Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Nov. 30, 2020 | Dec. 31, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | PURE CYCLE CORP | |
Entity Central Index Key | 0000276720 | |
Current Fiscal Year End Date | --08-31 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 30, 2020 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Address, State or Province | CO | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,868,216 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Nov. 30, 2020 | Aug. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 21,303 | $ 21,797 |
Trade accounts receivable, net | 713 | 1,124 |
Prepaid expenses and other assets | 887 | 1,001 |
Land development inventories | 0 | 481 |
Income taxes receivable | 1,455 | 1,588 |
Total current assets | 24,358 | 25,991 |
Investments in water and water systems, net | 55,165 | 55,087 |
Land and mineral interests | 5,239 | 4,915 |
Other assets | 2,471 | 2,042 |
Notes receivable - related parties, including accrued interest | 1,091 | 1,079 |
Long-term land investment | 451 | 451 |
Operating leases - right of use assets, less current portion | 178 | 196 |
Total assets | 88,953 | 89,761 |
Current liabilities: | ||
Accounts payable | 184 | 180 |
Accrued liabilities | 989 | 1,391 |
Accrued liabilities - related parties | 1,191 | 1,212 |
Deferred lot sale revenues | 1,462 | 1,635 |
Deferred oil and gas lease payment and water sales payment | 596 | 1,800 |
Total current liabilities | 4,422 | 6,218 |
Deferred oil and gas lease payment and water sales payment, less current portion | 117 | 165 |
Participating interests in export water supply | 327 | 328 |
Deferred tax liability | 1,012 | 886 |
Lease obligations - operating leases, less current portion | 100 | 120 |
Total liabilities | 5,978 | 7,717 |
Commitments and contingencies | ||
SHAREHOLDERS' EQUITY: | ||
Preferred stock, Series B - par value $0.001 per share, 25 million shares authorized; 432,513 shares issued and outstanding (liquidation preference of $432,513) | 0 | 0 |
Common stock, Par value 1/3 of $.01 per share, 40 million shares authorized; 23,868,216 and 23,856,098 shares outstanding, respectively | 80 | 80 |
Additional paid-in capital | 173,013 | 172,927 |
Accumulated deficit | (90,118) | (90,963) |
Total shareholders' equity | 82,975 | 82,044 |
Total liabilities and shareholders' equity | $ 88,953 | $ 89,761 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Nov. 30, 2020 | Aug. 31, 2020 |
SHAREHOLDERS' EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0.003 | $ 0.003 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares outstanding (in shares) | 23,868,216 | 23,856,098 |
Series B Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 432,513 | 432,513 |
Preferred stock, shares outstanding (in shares) | 432,513 | 432,513 |
Liquidation preference | $ 432,513 | $ 432,513 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Nov. 30, 2020 | Nov. 30, 2019 | |
Revenues: | ||
Total revenues | $ 4,868 | $ 10,460 |
Expenses: | ||
Water service operations | (545) | (254) |
Wastewater service operations | (92) | (26) |
Land development construction costs | (1,719) | (8,063) |
Other | (24) | (24) |
Depletion and depreciation | (365) | (219) |
Total cost of revenues | (2,745) | (8,586) |
Gross profit | 2,123 | 1,874 |
General and administrative expenses | (1,086) | (801) |
Depreciation | (84) | (85) |
Operating income | 953 | 988 |
Other income: | ||
Oil and gas royalty income | 75 | 270 |
Oil and gas lease income | 52 | 62 |
Interest income | 15 | 54 |
Other | 10 | 0 |
Income from reimbursement of construction costs - related party | 0 | 6,276 |
Net income before taxes | 1,105 | 7,650 |
Income tax expense | (260) | (1,887) |
Net income | 845 | 5,763 |
Unrealized holding losses | 0 | (4) |
Total comprehensive income | $ 845 | $ 5,759 |
Basic net income per common share (in dollars per share) | $ 0.04 | $ 0.24 |
Diluted net income per common share (in dollars per share) | $ 0.04 | $ 0.24 |
Weighted average common shares outstanding-basic (in shares) | 23,867 | 23,827 |
Weighted average common shares outstanding-diluted (in shares) | 24,036 | 24,051 |
Metered Water Usage - Municipal Customers [Member] | ||
Revenues: | ||
Total revenues | $ 167 | $ 103 |
Metered Water Usage - Oil and Gas [Member] | ||
Revenues: | ||
Total revenues | 1,199 | 37 |
Wastewater Treatment Fees [Member] | ||
Revenues: | ||
Total revenues | 42 | 20 |
Lot Sales [Member] | ||
Revenues: | ||
Total revenues | 2,356 | 8,542 |
Water and Wastewater Tap Fees [Member] | ||
Revenues: | ||
Total revenues | 1,083 | 1,672 |
Other [Member] | ||
Revenues: | ||
Total revenues | $ 21 | $ 86 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Deficit [Member] | Total |
Balance at Aug. 31, 2019 | $ 0 | $ 79 | $ 172,361 | $ 4 | $ (97,713) | $ 74,731 |
Balance (in shares) at Aug. 31, 2019 | 433 | 23,827 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | $ 0 | $ 0 | 105 | 0 | 0 | 105 |
Net income | 0 | 0 | 0 | 0 | 5,763 | 5,763 |
Unrealized holding loss on investments | 0 | 0 | 0 | (4) | 0 | (4) |
Balance at Nov. 30, 2019 | $ 0 | $ 79 | 172,466 | 0 | (91,950) | 80,595 |
Balance (in shares) at Nov. 30, 2019 | 433 | 23,827 | ||||
Balance at Aug. 31, 2020 | $ 0 | $ 80 | 172,927 | 0 | (90,963) | 82,044 |
Balance (in shares) at Aug. 31, 2020 | 433 | 23,856 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock option exercises | $ 0 | $ 0 | 0 | 0 | 0 | 0 |
Stock option exercises (in shares) | 0 | 12 | ||||
Share-based compensation | $ 0 | $ 0 | 86 | 0 | 0 | 86 |
Net income | 0 | 0 | 0 | 0 | 845 | 845 |
Unrealized holding loss on investments | 0 | |||||
Balance at Nov. 30, 2020 | $ 0 | $ 80 | $ 173,013 | $ 0 | $ (90,118) | $ 82,975 |
Balance (in shares) at Nov. 30, 2020 | 433 | 23,868 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2020 | Nov. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 845 | $ 5,763 |
Adjustments to reconcile net income to net cash provided (used ) by operating activities: | ||
Depreciation and depletion | 449 | 304 |
Share-based compensation expense | 86 | 105 |
Interest added to receivable from related parties | (11) | (11) |
Deferred income taxes | 126 | 719 |
Proceeds from CAB reimbursement applied to land development inventories | 0 | 4,230 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 411 | 221 |
Prepaid expenses | (370) | (107) |
Land development inventories | (413) | 4,777 |
Accounts payable and accrued liabilities | 174 | (387) |
Deferred revenues | (1,425) | (2,054) |
Other assets and liabilities | 134 | 1,161 |
Net cash provided by operating activities | 6 | 14,721 |
Cash flows from investing activities: | ||
Sale and maturities of short-term investments | 0 | 5,185 |
Investments in water, water systems and land | (468) | (2,273) |
Purchase of property and equipment | (31) | (37) |
Net cash (used) provided by investing activities | (499) | 2,875 |
Cash flows from financing activities: | ||
Payments to contingent liability holders | (1) | (2) |
Net cash used by financing activities | (1) | (2) |
Net change in cash and cash equivalents | (494) | 17,594 |
Cash and cash equivalents - beginning of period | 21,797 | 4,478 |
Cash and cash equivalents - end of period | 21,303 | 22,072 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH ACTIVITIES | ||
Changes in Land development inventories included in accounts payable and accrued liabilities | 894 | 1,255 |
Changes in Investments in water, water systems and land included in accounts payable and accrued liabilities | $ 297 | $ (737) |
PRESENTATION OF INTERIM INFORMA
PRESENTATION OF INTERIM INFORMATION | 3 Months Ended |
Nov. 30, 2020 | |
PRESENTATION OF INTERIM INFORMATION [Abstract] | |
PRESENTATION OF INTERIM INFORMATION | NOTE 1 – PRESENTATION OF INTERIM INFORMATION The November 30, 2020 condensed consolidated balance sheet, the condensed consolidated statements of operations and comprehensive income for the three months ended November 30, 2020 and 2019, the condensed consolidated statements of shareholders’ equity for the three months ended November 30, 2020 and 2019, and the condensed consolidated statements of cash flows for the three months ended November 30, 2020 and 2019 have been prepared by Pure Cycle Corporation (the “Company”) and have not been audited. The unaudited condensed consolidated financial statements include all adjustments that are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows at November 30, 2020, and for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is suggested that the accompanying condensed consolidated financial statements and notes be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2020 (the “2020 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on November 10, 2020. The results of operations for interim periods presented are not necessarily indicative of the operating results expected for the full fiscal year. The August 31, 2020 balance sheet was derived from the Company’s audited consolidated financial statements. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) On March 27, 2020, Congress enacted the CARES Act to provide certain relief because of the recent outbreak of a novel strain of the coronavirus (“COVID-19”) pandemic. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain refundable employee retention credits. The Company does not believe there will be any material impact to its condensed consolidated financial statements because of the CARES Act. Use of Estimates The preparation of financial statements in conformity with 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. Estimates are used to account for certain items such as revenue recognition, reimbursable costs and expenses, costs of revenue for lot sales, share-based compensation, deferred tax asset and liability valuation, depreciation and the recoverability of long lived assets. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to COVID-19. Recently Issued Accounting Pronouncements The Company continually assesses new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and to ensure that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below: In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments continues to monitor economic implications of the COVID-19 pandemic; however, based on current market conditions, the Company does not expect the adoption of ASU 2016-13 to have a material impact on the Company’s financial statements. |
