Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Feb. 29, 2016 | Apr. 06, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | PURE CYCLE CORP | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --08-31 | |
Amendment Flag | false | |
Entity Central Index Key | 276,720 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 23,754,098 | |
Document Period End Date | Feb. 29, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 6,181,392 | $ 37,089,041 |
Short-term investments | 20,003,955 | 0 |
Trade accounts receivable | 92,464 | 399,925 |
Sky Ranch receivable | 0 | 148,415 |
Prepaid expenses | 358,788 | 228,086 |
Assets of discontinued operations | 929,233 | 1,715,472 |
Total current assets | 27,565,832 | 39,580,939 |
Long-term investments | 10,018,687 | 0 |
Investments in water and water systems, net | 27,780,351 | 27,708,595 |
Land and mineral interests | 5,119,621 | 5,091,668 |
Notes receivable - related parties, including accrued interest | 774,352 | 591,223 |
Other assets | 466,624 | 88,488 |
Total assets | 71,725,467 | 73,060,913 |
Current liabilities: | ||
Accounts payable | 118,769 | 172,634 |
Accrued liabilities | 61,923 | 499,808 |
Income taxes | 0 | 292,729 |
Deferred revenues | 55,800 | 55,800 |
Deferred oil and gas lease payment | 49,905 | 360,765 |
Liabilities of discontinued operations | 164,756 | 117,329 |
Total current liabilities | 451,153 | 1,499,065 |
Deferred revenues, less current portion | 1,083,392 | 1,111,293 |
Deferred oil and gas lease payment, less current portion | 7,000 | 19,000 |
Participating Interests in Export Water Supply | 344,554 | 346,007 |
Total liabilities | 1,886,099 | $ 2,975,365 |
Commitments and contingencies | ||
Preferred stock: | ||
Series B - par value $.001 per share, 25 million shares authorized; 432,513 shares issued and outstanding (liquidation preference of $432,513) | 433 | $ 433 |
Common stock: | ||
Par value 1/3 of $.01 per share, 40 million shares authorized; 23,754,098 and 24,054,098 shares outstanding, respectively | 79,185 | 80,185 |
Collateral stock | 0 | (1,407,000) |
Additional paid-in capital | 171,087,233 | 172,384,355 |
Accumulated other comprehensive income | 13,182 | 0 |
Accumulated deficit | (101,340,665) | (100,972,425) |
Total shareholders' equity | 69,839,368 | 70,085,548 |
Total liabilities and shareholders' equity | $ 71,725,467 | $ 73,060,913 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock; Series B- par value | $ .001 | $ .001 |
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 | $ 0.003333 | $ 0.003333 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares outstanding | 23,754,098 | 24,054,098 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |||
Revenues: | ||||||
Metered water usage | $ 27,393 | $ 328,446 | $ 84,173 | $ 820,269 | ||
Wastewater treatment fees | 10,700 | 13,226 | 21,003 | 24,931 | ||
Special facility funding recognized | 10,377 | 10,377 | 20,754 | 20,754 | ||
Water tap fees recognized | 3,573 | 3,573 | 7,147 | 7,147 | ||
Other | 24,399 | 16,366 | 69,275 | 68,851 | ||
Total revenues | 76,442 | 371,988 | 202,352 | 941,952 | ||
Expenses: | ||||||
Water service operations | (58,476) | (92,625) | (125,792) | (229,432) | ||
Wastewater service operations | (6,195) | (6,457) | (13,269) | (12,810) | ||
Depletion and depreciation | (41,575) | (45,274) | (83,230) | (88,730) | ||
Other | (14,682) | (10,951) | (30,610) | (21,024) | ||
Total cost of revenues | (120,928) | (155,307) | (252,901) | (351,996) | ||
Gross (loss) profit | (44,486) | 216,681 | (50,549) | 589,956 | ||
General and administrative expenses | (449,334) | (492,815) | (889,133) | (1,027,105) | ||
Depreciation | (62,911) | (47,993) | (115,827) | (83,402) | ||
Operating loss | (556,731) | (324,127) | (1,055,509) | (520,551) | ||
Other income (expense): | ||||||
Oil and gas lease income, net | 161,430 | 161,430 | 322,860 | 322,860 | ||
Oil and gas royalty income, net | 72,456 | 0 | 194,602 | 0 | ||
Interest income | 77,579 | 11,645 | 141,400 | 14,835 | ||
Other | 3,208 | (345) | (1,060) | 5,947 | ||
Net loss from continuing operations | (242,058) | (151,397) | (397,707) | (176,909) | ||
(Loss) income from discontinued operations, net of tax | (28,641) | 65,402 | 29,467 | 101,222 | ||
Net loss | (270,699) | (85,995) | (368,240) | (75,687) | ||
Unrealized holding gains | 13,182 | 0 | 13,182 | 0 | ||
Total comprehensive loss | $ (257,517) | $ (85,995) | $ (355,058) | $ (75,687) | ||
Net loss from discontinuing operations per common share - basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 | ||
Net loss from continuing operations per common share - basic and diluted | (0.01) | (0.02) | ||||
Net loss per common share - basic and diluted | $ (0.01) | [1] | $ (0.02) | [1] | ||
Weighted average common shares outstanding - basic and diluted (in Shares) | 23,754,098 | 24,037,598 | 23,841,461 | 24,037,598 | ||
[1] | Amount is less than $(.01) per share |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - 6 months ended Feb. 29, 2016 - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Collateral Stock | Accumulated Deficit | Total |
Balance, beginning at Aug. 31, 2015 | $ 433 | $ 80,185 | $ 172,384,355 | $ 0 | $ (1,407,000) | $ (100,972,425) | $ 70,085,548 |
Balance, beginning, shares at Aug. 31, 2015 | 432,513 | 24,054,098 | |||||
Share-based compensation | 108,878 | 108,878 | |||||
Collateral stock retired | $ (1,000) | (1,406,000) | 1,407,000 | 0 | |||
Collateral stock retired, shares | (300,000) | ||||||
Net loss | (368,240) | (368,240) | |||||
Unrealized holding gain on investments | 13,182 | 13,182 | |||||
Balance, ending at Feb. 29, 2016 | $ 433 | $ 79,185 | $ 171,087,233 | $ 13,182 | $ 0 | $ (101,340,665) | $ 69,839,368 |
Balance, ending, shares at Feb. 29, 2016 | 432,513 | 23,754,098 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (368,240) | $ (75,687) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and depletion | 199,057 | 172,132 |
Investment in Well Enhancement Recover Systems, LLC | 5,334 | (1,131) |
Stock-based compensation expense | 108,878 | 132,606 |
Interest income and other non-cash items | (10,677) | (210) |
Interest added to receivable from related parties | (16,436) | (6,631) |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 307,461 | 1,230,223 |
Sky Ranch Receivable | (5,521) | (29,000) |
Prepaid expenses | (130,702) | (20,233) |
Notes receivable - related parties | (12,757) | (82,000) |
Accounts payable and accrued liabilities | (491,750) | (1,279,203) |
Income taxes | (292,729) | 0 |
Deferred revenues | (27,901) | (32,692) |
Deferred oil & gas lease payment | (322,860) | (322,860) |
Net cash used in operating activities from continuing operations | (1,058,843) | (314,686) |
Net cash provided by (used in) operating activities from discontinued operations | 833,666 | (347,470) |
