to contribute wastewater flows of approximately 300 gallons per day. Water usage pricing uses a tiered pricing structure. The Company recognizes wholesale water usage revenues upon delivering water to its customers or its governmental customers’ end-use customers, as applicable. The water revenues recognized by the Company are shown net of royalties to the Land Board and, when applicable, amounts retained by the Rangeview Metropolitan District (the “District”). | |
The Company recognizes wastewater processing revenues monthly based on usage. The monthly wastewater service fees are shown net of amounts retained by the District. Amounts recognized for water and wastewater services during the fiscal years ended August 31, 2014, 2013 and 2012, are presented in the statements of operations. Costs of delivering water and providing wastewater service to customers are recognized as incurred. | ||
The Company delivered 190.1 million, 69.2 million and 34.2 million gallons of water to customers during the fiscal years ended August 31, 2014, 2013 and 2012, respectively. | ||
ii) | Water and wastewater tap fees and construction fees – Tap fees, also called system development fees, are received in advance, are non-refundable and are typically used to fund construction of certain facilities and defray the acquisition costs of obtaining water rights. Construction fees are fees used by the Company to construct assets that are typically required to be constructed by developers or home builders. | |
Proceeds from tap fees and construction fees are deferred upon receipt and recognized in income either upon completion of construction of infrastructure or ratably over time, depending on whether the Company owns the infrastructure constructed with the proceeds or a customer owns the infrastructure constructed with the proceeds. | ||
Tap and construction fees derived from agreements in which the Company will not own the assets constructed with the fees are recognized as revenue using the percentage-of-completion method. Costs of construction of the assets when the Company will not own the assets are recorded as construction costs. | ||
Tap and construction fees derived from agreements for which the Company will own the infrastructure are recognized as revenues ratably over the estimated accounting service life of the facilities constructed, starting at completion of construction, which could be in excess of thirty years. Costs of construction of the assets when the Company will own the assets are capitalized and depreciated over their estimated economic lives. | ||
From time to time the Company enters into water service agreements to provide water service to customers. The Company owns the facilities which store, treat, and deliver the water and amortizes the cost of these facilities over their useful lives. In each of the three fiscal years ended August 31, 2014, 2013 and 2012, the Company recognized $14,300 of tap fee revenue. At August 31, 2014, $313,300 of these tap fees are still deferred. The Company recognized $41,500 of “Special Facilities” funding as revenue in each of the three fiscal years ended August 31, 2014, 2013, and 2012 respectively. As of August 31, 2014, the Company has deferred recognition of $1.2 million of tap and construction fee revenue from customer agreements, which will be recognized as revenue ratably through 2016. | ||
In addition to the tap fee revenues and the construction revenues, the Company also recorded interest income from Arapahoe County using the effective interest method. Pursuant to the Arapahoe County agreement, the County made payments to the Company totaling $82,200 per year through 2013 for the construction of the Special Facilities at the Fairgrounds. These payments include interest at 6% per annum. In April 2013 the County paid the balance on the note. The Company recognized $5,500 and $19,200 of interest income from the County during the fiscal years ended August 31, 2013 and 2012, respectively. | ||
In August 2012, the Company entered into an agreement with Front Range Pipeline which grants Front Range Pipeline easement rights for a period of three years to construct a pipeline for total consideration of $28,700. As of August 31, 2014, the Company had $9,300 in deferred revenue from Front Range Pipeline. | ||
i) | Consulting Fees – Consulting fees are fees the Company receives, typically on a monthly basis, from municipalities and area water providers along the I-70 corridor, for system management and maintenance | |