REVENUE RECOGNITION AND REIMBUR
REVENUE RECOGNITION AND REIMBURSABLE COSTS | 3 Months Ended |
Nov. 30, 2020 | |
REVENUE RECOGNITION AND REIMBURSABLE COSTS [Abstract] | |
REVENUE RECOGNITION AND REIMBURSABLE COSTS | NOTE 2 – REVENUE RECOGNITION AND REIMBURSABLE COSTS The Company disaggregates revenue by major product line as reported on the condensed consolidated statement of operations and comprehensive income, which the Company believes best depicts the nature, timing, and uncertainty of the Company’s revenue and cash flows. The Company primarily generates revenues through two lines of business, its water and wastewater resource development business and through the sale of finished lots in its land development business, both of which are described below. Water and Wastewater Resource Development Segment The Company’s water and wastewater resource development segment provides municipal water and wastewater services, through the Rangeview Metropolitan District (the “Rangeview District”) and Elbert and Highway 86 Metropolitan District (the “Elbert 86 District”) to end use customers for fees, described below. The Rangeview District services Sky Ranch and the other customers on the Lowry Range. The Elbert 86 District services Wild Pointe. Monthly water usage and wastewater treatment fees The Company provides water to customers, collects wastewater from those customers and treats that wastewater which is reused for irrigation purposes. For these services, the Company charges customers monthly fees. Potable and reuse water fees are comprised of a base charge and a usage charge based on actual amounts of water delivered to the customer using a tiered structure that results in higher fees for higher usage. Wastewater treatment services incur flat monthly fees. The Company recognizes these revenues at a point in time upon delivering water to the end use customers. Water and wastewater tap fees A tap constitutes a right to connect a residential or commercial building or property to the Company’s water and wastewater systems. Once granted, the customer may make a physical tap into the service line(s) to connect its property to the Company’s systems to obtain water and/or wastewater service. The right stays with the property. The Company has no obligation to physically connect the property to the lines. Once connected to the water and/or wastewater systems, the customer has live service to receive metered water deliveries from the Company’s system and send wastewater to the Company. Thus, the customer has full control of the connection right as it can obtain all the benefits from this right. As such, tap fees are deemed separate and distinct performance obligations that are recognized as revenue at a point in time. Land Development Segment Sale of finished lots The Company sells lots at its Master Planned Community, Sky Ranch, pursuant to distinct agreements with each home builder. These agreements follow one of two formats. One format is the sale of a finished lot, whereby the home builder pays for a ready-to-build finished lot and the sales price is paid in a lump-sum upon completion of the finished lot that is permit ready. The Company recognizes revenues at the point in time of the closing of the sale of a finished lot in which control transfers to the builder as the transaction cycle is complete and the Company has no further obligations for the lot. The second format is the sale of a finished lot pursuant to a lot development agreement with builders, whereby the Company receives payments in stages that include: (i) payment upon the delivery of a platted lot (which requires the Company to deliver deeded title to individual lots), (ii) a second payment upon the completion of certain infrastructure milestones, and (iii) final payment upon the delivery of the finished lot. Ownership and control of the platted lot passes to the builder once the Company closes the sale of the platted lots. Because the builder takes control and legal ownership of the lot at the first closing, and subsequent improvements made by the Company improve the builder’s lot as construction progresses, the Company accounts for revenue over time with progress measured based upon costs incurred to date compared to total expected costs. Any revenue in excess of amounts entitled to be billed is reflected on the balance sheet as a contract asset, and amounts received in excess of revenue recognized are recorded as deferred revenue. Reimbursable Public Improvement Costs – The Sky Ranch Community Authority Board (the “Sky Ranch ”) Related Party Transactions constructed for at Sky Ranch 21.1 total reimbursable costs between the Company and the Sky Ranch CAB repay 21.1 Income from reimbursement of construction costs (related party) Land development nventories is These public improvements are constructed pursuant to design standards specified by local governmental jurisdictions including the Sky Ranch Districts, the Sky Ranch CAB and Arapahoe County, and, after inspection and acceptance, are turned over to the applicable governmental entity to operate and maintain. Project management services the Company acts as the project manager and provides the services required to deliver the Sky Ranch CAB-eligible public improvements (see discussion of reimbursable public improvements above), including but not limited to Sky Ranch CAB compliance; planning design and approvals; project administration; contractor agreements; and construction management and administration. The Company is responsible for all expenses it incurs in the performance of the Project Management Agreements and is not entitled to any reimbursement or compensation except as set forth in the Project Management Agreements, unless otherwise approved in advance by the Sky Ranch CAB in writing. The Company receives a project management fee of five percent (5%) of actual construction costs of Sky Ranch CAB-eligible public improvements. The project management fee to be paid to the Company qualifies as a reimbursable cost to the Company. The project management fee is based only on the actual costs of the improvements; thus, items such as fees, permits, review fees, consultant or other soft costs, and land acquisition or any other costs that are not directly related to the cost of construction of Sky Ranch CAB-eligible public improvements are not included in the calculation of the project management fee. Soft costs and other costs incurred by the Company that are not directly related to the construction of Sky Ranch CAB-eligible public improvements are included in Land development i nventories and accounted for in the same manner as construction support activities as described below. Per the Project Management Agreements, no payment is required by the Sky Ranch CAB with respect to project management fees unless and until the Sky Ranch CAB and/or the Sky Ranch Districts have funds or issue municipal bonds in an amount sufficient to reimburse the Company for all or a portion of advances provided, or expenses incurred for construction of public improvements that qualify as reimbursable expenses. Because payment is contingent on receipt of tax dollars or the issuance of bonds, project management fees are deferred and not recognized until they are received. Construction support activities The Company performs certain construction activities at Sky Ranch. The activities performed include construction and maintenance of the grading erosion and sediment control best management practices and other construction-related services. These activities are invoiced upon completion and are included in Land development i nventories and subsequently expensed through Land development construction costs unless or until reimbursement occurs. As noted above, pursuant to the funding agreements between the Company and the Sky Ranch CAB, the Company is owed amounts it funded or that the Sky Ranch CAB was unable to pay at the time of construction. The following table summarizes the amounts the Company paid, what was repaid by the Sky Ranch CAB and amounts still owed to the Company by the Sky Ranch CAB: As of November 30, 2020 Costs incurred to date Payments repaid by Sky Ranch CAB Amounts payable to Pure Cycle by the Sky Ranch CAB (In thousands) Public Improvements $ 28,008 $ 10,505 $ 17,503 Accrued interest 1,456 — 1,456 Project management services 1,496 — 1,496 Construction support activities 683 — 683 Total reimbursable costs $ 31,643 $ 10,505 $ 21,138 As noted above, the project management services and construction support activities amounts do not include interest since payment of that interest is deemed too contingent. The Company expects to incur an additional $1.3 million through the end of the calendar year 2021 for construction costs related to public improvements to complete its initial 506 lots and expects that amount to be reimbursed