Net cash (used in) provided by operating activities | (225,177) | (662,156) |
Cash flows from investing activities: | ||
Purchase of short-term investments | (19,998,992) | 0 |
Purchase of long-term investments | (10,000,000) | 0 |
Investments in water, water systems, and land | (270,105) | (1,872,986) |
Purchase of property and equipment | (411,922) | (933) |
Net cash used in investing activities from continuing operations | (30,681,019) | (1,873,919) |
Net cash provided by investing activities from discontinued operations | 0 | 699,826 |
Net cash (used in) provided by investing activities | (30,681,019) | (1,174,093) |
Cash flows from financing activities: | ||
Payments to contingent liability holders | (1,453) | (6,409) |
Net cash used in financing activities from continuing operations | (1,453) | (6,409) |
Net cash provided by financing activities from discontinued operations | 0 | 916,647 |
Net cash provided by (used in) financing activities | (1,453) | 910,238 |
Net change in cash and cash equivalents | (30,907,649) | (926,011) |
Cash and cash equivalents - beginning of period | 37,089,041 | 1,749,558 |
Cash and cash equivalents - end of period | 6,181,392 | 823,547 |
SUPPLEMENTAL DISCLSOURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Retirement of Collateral Stock | 1,407,000 | 0 |
Net reduction in Tap Participation Fee liability and HP A&M receivable collateral stock and mineral rights received as result of settlement of the Arkansas River Agreement | 0 | 1,894,203 |
Assets acquired through WISE funding obligation | $ 0 | $ 1,400,000 |
1. PRESENTATION OF INTERIM INFO
1. PRESENTATION OF INTERIM INFORMATION | 6 Months Ended |
Feb. 29, 2016 | |
Presentation Of Interim Information | |
PRESENTATION OF INTERIM INFORMATION | The February 29, 2016 consolidated balance sheet, the consolidated statements of operations and other comprehensive income (loss) for the three and six months ended February 29, 2016 and February 28, 2015, the consolidated statement of shareholders' equity for the six months ended February 29, 2016, and the consolidated statements of cash flows for the six months ended February 29, 2016 and February 28, 2015 have been prepared by Pure Cycle Corporation (the "Company") and have not been audited. The unaudited 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 February 29, 2016, 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 these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 2015 Annual Report on Form 10-K (the "2015 Annual Report") filed with the Securities and Exchange Commission (the "SEC") on November 9, 2015. The results of operations for interim periods presented are not necessarily indicative of the operating results for the full fiscal year. The August 31, 2015 balance sheet was taken from the Company's audited financial statements and was modified to reflect the discontinued operations presentation of the Company's agricultural segment. Use of Estimates The preparation of consolidated financial statements in accordance 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 consolidated 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 reputable financial institution. At various times during the three and six months ended February 29, 2016, the Company's main operating account exceeded federally insured limits. The Company has never suffered a loss due to such excess balance. Investments Management determines the appropriate classification of its investments in certificates of deposit and debt and equity securities at the time of purchase and reevaluates such determinations each reporting period. Certificates of deposit and debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. The Company has $10,018,700 of investments classified as held-to-maturity at February 29, 2016 which represent certificates of deposit with maturity dates after February 28, 2017. Debt securities for which the Company does not have the positive intent or ability to hold to maturity are classified as available-for-sale, along with any investments in equity securities. Securities classified as available-for-sale are marked-to-market at each reporting period. Changes in value on such securities are recorded as a component of Accumulated comprehensive income. Concentration of Credit Risk and Fair Value Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and available for sale securities. From time to time, the Company places its cash in money market instruments, commercial paper obligations, corporate bonds and U.S. government treasury obligations. To date, the Company has not experienced significant losses on any of these investments. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value. Cash and Cash Equivalents Trade Accounts Receivable Investments Fair Value Measurements Accounts Payable Long-Term Financial Liabilities Water and Land Assets Water and Land Assets Long-Term Obligations and Operating Lease Participating Interests in Export Water Supply Notes Receivable Related Parties Off-Balance Sheet Instruments Long-Term Obligations and Operating Lease Participating Interests in Export Water Supply Revenue Recognition Wholesale Water and Wastewater Fees The Company recognizes wastewater treatment fees monthly based on usage. The monthly wastewater treatment fees are shown net of amounts retained by the District. The Company recognized $10,700 and $13,200 of wastewater treatment fees during the three months ended February 29, 2016 and February 28, 2015, respectively. The Company recognized $21,000 and $24,900 of wastewater treatment fees during the six months ended February 29, 2016 and February 28, 2015, respectively. Costs of delivering water and providing wastewater services to customers are recognized as incurred. Tap and Construction Fees Long-Term Obligations and Operating Lease The Company recognized $10,400 and $20,800 of "Special Facilities" (defined in Part I, Item 1 of the 2015 Annual Report) funding as revenue during each of the three and six months ended February 29, 2016 and February 28, 2015, respectively. This is the ratable portion of the Special Facilities funding proceeds received from water agreements as more fully described in Note 2 Summary of Significant Accounting Policies As of February 29, 2016, and August 31, 2015, the Company has deferred recognition of approximately $1,139,200 and $1,167,100, respectively, of water tap and construction fee revenue from the County, which will be recognized as revenue ratably over the estimated useful accounting life of the assets constructed with the construction proceeds as described above. 