Agricultural Farming Operations – The Company leases its Arkansas River water and land to area farmers who actively farm the properties. Prior to August 3, 2012, pursuant to a property management agreement between HP A&M and the Company (the “Property Management Agreement”), HP A&M received a management fee equal to 100% of the income from the land and water leases. As a result, the Company presented its land and water lease income net of the management fees paid to HP A&M. Effective August 3, 2012, the Company terminated the Property Management Agreement due to a default by HP A&M on certain promissory notes secured by deeds of trust on the land and water purchased by the Company from HP A&M in 2006. Effective August 3, 2012, the Company manages the land and water leases and the income from the land and water leases became payable to the Company. Pursuant to the farm lease agreements, the Company bills the lessees semi-annually in March and November. The lease billings include minimum billings and adjustments based on actual water deliveries by the Fort Lyon Canal Company (“FLCC”) or are based on crop yields. Subsequent to August 3, 2012, the Company records farm lease income ratably each month based on estimated annual lease income the Company anticipates collecting from its land and water leases. The Company recorded these amounts as receivables, less an estimated allowance for uncollectible accounts. The allowance as of August 31, 2014, was determined by the Company’s specific review of all past due accounts. The Company has recorded allowances for doubtful accounts totaling $26,300 and $41,100 as of August 31, 2014 and 2013, respectively. As of August 31, 2014 and 2013 the Company has accrued $256,500 and $397,300, respectively, of farm income related to billings for future periods. The Company manages the farm lease business as a separate line of business from the wholesale water and wastewater business. | ||
Royalty and other obligations | ' | |
Royalty and other obligations | ||
Revenues from the sale of “Export Water” are shown net of royalties payable to the Land Board. Revenues from the sale of water on the “Lowry Range” are shown net of the royalties to the Land Board and the amounts retained by the District. See further description of “Export Water” and the “Lowry Range” in Note 4 under section “Rangeview Water Supply and Water System”. | ||
Oil and Gas Lease Payments | ' | |
Oil and Gas Lease Payments | ||
As further described in Note 4 below, on March 10, 2011, the Company entered into a Paid-Up Oil and Gas Lease (the “O&G Lease”) and a Surface Use and Damage Agreement (the “Surface Use Agreement”) with Anadarko E&P Company, L.P. (“Anadarko”), a wholly owned subsidiary of Anadarko Petroleum Company. Pursuant to the O&G Lease on March 10, 2011, the Company received an up-front payment of $1,243,400 from Anadarko for the purpose of exploring for, developing, producing and marketing oil and gas on approximately 634 acres of mineral estate owned by the Company at its Sky Ranch property. In December 2012 the O&G Lease was purchased by a wholly owned subsidiary of ConocoPhillips Company. The Company received an additional payment of $1,243,400 during February 2014 to extend the O&G Lease an additional two years through February 2016, which will be recognized as income on a straight-line basis over two years (the extension term of the O&G Lease). In addition, during the fiscal years ended August 31, 2014 and 2013, the Company received up-front payments of $72,000 and $12,540, respectively, for the purpose of exploring for, developing, producing, and marketing oil and gas on 40 acres of mineral estate the Company owns adjacent to the Lowry Range (the “Rangeview Lease”). The Company recognizes the up-front payments on a straight-line basis over the terms of the respective leases. During the years ended August 31, 2014, 2013 and 2012, the Company recognized $525,400, $416,000, and $423,000, respectively, of income related to the up-front payments received pursuant to these leases. | ||
As of August 31, 2014, the Company has deferred recognition of $1,025,500 of income related to the O&G Lease, which will be recognized into income ratably through July 2017. | ||
Share-based Compensation | ' | |
Share-based Compensation | ||
The Company maintains a stock option plan for the benefit of its employees and directors. The Company records share-based compensation costs which are measured at the grant date based on the fair value of the award and are recognized as expense over the applicable vesting period of the stock award using the straight-line method. The Company has adopted the alternative transition method for calculating the tax effects of share-based compensation which allows for a simplified method of calculating the tax effects of employee share-based compensation. Because the Company has a full valuation allowance on its deferred tax assets, the granting and exercise of stock options during the fiscal years ended August 31, 2014 and 2013 had no impact on the income tax provisions. | ||
The Company recognized $251,900, $66,800, and $54,600 of share-based compensation expenses during the fiscal years ended August 31, 2014, 2013 and 2012, respectively. | ||
Income Taxes | ' | |
Income Taxes | ||
The Company uses a “more-likely-than-not” threshold for the recognition and de-recognition of tax positions, including any potential interest and penalties relating to tax positions taken by the Company. The Company does not have any significant unrecognized tax benefits as of August 31, 2014. | ||