to the Company along with the amounts noted in the table above as the Sky Ranch CAB issues bonds or collects property tax assessments. Deferred Revenue As noted above, the Company recognizes some lot sales over time as construction activities progress for lots sold pursuant to lot development agreements and not when payment is received. Based on this, the Company will receive milestone payments before revenue can be recognized (i.e. prior to the Company completing the construction milestones which produced the revenue) which results in the Company recording deferred revenue. The Company will recognize this revenue into income as construction activities progress. In fiscal 2018 and 2019, the Company received up-front payments for certain oil and gas leases which permitted an oil and gas operator priority rights to water deliveries over a specified period of time. As the Company was not required to perform on its delivery obligations when the payments were received, recognition of revenue was deferred and is being recognized on a straight-line basis over the agreement term. The Company also received an up-front payment from an oil and gas industrial customer to reserve priority water for their operations, which the Company is recognizing this revenue based either on actual usage each reporting period or based on amounts not expected to be used by the operator. The customer may take up to one year from the invoice date to use such water. If the customer uses water, the Company recognizes the amount of water used as revenue in the period the water is delivered. If the customer does not use the water in the contract period, such water is forfeited by the customer. The Company evaluates the likelihood that the customer will use the water each reporting period and estimates and recognizes any amounts not anticipated to be used by the customer as revenue in the period the Company determines it is remote the customer will use all the remaining prepaid water volume during the remaining contract period. Deferred revenue by segment is as follows: November 30, 2020 August 31, 2020 (In thousands) Land development segment $ 1,462 $ 1,636 Water and wastewater resource development segment 713 1,965 Balance, end of period $ 2,175 $ 3,601 Changes in deferred revenue were as follows: November 30, 2020 (In thousands) Balance, August 31, 2020 $ 3,601 Deferral of revenue 2,182 Recognition of unearned revenue (3,608 ) Balance, November 30, 2020 $ 2,175 For the three months ended November 30, 2020 and 2019, we recognized deferred land development revenues of $2.4 million and $8.5 million, and recognized deferred oil and gas leases and water sales revenues of $1.2 million and $1.9 million. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. During the three months ended November 30, 2020, the Company received the final payment of $2.2 million, including $1.6 million for outstanding open contracts in the first development filing at Sky Ranch, which represents the final lot sales in the first filing at Sky Ranch, and $0.6 million for neighborhood amenities. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Nov. 30, 2020 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 3 – 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 significant input to determine fair value. Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the NASDAQ Stock Market. The Company had no Level 1 assets or liabilities as of November 30, 2020 or August 31, 2020. 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 as of November 30, 2020 or August 31, 2020. 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, the contingent portion of the CAA, as of November 30, 2020 and August 31, 2020. The Company has determined that the contingent portion of the CAA does not have a determinable fair value (see Note 5 – Long-Term Obligations and Operating Lease) The Company maintains policies and procedures to value instruments using what management believes to be the best and most relevant data available. There were no assets or liabilities measured at fair value on a recurring basis as of November 30, 2020 and August 31, 2020. |
WATER AND LAND ASSETS
WATER AND LAND ASSETS | 3 Months Ended |
Nov. 30, 2020 | |
WATER AND LAND ASSETS [Abstract] | |
WATER AND LAND ASSETS | NOTE 4 – WATER AND LAND ASSETS The Company’s water rights and current water and wastewater service agreements, including capitalized terms not defined herein, are more fully described in Note 4 – Water and Land Assets Investment in Water and Water Systems The Company’s Investments in Water and Water Systems consist of the following costs and accumulated depreciation and depletion at November 30, 2020 and August 31, 2020: November 30, 2020 August 31, 2020 Costs Accumulated Depreciation and Depletion Costs Accumulated Depreciation and Depletion (In thousands) Rangeview water supply $ 14,570 $ (16 ) $ 14,570 $ (15 ) Sky Ranch water rights and other costs 7,538 (1,035 ) 7,499 (981 ) Fairgrounds water and water system 2,900 (1,261 ) 2,900 (1,239 ) Rangeview water system 16,049 (929 ) 15,948 (789 ) Water supply – Other 7,735 (1,196 ) 7,550 (1,116 ) Wild Pointe service rights 1,632 (725 ) 1,632 (708 ) Sky Ranch pipeline 5,727 (650 ) 5,727 (602 ) Lost Creek water supply 3,372 — 3,372 — Construction in progress 1,454 — 1,339 — Totals 60,977 (5,812 ) 60,537 (5,450 ) Net investments in water and water systems $ 55,165 $ 55,087 Construction in progress primarily consists of additional water facilities at Sky Ranch. The Company anticipates the additional facilities will be placed in service during fiscal 2021. |
LONG-TERM OBLIGATIONS AND OPERA
LONG-TERM OBLIGATIONS AND OPERATING LEASE | 3 Months Ended |
Nov. 30, 2020 | |
LONG-TERM OBLIGATIONS AND OPERATING LEASE [Abstract] | |
LONG-TERM OBLIGATIONS AND OPERATING LEASE | NOTE 5 – LONG-TERM OBLIGATIONS AND OPERATING LEASE The Participating Interests in Export Water Supply is an obligation of the Company that has no scheduled maturity date. Therefore, maturity of this liability is not disclosed in tabular form but is described below. Participating Interests in Export Water Supply The acquisition of the Rangeview Water Supply was finalized with the signing of the Comprehensive Amendment Agreement in 1996. The CAA is explained in greater detail in Note 5 to the 2020 Annual Report. The terms and conditions of the CAA, other than whom the amounts are payable too, have not been modified since signing. 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. Additionally, if the Company does not sell the Export Water, the holders of the Series B Preferred Stock are 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 they are either retained by the Company or remitted to various parties pursuant to the CAA. As of November 30, 2020, the recorded obligation of the CAA is $0.3 million and the contingent off-balance sheet portion is $0.6 million. The CAA includes contractually established priorities which call for payments to CAA holders in order of their priority. This means that the first payees receive their full payment before the next priority level receives any payment and so on until full repayment. Of the next $6.3 million of Export Water payouts, which based on current payout levels would occur over several years, the Company will receive $5.6 million of revenue. Thereafter, the Company will be entitled to all but $0.2 million of the proceeds from the sale of Export Water after deduction of the Land Board royalty. Sky Ranch In November 2020, the Company entered into separate contracts with KB Home, Meritage Homes, Melody (a DR Horton Company) and Challenger Homes to sell 789 single-family attached and detached residential lots at the Sky Ranch property. This next development phase of Sky Ranch will incorporate approximately 250 acres and is planned to be completed in four sub-phases. Due to the Company’s strong performance in the first filing of the Sky Ranch project, the Company was able to realize a 30% increase in lot prices from $75,000 for a 50’ lot in phase one to $97,000 for the same 50’ lot in the first subphase of filing two. The timing of cash flows will include certain milestone deliveries, including, but not limited to, completion of governmental approvals for final plats, installation of wet utility public improvements, and final completion of lot deliveries. In January 2021, the Company expects to begin construction on the second filing at Sky Ranch, which is expected to include 895 residential lots. The 106 lots not currently under contract to home builders are being retained for future use. WISE Partnership The South Metro WISE Authority (“SMWA”) is a group of ten governmental or quasi-governmental water providers including the Rangeview District, that was formed to enable its members to participate in a regional water supply project known as the Water Infrastructure Supply Efficiency partnership (“WISE”) created by the “WISE Partnership Agreement,” defined below. Each member of SMWA controls a contractually defined share of WISE and the members’ rights and obligations with respect to WISE. The WISE Partnership Agreement provides for the purchase of certain infrastructure (i.e., pipelines, water storage facilities, water treatment facilities, and other appurtenant facilities) to deliver water to and among the ten members of the SMWA, and to “Denver Water” and “Aurora Water,” both defined below. Certain infrastructure has been constructed and other infrastructure will be constructed over the next several years. In December 2014, the Company, through the Rangeview District, consented to the waiver of all contingencies set