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" (described in Note 4 Water and Land Assets Oil and Gas Lease Payments As further described in Note 2 Summary of Significant Accounting Policies Water and Land Assets As of February 29, 2016 and August 31, 2015, the Company has deferred recognition of $56,900 and $379,800, respectively, of income related to the O&G Lease and the Rangeview Lease, which will be recognized into income ratably through March 2016 and July 2017, respectively. During the three months ended February 28, 2015, two wells were drilled within the Company's mineral interest. Beginning in March 2015, both wells were placed into service and began producing oil and gas and accruing royalties to the Company. In May 2015, certain gas collection infrastructure was extended to the property to allow the collection of gas from the wells and accrual of royalties attributable to gas production. During the three and six months ended February 29, 2016, the Company received $72,500 and $194,600, respectively, in royalties attributable to these two wells. 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. Capitalized Costs of Water and Wastewater Systems and Depletion and Depreciation of Water Assets 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 30 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 groundwater 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. Share-Based Compensation The Company maintains a stock option plan for the benefit of its employees and non-employee directors. The Company records share-based compensation costs as expense over the applicable vesting period of the stock award using the straight-line method. The compensation costs to be expensed are measured at the grant date based on the fair value of the award. 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 has no impact on the income tax provisions. The Company recognized $55,200 and $63,800 of share-based compensation expense during the three months ended February 29, 2016 and February 28, 2015, respectively. The Company recognized $108,900 and $132,600 of share-based compensation expense during the six months ended February 29, 2016 and February 28, 2015, 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 did not have any significant unrecognized tax benefits as of February 29, 2016. 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 year 2013 through fiscal year 2015. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 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 February 29, 2016, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the three or six months ended February 29, 2016 or February 28, 2015. Discontinued Operations In August 2015, the Company sold its Arkansas River water and land properties. Pursuant to the terms of the purchase and sale agreement, the Company continued to manage and receive the lease income until December 31, 2015. The operating results and the assets and liabilities of the discontinued operations, which formerly comprised the agricultural segment, are presented separately in the Company's Consolidated Financial Statements. Summarized financial information for the discontinued agricultural business is shown below. Prior period balances have been reclassified to present the operations of the agricultural business as a discontinued operation. Discontinued Operations Income Statement Three Months Ended Six Months Ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Farm revenues $ 63,743 $ 284,530 $ 275,991 $ 548,343 Farm expenses (17,736 ) (20,384 ) (33,368 ) (46,870 ) Gross profit 46,007 264,146 242,623 501,473 General and administrative expenses 74,648 120,061 213,156 233,300 Operating (loss) profit (28,641 ) 144,085 29,467 268,173 Interest expense - 78,683 - 143,135 Interest imputed on the Tap Participation Fee payable to HP A&M - - - 23,816 Income (loss) from discontinued operations $ (28,641 ) $ 65,402 $ 29,467 $ 101,222 The individual assets and liabilities of the discontinued agricultural operation are combined in the captions "Assets of discontinued operation" and "Liabilities of discontinued operation" in the consolidated Balance Sheet. The carrying amounts of the major classes of assets and liabilities included part of the discontinued business are presented in the following table: Discontinued Operation Balance Sheet February 29, 2016 August 31, 2015 Assets: Trade accounts receivable, net $ 478,886 $ 307,913 Escrow receivable - 1,342,250 Land held for sale (*) 450,347 - Prepaid expenses - 65,309 Total assets $ 929,233 $ 1,715,472 Liabilities: Accounts payable $ 163,657 $ 25,704 Accrued liabilities 1,099 90,725 Deferred revenues - 900 Total liabilities $ 164,756 $ 117,329 (*) Land Held for Sale. Income (Loss) per Common Share Income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares outstanding during each period. Common stock options and warrants aggregating 348,100 and 341,100 common share equivalents were outstanding as of February 29, 2016 and February 28, 2015, respectively, and have been included in the calculation of net income per common share but 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. When 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 consolidated financial statements and 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 March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) Revenue from Contracts with Customers In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity |
2. FAIR VALUE MEASUREMENTS
2. FAIR VALUE MEASUREMENTS | 6 Months Ended |
Feb. 29, 2016 | |
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 NASDAQ Stock Market. The Company had 13 of these instruments as of February 29, 2016 and none of these instruments as of August 31, 2015. 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 41 Level 2 assets at February 29, 2016, its certificate of deposits. The Company had no Level 2 assets or liabilities as of August 31, 2015. 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 no Level 3 liability as of February 29, 2016 or August 31, 2015. The Company maintains policies and procedures to value instruments using what management believes to be the best and most relevant data available. Level 2 Asset Available for Sale Securities. 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, land held for sale, and other long-lived assets. See Note 3 Water and Land Assets The following table provides information on the assets and liabilities measured at fair value on a recurring basis as of February 29, 2016: Fair value measurement using: Fair Value Cost / Other Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Accumulated Unrealized Gains and (Losses) Marketable securities $ 30,022,600 $ 30,009,400 $ 20,003,900 $ 10,018,700 $ - $ 13,200 |
3. WATER AND LAND ASSETS
3. WATER AND LAND ASSETS | 6 Months Ended |
Feb. 29, 2016 | |