The Company files income tax returns with the Internal Revenue Service and the State of Colorado. The tax years that remain subject to examination are fiscal 2010 through fiscal 2013. The Company does not believe there will be any material changes in its unrecognized tax positions over the next twelve months. | ||
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At August 31, 2014, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the fiscal years ended August 31, 2014, 2013 or 2012. | ||
Loss per Common Share | ' | |
Loss per Common Share | ||
Loss per common share is computed by dividing net loss by the weighted average number of shares outstanding during each period. Common stock options and warrants aggregating 315,100, 347,600, and 215,100 common share equivalents as of August 31, 2014, 2013 and 2012, respectively, have been excluded from the calculation of loss per common share as their effect is anti-dilutive. | ||
Recently Issued Accounting Pronouncements | ' | |
Recently Issued Accounting Pronouncements | ||
The Company continually assesses any new accounting pronouncements to determine their applicability. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, the Company has not determined whether implementation of such proposed standards would be material to the Company’s financial statements. New pronouncements assessed by the Company recently are discussed below: | ||
In May 2014, FASB issued ASU No. 2014-09 “Revenue from Contracts from Customers,” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to the exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early adoption not permitted. The Company is currently evaluating the new standard. | ||
In August 2014, FASB issued ASU No. 2014-15 “Preparation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern.” ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans and requires an express statement and other disclosures when substantial doubt is not alleviated. The new standard will be effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure. |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||||||
Fair Value Measurements Tables | ' | ||||||||||||||||||||||||
Schedule of fair value of assets and liabilities measured on a recurring basis | ' | ||||||||||||||||||||||||
The following table provides information on the assets and liabilities measured at fair value as of August 31, 2014: | |||||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | Total Unrealized Gains and | ||||||||||||||||||||||
Fair Value | Cost / Other Value | (Level 1) | (Level 2) | (Level 3) | (Losses) | ||||||||||||||||||||
Tap Participation Fee | $ | 7,935,300 | $ | 7,935,300 | $ | - | $ | - | $ | 7,935,300 | $ | - | |||||||||||||
Schedule of unobservable input reconciliation of fair value liabilities measured on a recurring basis | ' | ||||||||||||||||||||||||
Although not required, the Company deems the following table, which presents the changes in the Tap Participation Fee for the year ended August 31, 2014, to be helpful to the users of its financial statements: | |||||||||||||||||||||||||
Gross Estimated Tap Participation Fee Liability | Tap Participation Fee Reported Liability | Discount - to be imputed as interest expense in future periods | |||||||||||||||||||||||
Balance at September 1, 2013 | $ | 102,681,900 | $ | 59,807,300 | $ | 42,874,600 | |||||||||||||||||||
Total gains and losses (realized and unrealized): | |||||||||||||||||||||||||
Imputed interest recorded as "Other Expense" | - | 1,445,500 | (1,445,500 | ) | |||||||||||||||||||||
Purchases, sales, issuances, payments, and settlements | (90,643,600 | ) | (53,317,500 | ) | (37,326,100 | ) | |||||||||||||||||||
Transfers in and/or out of Level 3 | - | - | - | ||||||||||||||||||||||
Balance at August 31, 2014 | $ | 12,038,300 | $ | 7,935,300 | $ | 4,103,000 |
WATER_AND_LAND_ASSETS_Tables
WATER AND LAND ASSETS (Tables) | 12 Months Ended | ||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||
Investments In Water Water Systems Land And Improvements Tables | ' | ||||||||||||||||
Schedule of water and water systems | ' | ||||||||||||||||
The Company’s water and water systems consist of the following approximate costs and accumulated depreciation and depletion as of August 31: | |||||||||||||||||
31-Aug-14 | 31-Aug-13 | ||||||||||||||||
Costs | Accumulated Depreciation and Depletion | Costs | Accumulated Depreciation and Depletion | ||||||||||||||
Arkansas River assets | $ | 68,340,600 | $ | (1,488,600 | ) | $ | 69,112,300 | $ | (1,487,700 | ) | |||||||
Rangeview water supply | 14,444,600 | (8,400 | ) | 14,667,000 | (7,700 | ) | |||||||||||
Sky Ranch water rights and other costs | 6,004,000 | (93,000 | ) | 3,915,100 | (79,800 | ) | |||||||||||
Fairgrounds water and water system | 2,899,900 | (710,600 | ) | 2,899,900 | (622,600 | ) | |||||||||||
