Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
May 31, 2018 | Jul. 06, 2018 | |
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 | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,764,098 | |
Document Period End Date | May 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | May 31, 2018 | Aug. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 2,876,152 | $ 5,575,823 |
Short-term investments | 17,005,914 | 20,055,345 |
Trade accounts receivable | 1,218,251 | 663,762 |
Notes receivable - related parties, including accrued interest, current | 0 | 215,504 |
Notes receivable, current | 173,249 | 0 |
Prepaid expenses and other current assets | 1,340,409 | 503,100 |
Inventories | 2,074,543 | 0 |
Assets of discontinued operations, net | 86,789 | 110,748 |
Total current assets | 24,775,307 | 27,124,282 |
Long-term investments | 189,774 | 187,975 |
Investments in water and water systems, net | 35,609,275 | 34,575,713 |
Land and mineral interests | 6,075,834 | 6,248,371 |
Notes receivable - related parties, including accrued interest | 2,375,352 | 776,364 |
Other assets | 654,027 | 424,226 |
Assets of discontinued operations held for sale | 450,641 | 450,641 |
Total assets | 70,130,210 | 69,787,572 |
Current liabilities: | ||
Accounts payable | 269,025 | 492,410 |
Accrued liabilities | 379,336 | 380,852 |
Deferred revenues, current | 0 | 55,800 |
Deferred oil and gas lease payment, current | 55,733 | 0 |
Liabilities of discontinued operations | 5,559 | 11,165 |
Total current liabilities | 709,653 | 940,227 |
Deferred revenues, less current portion | 0 | 999,688 |
Deferred oil and gas lease payment, less current portion | 74,311 | 0 |
Participating interests in export water supply | 339,406 | 341,558 |
Total liabilities | 1,123,370 | 2,281,473 |
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; 23,764,098 and 23,754,098 shares outstanding, respectively | 79,218 | 79,185 |
Additional paid-in capital | 171,747,662 | 171,431,486 |
Accumulated other comprehensive income (loss) | 60,225 | (11,105) |
Accumulated deficit | (102,880,698) | (103,993,900) |
Total shareholders' equity | 69,006,840 | 67,506,099 |
Total liabilities and shareholders' equity | $ 70,130,210 | $ 69,787,572 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (unaudited) - USD ($) | May 31, 2018 | Aug. 31, 2017 |
Common stock: | ||
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) | 23,764,098 | 23,754,098 |
Series B Preferred Stock [Member] | ||
Preferred stock: | ||
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 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | |
Revenues: | ||||
Total revenues | $ 1,212,119 | $ 134,008 | $ 3,066,911 | $ 570,186 |
Expenses: | ||||
Water service operations | (418,280) | (76,878) | (906,899) | (234,444) |
Wastewater service operations | (6,632) | (7,509) | (21,303) | (22,478) |
Depletion and depreciation | (79,772) | (69,013) | (179,913) | (178,394) |
Other | (24,243) | (13,649) | (64,822) | (45,921) |
Total cost of revenues | (528,927) | (167,049) | (1,172,937) | (481,237) |
Gross profit (loss) | 683,192 | (33,041) | 1,893,974 | 88,949 |
General and administrative expenses | (635,502) | (518,625) | (1,816,110) | (1,411,410) |
Depreciation | (135,488) | (79,388) | (380,065) | (227,643) |
Operating loss | (87,798) | (631,054) | (302,201) | (1,550,104) |
Other income (expense): | ||||
Oil and gas lease income, net | 13,933 | 6,000 | 37,156 | 17,265 |
Oil and gas royalty income, net | 61,113 | 24,935 | 152,653 | 164,338 |
Interest income | 69,027 | 59,578 | 176,001 | 199,242 |
Other | (2,643) | (2,600) | (7,846) | (7,814) |
Net income (loss) from continuing operations | 53,632 | (543,141) | 55,763 | (1,177,073) |
Income (loss) from discontinued operations, net of taxes | 969 | (11,275) | 2,390 | (32,607) |
Net income (loss) | 54,601 | (554,416) | 58,153 | (1,209,680) |
Unrealized holding gains (losses) | 40,613 | 8,404 | 71,330 | (26,488) |
Total comprehensive income (loss) | $ 95,214 | $ (546,012) | $ 129,483 | $ (1,236,168) |
Basic and diluted net income (loss) per common share | ||||
Income (loss) from continuing operations (in dollars per share) | $ (0.02) | $ (0.05) | ||
Income (loss) from discontinued operations (in dollars per share) | ||||
Net income (loss) (in dollars per share) | $ (0.02) | $ (0.05) | ||
Weighted average common shares outstanding-basic (in shares) | 23,764,098 | 23,754,098 | 23,759,654 | 23,754,098 |
Weighted average common shares outstanding-diluted (in shares) | 23,955,046 | 23,754,098 | 23,913,863 | 23,754,098 |
Metered Water Usage [Member] | ||||
Revenues: | ||||
Total revenues | $ 1,162,570 | $ 47,695 | $ 2,888,913 | $ 379,462 |
Wastewater Treatment Fees [Member] | ||||
Revenues: | ||||
Total revenues | 11,675 | 6,967 | 32,157 | 30,516 |
Special Facility Funding Recognized [Member] | ||||
Revenues: | ||||
Total revenues | 0 | 10,377 | 0 | 31,131 |
Water Tap Fee Recognized [Member] | ||||
Revenues: | ||||
Total revenues | 0 | 46,978 | 49,948 | 54,125 |
Other [Member] | ||||
Revenues: | ||||
Total revenues | $ 37,874 | $ 21,991 | $ 95,893 | $ 74,952 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) - 9 months ended May 31, 2018 - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive (Loss) Income [Member] | Accumulated Deficit [Member] | Total |
Balance at Aug. 31, 2017 | $ 433 | $ 79,185 | $ 171,431,486 | $ (11,105) | $ (103,993,900) | $ 67,506,099 |
Balance (in shares) at Aug. 31, 2017 | 432,513 | 23,754,098 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock option exercises | $ 33 | 74,967 | 75,000 | |||
Stock option exercises (in shares) | 10,000 | |||||
Share-based compensation | $ 0 | $ 0 | 241,209 | 0 | 0 | 241,209 |
Net income | 0 | 0 | 0 | 0 | 58,153 | 58,153 |
Unrealized holding gain on investments | 0 | 0 | 0 | 71,330 | 0 | 71,330 |
Balance at May. 31, 2018 | $ 433 | $ 79,218 | 171,747,662 | 60,225 | (102,880,698) | 69,006,840 |
Balance (in shares) at May. 31, 2018 | 432,513 | 23,764,098 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Adoption of accounting standards | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,055,049 | $ 1,055,049 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 9 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 58,153 | $ (1,209,680) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and depletion | 559,975 | 405,167 |
Equity loss in Well Enhancement Recovery Systems, LLC | 7,847 | 7,652 |
Share-based compensation expense | 241,209 | 168,034 |
Interest income and other non-cash items | (867) | (26,641) |
Interest added to receivable from related parties | (46,377) | (18,316) |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (554,489) | 119,452 |
Prepaid expenses | (926,917) | (164,626) |
Inventories | (382,554) | 0 |
Notes receivable - related parties | (62,611) | (86,818) |
Notes receivable | (172,698) | 0 |
Accounts payable and accrued liabilities | (224,901) | (90,322) |
Deferred revenues | 0 | (41,852) |
Deferred oil & gas lease payment | 130,044 | (18,000) |
Net cash used in operating activities from continuing operations | (1,374,186) | (955,950) |
Net cash provided by operating activities from discontinued operations | 17,914 | 116,706 |
Net cash used in operating activities | (1,356,272) | (839,244) |
Cash flows from investing activities: | ||
Sale of short-term investments, net | 3,118,962 | 8,366,614 |