Investments In Water Water Systems Land And Improvements | |
WATER AND LAND ASSETS | The Company's water rights and current water and wastewater service agreements are more fully described in Note 4 Water and Land Assets The Company's Investments in Water and Water Systems consist of the following costs and accumulated depreciation and depletion at February 29, 2016 and August 31, 2015: February 29, 2016 August 31, 2015 Costs Accumulated Depreciation and Depletion Costs Accumulated Depreciation and Depletion Rangeview water supply $ 14,444,600 $ (9,000 ) $ 14,444,600 $ (8,800 ) Sky Ranch water rights and other costs 6,440,800 (243,500 ) 6,440,800 (194,600 ) Fairgrounds water and water system 2,899,900 (842,700 ) 2,899,900 (798,700 ) Rangeview water system 1,256,300 (131,000 ) 1,256,300 (110,300 ) Water supply other 4,211,000 (246,000 ) 3,973,300 (193,900 ) Totals 29,252,600 (1,472,200 ) 29,014,900 (1,306,300 ) Net investments in water and water systems $ 27,780,400 $ 27,708,600 Water and Land Assets Depletion and Depreciation. The Company recorded $104,500 and $89,600 of depreciation expense during the three months ended February 29, 2016 and February 28, 2015, respectively. The Company recorded $199,000 and $165,900 of depreciation expense during the six months ended February 29, 2016 and February 28, 2015, respectively. |
4. LONG-TERM OBLIGATIONS AND OP
4. LONG-TERM OBLIGATIONS AND OPERATING LEASE | 6 Months Ended |
Feb. 29, 2016 | |
Long-Term Obligations And Operating Lease | |
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 format, but is described below. Participating Interests in Export Water Supply The Company acquired its Rangeview Water Supply through various amended agreements entered into in the early 1990s. 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 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 From time to time, the Company repurchased various portions of the CAA obligations, which retained their original priority, and in 2014, the Land Board relinquished its CAA interest to the Company. The Company did not make any CAA acquisitions during the six months ended February 29, 2016 or February 28, 2015. As a result of the acquisitions, the relinquishment by the Land Board, and the sale of Export Water, as detailed in the table below, the remaining potential third-party obligation at February 29, 2016, is approximately $1 million, and the Company has the right to approximately $29.8 million in Export Water proceeds: 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, 2015: Acquisitions 28,042,500 (28,042,500 ) (9,790,000 ) (18,252,500 ) Relinquishment 2,386,400 (2,386,400 ) (832,100 ) (1,554,300 ) 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 569,200 (445,800 ) (123,400 ) (42,900 ) (80,500 ) Balance at August 31, 2015 1,212,600 29,786,200 1,027,400 346,000 681,400 Fiscal 2016 activity: Export Water sale payments 34,400 (30,300 ) (4,100 ) (1,400 ) (2,700 ) Balance at February 29, 2016 $ 1,247,000 $ 29,755,900 $ 1,023,300 $ 344,600 $ 678,700 * The Arapahoe County tap fees are net of $34,522 in royalties paid to the Land Board. The CAA includes contractually established priorities that 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 million of the first priority payout (the remaining entire first priority payout totals approximately $6.8 million as of February 29, 2016). WISE Partnership During December 2014, the Company, through the 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"), and the South Metro WISE Authority ("SMWA"). The SMWA was formed by the District and nine other governmental or quasi-governmental water providers pursuant to the South Metro WISE Authority Formation and Organizational Intergovernmental Agreement, dated December 31, 2013 (the "SM IGA"), to enable the members of SMWA to participate in the regional water supply project known as the Water Infrastructure Supply Efficiency partnership ("WISE") created by the WISE Partnership Agreement. The SM IGA specifies each member's pro rata 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 10 members of the SMWA, Denver Water and Aurora Water. Certain infrastructure has been constructed, and other infrastructure will be constructed over the next several years. By consenting to the waiver of the contingencies set forth in the WISE Partnership Agreement, pursuant to the terms of the Rangeview/Pure Cycle WISE Project Financing Agreement (the "WISE Financing Agreement") between the Company and the District, the Company has an agreement to fund the District's participation in WISE effective as of December 22, 2014. The Company's cost of funding the District's purchase of its share of existing infrastructure and future infrastructure for WISE is projected to be approximately $5.8 million over the next five years. See further discussion in Note 6 Related Party Transactions. Operating Lease Effective January 2016, the Company entered into an operating lease for approximately 2,500 square feet of office and warehouse space. The lease has a one-year term with payments of $3,000 per month. |
5. SHAREHOLDERS' EQUITY
5. SHAREHOLDERS' EQUITY | 6 Months Ended |
Feb. 29, 2016 | |
Shareholders Equity | |
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 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 restricted 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. The Company began awarding options under the 2014 Equity Plan during January 2015. Prior to the effective date of the 2014 Equity Plan, the Company granted stock awards to eligible participants under its 2004 Incentive Plan (the "2004 Incentive Plan"), which expired April 11, 2014. No additional awards may be granted pursuant to the 2004 Incentive 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 Incentive Plan. The following table summarizes the combined stock option activity for the 2004 Incentive Plan and 2014 Equity Plan for the six months ended February 29, 2016: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Approximate Aggregate Instrinsic Value Oustanding at August 31, 2015 312,000 $ 6.61 Granted 36,000 4.26 Exercised - - Forfeited or expired - - Outstanding at February 29, 2016 348,000 $ 5.01 6.01 $ 212,360 Options exercisable at February 29, 2016 278,667 $ 5.00 5.47 $ 186,440 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 six months ended February 29, 2016: Number of Options Weighted-Average Grant Date Fair Value Non-vested options oustanding at August 31, 2015 59,333 $ 4.59 Granted 36,000 - Vested (26,000 ) - Forfeited - - Non-vested options outstanding at February 29, 2016 69,333 $ 5.04 All non-vested options are expected to vest. Stock-based compensation expense was $55,200 and $63,800 for the three months ended February 29, 2016 and February 28, 2015, respectively. Stock-based compensation expense was $108,900 and $132,600 for the six months ended February 29, 2016 and February 28, 2015, respectively. At February 29, 2016, the Company had unrecognized expenses relating to non-vested options that are expected to vest totaling $162,400, which options have a weighted average life of less than three years. The Company has not recorded any excess tax benefits to additional paid-in capital. |