Rangeview water system | 1,148,200 | (77,900 | ) | 167,700 | (72,800 | ) | |||||||||||
Water supply – other | 1,050,200 | (90,900 | ) | 43,200 | (22,400 | ) | |||||||||||
Totals | 93,887,500 | (2,469,400 | ) | 90,805,200 | (2,293,000 | ) | |||||||||||
Net investments in water and water systems | $ | 90,823,900 | $ | 88,512,200 |
PARTICIPATING_INTERESTS_IN_EXP1
PARTICIPATING INTERESTS IN EXPORT WATER (Tables) | 12 Months Ended | ||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||
Participating Interests In Export Water Tables | ' | ||||||||||||||||||||
Schedule of remaining third party obligation | ' | ||||||||||||||||||||
As a result of the acquisitions, and due to the sale of Export Water, as detailed in the table below, the remaining potential third party obligation at August 31, 2014, is approximately $1 million: | |||||||||||||||||||||
Export Water Proceeds Received | Initial Export Water Proceeds to Pure Cycle | Total Potential Third party Obligation | Paticipating Interests Liability | Contingency | |||||||||||||||||
Original balances | $ | – | $ | 218,500 | $ | 31,807,700 | $ | 11,090,600 | $ | 20,717,100 | |||||||||||
Activity from inception until August 31, 2012: | |||||||||||||||||||||
Acquisitions | – | 28,077,500 | (28,077,500 | ) | (9,790,000 | ) | (18,287,500 | ) | |||||||||||||
Option payments - Sky Ranch | |||||||||||||||||||||
and The Hills at Sky Ranch | 110,400 | (42,300 | ) | (68,100 | ) | (23,800 | ) | (44,300 | ) | ||||||||||||
Arapahoe County tap fees * | 533,000 | (373,100 | ) | (159,900 | ) | (55,800 | ) | (104,100 | ) | ||||||||||||
Export Water sale payments | 111,300 | (77,900 | ) | (33,400 | ) | (12,100 | ) | (21,300 | ) | ||||||||||||
Balance at August 31, 2012 | 754,700 | 27,802,700 | 3,468,800 | 1,208,900 | 2,259,900 | ||||||||||||||||
Fiscal 2013 activity: | |||||||||||||||||||||
Export Water sale payments | 158,000 | (110,600 | ) | (47,400 | ) | (16,000 | ) | (31,400 | ) | ||||||||||||
Balance at August 31, 2013 | 912,700 | 27,692,100 | 3,421,400 | 1,192,900 | 2,228,500 | ||||||||||||||||
Fiscal 2014 activity: | |||||||||||||||||||||
Export Water sale payments | 91,600 | (73,700 | ) | (17,900 | ) | (6,200 | ) | (11,700 | ) | ||||||||||||
Relinquishment | 2,386,400 | (2,386,400 | ) | (832,100 | ) | (1,554,300 | ) | ||||||||||||||
Balance at August 31, 2014 | $ | 1,004,300 | $ | 30,004,800 | $ | 1,017,100 | $ | 354,600 | $ | 662,500 |
LONGTERM_OBLIGATIONS_AND_OPERA1
LONG-TERM OBLIGATIONS AND OPERATING LEASE (Tables) | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
Long-Term Obligations And Operating Lease Tables | ' | ||||
Schedule of remaining third party obligation | ' | ||||
Mortgage notes payable, primarily bear interest at 5%, 5 year term; one note in amount of $1.75 million has 20 year term | 4,958,200 | ||||
Less: current portion | (926,000 | ) | |||
Total long-term mortgage payable | $ | 4,032,200 | |||
Future Maturities | |||||
2015 | 926,000 | ||||
2016 | 892,100 | ||||
2017 | 937,600 | ||||
2018 | 615,000 | ||||
2019 | 123,500 | ||||
Post 2019 | 1,464,000 | ||||
Total | $ | 4,958,200 | |||
SHAREHOLDERS_EQUITY_Tables
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||
Shareholders Equity Tables | ' | ||||||||||||||||
Schedule of stock option activity | ' | ||||||||||||||||
The following table summarizes the stock option activity for the Equity Plan for the fiscal year ended August 31, 2014: | |||||||||||||||||
Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Approximate Aggregate Instrinsic Value | ||||||||||||||
Oustanding at beginning of period | 347,500 | $ | 5.62 | ||||||||||||||
Granted | 32,500 | $ | 6.08 | ||||||||||||||
Exercised | - | - | |||||||||||||||
Forfeited or expired | (65,000 | ) | 8.23 | ||||||||||||||
Outstanding at August 31, 2014 | 315,000 | $ | 5.76 | 6.32 | $ | 239,400 | |||||||||||
Options exercisable at August 31, 2014 | 215,833 | $ | 6.47 | 4.59 | $ | 10,792 | |||||||||||
Schedule of activity and value of non-vested options | ' | ||||||||||||||||
The following table summarizes the activity and value of non-vested options as of and for the fiscal year ended August 31, 2014: | |||||||||||||||||
Number of Options | Weighted-Average Grant Date Fair Value | ||||||||||||||||
Non-vested options oustanding at beginning of period | 132,500 | $ | 3.8 | ||||||||||||||
Granted | 32,500 | 4.09 | |||||||||||||||
Vested | (65,833 | ) | 2.36 | ||||||||||||||
Forfeited | - | - | |||||||||||||||
Non-vested options outstanding at August 31, 2014 | 99,167 | $ | 4.85 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Aug. 31, 2014 | |||||||||||||
Income Taxes Tables | ' | ||||||||||||
Schedule of deferred tax assets | ' | ||||||||||||
Significant components of the Company’s deferred tax assets as of August 31 are as follows: | |||||||||||||
For the Fiscal Years Ended August 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carryforwards | $ | 7,279,900 | $ | 6,227,200 | |||||||||
Imputed interest on Tap Participation Fee | 10,609,600 | 10,074,200 | |||||||||||