forth in the Amended and Restated WISE Partnership – Water Delivery Agreement, dated December 31, 2013 (the “WISE Partnership Agreement”), among the City and County of Denver acting through its Board of Water Commissioners (“Denver Water”), the City of Aurora acting by and through its utility enterprise (“Aurora Water”). In December 2014, the Company and the Rangeview District entered the Rangeview/Pure Cycle WISE Project Financing and Service Agreement (the “WISE Financing Agreement”), which requires the Company to fund the Rangeview District’s participation in WISE. During the three months ended November 30, 2020 and 2019, the Company through the Rangeview District, purchased an additional 166 and 0 acre-feet of WISE water for $0.3 million and $0. See further discussion in Note 7 – Related Party Transactions. Lease Commitments In February 2018, the Company entered into an operating lease for 11,393 square feet of office and warehouse space in Watkins, Colorado. The lease has a three-year term with payments of $6,600 per month and an option to extend the primary lease term for a two-year period at a rate equal to a 12.5% increase over the primary base payments. For both three month periods ended November 30, 2020 and 2019, the Company recorded less than $0.1 million of rent expense related to its office lease. During both the three month periods ended November 30, 2020 and 2019, the Company paid less than $0.1 million against the Lease obligations — operating leases . Operating lease expense is generally recognized evenly over the term of the lease. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheet. For lease agreements entered into or reassessed in the future, the Company will be required to combine the lease and non-lease components in determining the lease liabilities and right-of-use (“ROU”) assets. The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rate of 6% on August 31, 2019, for all leases that commenced prior to that date. The Company elected the hindsight practical expedient to determine the lease term for existing leases, which resulted in the lengthening of the lease term related to the Company’s office lease. ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the condensed consolidated balance sheet as follows: As of November 30, 2020 As of August 31, 2020 (In thousands) Operating leases - right of use assets $ 178 $ 196 Accrued liabilities $ 78 $ 74 Lease obligations - operating leases, net of current portion 100 120 Total lease liability $ 178 $ 194 Weighted average remaining lease term (in years) 2 2 Weighted average discount rate 6 % 6 % |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 3 Months Ended |
Nov. 30, 2020 | |
SHAREHOLDERS' EQUITY [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 6 – SHAREHOLDERS’ EQUITY The Company maintains the 2014 Equity Incentive Plan (the “2014 Equity Plan”), which was approved by shareholders in January 2014 and became effective on April 12, 2014. Executives, eligible employees, consultants and non-employee directors are eligible to receive options and stock grants pursuant to the 2014 Equity Plan. Pursuant to the 2014 Equity Plan, options to purchase shares of stock and stock awards can be granted with exercise prices, vesting conditions and other performance criteria determined by the Compensation Committee of the board of directors. The Company has reserved 1.6 million shares of common stock for issuance under the 2014 Equity Plan. As of November 30, 2020 and August 30, 2020, there were 979,382 and 1,088,500 shares available for grant under the 2014 Equity Plan The following table summarizes the combined stock option activity for the 2004 Incentive Plan and 2014 Equity Plan for the three months ended November 30, 2020: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Approximate Aggregate Intrinsic Value (in thousands) Outstanding at August 31, 2020 661,500 $ 7.23 6.17 $ 1,831 Granted 115,000 $ 9.00 Net settlement exercised (18,000 ) $ 3.04 Outstanding at November 30, 2020 758,500 $ 7.59 6.61 $ 1,670 Options exercisable at November 30, 2020 540,167 $ 6.73 5.53 $ 1,608 On September 23, 2020, there were 85,000 stock options granted to employees, which vest evenly over five years from the date of the grant. All 85,000 options expire no more than ten years from the date of the grant. The weighted-average grant-date fair value of stock options granted was $3.93. Additionally, on September 23, 2020, there were 30,000 stock options granted to an executive officer which vest evenly over three years from the date of the grant. All 30,000 options expire no more than ten years from the date of the grant. The weighted-average grant-date fair value of stock options granted was $3.37. During the three months ended November 30, 2020, the Company had net settlement exercises of stock options, whereby the optionee did not pay cash for the options but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise. Net settlement exercises during the three months ended November 30, 2020, resulted in 12,118 shares issued and 5,882 options cancelled in settlement of shares issued. There were no net settlement exercises during the three months ended November 30, 2019. The following table summarizes the combined activity and value of non-vested options under the 2004 Equity Plan and 2014 Incentive Plan as of and for the three months ended November 30, 2020: Number of Options Weighted Average Grant Date Fair Value Non-vested options outstanding at August 31, 2020 179,999 $ 4.31 Granted 115,000 $ 3.78 Vested (76,666 ) $ 4.27 Forfeited (a) — $ — Non-vested options outstanding at November 30, 2020 218,333 $ 4.04 (a) All non-vested options are expected to vest. For the three months ended November 30, 2020 and 2019, the Company recorded less than $0.1 million and $0.1 million of stock-based compensation expense. At November 30, 2020, the Company had unrecognized compensation expenses totaling $0.8 million relating to non-vested options that are expected to vest. The weighted-average period over which these options are expected to vest is approximately three years. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Nov. 30, 2020 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS The Rangeview District The Rangeview District is a quasi-municipal corporation and political subdivision of Colorado formed in 1986 for the purpose of providing water and wastewater service to the Lowry Range and other approved areas. The Rangeview District is governed by an elected board of directors. Eligible voters and persons eligible to serve as a director of the Rangeview District must own an interest in property within the boundaries of the Rangeview District. The Company owns certain rights and real property interests which encompass the current boundaries of the Rangeview District. On December 16, 2009, the Company entered into a Participation Agreement with the Rangeview District, whereby the Company agreed to provide funding to the Rangeview District in connection with the Rangeview District joining the South Metro Water Supply Authority (“SMWSA”). The Company provides funding pursuant to the Participation Agreement annually, which for fiscal 2021 and 2020 is an immaterial amount. Through the WISE Financing Agreement, the Company agreed to fund the Rangeview District’s cost of participating in the regional water supply project known as the WISE partnership. During the three months ended November 30, 2020 and 2019, the Company through the Rangeview District, purchased an additional 166 and 0 acre-feet of WISE water for $0.3 million and $0 . The cost of the water to the members is based on the water rates charged by Aurora Water and can be adjusted each January 1. As of January 1, 2020, WISE water was $5.77 per thousand gallons and such rate will remain in effect through calendar 2021. In addition, the Company pays certain system operational and construction costs. If a WISE member, including the Rangeview District, does not need its WISE water each year or a member needs additional water, the members can trade and/or buy and sell water amongst themselves. To date, the Company has capitalized the funding provided pursuant to the WISE Financing Agreement because the funding has been provided to purchase capacity in the WISE infrastructure. The Company’s total investment in the WISE assets as of November 30, 2020, is $6.1 million. In 1995, the Company extended a loan to the Rangeview District. The loan provided for borrowings of up to $250,000, is unsecured, and bears interest based on the prevailing prime rate plus 2% (5.25% at November 30, 2020). The maturity date of the loan is December 31, 2020, at which time it will automatically renew for another 12 month term. In January 2014, the Rangeview District and the Company entered into a funding agreement that allows the Company to continue to provide funding to the Rangeview District for day-to-day operations and accrue the funding into a note that bears interest at a rate of 8% per annum and remains in full force and effect for so long as the 2014 Amended and Restated Lease Agreement remains in effect. Of the November 30, 2020 balance in Notes receivable - related parties, Notes receivable - related parties, Sky Ranch Community Authority Board Sky Ranch Metropolitan District Nos. 1, 3, 4 and 5 (collectively, the “Sky Ranch Districts”) and the Sky Ranch CAB are quasi-municipal corporations and political subdivisions of Colorado formed for the purpose of providing service to the Company’s Sky Ranch property. The current members of the board of directors of each of the Rangeview District, the Sky Ranch