6. RELATED PARTY TRANSACTIONS
6. RELATED PARTY TRANSACTIONS | 6 Months Ended |
Feb. 29, 2016 | |
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"). On November 10, 2014, the Company and the District entered into the WISE Financing Agreement, whereby the Company agreed to fund the District's cost of participating in a regional water supply project known as the WISE partnership. The Company anticipates investing approximately $1.2 million per year for each of the next five 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 February 29, 2016) and was scheduled to mature on December 31, 2014. The Company extended the maturity date of the loan to December 31, 2020. Beginning in January 2014, the District and the Company entered into a funding agreement that allows the Company to continue to provide funding to the 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. The $610,400 balance of the note receivable at February 29, 2016, includes borrowings of $249,800 and accrued interest of $360,600. In November 2015, but effective as of January 1, 2014, the Company entered into a funding agreement obligating the Company to provide funding to Sky Ranch Metropolitan District No. 5, a related party, for calendar years 2014 and 2015 up to a maximum amount of $350,000. The funding was accrued into a note that bears interest at a rate of 6% per annum. No payments are due for a minimum of five years after the date of borrowing. The funding relates to costs associated with establishing and operating the district. The company anticipates repayment of the note through future revenues from property tax assessments. The $163,900 balance of the note receivable at February 29, 2016, includes borrowings of $153,900 and accrued interest of $10,000. Upon the execution of the note, the amount was reclassified to long-term and is recorded as a part of Notes Receiveable |
7. SIGNIFICANT CUSTOMERS
7. SIGNIFICANT CUSTOMERS | 6 Months Ended |
Feb. 29, 2016 | |
Significant Customers | |
SIGNIFICANT CUSTOMERS | The Company sells wholesale water and wastewater services to the District pursuant to the Rangeview Water Agreements (defined in Note 4 Water and Land Assets Revenues related to the provision of water for the oil and gas industry to one customer accounted for 88% of the Company's water and wastewater revenues for the three months ended February 28, 2015. The Company had no revenues related to the provision of water for the oil and gas industry for the three months ended February 29, 2016. The Company had accounts receivable from the District which accounted for 90% and 87% of the Company's trade receivables balances at February 29, 2016 and August 31, 2015, respectively. Accounts receivable from the District's largest customer accounted for 80% and 76% of the Company's trade receivables as of February 29, 2016 and August 31, 2015, respectively. |
8. ACCRUED LIABILITIES
8. ACCRUED LIABILITIES | 6 Months Ended |
Feb. 29, 2016 | |
Accrued Liabilities | |
ACCRUED LIABILITIES | At February 29, 2016, the Company had accrued liabilities of $61,900, of which $1,400 was for estimated property taxes, $34,800 was for professional fees, and $25,700 was for operating payables. At August 31, 2015, the Company had accrued liabilities of $499,800, of which $400,000 was for accrued compensation, $4,800 was for estimated property taxes, $52,500 was for professional fees and the remaining $42,500 was related to operating payables. |
9. LITIGATION LOSS CONTINGENCIE
9. LITIGATION LOSS CONTINGENCIES | 6 Months Ended |
Feb. 29, 2016 | |
Litigation Loss Contingencies | |
LITIGATION LOSS 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 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. |
10. SEGMENT INFORMATION
10. SEGMENT INFORMATION | 6 Months Ended |
Feb. 29, 2016 | |
Segment Information | |
SEGMENT INFORMATION | Prior to the sale of the Company's agricultural assets and the residual operations through December 31, 2015, the Company operated primarily in two lines of business: (i) the wholesale water and wastewater business; and (ii) the agricultural farming business. The Company has discontinued its agricultural farming operations. The Company will continue to operate its wholesale water and wastewater services segment as its only line of business. The wholesale water and wastewater services business includes selling to customers using water rights owned by the Company and to develop infrastructure to divert, treat and distribute that water and collect, treat and reuse wastewater. |
1. PRESENTATION OF INTERIM IN17
1. PRESENTATION OF INTERIM INFORMATION (Policies) | 6 Months Ended |
Feb. 29, 2016 | |
Presentation Of Interim Information Policies | |
Use of Estimates | The preparation of consolidated financial statements in accordance 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 consolidated 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 reputable financial institution. At various times during the three and six months ended February 29, 2016, the Company's main operating account exceeded federally insured limits. The Company has never suffered a loss due to such excess balance. |
Investments | Management determines the appropriate classification of its investments in certificates of deposit and debt and equity securities at the time of purchase and reevaluates such determinations each reporting period. Certificates of deposit and debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. The Company has $10,018,700 of investments classified as held-to-maturity at February 29, 2016 which represent certificates of deposit with maturity dates after February 28, 2017. Debt securities for which the Company does not have the positive intent or ability to hold to maturity are classified as available-for-sale, along with any investments in equity securities. Securities classified as available-for-sale are marked-to-market at each reporting period. Changes in value on such securities are recorded as a component of Accumulated comprehensive income. |