Issuance of note receivable - related parties | (1,490,000) | 0 |
Investments in water, water systems, and land | (2,989,567) | (6,397,763) |
Purchase of property and equipment | (271,146) | (77,242) |
Net cash (used in) provided by investing activities | (1,631,751) | 1,891,609 |
Cash flows from financing activities: | ||
Proceeds from note receivable - related parties | 215,504 | 0 |
Proceeds from the issuance of stock | 75,000 | 0 |
Payments to contingent liability holders | (2,152) | (2,102) |
Net cash provided by (used in) financing activities | 288,352 | (2,102) |
Net change in cash and cash equivalents | (2,699,671) | 1,050,263 |
Cash and cash equivalents - beginning of period | 5,575,823 | 4,697,288 |
Cash and cash equivalents - end of period | 2,876,152 | 5,747,551 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES | ||
Investment in water assets through accounts payable | 0 | 210,889 |
Transfer of prepaid asset to other asset | 89,609 | 0 |
Transfer of land and mineral interest to inventory | $ 1,691,989 | $ 0 |
PRESENTATION OF INTERIM INFORMA
PRESENTATION OF INTERIM INFORMATION | 9 Months Ended |
May 31, 2018 | |
PRESENTATION OF INTERIM INFORMATION [Abstract] | |
PRESENTATION OF INTERIM INFORMATION | NOTE 1 – PRESENTATION OF INTERIM INFORMATION The May 31, 2018 consolidated balance sheet, the consolidated statements of operations and comprehensive income (loss) for the three and nine months ended May 31, 2018 and 2017, the consolidated statement of shareholders’ equity for the nine months ended May 31, 2018, and the consolidated statements of cash flows for the nine months ended May 31, 2018 and 2017 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 May 31, 2018, and for all periods presented. As described in Revenue Recognition Recently Issued Accounting Pronouncements Revenue from Contracts with Customers (Topic 606) 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 Annual Report on Form 10-K for the fiscal year ended August 31, 2017 (the “2017 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on November 15, 2017. The results of operations for interim periods presented are not necessarily indicative of the operating results for the full fiscal year. The August 31, 2017 balance sheet was derived from the Company’s audited consolidated financial statements. 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 months ended May 31, 2018, the Company’s main operating account exceeded federally insured limits. The Company has never suffered a loss due to such excess balance. Inventories Inventories primarily include land held for development and sale. Inventories are stated at cost, less reimbursements. Capitalized lot development costs at Sky Ranch are costs incurred to construct lots at Sky Ranch that meet the Company’s capitalization criteria for improvements to a lot and are capitalized as incurred, including interest. The Company capitalizes certain legal, engineering, design, permitting, land acquisition, and construction costs related to the development of lots at Sky Ranch. We use the specific identification method for purposes of accumulating land development costs and allocate costs to each lot to determine the cost basis for each lot sale. We will record all land cost of sales when a lot is closed on a lot-by-lot basis. Investments Management determines the appropriate classification of its investments in certificates of deposit and debt and equity securities at the time of purchase and re-evaluates 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 $190,000 of investments classified as held-to-maturity at May 31, 2018, which represent certificates of deposit with a maturity date after May 31 Securities that the Company does not have the positive intent or ability to hold to maturity, including certificates of deposit, debt securities and any investments in equity securities, are classified as available-for-sale. Securities classified as available-for-sale are marked-to-market at each reporting period. Changes in value of such securities are recorded as a component of Accumulated other comprehensive income (loss) March 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 investments. From time to time, the Company places its cash in money market instruments, certificates of deposit 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 – Related Party Transactions, The note receivable – related parties balance primarily relates to the Company funding certain costs related to the development of public improvements, such as drainage improvements, storm water improvements, roadways, curb and gutter improvements, parks and open spaces. These costs are incurred by the CAB and funds for these improvements are advanced by the Company to the CAB under a Project Funding and Reimbursement Agreement which acts as a loan of funds from the Company to the CAB and earns interest at the rate of 6%. As homes are sold, the Sky Ranch Metropolitan Districts will develop assessed value in the community and levy mills against the assessed value to generate property tax revenues to the Sky Ranch Metropolitan Districts that can be used to fund the CAB to repay the Company’s loan advances. These loan advances are recorded as a note receivable and accrue interest from the time of the loan. Notes Receivable – Payment Cap The market value of the notes receivable approximate fair value due to the relatively short period to maturity for these instruments and the prevailing rates approximate market rates . Off-Balance Sheet Instruments – Long-Term Obligations and Operating Lease – Participating Interests in Export Water Supply Revenue Recognition The Company disaggregates revenue by major product line as reported on the consolidated statements of operations and comprehensive income (loss). Comparative results for the three and nine months ended May 31, 2018 and 2017 differ due to the adoption by the Company of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) As described in Recently Issued Accounting Pronouncements The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The most significant impact of the standard relates to the Company’ accounting for tap fees and special facility or construction fees, which revenues are expected to be recognized in earlier periods under the new revenue standard. Revenue recognition related to the Company’s water and wastewater usage fees, consulting fees and oil and gas royalty or lease payments will remain substantially unchanged as a result of the adoption of ASU 2014-09. Wholesale Water and Wastewater Fees – The Company recognizes wastewater treatment fees monthly based on usage. The monthly wastewater treatment fees are recognized based on the amounts billed to the Rangeview District. The Company recognized $11,700 and $7,000 of wastewater treatment fees during the three months ended May 31, 2018 and 2017, respectively. The Company recognized $32,200 and $30,500 of wastewater treatment fees during the nine months ended May 31, 2018 and 2017, respectively. Costs of delivering water and providing wastewater services to customers are recognized as incurred. Tap Fees The Company recognizes water tap fees as revenue at the time the Company grants a right for the customer to tap into the water service line to obtain water service. The