Districts and the Sky Ranch CAB consist of three employees of the Company and one independent board member. Pursuant to that certain Community Authority Board Establishment Agreement, as the same may be amended from time to time, Sky Ranch Metropolitan District Nos. 1 and 5 formed the Sky Ranch CAB to, among other things, design, construct, finance, operate and maintain certain public improvements for the benefit of the property within the boundaries and/or service area of the Sky Ranch Districts. In order for the public improvements to be constructed and/or acquired, it is necessary for each Sky Ranch District, directly or through the Sky Ranch CAB, to be able to fund the improvements and pay its ongoing operations and maintenance expenses related to the provision of services that benefit the property. The Company and the Sky Ranch CAB entered into a Facilities Funding and Acquisition Agreement (the “FFAA”) effective November 2017, obligating the company to advance funding to the Sky Ranch CAB for specified public improvements constructed from 2018 to 2023. All amounts owed under the FFAA bear interest at a rate of 6% per annum. Due to the uncertainty of collecting the interest (because payment is contingent on the issuance of bonds), interest income is not recognized on the amounts owed by the Sky Ranch CAB until the bonds are issued. Due to this contingency, interest is deferred until the point in time when bonds are issued. At that point, the accrued interest will be recognized. The Sky Ranch CAB agrees to exercise reasonable efforts to issue bonds to reimburse the Company subject to certain limitations. In addition, the Sky Ranch CAB agrees to utilize any available moneys not otherwise pledged to payment of debt, used for operation and maintenance expenses, or otherwise encumbered, to reimburse the Company. Any advances not paid or reimbursed by the Sky Ranch CAB by December 31, 2058, shall be deemed forever discharged and satisfied in full. As of November 30, 2020, the balance of the Company’s advances for improvements, including interest, net of costs reimbursed in November 2019, to the Sky Ranch CAB totaled $21.1 million, of which $0.3 million is included in Accrued liabilities, Land development construction costs and $1.5 million of interest, which has not yet been recognized Land development nventories. Other income. T Refer to Note 2 – Revenue Recognition In September 2018, effective as of November 13, 2017, the Company entered into an Operation Funding Agreement with the Sky Ranch CAB obligating the Company to advance funding to the Sky Ranch CAB for operation and maintenance expenses for the 2018 and 2019 calendar years. All payments are subject to annual appropriations by the Sky Ranch CAB in its absolute discretion. The advances by the Company accrue interest at the rate of 6% per annum from the date of the advance. As of the November 30, 2020 and August 31, 2020, the balances included in Notes receivable – related parties, |
SIGNIFICANT CUSTOMERS
SIGNIFICANT CUSTOMERS | 3 Months Ended |
Nov. 30, 2020 | |
SIGNIFICANT CUSTOMERS [Abstract] | |
SIGNIFICANT CUSTOMERS | NOTE 8 – SIGNIFICANT CUSTOMERS The Company has significant customers in its operations. For the water and wastewater resource development segment, the Company primarily provides water and wastewater services on behalf of Rangeview Metropolitan District. The significant end users include all Sky Ranch homes combined and Crestone Peak Resources (oil & gas operations). For the land development segment and water and wastewater tap fees, which are reported within the water and wastewater resource development segment, significant customers include Taylor Morrison, KB Home and Richmond Homes. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 3 Months Ended |
Nov. 30, 2020 | |
ACCRUED LIABILITIES [Abstract] | |
ACCRUED LIABILITIES | NOTE 9 – ACCRUED LIABILITIES November 30, 2020 August 31, 2020 (In thousands) Due to the Sky Ranch CAB - related party $ 823 $ 1,169 Other operating payables 329 353 WISE water 326 69 Land development - warranty and other - related party 321 — Accrued compensation 146 767 Operating lease obligations 78 74 Property taxes 56 72 Professional fees 54 56 Due to the Rangeview District - related party 47 43 Total $ 2,180 $ 2,603 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Nov. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES The Company has historically been 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 material 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 was not involved in litigation or other legal proceedings and had no contingencies where the risk of material loss was reasonably possible as of November 30, 2020, or August 31, 2020. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Nov. 30, 2020 | |
SEGMENT INFORMATION [Abstract] | |
SEGMENT INFORMATION | NOTE 11 – SEGMENT INFORMATION Because of the methods used by the Chief Operating Decision Maker (the “CODM”) to allocate resources, the Company has identified two operating segments which meet GAAP segment disclosure requirements, namely the water and wastewater resource development segment and the land development segment. The water and wastewater resource development business includes selling water services to customers, which water is provided by the Company using water rights owned or controlled by the Company, and developing infrastructure to divert, treat and distribute that water and collect, treat and reuse wastewater. The land development segment includes all the activities necessary to develop and sell finished lots, which as of and for the three months ended November 30, 2020 and 2019, was done exclusively at the Company’s Sky Ranch Master Planned Community. Oil and gas operations, although material in certain years, are deemed a passive activity as the CODM does not actively allocate resources to these projects; therefore, this is not classified as a reportable segment. The tables below present the measure of profit and assets the CODM uses to assess the performance of the segment for the periods presented: Three Months Ended November 30, 2020 Water and wastewater resource development Land development Corporate Total (In thousands) Total Revenue $ 2,512 $ 2,356 $ — $ 4,868 Cost of revenue (661 ) (1,719 ) — (2,380 ) Depreciation and depletion (365 ) — — (365 ) Total cost of revenue (1,026 ) (1,719 ) — (2,745 ) Gross Margin 1,486 637 — 2,123 Pretax operating income $ 1,486 $ 637 $ (1,170 ) $ 953 Three Months Ended November 30, 2019 Water and wastewater resource development Land development Corporate Total (In thousands) Total Revenue $ 1,918 $ 8,542 $ — $ 10,460 Cost of revenue (304 ) (8,063 ) — (8,367 ) Depreciation and depletion (219 ) — — (219 ) Total cost of revenue (523 ) (8,063 ) — (8,586 ) Gross Margin 1,395 479 — 1,874 Reimbursement of construction costs — 6,276 — 6,276 Gross Margin after reimbursables $ 1,395 $ 6,755 $ — $ 8,150 Pretax operating income $ 1,395 $ 479 $ (886 ) $ 988 The following table summarizes total assets for the Company’s water and wastewater resource development business and land development business by segment. The assets consist of water rights and water and wastewater systems in the Company’s water and wastewater resource development segment and land, inventories and deposits in the Company’s land development segment. The Company’s other assets (“Corporate”) primarily consist of cash and cash equivalents, equipment, mineral rights, related party notes receivables and an income tax receivable. November 30, 2020 August 31, 2020 (In thousands) Water and wastewater resource development $ 55,376 $ 56,267 Land development 6,598 6,975 Corporate 26,979 26,519 Total assets $ 88,953 $ 89,761 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Nov. 30, 2020 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 12 – INCOME TAXES For the three months ended November 30, 2020 and 2019, the Company recorded income tax expense of $0.3 million and $1.9 million. The net expense during the three months ended November 30, 2020 consisted of current income tax expense of $0.2 million and deferred income tax expense of $0.2 million. The net expense during the three months ended November 30, 2019 consisted of current income tax expense of $1.2 million and deferred income tax expense of $0.7 million. The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items. At November 30, 2020 the Company is estimating an annual effective tax rate of approximately 25%. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to various factors. The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. For the three months ended November 30, 2020 and 2019, the Company’s effective income tax rate was 24.6% and 24.7% No taxes were paid during the three months ended November 30, 2020 and 2019, respectively. 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 liability as of November 30, 2020 and August 31, 2020 are as follows: November 30, 2020 August 31, 2020 Deferred tax assets (liabilities): (In thousands) Net operating loss carryforwards $ — $ 23 Accrued compensation 33 167 Deferred revenues 76 89 Depreciation and depletion (1,672 ) (1,701 ) Non-qualified stock options 505 491 Other 46 45 Net deferred tax liability $ (1,012 ) $ (886 ) |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Nov. 30, 2020 | |
EARNINGS PER SHARE [Abstract] | |