Deferred revenue | 768,400 | 494,600 | |||||||||||
Impairment Charges | 2,360,200 | 2,408,800 | |||||||||||
Depreciation and depletion | 4,695,900 | 4,899,800 | |||||||||||
Other | 26,700 | 43,600 | |||||||||||
Valuation allowance | (25,740,700 | ) | (24,148,200 | ) | |||||||||
Net deferred tax asset | $ | - | $ | - | |||||||||
Schedule of income tax reconciliation | ' | ||||||||||||
Income taxes computed using the federal statutory income tax rate differs from our effective tax rate primarily due to the following for the fiscal years ended August 31: | |||||||||||||
For the Fiscal Years Ended August 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected benefit from federal taxes at statutory rate of 34% | $ | (105,900 | ) | $ | (1,411,200 | ) | $ | (5,922,300 | ) | ||||
State taxes, net of federal benefit | (10,300 | ) | (137,000 | ) | (574,800 | ) | |||||||
Expiration of net operating losses | 89,400 | 147,400 | 90,000 | ||||||||||
Permanent and other differences | 4,175,300 | 27,400 | 25,800 | ||||||||||
Change in valuation allowance | (4,148,500 | ) | 1,373,400 | 6,381,300 | |||||||||
Total income tax expense / benefit | $ | - | $ | - | $ | - |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||
Segment Information Tables | ' | ||||||||||||||||
Schedule of segment reporting | ' | ||||||||||||||||
Fiscal Year Ended August 31, 2014 | |||||||||||||||||
Business segments | |||||||||||||||||
Wholesale | |||||||||||||||||
water and | |||||||||||||||||
wastewater | Agricultural | All Other | Total | ||||||||||||||
Revenues | $ | 1,924,900 | $ | 1,068,000 | $ | 98,200 | $ | 3,091,100 | |||||||||
Gross profit | 1,189,200 | 979,900 | 58,800 | 2,227,900 | |||||||||||||
Depletion and depreciation | 196,600 | - | - | 196,600 | |||||||||||||
Other significant noncash items: | |||||||||||||||||
Stock-based compensation | - | - | 251,900 | 251,900 | |||||||||||||
TPF interest expense | 1,445,500 | - | - | 1,445,500 | |||||||||||||
Impairment of land and water rights held for sale | 402,700 | - | 402,700 | ||||||||||||||
Gain in extinquishment of contingent obligations | 832,100 | - | 832,100 | ||||||||||||||
Gain on sale of land and water rights held for sale | 1,308,400 | - | 1,308,400 | ||||||||||||||
Segment assets | 98,851,900 | 7,354,100 | 1,967,800 | 108,173,800 | |||||||||||||
Expenditures for segment assets | 3,878,100 | - | - | 3,878,100 | |||||||||||||
Fiscal Year Ended August 31, 2013 | |||||||||||||||||
Business segments | |||||||||||||||||
Wholesale | |||||||||||||||||
water and | |||||||||||||||||
wastewater | Agricultural | All Other | Total | ||||||||||||||
Revenues | $ | 544,400 | $ | 1,241,900 | $ | 71,200 | $ | 1,857,500 | |||||||||
Gross profit | 248,600 | 1,145,600 | 70,000 | 1,464,200 | |||||||||||||
Depletion and depreciation | 311,300 | - | - | 311,300 | |||||||||||||
Other significant noncash items: | |||||||||||||||||
Stock-based compensation | - | - | 66,800 | 66,800 | |||||||||||||
TPF interest expense | 3,275,400 | - | - | 3,275,400 | |||||||||||||
Segment assets | 93,522,800 | 6,697,500 | 8,398,000 | 108,618,300 | |||||||||||||
Expenditures for segment assets | 378,000 | - | - | 378,000 | |||||||||||||
ORGANIZATION_Details_Narrative
ORGANIZATION (Details Narrative) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2011 |
Organization Details Narrative | ' | ' | ' | ' |
Cash and cash equivalents | $1,749,558 | $2,448,363 | $1,623,517 | $71,795 |
Working capital | $1,200,000 | ' | ' | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
gal | gal | gal | |
acre | |||
Mortgage term | ' | '5 years | ' |
Mortgage interest rate | ' | 5.00% | ' |
Interest imputed on the Tap Participation Fee payable to HP A&M | $1,445,509 | $3,275,378 | $3,470,523 |
Water delivered to customers | 190,100,000 | 69,200,000 | 34,200,000 |
Water tap fees recognized | 14,294 | 14,294 | 14,296 |
Special facility (deferred construction) funding recognized | 41,508 | 41,508 | 41,508 |
Interest income related to construction of Special Facilities | ' | 5,500 | 19,200 |
Number of acres for exploration and development | 634 | ' | ' |
Antidilutive securities excluded from earnings per share calculation | 315,100 | 347,600 | 215,100 |
Interest | 239,200 | 245,500 | ' |
Allowance for uncollectible accounts | 26,300 | 41,100 | ' |
Stock-based compensation expense | 251,915 | 66,812 | 54,588 |
County Tap And Construction Fee Deferred Revenue | ' | ' | ' |
Deferred revenue | 313,300 | ' | ' |
Deferred revenue recognizable | 1,200,000 | ' | ' |
Front Range Pipeline | ' | ' | ' |
Deferred revenue | 9,300 | ' | ' |
Farm Income | ' | ' | ' |
Deferred revenue | 256,500 | 397,300 | ' |
Allowance for doubtful accounts | 26,300 | 41,100 | 20,400 |
Oil And Gas Lease | ' | ' | ' |
Deferred revenue recognizable | 1,025,500 | ' | ' |
Lease revenue from up-front payments | $525,400 | $416,000 | $423,000 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Tap Participation Fee liability | $7,935,262 | $59,807,289 |