Company recognized $0 and $47,000 of water tap fee revenues during the three months ended May 31, 2018 and 2017, respectively. The Company recognized $49,900 and $54,100 of water tap fee revenues during the nine months ended May 31, 2018 and 2017, respectively. The water tap fees recognized are based on the amounts billed to the Rangeview District and any amounts paid to third parties pursuant to the CAA as further described in Note 4 – Long-Term Obligations and Operating Lease The Company recognizes construction fees, including fees received to construct “Special Facilities” (defined in Part I, Item 1 of the 2017 Annual Report), on a percentage-of-completion basis as the construction is completed. Special Facilities are facilities that enable water to be delivered to a single customer. Management has determined that Special Facilities are separate and distinct performance obligations. The Company recognized $10,400 and $31,100 of Special Facilities funding as revenue under its previous revenue recognition ASU No. 2009-13, Revenue Recognition (Topic 605) Summary of Significant Accounting Policies As of May 31, 2018, and August 31, 2017, the Company has deferred recognition of approximately $0 and $1,055,500, respectively, of water tap and construction fee revenue. Consulting Fees Lot Sales – The Company sells lots at Sky Ranch pursuant to distinct agreements with each builder. These agreements follow one of two formats. One format is the sale of a finished lot, whereby the purchaser pays for a ready-to-build finished lot and payment is a lump-sum payment upon completion of the finished lot. The Company will recognize revenues at the point in time at the closing of the sale of an individual finished lot as the transaction cycle will be complete and the Company will have no further obligations for the lot. The Company’s second format is the sale of finished lots pursuant to a development agreement with builders, whereby the Company will recognize revenues in stages that include (i) payment upon the delivery of platted lots (which requires the Company to deliver deeded title to individual lots), (ii) a second payment at the completion of certain infrastructure milestones, and (iii) final payment upon the delivery of the finished lot. The Company has determined that the development agreement format has a single performance obligation and thus will defer the receipt of revenues from the first two milestones and recognize the full revenue from the sale of the lot at a point in time upon delivery of the third milestone once the Company completes all contractual commitments concurrent with the delivery of the finished lot. Royalty and Other Obligations Revenues from the sale of Export Water are shown gross 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 Other income On October 5, 2017, the Company entered into a Paid-Up Oil and Gas Lease with Bison Oil and Gas, LLP for the purpose of exploring for, developing, producing, and marketing oil and gas on the 40 acres of mineral estate the Company owns adjacent to the Lowry Range (the “Bison Lease”). Pursuant to the Bison Lease, the Company received an up-front payment of $167,200, which will be recognized as income on a straight-line basis over three years (the term of the Bison Lease). The Company recognized lease income of $13,900 and $37,200 during the three and nine months ended May 31, 2018, respectively, related to the up-front payment received pursuant to the Bison Lease. As of May 31, 2018, the Company has deferred recognition of $130,000 of income related to the Bison Lease which will be recognized into income ratably through September 2020. 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 $83,600 and $63,500 of share-based compensation expense during the three months ended May 31, 2018 and 2017, respectively, and $241,200 and $168,000 of share-based compensation expense during the nine months ended May 31, 2018 and 2017, 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 May 31, 2018. Due to the complexities involved in accounting for the recently enacted Tax Cuts and Jobs Act (the “Tax Act”), the SEC’s Staff Accounting Bulletin No. 118 (“SAB 118”) requires that the Company include in its financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such estimate has been determined. Pursuant to SAB 118, the Company is allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The final impact on the Company from the Tax Act may differ from the aforementioned estimates due to the complexity of calculating and supporting with primary evidence, changes in interpretations of the Tax Act, future legislative action to address questions that arise because of the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the reasonable estimate. The Company’s deferred tax asset and full valuation allowance was decreased by approximately $1 million as a result of the decreased corporate tax rate. The Company will continue to evaluate the impact of the Tax Act and will record any resulting tax adjustments during 2018. 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 2014 through fiscal year 2017. 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 May 31, 2018, 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 months ended May 31, 2018 or 2017. Discontinued Operations In August 2015, the Company sold substantially all of 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 associated with such properties 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 May 31, Nine Months Ended May 31, 2018 2017 2018 2017 Farm revenues $ 1,000 $ 600 $ 2,400 $ 6,300 Farm expenses - - - - Gross profit 1,000 600 2,400 6,300 General and administrative expenses - 11,900 - 48,300 Operating profit (loss) 1,000 (11,300 ) 2,400 (42,000 ) Finance charges - - - 9,400 Income (loss) from discontinued operations $ 1,000 $ (11,300 ) $ 2,400 $ (32,600 ) The Company anticipates continued expenses through calendar 2018 related to the discontinued operations. The Company will continue to incur expenses (including property taxes) related to the remaining agricultural land the Company continues to own and for the purpose of collecting outstanding receivables. The individual assets and liabilities of the discontinued agricultural business are combined in the captions “Assets of discontinued operations held for sale” and “Liabilities of discontinued operations” in the consolidated balance sheet. The carrying amounts of the major classes of assets and liabilities included as part of the discontinued business are presented in the following table: Discontinued Operations Balance Sheet May 31, 2018 August 31, 2017 Assets: Trade accounts receivable $ 86,800 $ 110,700 Land held for sale (*) 450,600 450,600 Total assets $ 537,400 $ 561,300 Liabilities: Accrued liabilities $ 5,600 $ 11,200 Total liabilities $ 5,600 $ 11,200 (*) 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 535,500 and 470,600 common share equivalents were outstanding as of May 31, 2018 and 2017, respectively, and have been included in the calculation of diluted 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 February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842). In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825) In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Topic 606 Revenue Recognition (Topic 