EARNINGS PER SHARE | NOTE 13 – EARNINGS PER SHARE Certain outstanding options are excluded from the diluted earnings per share calculation because they are anti-dilutive (i.e., their assumed conversion into common stock would increase rather than decrease earnings per share). The options excluded totaled 180,000 for the three months ended November 30, 2020. There were no excluded options for the three months ended November 30, 2019. Three Months Ended November 30, 2020 2019 (In thousands, except share and per share amounts) Net Income $ 845 $ 5,763 Basic weighted average common shares 23,866,740 23,826,598 Effect of dilutive securities 169,739 224,097 Weighted average shares applicable to diluted earnings per share 24,036,479 24,050,695 Earnings per share - basic $ 0.04 $ 0.24 Earnings per share - diluted $ 0.04 $ 0.24 |
PRESENTATION OF INTERIM INFOR_2
PRESENTATION OF INTERIM INFORMATION (Policies) | 3 Months Ended |
Nov. 30, 2020 | |
PRESENTATION OF INTERIM INFORMATION [Abstract] | |
Basis of Presentation | The November 30, 2020 condensed consolidated balance sheet, the condensed consolidated statements of operations and comprehensive income for the three months ended November 30, 2020 and 2019, the condensed consolidated statements of shareholders’ equity for the three months ended November 30, 2020 and 2019, and the condensed consolidated statements of cash flows for the three months ended November 30, 2020 and 2019 have been prepared by Pure Cycle Corporation (the “Company”) and have not been audited. The unaudited condensed consolidated financial statements include all adjustments that are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows at November 30, 2020, and for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is suggested that the accompanying condensed consolidated financial statements and notes be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2020 (the “2020 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on November 10, 2020. The results of operations for interim periods presented are not necessarily indicative of the operating results expected for the full fiscal year. The August 31, 2020 balance sheet was derived from the Company’s audited consolidated financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with 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. Estimates are used to account for certain items such as revenue recognition, reimbursable costs and expenses, costs of revenue for lot sales, share-based compensation, deferred tax asset and liability valuation, depreciation and the recoverability of long lived assets. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to COVID-19. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company continually assesses new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and to ensure that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below: In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments continues to monitor economic implications of the COVID-19 pandemic; however, based on current market conditions, the Company does not expect the adoption of ASU 2016-13 to have a material impact on the Company’s financial statements. |
REVENUE RECOGNITION AND REIMB_2
REVENUE RECOGNITION AND REIMBURSABLE COSTS (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
REVENUE RECOGNITION AND REIMBURSABLE COSTS [Abstract] | |
Reimbursable Costs | The following table summarizes the amounts the Company paid, what was repaid by the Sky Ranch CAB and amounts still owed to the Company by the Sky Ranch CAB: As of November 30, 2020 Costs incurred to date Payments repaid by Sky Ranch CAB Amounts payable to Pure Cycle by the Sky Ranch CAB (In thousands) Public Improvements $ 28,008 $ 10,505 $ 17,503 Accrued interest 1,456 — 1,456 Project management services 1,496 — 1,496 Construction support activities 683 — 683 Total reimbursable costs $ 31,643 $ 10,505 $ 21,138 |
Deferred Revenue and Changes in Deferred Revenue | Deferred revenue by segment is as follows: November 30, 2020 August 31, 2020 (In thousands) Land development segment $ 1,462 $ 1,636 Water and wastewater resource development segment 713 1,965 Balance, end of period $ 2,175 $ 3,601 Changes in deferred revenue were as follows: November 30, 2020 (In thousands) Balance, August 31, 2020 $ 3,601 Deferral of revenue 2,182 Recognition of unearned revenue (3,608 ) Balance, November 30, 2020 $ 2,175 |
WATER AND LAND ASSETS (Tables)
WATER AND LAND ASSETS (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
WATER AND LAND ASSETS [Abstract] | |
Investments in Water and Water Systems | The Company’s Investments in Water and Water Systems consist of the following costs and accumulated depreciation and depletion at November 30, 2020 and August 31, 2020: November 30, 2020 August 31, 2020 Costs Accumulated Depreciation and Depletion Costs Accumulated Depreciation and Depletion (In thousands) Rangeview water supply $ 14,570 $ (16 ) $ 14,570 $ (15 ) Sky Ranch water rights and other costs 7,538 (1,035 ) 7,499 (981 ) Fairgrounds water and water system 2,900 (1,261 ) 2,900 (1,239 ) Rangeview water system 16,049 (929 ) 15,948 (789 ) Water supply – Other 7,735 (1,196 ) 7,550 (1,116 ) Wild Pointe service rights 1,632 (725 ) 1,632 (708 ) Sky Ranch pipeline 5,727 (650 ) 5,727 (602 ) Lost Creek water supply 3,372 — 3,372 — Construction in progress 1,454 — 1,339 — Totals 60,977 (5,812 ) 60,537 (5,450 ) Net investments in water and water systems $ 55,165 $ 55,087 |
LONG-TERM OBLIGATIONS AND OPE_2
LONG-TERM OBLIGATIONS AND OPERATING LEASE (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
LONG-TERM OBLIGATIONS AND OPERATING LEASE [Abstract] | |
ROU Lease Assets and Lease Liabilities | ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the condensed consolidated balance sheet as follows: As of November 30, 2020 As of August 31, 2020 (In thousands) Operating leases - right of use assets $ 178 $ 196 Accrued liabilities $ 78 $ 74 Lease obligations - operating leases, net of current portion 100 120 Total lease liability $ 178 $ 194 Weighted average remaining lease term (in years) 2 2 Weighted average discount rate 6 % 6 % |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
SHAREHOLDERS' EQUITY [Abstract] | |
Stock Option Activity | The following table summarizes the combined stock option activity for the 2004 Incentive Plan and 2014 Equity Plan for the three months ended November 30, 2020: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Approximate Aggregate Intrinsic Value (in thousands) Outstanding at August 31, 2020 661,500 $ 7.23 6.17 $ 1,831 Granted 115,000 $ 9.00 Net settlement exercised (18,000 ) $ 3.04 Outstanding at November 30, 2020 758,500 $ 7.59 6.61 $ 1,670 Options exercisable at November 30, 2020 540,167 $ 6.73 5.53 $ 1,608 |
Non-Vested Options | The following table summarizes the combined activity and value of non-vested options under the 2004 Equity Plan and 2014 Incentive Plan as of and for the three months ended November 30, 2020: Number of Options Weighted Average Grant Date Fair Value Non-vested options outstanding at August 31, 2020 179,999 $ 4.31 Granted 115,000 $ 3.78 Vested (76,666 ) $ 4.27 Forfeited (a) — $ — Non-vested options outstanding at November 30, 2020 218,333 $ 4.04 (a) All non-vested options are expected to vest. |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
ACCRUED LIABILITIES [Abstract] | |
Accrued Liabilities | November 30, 2020 August 31, 2020 (In thousands) Due to the Sky Ranch CAB - related party $ 823 $ 1,169 Other operating payables 329 353 WISE water 326 69 Land development - warranty and other - related party 321 — Accrued compensation 146 767 Operating lease obligations 78 74 Property taxes 56 72 Professional fees 54 56 Due to the Rangeview District - related party 47 43 Total $ 2,180 $ 2,603 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
SEGMENT INFORMATION [Abstract] | |
Segment Information | The tables below present the measure of profit and assets the CODM uses to assess the performance of the segment for the periods presented: Three Months Ended November 30, 2020 Water and wastewater resource development Land development Corporate Total (In thousands) Total Revenue $ 2,512 $ 2,356 $ — $ 4,868 Cost of revenue (661 ) (1,719 ) — (2,380 ) Depreciation and depletion (365 ) — — (365 ) Total cost of revenue (1,026 ) (1,719 ) — (2,745 ) Gross Margin 1,486 637 — 2,123 Pretax operating income $ 1,486 $ 637 $ (1,170 ) $ 953 Three Months Ended November 30, 2019 Water and wastewater resource development Land development Corporate Total (In thousands) Total Revenue $ 1,918 $ 8,542 $ — $ 10,460 Cost of revenue (304 ) (8,063 ) — (8,367 ) Depreciation and depletion (219 ) — — (219 ) Total cost of revenue (523 ) (8,063 ) — (8,586 ) Gross Margin 1,395 479 — 1,874 Reimbursement of construction costs — 6,276 — 6,276 Gross Margin after reimbursables $ 1,395 $ 6,755 $ — $ 8,150 Pretax operating income $ 1,395 $ 479 $ (886 ) $ 988 The following table summarizes total assets for the Company’s water and wastewater resource development business and land development business by segment. The assets consist of water rights and water and wastewater systems in the Company’s water and wastewater resource development segment and land, inventories and deposits in the Company’s land development segment. The Company’s other assets (“Corporate”) primarily consist of cash and cash equivalents, equipment, mineral rights, related party notes receivables and an income tax receivable. November 30, 2020 August 31, 2020 (In thousands) Water and wastewater resource development $ 55,376 $ 56,267 Land development 6,598 6,975 Corporate 26,979 26,519 Total assets $ 88,953 $ 89,761 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
INCOME TAXES [Abstract] | |