Total Unrealized Gain | ' | ' |
Tap Participation Fee liability | ' | ' |
Cost/Other Value | ' | ' |
Tap Participation Fee liability | 7,935,300 | ' |
Fair Value | ' | ' |
Tap Participation Fee liability | 7,935,300 | ' |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' |
Tap Participation Fee liability | ' | ' |
Significant Other Observable Inputs (Level 2) | ' | ' |
Tap Participation Fee liability | ' | ' |
Significant Unobservable Inputs (Level 3) | ' | ' |
Tap Participation Fee liability | $7,935,300 | ' |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 1) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Imputed interest recorded as "Other Expense" | ($1,445,509) | ($3,275,378) | ($3,470,523) |
Gross Estimated Tap Participation Fee Liability | ' | ' | ' |
Balance, beginning | 102,681,900 | ' | ' |
Total gains and losses (realized and unrealized) | ' | ' | ' |
Purchases, sales, issuances, payments, and settlements | -90,643,600 | ' | ' |
Transfers in and/or out of Level 3 | ' | ' | ' |
Balance, ending | 12,038,300 | ' | ' |
Tap Participation Fee Reported Liability | ' | ' | ' |
Balance, beginning | 59,807,300 | ' | ' |
Total gains and losses (realized and unrealized) | ' | ' | ' |
Imputed interest recorded as "Other Expense" | 1,445,500 | ' | ' |
Purchases, sales, issuances, payments, and settlements | -53,317,500 | ' | ' |
Transfers in and/or out of Level 3 | ' | ' | ' |
Balance, ending | 7,935,300 | ' | ' |
Discount To Be Imputed As Interest Expense In Future Periods | ' | ' | ' |
Balance, beginning | 42,874,600 | ' | ' |
Total gains and losses (realized and unrealized) | ' | ' | ' |
Imputed interest recorded as "Other Expense" | 1,445,500 | ' | ' |
Purchases, sales, issuances, payments, and settlements | -37,326,100 | ' | ' |
Transfers in and/or out of Level 3 | ' | ' | ' |
Balance, ending | $4,103,000 | ' | ' |
WATER_AND_LAND_ASSETS_Details
WATER AND LAND ASSETS (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Costs | $93,887,500 | $90,805,200 |
Accumulated Depreciation and Depletion | -2,469,400 | -2,293,000 |
Net investments in water and water systems | 90,823,916 | 88,512,249 |
Arkansas River Assets | ' | ' |
Costs | 68,340,600 | 69,112,300 |
Accumulated Depreciation and Depletion | -1,488,600 | -1,487,700 |
Rangeview Water Supply | ' | ' |
Costs | 14,444,600 | 14,667,000 |
Accumulated Depreciation and Depletion | -8,400 | -7,700 |
Sky Ranch Water Rights And Other Costs | ' | ' |
Costs | 6,004,000 | 3,915,100 |
Accumulated Depreciation and Depletion | -93,000 | -79,800 |
Fairgrounds Water And Water System | ' | ' |
Costs | 2,899,900 | 2,899,900 |
Accumulated Depreciation and Depletion | -710,600 | -622,600 |
Rangeview Water System | ' | ' |
Costs | 1,148,200 | 167,700 |
Accumulated Depreciation and Depletion | -77,900 | -72,800 |
Water Supply Other | ' | ' |
Costs | 1,050,200 | 43,200 |
Accumulated Depreciation and Depletion | ($90,900) | ($22,400) |
WATER_AND_LAND_ASSETS_Detail_N
WATER AND LAND ASSETS (Detail Narrative) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
acre | |||
N | |||
Depletion | $4,400 | $500 | $500 |
Depreciation | 192,200 | 310,800 | 308,700 |
Acres of land sold | 1,886 | ' | ' |
Number of FLCC shares sold | 2,982 | ' | ' |
Impairment gain | 1,300,000 | ' | 5,500,000 |
Costs of assets acquired | 1,440,000 | ' | ' |
Farm Leases | ' | ' | ' |
Lease income | 1,068,000 | 1,241,900 | 71,100 |
Sky Ranch | ' | ' | ' |
Establishment and operating costs | $50,900 | ' | ' |
PARTICIPATING_INTERESTS_IN_EXP2
PARTICIPATING INTERESTS IN EXPORT WATER (Details) (USD $) | 12 Months Ended | 48 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Export Water Proceeds Received | ' | ' | ' |
Remaining Third Party Obligation: | ' | ' | ' |
Balance, original | ' | ' | ' |
Balance, beginning | 912,700 | 754,700 | ' |
Acquisitions | ' | ' | ' |
Option payments | ' | ' | 110,400 |
Arapahoe Tap fees | ' | ' | 533,000 |
Export Water Sale Payments | 91,600 | 158,000 | 269,300 |
Balance, ending | 1,004,300 | 912,700 | 754,700 |
Initial Export Water Proceeds To Pure Cycle | ' | ' | ' |
Remaining Third Party Obligation: | ' | ' | ' |
Balance, original | ' | ' | 218,500 |
Balance, beginning | 27,692,100 | 27,802,700 | ' |
Acquisitions | ' | ' | 28,077,500 |
Option payments | ' | ' | -42,300 |
Arapahoe Tap fees | ' | ' | -373,100 |
Export Water Sale Payments | -73,700 | -110,600 | -188,500 |
Relinquishment | 2,386,400 | ' | ' |
Balance, ending | 30,004,800 | 27,692,100 | 27,802,700 |
Total Potential Third Party Obligation | ' | ' | ' |
Remaining Third Party Obligation: | ' | ' | ' |
Balance, original | ' | ' | 31,807,700 |
Balance, beginning | 3,421,400 | 3,468,800 | ' |
Acquisitions | ' | ' | -28,077,500 |
Option payments | ' | ' | -68,100 |
Arapahoe Tap fees | ' | ' | -159,900 |
Export Water Sale Payments | -17,900 | -47,400 | -80,800 |
Relinquishment | -2,386,400 | ' | ' |
Balance, ending | 1,017,100 | 3,421,400 | 3,468,800 |
Participating Interests Liability | ' | ' | ' |