605) The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of the changes made to the Company’s consolidated September 1, 2017 balance sheet for the adoption of ASU 2014-09 were as follows: Balance at August 31, 2017 Adjustments Due to ASU 2014-09 Balance at September 1, 2017 Balance Sheet Assets Deferred tax assets (Deferred revenue) $ 316,400 $ (316,400 ) $ - Deferred tax assets - valuation allowance (Deferred revenue) (316,400 ) 316,400 - Liabilities Deferred revenues, current $ 55,800 $ (55,800 ) $ - Deferred revenues, less current portion 999,249 (999,249 ) - Equity Accumulated deficit $ (103,993,900 ) $ 1,055,049 $ (102,938,851 ) In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on the Company’s consolidated statements of operations and comprehensive income (loss) and balance sheet was as follows: For the Nine Months Ended May 31, 2018 As Reported Amounts that would have been reported under ASC 605 Higher/(Lower) Income statement Revenues Special facility fees $ - $ 31,131 $ (31,131 ) Water tap fees 49,948 60,669 (10,721 ) Net income $ 58,153 $ 100,004 $ (41,852 ) As of May 31, 2018 As Reported Amounts that would have been reported under ASC 605 (1) Higher/(Lower) Balance Sheet Liabilities Deferred revenues, current $ - $ 55,800 $ (55,800 ) Deferred revenues, less current portion - 957,836 (957,836 ) Deferred oil and gas lease payment, current (1) 55,733 55,733 - Deferred oil and gas lease payment, less current portion 74,311 74,311 - Equity Accumulated deficit $ (102,880,698 ) $ (103,893,896 ) $ 1,013,198 (1) Inclusive of the Bison Lease deferred oil and gas lease payment and water tap and construction fee deferred revenues as described in the 2017 Annual Report. Revenue recognition related to the Company’s water and wastewater usage, consulting revenues and oil and gas revenues will remain substantially unchanged as a result of the adoption of ASU 2014-09. The most significant impact of the standard relates to the Company’s accounting for water and wastewater tap fees and special facility/construction fees, which revenues will be recognized in earlier periods when performance obligations are complete under the new revenue standard. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
May 31, 2018 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 2 – 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 where within the fair value hierarchy the measurement falls. 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 May 31, 2018 or August 31, 2017. 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 16 and 56 Level 2 assets as of May 31, 2018 and August 31, 2017, respectively, which consist of certificates of deposit, U.S. Treasury bills and U.S. Treasury notes. 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 May 31, 2018 and August 31, 2017. The Company has determined that the contingent portion of the CAA does not have a determinable fair value (see Note 4 – 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. 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 May 31, 2018: 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) Certificates of deposit $ 1,248,781 $ 1,250,000 $ - $ 1,248,781 $ - $ (1,219 ) U.S. treasuries 15,757,133 15,695,690 - 15,757,133 - 61,443 Total $ 17,005,914 $ 16,945,690 $ - $ 17,005,914 $ - $ 60,224 The following table provides information on the assets and liabilities measured at fair value on a recurring basis as of August 31, 2017: 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) Certificates of deposit $ 12,673,700 $ 12,694,500 $ - $ 12,673,700 $ - $ (20,800 ) U.S. treasuries 7,381,700 7,372,000 - 7,381,700 - 9,700 Total $ 20,055,400 $ 20,066,500 $ - $ 20,055,400 $ - $ (11,100 ) The Company also holds a certificate of deposit that is not carried at fair value on the consolidated balance sheets and is classified as a held-to-maturity security. As of May 31, 2018, the carrying amount of held-to-maturity securities was $189,800. As of August 31, 2017, the carrying amount of held-to-maturity securities was $188,000. |
WATER AND LAND ASSETS
WATER AND LAND ASSETS | 9 Months Ended |
May 31, 2018 | |
WATER AND LAND ASSETS [Abstract] | |
WATER AND LAND ASSETS | NOTE 3 – 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 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 May 31, 2018 and August 31, 2017: May 31, 2018 August 31, 2017 Costs Accumulated Depreciation and Depletion Costs Accumulated Depreciation and Depletion Rangeview water supply $ 14,805,500 $ (12,100 ) $ 14,529,600 $ (10,600 ) Sky Ranch water rights and other costs 7,342,400 (523,100 ) 6,725,000 (436,300 ) Fairgrounds water and water system 2,899,900 (1,040,900 ) 2,899,900 (974,800 ) Rangeview water system 1,652,400 (247,700 ) 1,639,000 (207,000 ) WISE partnership 3,114,100 - 3,114,100 - Water supply – other 1,177,700 (486,700 ) 944,800 (401,300 ) Wild Pointe service rights 1,631,800 (251,400 ) 1,631,700 (213,000 ) Sky Ranch pipeline 4,697,800 (156,600 ) 4,700,000 (39,200 ) Construction in progress 1,006,400 - 673,800 - Totals 38,328,000 (2,718,500 ) 36,857,900 (2,282,200 ) Net investments in water and water systems $ 35,609,500 $ 34,575,700 Capitalized terms in this section not defined herein are defined in Note 4 – Water and Land Assets Depletion and Depreciation The Company recorded depletion charges of $4,300 and $100 during the three months ended May 31, 2018 and 2017, respectively. The Company recorded depletion charges of $5,300 and $600 during the nine months ended May 31, 2018 and 2017, respectively. During the three and nine months ended May 31, 2018, the depletion was related entirely to the “Lowry Water Supply.” The Lowry Water Supply is defined as the “Rangeview Water Supply” and described in detail in Note 4 – Water and Land Assets The Company recorded $211,000 and $148,400 of depreciation expense during the three months ended May 31, 2018 and 2017, respectively. The Company recorded $554,700 and $406,000 of depreciation expense during the nine months ended May 31, 2018 and 2017, respectively. These figures include depreciation for other equipment not included in the table above. |
LONG-TERM OBLIGATIONS AND OPERA
LONG-TERM OBLIGATIONS AND OPERATING LEASE | 9 Months Ended |
May 31, 2018 | |
LONG-TERM OBLIGATIONS AND OPERATING LEASE [Abstract] | |