Concentration of Credit Risk and Fair Value | Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and available for sale securities. From time to time, the Company places its cash in money market instruments, commercial paper obligations, corporate bonds and U.S. government treasury obligations. To date, the Company has not experienced significant losses on any of these investments. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value. Cash and Cash Equivalents Investments Fair Value Measurements. Trade Accounts Receivable Accounts Payable Long-Term Financial Liabilities Water and Land Assets Water and Land Assets Long-Term Obligations and Operating Lease Participating Interests in Export Water Supply Notes Receivable Related Parties Off-Balance Sheet Instruments Long-Term Obligations and Operating Lease Participating Interests in Export Water Supply |
Revenue Recognition | Wholesale Water and Wastewater Fees The Company recognizes wastewater treatment fees monthly based on usage. The monthly wastewater treatment fees are shown net of amounts retained by the District. The Company recognized $10,700 and $13,200 of wastewater treatment fees during the three months ended February 29, 2016 and February 28, 2015, respectively. The Company recognized $21,000 and $24,900 of wastewater treatment fees during the six months ended February 29, 2016 and February 28, 2015, respectively. Costs of delivering water and providing wastewater services to customers are recognized as incurred. Tap and Construction Fees Long-Term Obligations and Operating Lease The Company recognized $10,400 and $20,800 of "Special Facilities" (defined in Part I, Item 1 of the 2015 Annual Report) funding as revenue during each of the three and six months ended February 29, 2016 and February 28, 2015, respectively. This is the ratable portion of the Special Facilities funding proceeds received from water agreements as more fully described in Note 2 Summary of Significant Accounting Policies As of February 29, 2016, and August 31, 2015, the Company has deferred recognition of approximately $1,139,200 and $1,167,100, respectively, of water tap and construction fee revenue from the County, which will be recognized as revenue ratably over the estimated useful accounting life of the assets constructed with the construction proceeds as described above. |
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" (described in Note 4 Water and Land Assets |
Oil and Gas Lease Payments | As further described in Note 2 Summary of Significant Accounting Policies Water and Land Assets As of February 29, 2016 and August 31, 2015, the Company has deferred recognition of $56,900 and $379,800, respectively, of income related to the O&G Lease and the Rangeview Lease, which will be recognized into income ratably through March 2016 and July 2017, respectively. During the three months ended February 28, 2015, two wells were drilled within the Company's mineral interest. Beginning in March 2015, both wells were placed into service and began producing oil and gas and accruing royalties to the Company. In May 2015, certain gas collection infrastructure was extended to the property to allow the collection of gas from the wells and accrual of royalties attributable to gas production. During the three and six months ended February 29, 2016, the Company received $72,500 and $194,600, respectively, in royalties attributable to these two wells. |
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. |
Capitalized Costs of Water and Wastewater Systems and Depletion and Depreciation of Water Assets | 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 30 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 groundwater 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. |
Share-based Compensation | The Company maintains a stock option plan for the benefit of its employees and non-employee directors. The Company records share-based compensation costs as expense over the applicable vesting period of the stock award using the straight-line method. The compensation costs to be expensed are measured at the grant date based on the fair value of the award. 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 has no impact on the income tax provisions. The Company recognized $55,200 and $63,800 of share-based compensation expense during the three months ended February 29, 2016 and February 28, 2015, respectively. The Company recognized $108,900 and $132,600 of share-based compensation expense during the six months ended February 29, 2016 and February 28, 2015, 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 did not have any significant unrecognized tax benefits as of February 29, 2016. 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 year 2013 through fiscal year 2015. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 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 February 29, 2016, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the three or six months ended February 29, 2016 or February 28, 2015. |
Discontinued Operations | In August 2015, the Company sold its Arkansas River water and land properties. Pursuant to the terms of the purchase and sale agreement, the Company continued to manage and receive the lease income until December 31, 2015. The operating results and the assets and liabilities of the discontinued operations, which formerly comprised the agricultural segment, are presented separately in the Company's Consolidated Financial Statements. Summarized financial information for the discontinued agricultural business is shown below. Prior period balances have been reclassified to present the operations of the agricultural business as a discontinued operation. Discontinued Operations Income Statement Three Months Ended Six Months Ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Farm revenues $ 63,743 $ 284,530 $ 275,991 $ 548,343 Farm expenses (17,736 ) (20,384 ) (33,368 ) (46,870 ) Gross profit 46,007 264,146 242,623 501,473 General and administrative expenses 74,648 120,061 213,156 233,300 Operating (loss) profit (28,641 ) 144,085 29,467 268,173 Interest expense - 78,683 - 143,135 Interest imputed on the Tap Participation Fee payable to HP A&M - - - 23,816 Income (loss) from discontinued operations $ (28,641 ) $ 65,402 $ 29,467 $ 101,222 The individual assets and liabilities of the discontinued agricultural operation are combined in the captions "Assets of discontinued operation" and "Liabilities of discontinued operation" in the consolidated Balance Sheet. The carrying amounts of the major classes of assets and liabilities included part of the discontinued business are presented in the following table: Discontinued Operation Balance Sheet February 29, 2016 August 31, 2015 Assets: Trade accounts receivable, net $ 478,886 $ 307,913 Escrow receivable - 1,342,250 Land held for sale (*) 450,347 - Prepaid expenses - 65,309 Total assets $ 929,233 $ 1,715,472 Liabilities: Accounts payable $ 163,657 $ 25,704 Accrued liabilities 1,099 90,725 Deferred revenues - 900 Total liabilities $ 164,756 $ 117,329 (*) Land Held for Sale. |