Remaining Third Party Obligation: | ' | ' | ' |
Balance, original | ' | ' | 11,090,600 |
Balance, beginning | 1,192,900 | 1,208,900 | ' |
Acquisitions | ' | ' | -9,790,000 |
Option payments | ' | ' | -23,800 |
Arapahoe Tap fees | ' | ' | -55,800 |
Export Water Sale Payments | -6,200 | -16,000 | -28,100 |
Relinquishment | -832,100 | ' | ' |
Balance, ending | 354,600 | 1,192,900 | 1,208,900 |
Contingency | ' | ' | ' |
Remaining Third Party Obligation: | ' | ' | ' |
Balance, original | ' | ' | 20,717,100 |
Balance, beginning | 2,228,500 | 2,259,900 | ' |
Acquisitions | ' | ' | -18,287,500 |
Option payments | ' | ' | -44,300 |
Arapahoe Tap fees | ' | ' | -104,100 |
Export Water Sale Payments | -11,700 | -31,400 | -52,700 |
Relinquishment | -1,554,300 | ' | ' |
Balance, ending | $662,500 | $2,228,500 | $2,259,900 |
PARTICIPATING_INTERESTS_IN_EXP3
PARTICIPATING INTERESTS IN EXPORT WATER (Details Narrative) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Recorded Portion Of Contingent Obligation | $354,628 | $1,192,910 |
Tap Participation Fee liability | 7,935,262 | 59,807,289 |
Gain on the extinguishment of debt | 832,100 | ' |
First Priority Payout | ' | ' |
Deferred Revenue | 6,200,000 | ' |
Remaining First Priority Payout | ' | ' |
Deferred Revenue | $7,000,000 | ' |
ACCRUED_LIABILITIES_Detail_Nar
ACCRUED LIABILITIES (Detail Narrative) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Accrued Liabilities Detail Narrative | ' | ' |
Accrued liabilities | $257,893 | $264,740 |
Estimated property taxes | 99,700 | 156,200 |
Professional Fees | 59,500 | 56,700 |
Farm lease prepayments | 22,400 | 30,300 |
Operating payables | $76,300 | $21,600 |
LONGTERM_DEBT_AND_OPERATING_LE
LONG-TERM DEBT AND OPERATING LEASE (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Long-Term Debt And Operating Lease Details | ' | ' |
Mortgage notes payable, primarily bear interest at 5%, 5 year term; one note in amount of $1.75 million has 20 year term | $4,958,200 | ' |
Less: current portion | -925,980 | -4,668,943 |
Total long-term mortgage payable | $4,032,227 | $3,211,112 |
LONGTERM_DEBT_AND_OPERATING_LE1
LONG-TERM DEBT AND OPERATING LEASE (Details 1) (USD $) | Aug. 31, 2013 |
Future Maturities | ' |
2015 | $926,000 |
2016 | 892,100 |
2017 | 937,600 |
2018 | 615,000 |
2019 | 123,500 |
Post 2019 | 1,464,000 |
Total | $4,958,200 |
LONGTERM_DEBT_AND_OPERATING_LE2
LONG-TERM DEBT AND OPERATING LEASE (Details Narrative) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Taps | Taps | ||
Long-Term Debt And Operating Lease Details Narrative | ' | ' | ' |
Tap Participation Fee payable to HP A&M, net of $42.9 million and $48.2 million discount, respectively | $7,935,262 | $59,807,289 | ' |
Tap Participation Fee Percentage | 20.00% | ' | ' |
Water Taps under Tap Participation Fee | 2,184 | ' | ' |
Reduction in Taps as result of foreclosure | 15,059 | 2,184 | ' |
Imputed Interest on TPF | 27,500,000 | ' | ' |
Notes Payable outstanding | 4,500,000 | 7,900,000 | 9,600,000 |
Purchase of notes payable | 9,400,000 | 9,600,000 | ' |
Accrued interest | $80,800 | $122,000 | ' |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended |
Aug. 31, 2014 | |
Number of options | ' |
Outstanding, beginning | 347,500 |
Granted | 32,500 |
Exercised | ' |
Forfeited or expired | -65,000 |
Outstanding, ending | 315,000 |
Exercisable | 215,833 |
Weighted average exercise price | ' |
Outstanding, beginning | $5.62 |
Granted | $6.08 |
Exercised | ' |
Forfeited or expired | $8.23 |
Outstanding, ending | $5.76 |
Exercisable | $6.47 |
Weighted average remaining contractual term | ' |
Outstanding, ending | '6 years 3 months 26 days |
Exercisable | '4 years 7 months 2 days |
Approximate aggregate intrinsic value | ' |
Outstanding, ending | $239,400 |
Exercisable | $10,792 |
SHAREHOLDERS_EQUITY_Details_1
SHAREHOLDERS' EQUITY (Details 1) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Number of options | ' | ' | ' |
Outstanding, beginning | 132,500 | ' | ' |
Granted | 32,500 | ' | ' |
Vested | -65,833 | ' | ' |
Forfeited | ' | ' | ' |
Outstanding, ending | 99,167 | 132,500 | ' |
Weighted average grant date fair value | ' | ' | ' |
Outstanding, beginning | $3.80 | ' | ' |
Granted | $4.09 | $3.80 | $1.23 |
Vested | $2.36 | ' | ' |
Forfeited | ' | ' | ' |
Outstanding, ending | $4.85 | $3.80 | ' |
SHAREHOLDERS_EQUITY_Details_Na
SHAREHOLDERS' EQUITY (Details Narrative) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Fair value of options vested | $219,200 | $48,700 | $66,000 |
Weighted average grant date fair value of options granted | $4.09 | $3.80 | $1.23 |
Stock-based compensation | 251,900 | 66,800 | 54,600 |
Unrecognized share-based compensation cost | 417,700 | ' | ' |
Options forfeited | ' | ' | 29,500 |
Options expired | 65,000 | ' | 48,000 |
Warrant outstanding | 92 | ' | ' |
Warrant exercise price | $1.80 | ' | ' |
Series B Preferred stock, liquidation preference per share | $1 | ' | ' |