Deferred Tax Assets (Liabilities) | Significant components of the Company’s deferred tax liability as of November 30, 2020 and August 31, 2020 are as follows: November 30, 2020 August 31, 2020 Deferred tax assets (liabilities): (In thousands) Net operating loss carryforwards $ — $ 23 Accrued compensation 33 167 Deferred revenues 76 89 Depreciation and depletion (1,672 ) (1,701 ) Non-qualified stock options 505 491 Other 46 45 Net deferred tax liability $ (1,012 ) $ (886 ) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Nov. 30, 2020 | |
EARNINGS PER SHARE [Abstract] | |
Earnings per Share | Three Months Ended November 30, 2020 2019 (In thousands, except share and per share amounts) Net Income $ 845 $ 5,763 Basic weighted average common shares 23,866,740 23,826,598 Effect of dilutive securities 169,739 224,097 Weighted average shares applicable to diluted earnings per share 24,036,479 24,050,695 Earnings per share - basic $ 0.04 $ 0.24 Earnings per share - diluted $ 0.04 $ 0.24 |
REVENUE RECOGNITION AND REIMB_3
REVENUE RECOGNITION AND REIMBURSABLE COSTS, Reimbursable Public Improvement Costs (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Nov. 30, 2019USD ($) | Nov. 30, 2020USD ($)SegmentAgreement | Nov. 30, 2019USD ($) | |
Revenue Recognition and Reimbursable Costs [Abstract] | |||
Number of operating segments | Segment | 2 | ||
Reimbursement of construction costs | $ 0 | $ 6,276 | |
Reduction in Land development inventories from reimbursement of advances for improvements | $ (4,200) | ||
Sky Ranch CAB [Member] | |||
Revenue Recognition and Reimbursable Costs [Abstract] | |||
Advances for improvements | 31,600 | ||
Reimbursement of advances for improvements | 10,500 | ||
Remaining reimbursable advances for improvements | $ 21,100 | ||
Reimbursement of construction costs | 6,300 | ||
Number of service agreements | Agreement | 2 | ||
Project management fee percentage | 5.00% | ||
Sky Ranch CAB [Member] | Bonds [Member] | |||
Revenue Recognition and Reimbursable Costs [Abstract] | |||
Face amount | $ 13,200 | $ 13,200 |
REVENUE RECOGNITION AND REIMB_4
REVENUE RECOGNITION AND REIMBURSABLE COSTS, Reimbursable Costs Incurred to Date (Details) $ in Thousands | Dec. 31, 2021USD ($) | Nov. 30, 2020USD ($)Lot |
Reimbursable Costs, Net [Abstract] | ||
Number of initial lots | Lot | 506 | |
Sky Ranch CAB [Member] | ||
Reimbursable Costs, Net [Abstract] | ||
Costs incurred to date | $ 31,600 | |
Payments repaid by Sky Ranch CAB | 10,500 | |
Amounts payable to Pure Cycle by the Sky Ranch CAB | 21,100 | |
Sky Ranch CAB [Member] | Public Improvements [Member] | ||
Reimbursable Costs, Net [Abstract] | ||
Costs incurred to date | 28,008 | |
Payments repaid by Sky Ranch CAB | 10,505 | |
Amounts payable to Pure Cycle by the Sky Ranch CAB | 17,503 | |
Sky Ranch CAB [Member] | Public Improvements [Member] | Forecast [Member] | ||
Reimbursable Costs, Net [Abstract] | ||
Costs incurred to date | $ 1,300 | |
Sky Ranch CAB [Member] | Accrued Interest [Member] | ||
Reimbursable Costs, Net [Abstract] | ||
Costs incurred to date | 1,456 | |
Payments repaid by Sky Ranch CAB | 0 | |
Amounts payable to Pure Cycle by the Sky Ranch CAB | 1,456 | |
Sky Ranch CAB [Member] | Project Management Services [Member] | ||
Reimbursable Costs, Net [Abstract] | ||
Costs incurred to date | 1,496 | |
Payments repaid by Sky Ranch CAB | 0 | |
Amounts payable to Pure Cycle by the Sky Ranch CAB | 1,496 | |
Sky Ranch CAB [Member] | Construction Support Activities [Member] | ||
Reimbursable Costs, Net [Abstract] | ||
Costs incurred to date | 683 | |
Payments repaid by Sky Ranch CAB | 0 | |
Amounts payable to Pure Cycle by the Sky Ranch CAB | $ 683 |
REVENUE RECOGNITION AND REIMB_5
REVENUE RECOGNITION AND REIMBURSABLE COSTS, Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Nov. 30, 2020 | Nov. 30, 2019 | |
Deferred Revenue [Abstract] | ||
Balance | $ 3,601 | |
Deferral of revenue | 2,182 | |
Recognition of unearned revenue | (3,608) | |
Balance | 2,175 | |
Sky Ranch CAB [Member] | ||
Deferred Revenue [Abstract] | ||
Final payment received | 2,200 | |
Proceeds received from sale of finished lots | 1,600 | |
Proceeds received for neighborhood amenities | 600 | |
Land Development Segment [Member] | ||
Deferred Revenue [Abstract] | ||
Balance | 1,636 | |
Recognition of unearned revenue | (2,400) | $ (8,500) |
Balance | 1,462 | |
Water and Wastewater Resource Development Segment [Member] | ||
Deferred Revenue [Abstract] | ||
Balance | 1,965 | |
Recognition of unearned revenue | (1,200) | $ (1,900) |
Balance | $ 713 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) | Nov. 30, 2020USD ($)AssetLiability | Aug. 31, 2020USD ($)AssetLiability |
Level 1 [Member] | ||
Fair Value Measurements [Abstract] | ||
Number of assets | Asset | 0 | 0 |
Number of liabilities | 0 | 0 |
Level 2 [Member] | ||
Fair Value Measurements [Abstract] | ||
Number of assets | Asset | 0 | 0 |
Number of liabilities | 0 | 0 |
Level 3 [Member] | ||
Fair Value Measurements [Abstract] | ||
Number of liabilities | 1 | 1 |
Recurring [Member] | ||
Fair Value Measurements [Abstract] | ||
Assets measured at fair value | $ | $ 0 | $ 0 |
Liabilities measured at fair value | $ | $ 0 | $ 0 |
WATER AND LAND ASSETS (Details)
WATER AND LAND ASSETS (Details) - USD ($) $ in Thousands | Nov. 30, 2020 | Aug. 31, 2020 |
Investment in Water and Water Systems [Abstract] | ||
Costs | $ 60,977 | $ 60,537 |
Accumulated depreciation and depletion | (5,812) | (5,450) |
Net investments in water and water systems | 55,165 | 55,087 |
Rangeview Water Supply [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 14,570 | 14,570 |
Accumulated depreciation and depletion | (16) | (15) |
Sky Ranch Water Rights and Other Costs [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 7,538 | 7,499 |
Accumulated depreciation and depletion | (1,035) | (981) |
Fairgrounds Water And Water System [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 2,900 | 2,900 |
Accumulated depreciation and depletion | (1,261) | (1,239) |
Rangeview Water System [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 16,049 | 15,948 |
Accumulated depreciation and depletion | (929) | (789) |
Water Supply - Other [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 7,735 | 7,550 |
Accumulated depreciation and depletion | (1,196) | (1,116) |
Wild Pointe Service Rights [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 1,632 | 1,632 |
Accumulated depreciation and depletion | (725) | (708) |
Sky Ranch Pipeline [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 5,727 | 5,727 |
Accumulated depreciation and depletion | (650) | (602) |
Lost Creek Water Supply [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 3,372 | 3,372 |
Accumulated depreciation and depletion | 0 | 0 |
Construction in Progress [Member] | ||
Investment in Water and Water Systems [Abstract] | ||
Costs | 1,454 | 1,339 |
Accumulated depreciation and depletion | $ 0 | $ 0 |
LONG-TERM OBLIGATIONS AND OPE_3
LONG-TERM OBLIGATIONS AND OPERATING LEASE, Long-Term Obligations (Details) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2020USD ($)Memberacre ft | Nov. 30, 2019USD ($)acre ft | Aug. 31, 2020USD ($) | |
Participating Interests in Export Water Supply [Abstract] | |||
Participating interests in export water supply | $ 327 | $ 328 | |
Contingent off-balance sheet liability | 600 | ||
Expected future export water payouts | 6,300 | ||
Revenue receivables from sale of export water | 5,600 | ||
Expected proceeds from sale of export water after deduction of Land Board royalty | $ 200 | ||
SMWA [Member] | |||
WISE Partnership [Abstract] | |||
Number of other governmental or quasi-governmental water providers | Member | 10 | ||
Number of members | Member | 10 | ||
Rangeview District [Member] | WISE Partnership [Member] | |||
WISE Partnership [Abstract] | |||
Volume of water purchased | acre ft | 166 | 0 | |
Purchase of water | $ 300 | $ 0 |
LONG-TERM OBLIGATIONS AND OPE_4
LONG-TERM OBLIGATIONS AND OPERATING LEASE, Lease Commitments (Details) | 3 Months Ended | ||
Nov. 30, 2020USD ($)ft² | Nov. 30, 2019USD ($) | Aug. 31, 2020USD ($) | |
Lease Commitments [Abstract] | |||
Area of office and warehouse | ft² | 11,393 | ||
Operating lease term | 3 years | ||
Monthly base rent of operating lease | $ 6,600 | ||
Operating lease extension term | 2 years | ||
Percentage of increase in primary base payment for operating lease | 12.50% | ||
Payment against lease obligation, operating lease | $ 100,000 | $ 100,000 | |
ROU Lease Assets and Lease Liabilities [Abstract] | |||
Operating leases - right of use assets | 178,000 | $ 196,000 | |
Lease Liabilities [Abstract] | |||
Lease obligations - operating leases, current portion | 78,000 | 74,000 | |
Lease obligations - operating leases, net of current portion | 100,000 | 120,000 | |
Total lease liability | $ 178,000 | $ 194,000 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OperatingLeaseLiabilityNoncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent | |
Weighted average remaining lease term | 2 years | 2 years | |
Weighted average discount rate | 6.00% | 6.00% | |
Maximum [Member] | |||
Lease Commitments [Abstract] | |||
Operating lease expense | $ 100,000 | $ 100,000 |
SHAREHOLDERS' EQUITY, Stock Opt
SHAREHOLDERS' EQUITY, Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 23, 2020 | Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | Aug. 30, 2020 |
2014 Equity Plan [Member] | |||||
Shareholders' Equity [Abstract] | |||||
Shares reserved for issuance (in shares) | 1,600,000 | ||||
Shares available for grant (in shares) | 979,382 | 1,088,500 | |||
2004 Incentive Plan and 2014 Equity Plan [Member] | |||||
Number of Options [Roll Forward] | |||||
Outstanding, beginning of period (in shares) | 661,500 | ||||
Granted (in shares) | 115,000 | ||||