LONG-TERM OBLIGATIONS AND OPERATING LEASE | NOTE 4 – 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 Lowry 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 of the Company 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 reacquired various portions of the CAA obligations, which retained their original priority, including the Land Board’s CAA interest which was assigned and relinquished to the Company in 2014. The Company did not make any CAA acquisitions during the three months ended May 31, 2018 and 2017. As a result of the acquisitions, the Company is currently allocated approximately 88% of the total proceeds from the sale of Export Water after payment of the Land Board royalty. The acquisitions and cumulative sales of Export Water are detailed in the table below. The remaining potential third-party obligation at May 31, 2018, is approximately $1 million. Export Water Proceeds Received Initial Export Water Proceeds to Pure Cycle Total Potential Third-Party Obligation Paticipating Interests Liability Contingency Original balances $ – $ 218,500 $ 31,807,700 $ 11,090,600 $ 20,717,100 Activity from inception until August 31, 2017: 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 110,400 (42,300 ) (68,100 ) (23,800 ) (44,300 ) and The Hills at Sky Ranch Arapahoe County tap fees (1) 533,000 (373,100 ) (159,900 ) (55,800 ) (104,100 ) Export Water sale payments 676,500 (540,300 ) (136,200 ) (47,300 ) (88,900 ) Balance at August 31, 2017 1,319,900 29,691,700 1,014,600 341,600 673,000 Fiscal 2018 activity: Export Water sale payments 51,900 (45,700 ) (6,200 ) (2,200 ) (4,000 ) Balance at May 31, 2018 $ 1,371,800 $ 29,646,000 $ 1,008,400 $ 339,400 $ 669,000 (1) The Arapahoe County tap fees are net of $34,522 in royalties paid to the Land Board. The CAA includes contractually established priorities which call for payments to CAA holders in order of their priority. This means the first payees receive their full payment before the next priority level receives any payment and so on until full repayment. Of the next approximately $6.6 million of Export Water payouts, which at current levels would occur over several years, the Company will receive approximately $5.8 million of revenue. Thereafter, the Company will be entitled to all but approximately $220,000 of the proceeds from the sale of Export Water after deduction of the Land Board royalty. WISE Partnership During December 2014, the Company, through Rangeview, 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 Rangeview 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 Rangeview, the Company has an agreement to fund Rangeview’s participation in WISE effective as of December 22, 2014. The Company’s cost of funding Rangeview’s purchase of its share of existing infrastructure and future infrastructure for WISE and funding operations and water deliveries related to WISE is projected to be approximately $5.2 million over the next five years. See further discussion in Note 6 – Related Party Transactions. Operating Lease Effective February 2018, the Company entered into an operating lease for approximately 11,393 square feet of office and warehouse space. 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. The change in the lease costs is not material to the Company’s operations. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
May 31, 2018 | |
SHAREHOLDERS EQUITY [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 5 – 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 nine months ended May 31, 2018: Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Approximate Aggregate Instrinsic Value Oustanding at August 31, 2017 465,500 $ 4.88 6.30 $ 1,007,740 Granted (1) 82,500 8.05 Exercised (10,000 ) 7.50 Forfeited or expired (2,500 ) 7.50 Outstanding at May 31, 2018 535,500 $ 5.31 6.29 $ 2,163,540 Options exercisable at May 31, 2018 379,668 $ 4.66 5.21 $ 1,780,275 (1) Includes 50,000 shares granted to Mr. Harding on September 27, 2017 and 32,500 total shares granted to the board of directors on January 17, 2018. 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 nine months ended May 31, 2018: Number of Options Weighted- Average Grant Date Fair Value Non-vested options oustanding at August 31, 2017 147,500 $ 3.64 Granted 82,500 4.41 Vested (74,168 ) 2.84 Forfeited - - Non-vested options outstanding at February 28, 2018 155,832 $ 3.76 All non-vested options are expected to vest. Stock-based compensation expense was $83,600 and $63,500 for the three months ended May 31, 2018 and 2017, respectively. Stock-based compensation expense was $241,200 and $168,000 for the nine months ended May 31, 2018 and 2017, respectively. At May 31, 2018, the Company had unrecognized expenses totaling $378,400 relating to non-vested options that are expected to vest. The weighted-average period over which these options are expected to vest is approximately two years. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
May 31, 2018 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS 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. Sky Ranch Metropolitan District Nos. 1, 3, 4 and 5 (the “Sky Ranch Districts”) and the 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 CAB consist of three employees of the Company and two independent board members. 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 with $22,200 and $198,200 being provided during fiscal years 2018 and 2017, respectively. 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. The Company anticipates spending approximately $5.2 million over the next five fiscal years to fund the Rangeview District’s purchase of its share of the water transmission line and additional facilities, water and related assets for WISE and to fund operations and water deliveries related to WISE. 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. Total investment in the WISE assets as of May 31, 2018 is approximately $3.1 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% (6.75% at May 31, 2018). The maturity date of the loan is December 31, 2020. 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. The $862,800 balance of the notes receivable at May 31, 2018, includes borrowings of $470,300 and accrued interest of $392,500. The Company has been providing funding to the Sky Ranch Districts. In each year, since 2012, the Company has entered into an Operation Funding Agreement with one of the Sky Ranch Districts, obligating the Company to advance funding to the Sky Ranch District for operations and maintenance expenses for the then-current calendar year. All payments are subject to annual appropriations by the Sky Ranch District in its absolute discretion. The advances by the Company accrue interest at a rate of 8% per annum from the date of the advance. In November 2014, but effective as of January 1, 2014, the Company entered into a Facilities Funding and Acquisition Agreement with a Sky Ranch District obligating the Company to either finance district improvements or to construct improvements on behalf of the Sky Ranch District subject to reimbursement. Improvements subject to this agreement are determined pursuant to a mutually agreed upon budget. Each year in September, the parties are to mutually determine the improvements required for the following year and finalize a budget by the end of October. Each advance or reimbursable expense accrues interest at a rate of 6% per annum. Upon the Sky Ranch District’s ratification of the advances and related expenditures, the amount is reclassified to long-term and is recorded as part of Notes receivable – related parties During the nine months ended May 31, 2018, the Sky Ranch Districts repaid all advances plus accrued interest totaling $215,504, and as of the period then ended, there was no outstanding balance on the receivable. Pursuant to that certain Community Authority Board Establishment Agreement, as the same may be amended from time to time, Sky Ranch Metropolitan District No. 1 and Sky Ranch Metropolitan District No. 5 formed the 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 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. Notes receivable – related parties In February 2018, the Company advanced the CAB $1,490,000 to begin construction of improvements on the Sky Ranch property. The $1,512,500 balance of the notes receivable at May 31, 2018, includes borrowings of $1,490,000 and accrued interest of $22,500. |