Series B Preferred stock, redemption price per share | '1.00 per share less any dividends previously paid | ' | ' |
Threshold Export Water rights | 36,026,232 | ' | ' |
Series B Preferred stock, liquidation preference value | $432,513 | $432,513 | ' |
2014 Incentive Plan | ' | ' | ' |
Number of shares authorized under plan | 1,600,000 | ' | ' |
SIGNIFICANT_CUSTOMERS_Details_
SIGNIFICANT CUSTOMERS (Details Narrative) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Sales | The District | ' | ' | ' |
Concentration Risk Percentage | 9.00% | 34.00% | 86.00% |
Sales | The District's Significant Customer | ' | ' | ' |
Concentration Risk Percentage | 7.00% | 28.00% | 53.00% |
Sales | Oil and Gas Industry Customer | ' | ' | ' |
Concentration Risk Percentage | 88.00% | 59.00% | 0.00% |
Accounts Receivable | The District | ' | ' | ' |
Concentration Risk Percentage | 5.00% | 14.00% | ' |
Accounts Receivable | The District's Significant Customer | ' | ' | ' |
Concentration Risk Percentage | 4.00% | 12.00% | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Deferred tax assets: | ' | ' |
Net operating loss carryforwards | $7,279,900 | $6,080,000 |
Imputed interest on Tap Participation Fee | 10,609,600 | 10,074,200 |
Deferred revenue | 768,400 | 494,600 |
Impairment Charges | 2,360,200 | 0 |
Depreciation and depletion | 4,695,900 | 4,899,800 |
Other | 26,700 | 43,600 |
Valuation allowance | -25,740,700 | -21,592,200 |
Net deferred tax asset | ' | ' |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Income Taxes Details 1 | ' | ' | ' |
Expected benefit from federal taxes at statutory rate of 34% | ($105,900) | ($1,411,200) | ($5,922,300) |
State taxes, net of federal benefit | -10,300 | -137,000 | -574,800 |
Expiration of net operating losses | 89,400 | 147,400 | 90,000 |
Permanent and other differences | 4,175,300 | 27,400 | 25,800 |
Change in valuation allowance | -4,148,500 | 1,373,400 | 6,381,300 |
Total income tax expense / benefit | ' | ' | ' |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Income Taxes Details Narrative | ' | ' | ' |
Net operating loss carryforwards | $19,500,000 | ' | ' |
Net operating loss carryforwards expired | $239,600 | $395,200 | $241,200 |
401k_PLAN_Details_Narrative
401(k) PLAN (Details Narrative) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
K Plan Details Narrative | ' | ' | ' |
Administrative fees paid for plan | $3,600 | $3,300 | $3,400 |
LITIGATION_LOSS_CONTINGENCIES_
LITIGATION LOSS CONTINGENCIES (Details Narrative) (Foreclosure Proceedings Commenced) | Aug. 31, 2014 |
Property | |
Foreclosure Proceedings Commenced | ' |
Properties under foreclosure proceedings | 38 |
Percent of the Arkansas River assets represented by the properties | 2.00% |
Percentage of FLLC shares represented by the properties | 3.00% |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | |
Revenues | $3,091,140 | $1,857,462 | $284,384 |
Gross profit | 2,227,869 | 1,464,191 | 96,400 |
Depletion and depreciation | 196,564 | 313,137 | 307,507 |
Other significant noncash items: | ' | ' | ' |
Stock-based compensation | 251,900 | 66,800 | 54,600 |
TPF interest expense | 1,445,509 | 3,275,378 | 3,470,523 |
Impairment of land and water rights held for sale | 402,700 | ' | ' |
Gain in extinquishment of contingent obligations | 832,100 | ' | ' |
Gain on sale of land and water rights held for sale | 1,308,400 | ' | ' |
Segment assets | 108,173,822 | 108,618,331 | ' |
Expenditures for segment assets | 3,864,400 | 378,000 | ' |
Wholesale Water And Wasterwater | ' | ' | ' |
Revenues | 1,924,900 | 544,400 | ' |
Gross profit | 1,239,200 | 248,600 | ' |
Depletion and depreciation | 196,600 | 311,300 | ' |
Other significant noncash items: | ' | ' | ' |
Stock-based compensation | ' | ' | ' |
TPF interest expense | 1,445,500 | 3,275,400 | ' |
Impairment of land and water rights held for sale | 402,700 | ' | ' |
Gain in extinquishment of contingent obligations | 832,100 | ' | ' |
Gain on sale of land and water rights held for sale | 1,308,400 | ' | ' |
Segment assets | 98,851,900 | 93,522,800 | ' |
Expenditures for segment assets | 3,878,100 | 378,000 | ' |
Agricultural | ' | ' | ' |
Revenues | 1,068,000 | 1,241,900 | ' |
Gross profit | 979,900 | 1,145,600 | ' |
Depletion and depreciation | ' | ' | ' |
Other significant noncash items: | ' | ' | ' |
Stock-based compensation | ' | ' | ' |
TPF interest expense | ' | ' | ' |
Impairment of land and water rights held for sale | ' | ' | ' |
Gain in extinquishment of contingent obligations | ' | ' | ' |
Gain on sale of land and water rights held for sale | ' | ' | ' |
Segment assets | 7,354,100 | 6,697,500 | ' |
Expenditures for segment assets | ' | ' | ' |
All Other | ' | ' | ' |
Revenues | 98,200 | 71,200 | ' |
Gross profit | 58,800 | 70,000 | ' |
Depletion and depreciation | ' | ' | ' |
Other significant noncash items: | ' | ' | ' |
Stock-based compensation | 251,900 | 66,800 | ' |
TPF interest expense | ' | ' | ' |
Segment assets | 1,967,800 | 8,398,000 | ' |
Expenditures for segment assets | ' | ' | ' |