Net settlement exercised (in shares) | (18,000) | 0 | |||
Outstanding, end of period (in shares) | 758,500 | 661,500 | |||
Options exercisable (in shares) | 540,167 | ||||
Weighted Average Exercise Price [Roll Forward] | |||||
Outstanding, beginning of period (in dollars per share) | $ 7.23 | ||||
Granted (in dollars per share) | 9 | ||||
Net settlement exercised (in dollars per share) | 3.04 | ||||
Outstanding, end of period (in dollars per share) | 7.59 | $ 7.23 | |||
Options exercisable (in dollars per share) | $ 6.73 | ||||
Stock Options [Abstract] | |||||
Weighted average remaining contractual term | 6 years 7 months 10 days | 6 years 2 months 1 day | |||
Weighted average remaining contractual term, options exercisable | 5 years 6 months 11 days | ||||
Approximate aggregate intrinsic value, outstanding | $ 1,670 | $ 1,831 | |||
Approximate aggregate intrinsic value, options exercisable | $ 1,608 | ||||
Weighted average grant-date fair value (in dollars per share) | $ 3.78 | ||||
Shares issued (in shares) | 12,118 | ||||
Options cancelled (in shares) | 5,882 | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | Employee [Member] | |||||
Number of Options [Roll Forward] | |||||
Granted (in shares) | 85,000 | ||||
Stock Options [Abstract] | |||||
Vesting period | 5 years | ||||
Weighted average grant-date fair value (in dollars per share) | $ 3.93 | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | Employee [Member] | Maximum [Member] | |||||
Stock Options [Abstract] | |||||
Expiration period | 10 years | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | Executive Officer [Member] | |||||
Number of Options [Roll Forward] | |||||
Granted (in shares) | 30,000 | ||||
Stock Options [Abstract] | |||||
Vesting period | 3 years | ||||
Weighted average grant-date fair value (in dollars per share) | $ 3.37 | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | Executive Officer [Member] | Maximum [Member] | |||||
Stock Options [Abstract] | |||||
Expiration period | 10 years |
SHAREHOLDERS' EQUITY, Non-Veste
SHAREHOLDERS' EQUITY, Non-Vested Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | ||
Stock Options [Abstract] | |||
Share-based compensation expense | $ 86 | $ 105 | |
2004 Incentive Plan and 2014 Equity Plan [Member] | |||
Number of Options [Roll Forward] | |||
Non-vested options outstanding, beginning of period (in shares) | 179,999 | ||
Granted (in shares) | 115,000 | ||
Vested (in shares) | (76,666) | ||
Forfeited (in shares) | [1] | 0 | |
Non-vested options outstanding, end of period (in shares) | 218,333 | ||
Weighted Average Grant Date Fair Value [Abstract] | |||
Non-vested options outstanding, beginning of period (in dollars per share) | $ 4.31 | ||
Granted (in dollars per share) | 3.78 | ||
Vested (in dollars per share) | 4.27 | ||
Forfeited (in dollars per share) | [1] | 0 | |
Non-vested options outstanding, end of period (in dollars per share) | $ 4.04 | ||
Stock Options [Abstract] | |||
Unrecognized compensation expenses | $ 800 | ||
Weighted-average period for options expected to vest | 3 years | ||
2004 Incentive Plan and 2014 Equity Plan [Member] | Maximum [Member] | |||
Stock Options [Abstract] | |||
Share-based compensation expense | $ 100 | $ 100 | |
[1] | All non-vested options are expected to vest. |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 3 Months Ended | |||
Nov. 30, 2020USD ($)EmployeeBoardMemberacre ft | Nov. 30, 2019USD ($)acre ft | Aug. 31, 2020USD ($) | Jan. 01, 2020USD ($) | |
FFAA [Member] | ||||
Related Party Transactions [Abstract] | ||||
Interest rate | 6.00% | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | ||||
Related Party Transactions [Abstract] | ||||
Number of employee board of directors | Employee | 3 | |||
Number of independent board of directors | BoardMember | 1 | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | Loans Receivable [Member] | ||||
Related Party Transactions [Abstract] | ||||
Maximum borrowing capacity | $ 250,000 | |||
Interest rate | 5.25% | |||
Maturity date | Dec. 31, 2020 | |||
Renewal term | 12 months | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | Loans Receivable [Member] | Prime Rate [Member] | ||||
Related Party Transactions [Abstract] | ||||
Basis spread on variable rate | 2.00% | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | Notes Receivable [Member] | ||||
Related Party Transactions [Abstract] | ||||
Interest rate | 8.00% | |||
Notes receivable | $ 1,100,000 | $ 1,100,000 | ||
Notes receivable, principal | 700,000 | 600,000 | ||
Notes receivable, accrued interest | $ 400,000 | $ 500,000 | ||
Rangeview District [Member] | WISE Partnership [Member] | ||||
Related Party Transactions [Abstract] | ||||
Volume of water purchased | acre ft | 166 | 0 | ||
Purchase of water | $ 300,000 | $ 0 | ||
Water rate | $ 5.77 | |||
Investments in the WISE assets | $ 6,100,000 | |||
Sky Ranch CAB [Member] | ||||
Related Party Transactions [Abstract] | ||||
Interest rate | 6.00% | |||
Remaining reimbursable advances for improvements | $ 21,100,000 | |||
Reimbursable advances expensed | 19,300,000 | |||
Advances for improvements | 31,600,000 | |||
Sky Ranch CAB [Member] | Accrued Liabilities [Member] | ||||
Related Party Transactions [Abstract] | ||||
Remaining reimbursable advances for improvements | 300,000 | |||
Sky Ranch CAB [Member] | Accrued Interest [Member] | ||||
Related Party Transactions [Abstract] | ||||
Remaining reimbursable advances for improvements | 1,456,000 | |||
Advances for improvements | $ 1,456,000 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands | Nov. 30, 2020 | Aug. 31, 2020 |
ACCRUED LIABILITIES [Abstract] | ||
Due to the Sky Ranch CAB - related party | $ 823 | $ 1,169 |
Other operating payables | 329 | 353 |
WISE water | 326 | 69 |
Land development - warranty and other - related party | 321 | 0 |
Accrued compensation | 146 | 767 |
Operating lease obligations | 78 | 74 |
Property taxes | 56 | 72 |
Professional fees | 54 | 56 |
Due to the Rangeview District - related party | 47 | 43 |
Total | $ 2,180 | $ 2,603 |
SEGMENT INFORMATION, Revenue by
SEGMENT INFORMATION, Revenue by Segments (Details) $ in Thousands | 3 Months Ended | |
Nov. 30, 2020USD ($)Segment | Nov. 30, 2019USD ($) | |
SEGMENT INFORMATION [Abstract] | ||
Number of operating segments | Segment | 2 | |
Segment Information [Abstract] | ||
Total revenue | $ 4,868 | $ 10,460 |
Cost of revenue | (2,380) | (8,367) |
Depreciation and depletion | (365) | (219) |
Total cost of revenues | (2,745) | (8,586) |
Gross profit | 2,123 | 1,874 |
Reimbursement of construction costs | 0 | 6,276 |
Gross Margin after reimbursables | 8,150 | |
Pretax operating income | 953 | 988 |
Corporate [Member] | ||
Segment Information [Abstract] | ||
Total revenue | 0 | 0 |
Cost of revenue | 0 | 0 |
Depreciation and depletion | 0 | 0 |
Total cost of revenues | 0 | 0 |
Gross profit | 0 | 0 |
Reimbursement of construction costs | 0 | |
Gross Margin after reimbursables | 0 | |
Pretax operating income | (1,170) | (886) |
Water and Wastewater Resource Development [Member] | ||
Segment Information [Abstract] | ||
Total revenue | 2,512 | 1,918 |
Cost of revenue | (661) | (304) |
Depreciation and depletion | (365) | (219) |
Total cost of revenues | (1,026) | (523) |
Gross profit | 1,486 | 1,395 |
Reimbursement of construction costs | 0 | |
Gross Margin after reimbursables | 1,395 | |
Pretax operating income | 1,486 | 1,395 |
Land Development [Member] | ||
Segment Information [Abstract] | ||
Total revenue | 2,356 | 8,542 |
Cost of revenue | (1,719) | (8,063) |
Depreciation and depletion | 0 | 0 |
Total cost of revenues | (1,719) | (8,063) |
Gross profit | 637 | 479 |
Reimbursement of construction costs | 6,276 | |
Gross Margin after reimbursables | 6,755 | |
Pretax operating income | $ 637 | $ 479 |
SEGMENT INFORMATION, Corporate
SEGMENT INFORMATION, Corporate Assets (Details) - USD ($) $ in Thousands | Nov. 30, 2020 | Aug. 31, 2020 |
Segment Information [Abstract] | ||
Total assets | $ 88,953 | $ 89,761 |
Corporate [Member] | ||
Segment Information [Abstract] | ||
Total assets | 26,979 | 26,519 |
Water and Wastewater Resource Development [Member] | ||
Segment Information [Abstract] | ||
Total assets | 55,376 | 56,267 |
Land Development [Member] | ||
Segment Information [Abstract] | ||
Total assets | $ 6,598 | $ 6,975 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Aug. 31, 2020 | |
INCOME TAXES [Abstract] | |||
Income tax expense | $ 260 | $ 1,887 | |
Current income tax expense | 200 | 1,200 | |
Deferred income tax expense | $ 126 | $ 719 | |
Estimated annual effective tax rate | 25.00% | ||
Effective tax rate | 24.60% | 24.70% | |
Income taxes paid | $ 0 | $ 0 | |
Deferred Tax Assets (Liabilities) [Abstract] | |||
Net operating loss carryforwards | 0 | $ 23 | |
Accrued compensation | 33 | 167 | |
Deferred revenues | 76 | 89 | |
Depreciation and depletion | (1,672) | (1,701) | |
Non-qualified stock options | 505 | 491 | |
Other | 46 | 45 | |
Net deferred tax liability | $ (1,012) | $ (886) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Nov. 30, 2020 | Nov. 30, 2019 | |
EARNINGS PER SHARE [Abstract] | ||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 180,000 | 0 |
Earnings Per Share [Abstract] | ||
Net Income | $ 845 | $ 5,763 |
Basic weighted average common shares (in shares) | 23,867,000 | 23,827,000 |
Effect of dilutive securities (in shares) | 169,739 | 224,097 |
Weighted average shares applicable to diluted earnings per share (in shares) | 24,036,000 | 24,051,000 |
Earnings per share - basic (in dollars per share) | $ 0.04 | $ 0.24 |
Earnings per share - diluted (in dollars per share) | $ 0.04 | $ 0.24 |