SIGNIFICANT CUSTOMERS
SIGNIFICANT CUSTOMERS | 9 Months Ended |
May 31, 2018 | |
SIGNIFICANT CUSTOMERS [Abstract] | |
SIGNIFICANT CUSTOMERS | NOTE 7 – SIGNIFICANT CUSTOMERS Pursuant to the Rangeview Water Agreements (defined in Note 4 – Water and Land Assets customers. Revenues related to the provision of water for the oil and gas industry to one customer accounted for 87% of the Company’s water and wastewater revenues for the three months ended May 31, 2018. Revenues related to the provision of water for the oil and gas industry to three customers accounted for 91% of the Company’s water and wastewater revenues for the nine months ended May 31, 2018. Revenues related to the provision of water for the oil and gas industry to one customer accounted for 0% and 55% of the Company’s water and wastewater revenues for the three and nine months ended May 31, 2017, respectively. The Company had accounts receivable from the Rangeview District which accounted for 26% and 50% of the Company’s trade receivables balances at May 31, 2018 and August 31, 2017, respectively. Accounts receivable from the Rangeview District’s largest customer accounted for 15% and 19% of the Company’s water and wastewater trade receivables as of May 31, 2018 and August 31, 2017, respectively. As of May 31, 2018 and August 31, 2017 one significant customer accounted for 55% and 46% of the Company’s trade receivables balances, respectively. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 9 Months Ended |
May 31, 2018 | |
ACCRUED LIABILITIES [Abstract] | |
ACCRUED LIABILITIES | NOTE 8 – ACCRUED LIABILITIES At May 31, 2018, the Company had accrued liabilities of $379,300, of which $4,900 was for estimated property taxes, $68,000 was for professional fees, and $306,400 was for operating payables. At August 31, 2017, the Company had accrued liabilities of $380,900, of which $265,000 was for accrued compensation, $5,000 was for estimated property taxes, $48,500 was for professional fees, and the remaining $62,400 was related to operating payables. |
LITIGATION LOSS CONTINGENCIES
LITIGATION LOSS CONTINGENCIES | 9 Months Ended |
May 31, 2018 | |
LITIGATION LOSS CONTINGENCIES [Abstract] | |
LITIGATION LOSS CONTINGENCIES | NOTE 9 – 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. The Company is currently not aware of any probable or reasonably possible claims requiring disclosure or an accrual. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
May 31, 2018 | |
SEGMENT INFORMATION [Abstract] | |
SEGMENT INFORMATION | NOTE 10 – 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. Currently, the Company operates its wholesale water and wastewater services segment as its only line of business but anticipates it will report its land development activities at Sky Ranch as a separate segment in future filings. The wholesale water and wastewater services business includes selling water service to customers, which is then 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. As part of the Company’s Sky Ranch development, the Company entered into contracts for the sale of lots (see Note 1 – Presentation of Interim Information |
PRESENTATION OF INTERIM INFOR17
PRESENTATION OF INTERIM INFORMATION (Policies) | 9 Months Ended |
May 31, 2018 | |
PRESENTATION OF INTERIM INFORMATION [Abstract] | |
Use of Estimates | 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 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 months ended May 31, 2018, the Company’s main operating account exceeded federally insured limits. The Company has never suffered a loss due to such excess balance. |
Inventories | Inventories Inventories primarily include land held for development and sale. Inventories are stated at cost, less reimbursements. Capitalized lot development costs at Sky Ranch are costs incurred to construct lots at Sky Ranch that meet the Company’s capitalization criteria for improvements to a lot and are capitalized as incurred, including interest. The Company capitalizes certain legal, engineering, design, permitting, land acquisition, and construction costs related to the development of lots at Sky Ranch. We use the specific identification method for purposes of accumulating land development costs and allocate costs to each lot to determine the cost basis for each lot sale. We will record all land cost of sales when a lot is closed on a lot-by-lot basis. |
Investments | Investments Management determines the appropriate classification of its investments in certificates of deposit and debt and equity securities at the time of purchase and re-evaluates 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 $190,000 of investments classified as held-to-maturity at May 31, 2018, which represent certificates of deposit with a maturity date after May 31 Securities that the Company does not have the positive intent or ability to hold to maturity, including certificates of deposit, debt securities and any investments in equity securities, are classified as available-for-sale. Securities classified as available-for-sale are marked-to-market at each reporting period. Changes in value of such securities are recorded as a component of Accumulated other comprehensive income (loss) March |
Concentration of Credit Risk and Fair Value | 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 investments. From time to time, the Company places its cash in money market instruments, certificates of deposit 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 – Related Party Transactions, The note receivable – related parties balance primarily relates to the Company funding certain costs related to the development of public improvements, such as drainage improvements, storm water improvements, roadways, curb and gutter improvements, parks and open spaces. These costs are incurred by the CAB and funds for these improvements are advanced by the Company to the CAB under a Project Funding and Reimbursement Agreement which acts as a loan of funds from the Company to the CAB and earns interest at the rate of 6%. As homes are sold, the Sky Ranch Metropolitan Districts will develop assessed value in the community and levy mills against the assessed value to generate property tax revenues to the Sky Ranch Metropolitan Districts that can be used to fund the CAB to repay the Company’s loan advances. These loan advances are recorded as a note receivable and accrue interest from the time of the loan. Notes Receivable – Payment Cap The market value of the notes receivable approximate fair value due to the relatively short period to maturity for these instruments and the prevailing rates approximate market rates . Off-Balance Sheet Instruments – Long-Term Obligations and Operating Lease – Participating Interests in Export Water Supply |