Income (Loss) per Common Share | Income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares outstanding during each period. Common stock options and warrants aggregating 348,100 and 341,100 common share equivalents were outstanding as of February 29, 2016 and February 28, 2015, respectively, and have been included in the calculation of net income per common share but 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. When 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 consolidated financial statements and 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 March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 provides for amendments to ASU No. 2014-09, Revenue from Contracts with Customers. The Company is assessing the impact of ASU 2016-08, but it does not expect the adoption of ASU 2016-08 to have a material impact on its financial statements. In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 changes the presentation and disclosure requirements for discontinued operations. The update was adopted by the Company in fiscal year 2016. |
1. PRESENTATION OF INTERIM IN18
1. PRESENTATION OF INTERIM INFORMATION (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Presentation Of Interim Information Tables | |
Discontinued operations financials | Discontinued Operations Income Statement Three Months Ended Six Months Ended February 29, 2016 February 28, 2015 February 29, 2016 February 28, 2015 Farm revenues $ 63,743 $ 284,530 $ 275,991 $ 548,343 Farm expenses (17,736 ) (20,384 ) (33,368 ) (46,870 ) Gross profit 46,007 264,146 242,623 501,473 General and administrative expenses 74,648 120,061 213,156 233,300 Operating (loss) profit (28,641 ) 144,085 29,467 268,173 Interest expense - 78,683 - 143,135 Interest imputed on the Tap Participation Fee payable to HP A&M - - - 23,816 Income (loss) from discontinued operations $ (28,641 ) $ 65,402 $ 29,467 $ 101,222 Discontinued Operation Balance Sheet February 29, 2016 August 31, 2015 Assets: Trade accounts receivable, net $ 478,886 $ 307,913 Escrow receivable - 1,342,250 Land held for sale (*) 450,347 - Prepaid expenses - 65,309 Total assets $ 929,233 $ 1,715,472 Liabilities: Accounts payable $ 163,657 $ 25,704 Accrued liabilities 1,099 90,725 Deferred revenues - 900 Total liabilities $ 164,756 $ 117,329 (*) Land Held for Sale. |
2. FAIR VALUE MEASUREMENTS (Tab
2. FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Fair Value Measurements Tables | |
Schedule of fair value of assets and liabilities measured on a recurring basis | Fair value measurement using: Fair Value Cost / Other Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Accumulated Unrealized Gains and (Losses) Marketable securities $ 30,022,600 $ 30,009,400 $ 20,003,900 $ 10,018,700 $ - $ 13,200 |
3. WATER AND LAND ASSETS (Table
3. WATER AND LAND ASSETS (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Investments In Water Water Systems Land And Improvements Tables | |
Schedule of water and water systems | February 29, 2016 August 31, 2015 Costs Accumulated Depreciation and Depletion Costs Accumulated Depreciation and Depletion Rangeview water supply $ 14,444,600 $ (9,000 ) $ 14,444,600 $ (8,800 ) Sky Ranch water rights and other costs 6,440,800 (243,500 ) 6,440,800 (194,600 ) Fairgrounds water and water system 2,899,900 (842,700 ) 2,899,900 (798,700 ) Rangeview water system 1,256,300 (131,000 ) 1,256,300 (110,300 ) Water supply other 4,211,000 (246,000 ) 3,973,300 (193,900 ) Totals 29,252,600 (1,472,200 ) 29,014,900 (1,306,300 ) Net investments in water and water systems $ 27,780,400 $ 27,708,600 |
4. LONG-TERM OBLIGATIONS AND 21
4. LONG-TERM OBLIGATIONS AND OPERATING LEASE (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Long-Term Obligations And Operating Lease Tables | |
Schedule of remaining third party obligation | 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, 2015: Acquisitions 28,042,500 (28,042,500 ) (9,790,000 ) (18,252,500 ) Relinquishment 2,386,400 (2,386,400 ) (832,100 ) (1,554,300 ) 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 569,200 (445,800 ) (123,400 ) (42,900 ) (80,500 ) Balance at August 31, 2015 1,212,600 29,786,200 1,027,400 346,000 681,400 Fiscal 2016 activity: Export Water sale payments 34,400 (30,300 ) (4,100 ) (1,400 ) (2,700 ) Balance at February 29, 2016 $ 1,247,000 $ 29,755,900 $ 1,023,300 $ 344,600 $ 678,700 * The Arapahoe County tap fees are net of $34,522 in royalties paid to the Land Board. |
5. SHAREHOLDERS' EQUITY (Tables
5. SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Feb. 29, 2016 | |
Shareholders Equity Tables | |
Schedule of stock option activity | Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Approximate Aggregate Instrinsic Value Oustanding at August 31, 2015 312,000 $ 6.61 Granted 36,000 4.26 Exercised - - Forfeited or expired - - Outstanding at February 29, 2016 348,000 $ 5.01 6.01 $ 212,360 Options exercisable at February 29, 2016 278,667 $ 5.00 5.47 $ 186,440 |
Schedule of activity and value of non-vested options | Number of Options Weighted-Average Grant Date Fair Value Non-vested options oustanding at August 31, 2015 59,333 $ 4.59 Granted 36,000 - Vested (26,000 ) - Forfeited - - Non-vested options outstanding at February 29, 2016 69,333 $ 5.04 |
1. PRESENTATION OF INTERIM IN23
1. PRESENTATION OF INTERIM INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Presentation Of Interim Information Details | ||||
Farm revenues | $ 63,743 | $ 284,530 | $ 275,991 | $ 548,343 |
Farm expenses | (17,736) | (20,384) | (33,368) | (46,870) |
Gross Profit | 46,007 | 264,146 | 242,623 | 501,473 |
General and administrative expenses | 74,648 | 120,061 | 213,156 | 233,300 |
Operating (loss) profit | (28,641) | 144,085 | 29,467 | 268,173 |
Interest expense | 0 | 78,683 | 0 | 143,135 |
Interest imputed on the Tap Participation Fee payable to HP A&M | 0 | 0 | 0 | 23,816 |
Income (loss) from discontinued operations | $ (28,641) | $ 65,402 | $ 29,467 | $ 101,222 |
1. PRESENTATION OF INTERIM IN24
1. PRESENTATION OF INTERIM INFORMATION (Details 1) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Assets: | ||
Trade accounts receivable, net | $ 478,886 | $ 307,913 |
Escrow receivable | 0 | 1,342,250 |
Land held for sale | 450,347 | 0 |
Prepaid expenses | 0 | 65,309 |
Total assets | 929,233 | 1,715,472 |
Liabilities: | ||
Accounts payable | 163,657 | 25,704 |
Accrued liabilities | 1,099 | 90,725 |
Deferred revenues | 0 | 900 |
Total liabilities | $ 164,756 | $ 117,329 |
1. PRESENTATION OF INTERIM IN25
1. PRESENTATION OF INTERIM INFORMATION (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Related Party Transactions Details Narrative | ||||