Revenue Recognition | Revenue Recognition The Company disaggregates revenue by major product line as reported on the consolidated statements of operations and comprehensive income (loss). Comparative results for the three and nine months ended May 31, 2018 and 2017 differ due to the adoption by the Company of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) As described in Recently Issued Accounting Pronouncements The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The most significant impact of the standard relates to the Company’ accounting for tap fees and special facility or construction fees, which revenues are expected to be recognized in earlier periods under the new revenue standard. Revenue recognition related to the Company’s water and wastewater usage fees, consulting fees and oil and gas royalty or lease payments will remain substantially unchanged as a result of the adoption of ASU 2014-09. Wholesale Water and Wastewater Fees – The Company recognizes wastewater treatment fees monthly based on usage. The monthly wastewater treatment fees are recognized based on the amounts billed to the Rangeview District. The Company recognized $11,700 and $7,000 of wastewater treatment fees during the three months ended May 31, 2018 and 2017, respectively. The Company recognized $32,200 and $30,500 of wastewater treatment fees during the nine months ended May 31, 2018 and 2017, respectively. Costs of delivering water and providing wastewater services to customers are recognized as incurred. Tap Fees The Company recognizes water tap fees as revenue at the time the Company grants a right for the customer to tap into the water service line to obtain water service. The Company recognized $0 and $47,000 of water tap fee revenues during the three months ended May 31, 2018 and 2017, respectively. The Company recognized $49,900 and $54,100 of water tap fee revenues during the nine months ended May 31, 2018 and 2017, respectively. The water tap fees recognized are based on the amounts billed to the Rangeview District and any amounts paid to third parties pursuant to the CAA as further described in Note 4 – Long-Term Obligations and Operating Lease The Company recognizes construction fees, including fees received to construct “Special Facilities” (defined in Part I, Item 1 of the 2017 Annual Report), on a percentage-of-completion basis as the construction is completed. Special Facilities are facilities that enable water to be delivered to a single customer. Management has determined that Special Facilities are separate and distinct performance obligations. The Company recognized $10,400 and $31,100 of Special Facilities funding as revenue under its previous revenue recognition ASU No. 2009-13, Revenue Recognition (Topic 605) Summary of Significant Accounting Policies As of May 31, 2018, and August 31, 2017, the Company has deferred recognition of approximately $0 and $1,055,500, respectively, of water tap and construction fee revenue. Consulting Fees Lot Sales – The Company sells lots at Sky Ranch pursuant to distinct agreements with each builder. These agreements follow one of two formats. One format is the sale of a finished lot, whereby the purchaser pays for a ready-to-build finished lot and payment is a lump-sum payment upon completion of the finished lot. The Company will recognize revenues at the point in time at the closing of the sale of an individual finished lot as the transaction cycle will be complete and the Company will have no further obligations for the lot. The Company’s second format is the sale of finished lots pursuant to a development agreement with builders, whereby the Company will recognize revenues in stages that include (i) payment upon the delivery of platted lots (which requires the Company to deliver deeded title to individual lots), (ii) a second payment at the completion of certain infrastructure milestones, and (iii) final payment upon the delivery of the finished lot. The Company has determined that the development agreement format has a single performance obligation and thus will defer the receipt of revenues from the first two milestones and recognize the full revenue from the sale of the lot at a point in time upon delivery of the third milestone once the Company completes all contractual commitments concurrent with the delivery of the finished lot. |
Royalty and Other Obligations | Royalty and Other Obligations Revenues from the sale of Export Water are shown gross 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 | Oil and Gas Lease Payments As further described in Note 2 – Summary of Significant Accounting Policies Other income On October 5, 2017, the Company entered into a Paid-Up Oil and Gas Lease with Bison Oil and Gas, LLP for the purpose of exploring for, developing, producing, and marketing oil and gas on the 40 acres of mineral estate the Company owns adjacent to the Lowry Range (the “Bison Lease”). Pursuant to the Bison Lease, the Company received an up-front payment of $167,200, which will be recognized as income on a straight-line basis over three years (the term of the Bison Lease). The Company recognized lease income of $13,900 and $37,200 during the three and nine months ended May 31, 2018, respectively, related to the up-front payment received pursuant to the Bison Lease. As of May 31, 2018, the Company has deferred recognition of $130,000 of income related to the Bison Lease which will be recognized into income ratably through September 2020. |
Long-Lived Assets | Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the eventual use of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
Capitalized Costs of Water and Wastewater Systems and Depletion and Depreciation of Water Assets | 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 | 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 $83,600 and $63,500 of share-based compensation expense during the three months ended May 31, 2018 and 2017, respectively, and $241,200 and $168,000 of share-based compensation expense during the nine months ended May 31, 2018 and 2017, respectively. |
Income Taxes | Income Taxes The Company uses a “more-likely-than-not” threshold for the recognition and de-recognition of tax positions, including any potential interest and penalties relating to tax positions taken by the Company. The Company did not have any significant unrecognized tax benefits as of May 31, 2018. Due to the complexities involved in accounting for the recently enacted Tax Cuts and Jobs Act (the “Tax Act”), the SEC’s Staff Accounting Bulletin No. 118 (“SAB 118”) requires that the Company include in its financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such estimate has been determined. Pursuant to SAB 118, the Company is allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The final impact on the Company from the Tax Act may differ from the aforementioned estimates due to the complexity of calculating and supporting with primary evidence, changes in interpretations of the Tax Act, future legislative action to address questions that arise because of the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the reasonable estimate. The Company’s deferred tax asset and full valuation allowance was decreased by approximately $1 million as a result of the decreased corporate tax rate. The Company will continue to evaluate the impact of the Tax Act and will record any resulting tax adjustments during 2018. 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 2014 through fiscal year 2017. 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 May 31, 2018, 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 months ended May 31, 2018 or 2017. |