Water tap fees recognized | $ 3,573 | $ 3,573 | $ 7,147 | $ 7,147 |
Special facility (deferred construction) funding recognized | $ 10,377 | $ 10,377 | $ 20,754 | $ 20,754 |
Antidilutive securities excluded from earnings per share calculation | 348,100 | 341,100 |
2. FAIR VALUE MEASUREMENTS (Det
2. FAIR VALUE MEASUREMENTS (Details) | 6 Months Ended |
Feb. 29, 2016USD ($) | |
Marketable Securities | $ 30,022,600 |
Accumulated Unrealized Gains and (Losses) | (13,200) |
Marketable Securities | 30,009,400 |
Level 1 | |
Marketable Securities | 20,003,900 |
Level 2 | |
Marketable Securities | 10,018,700 |
Level 3 | |
Marketable Securities | $ 0 |
3. WATER AND LAND ASSETS (Detai
3. WATER AND LAND ASSETS (Details) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Costs | $ 29,252,600 | $ 29,014,900 |
Accumulated Depreciation and Depletion | (1,472,200) | (1,306,300) |
Net investments in water and water systems | 27,780,351 | 27,708,595 |
Rangeview Water Supply | ||
Costs | 14,444,600 | 14,444,600 |
Accumulated Depreciation and Depletion | (9,000) | (8,800) |
Sky Ranch Water Rights And Other Costs | ||
Costs | 6,440,800 | 6,440,800 |
Accumulated Depreciation and Depletion | (243,500) | (194,600) |
Fairgrounds Water And Water System | ||
Costs | 2,899,900 | 2,899,900 |
Accumulated Depreciation and Depletion | (842,700) | (798,700) |
Rangeview Water System | ||
Costs | 1,256,300 | 1,256,300 |
Accumulated Depreciation and Depletion | (131,000) | (110,300) |
Water Supply Other | ||
Costs | 4,211,000 | 3,973,300 |
Accumulated Depreciation and Depletion | $ (246,000) | $ (193,900) |
3. WATER AND LAND ASSETS (Det28
3. WATER AND LAND ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Investments In Water Water Systems Land And Improvements Detail Narrative | ||||
Depletion | $ 40 | $ 3,700 | $ 100 | $ 6,200 |
Depreciation | $ 104,500 | $ 89,600 | $ 199,000 | $ 165,900 |
4. LONG-TERM OBLIGATIONS AND 29
4. LONG-TERM OBLIGATIONS AND OPERATING LEASE (Details) - USD ($) | 6 Months Ended | 233 Months Ended | |
Feb. 29, 2016 | Aug. 31, 2015 | ||
Export Water Proceeds Received | |||
Remaining Third Party Obligation: | |||
Balance, original | $ 0 | ||
Balance, beginning | $ 1,212,600 | ||
Acquisitions | 0 | ||
Relinquishment | 0 | ||
Option payments | 110,400 | ||
Arapahoe Tap fees | [1] | 533,000 | |
Export Water Sale Payments | 34,400 | 569,200 | |
Balance, ending | 1,247,000 | 1,212,600 | |
Initial Export Water Proceeds To Pure Cycle | |||
Remaining Third Party Obligation: | |||
Balance, original | 218,500 | ||
Balance, beginning | 29,786,200 | ||
Acquisitions | 28,042,500 | ||
Relinquishment | 2,386,400 | ||
Option payments | (42,300) | ||
Arapahoe Tap fees | [1] | (373,100) | |
Export Water Sale Payments | (30,300) | (445,800) | |
Balance, ending | 29,755,900 | 29,786,200 | |
Total Potential Third Party Obligation | |||
Remaining Third Party Obligation: | |||
Balance, original | 31,807,700 | ||
Balance, beginning | 1,027,400 | ||
Acquisitions | (28,042,500) | ||
Relinquishment | (2,386,400) | ||
Option payments | (68,100) | ||
Arapahoe Tap fees | [1] | (159,900) | |
Export Water Sale Payments | (4,100) | (123,400) | |
Balance, ending | 1,023,300 | 1,027,400 | |
Participating Interests Liability | |||
Remaining Third Party Obligation: | |||
Balance, original | 11,090,600 | ||
Balance, beginning | 346,000 | ||
Acquisitions | (9,790,000) | ||
Relinquishment | (832,100) | ||
Option payments | (23,800) | ||
Arapahoe Tap fees | [1] | (55,800) | |
Export Water Sale Payments | (1,400) | (42,900) | |
Balance, ending | 344,600 | 346,000 | |
Contingency | |||
Remaining Third Party Obligation: | |||
Balance, original | 20,717,100 | ||
Balance, beginning | 681,400 | ||
Acquisitions | (18,252,500) | ||
Relinquishment | (1,554,300) | ||
Option payments | (44,300) | ||
Arapahoe Tap fees | [1] | (104,100) | |
Export Water Sale Payments | (2,700) | (80,500) | |
Balance, ending | $ 678,700 | $ 681,400 | |
[1] | The Arapahoe County tap fees are net of $34,522 in royalties paid to the Land Board. |
5. SHAREHOLDERS' EQUITY (Detail
5. SHAREHOLDERS' EQUITY (Details) | 6 Months Ended |
Feb. 29, 2016USD ($)$ / sharesshares | |
Number of options | |
Outstanding, beginning | shares | 312,000 |
Granted | shares | 36,000 |
Exercised | shares | 0 |
Forfeited or expired | shares | 0 |
Outstanding, ending | shares | 348,000 |
Exercisable | shares | 278,667 |
Weighted average exercise price | |
Outstanding, beginning | $ / shares | $ 6.61 |
Granted | $ / shares | 4.26 |
Exercised | $ / shares | 0 |
Forfeited or expired | $ / shares | 0 |
Outstanding, ending | $ / shares | 5.01 |
Exercisable | $ / shares | $ 5 |
Weighted average remaining contractual term | |
Outstanding, ending | 6 years 4 days |
Exercisable | 5 years 5 months 19 days |
Approximate aggregate intrinsic value | |
Outstanding, ending | $ | $ 212,360 |
Exercisable | $ | $ 186,440 |
5. SHAREHOLDERS' EQUITY (Deta31
5. SHAREHOLDERS' EQUITY (Details 1) | 6 Months Ended |
Feb. 29, 2016$ / sharesshares | |
Number of options | |
Outstanding, beginning | shares | 59,333 |
Granted | shares | 36,000 |
Vested | shares | (26,000) |
Forfeited | shares | 0 |
Outstanding, ending | shares | 69,333 |
Weighted average grant date fair value | |
Outstanding, beginning | $ / shares | $ 4.59 |
Granted | $ / shares | 0 |
Vested | $ / shares | 0 |
Forfeited | $ / shares | 0 |
Outstanding, ending | $ / shares | $ 5.04 |
5. SHAREHOLDERS' EQUITY (Deta32
5. SHAREHOLDERS' EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | |
Stock-based compensation | $ 55,200 | $ 63,800 | $ 108,900 | $ 132,600 |
Unrecognized share-based compensation cost | $ 162,400 | $ 162,400 | ||
2014 Incentive Plan | ||||
Number of shares authorized under plan | 1,600,000 | 1,600,000 |
7. SIGNIFICANT CUSTOMERS (Detai
7. SIGNIFICANT CUSTOMERS (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 29, 2016 | Feb. 28, 2015 | Aug. 31, 2015 | |
Sales | The District | |||||
Concentration Risk Percentage | 76.00% | 12.00% | 66.00% | 10.00% | |
Sales | The District's Significant Customer | |||||
Concentration Risk Percentage | 89.00% | 11.00% | 76.00% | 9.00% | |
Sales | Oil and Gas Industry Customer | |||||
Concentration Risk Percentage | 88.00% | ||||
Accounts Receivable | The District | |||||
Concentration Risk Percentage | 90.00% | 87.00% | |||
Accounts Receivable | The District's Significant Customer | |||||
Concentration Risk Percentage | 80.00% | 76.00% |
8. ACCRUED LIABILITIES (Details
8. ACCRUED LIABILITIES (Details Narrative) - USD ($) | Feb. 29, 2016 | Aug. 31, 2015 |
Accrued Liabilities Detail Narrative | ||
Accrued liabilities | $ 61,923 | $ 499,808 |
Accrued compensation | 400,000 | |
Estimated property taxes | 1,400 | 4,800 |
Professional Fees | 34,800 | 52,500 |
Operating payables | $ 25,700 | $ 42,500 |