Discontinued Operations | Discontinued Operations In August 2015, the Company sold substantially all of 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 associated with such properties 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 May 31, Nine Months Ended May 31, 2018 2017 2018 2017 Farm revenues $ 1,000 $ 600 $ 2,400 $ 6,300 Farm expenses - - - - Gross profit 1,000 600 2,400 6,300 General and administrative expenses - 11,900 - 48,300 Operating profit (loss) 1,000 (11,300 ) 2,400 (42,000 ) Finance charges - - - 9,400 Income (loss) from discontinued operations $ 1,000 $ (11,300 ) $ 2,400 $ (32,600 ) The Company anticipates continued expenses through calendar 2018 related to the discontinued operations. The Company will continue to incur expenses (including property taxes) related to the remaining agricultural land the Company continues to own and for the purpose of collecting outstanding receivables. The individual assets and liabilities of the discontinued agricultural business are combined in the captions “Assets of discontinued operations held for sale” and “Liabilities of discontinued operations” in the consolidated balance sheet. The carrying amounts of the major classes of assets and liabilities included as part of the discontinued business are presented in the following table: Discontinued Operations Balance Sheet May 31, 2018 August 31, 2017 Assets: Trade accounts receivable $ 86,800 $ 110,700 Land held for sale (*) 450,600 450,600 Total assets $ 537,400 $ 561,300 Liabilities: Accrued liabilities $ 5,600 $ 11,200 Total liabilities $ 5,600 $ 11,200 (*) Land Held for Sale. |
Income (Loss) per Common Share | 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 535,500 and 470,600 common share equivalents were outstanding as of May 31, 2018 and 2017, respectively, and have been included in the calculation of diluted 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 | 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 February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842). In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825) In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Topic 606 Revenue Recognition (Topic 605) The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of the changes made to the Company’s consolidated September 1, 2017 balance sheet for the adoption of ASU 2014-09 were as follows: Balance at August 31, 2017 Adjustments Due to ASU 2014-09 Balance at September 1, 2017 Balance Sheet Assets Deferred tax assets (Deferred revenue) $ 316,400 $ (316,400 ) $ - Deferred tax assets - valuation allowance (Deferred revenue) (316,400 ) 316,400 - Liabilities Deferred revenues, current $ 55,800 $ (55,800 ) $ - Deferred revenues, less current portion 999,249 (999,249 ) - Equity Accumulated deficit $ (103,993,900 ) $ 1,055,049 $ (102,938,851 ) In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on the Company’s consolidated statements of operations and comprehensive income (loss) and balance sheet was as follows: For the Nine Months Ended May 31, 2018 As Reported Amounts that would have been reported under ASC 605 Higher/(Lower) Income statement Revenues Special facility fees $ - $ 31,131 $ (31,131 ) Water tap fees 49,948 60,669 (10,721 ) Net income $ 58,153 $ 100,004 $ (41,852 ) As of May 31, 2018 As Reported Amounts that would have been reported under ASC 605 (1) Higher/(Lower) Balance Sheet Liabilities Deferred revenues, current $ - $ 55,800 $ (55,800 ) Deferred revenues, less current portion - 957,836 (957,836 ) Deferred oil and gas lease payment, current (1) 55,733 55,733 - Deferred oil and gas lease payment, less current portion 74,311 74,311 - Equity Accumulated deficit $ (102,880,698 ) $ (103,893,896 ) $ 1,013,198 (1) Inclusive of the Bison Lease deferred oil and gas lease payment and water tap and construction fee deferred revenues as described in the 2017 Annual Report. Revenue recognition related to the Company’s water and wastewater usage, consulting revenues and oil and gas revenues will remain substantially unchanged as a result of the adoption of ASU 2014-09. The most significant impact of the standard relates to the Company’s accounting for water and wastewater tap fees and special facility/construction fees, which revenues will be recognized in earlier periods when performance obligations are complete under the new revenue standard. |
PRESENTATION OF INTERIM INFOR18
PRESENTATION OF INTERIM INFORMATION (Tables) | 9 Months Ended |
May 31, 2018 | |
PRESENTATION OF INTERIM INFORMATION [Abstract] | |
Discontinued Operations Financials | 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 May 31, Nine Months Ended May 31, 2018 2017 2018 2017 Farm revenues $ 1,000 $ 600 $ 2,400 $ 6,300 Farm expenses - - - - Gross profit 1,000 600 2,400 6,300 General and administrative expenses - 11,900 - 48,300 Operating profit (loss) 1,000 (11,300 ) 2,400 (42,000 ) Finance charges - - - 9,400 Income (loss) from discontinued operations $ 1,000 $ (11,300 ) $ 2,400 $ (32,600 ) The carrying amounts of the major classes of assets and liabilities included as part of the discontinued business are presented in the following table: Discontinued Operations Balance Sheet May 31, 2018 August 31, 2017 Assets: Trade accounts receivable $ 86,800 $ 110,700 Land held for sale (*) 450,600 450,600 Total assets $ 537,400 $ 561,300 Liabilities: Accrued liabilities $ 5,600 $ 11,200 Total liabilities $ 5,600 $ 11,200 (*) Land Held for Sale. |
Effects of New Accounting Standard | The cumulative effect of the changes made to the Company’s consolidated September 1, 2017 balance sheet for the adoption of ASU 2014-09 were as follows: Balance at August 31, 2017 Adjustments Due to ASU 2014-09 Balance at September 1, 2017 Balance Sheet Assets Deferred tax assets (Deferred revenue) $ 316,400 $ (316,400 ) $ - Deferred tax assets - valuation allowance (Deferred revenue) (316,400 ) 316,400 - Liabilities Deferred revenues, current $ 55,800 $ (55,800 ) $ - Deferred revenues, less current portion 999,249 (999,249 ) - Equity Accumulated deficit $ (103,993,900 ) $ 1,055,049 $ (102,938,851 ) In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on the Company’s consolidated statements of operations and comprehensive income (loss) and balance sheet was as follows: For the Nine Months Ended May 31, 2018 As Reported Amounts that would have been reported under ASC 605 Higher/(Lower) Income statement Revenues Special facility fees $ - $ 31,131 $ (31,131 ) Water tap fees 49,948 60,669 (10,721 ) Net income $ 58,153 $ 100,004 $ (41,852 ) As of May 31, 2018 As Reported Amounts that would have been reported under ASC 605 (1) Higher/(Lower) Balance Sheet Liabilities Deferred revenues, current $ - $ 55,800 $ (55,800 ) Deferred revenues, less current portion - 957,836 (957,836 ) Deferred oil and gas lease payment, current (1) 55,733 55,733 - Deferred oil and gas lease payment, less current portion 74,311 74,311 - Equity Accumulated deficit $ (102,880,698 ) $ (103,893,896 ) $ 1,013,198 (1) Inclusive of the Bison Lease deferred oil and gas lease payment and water tap and construction fee deferred revenues as described in the 2017 Annual Report. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
May 31, 2018 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table provides information on the assets and liabilities measured at fair value on a recurring basis as of May 31, 2018: 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) Certificates of deposit $ 1,248,781 $ 1,250,000 $ - $ 1,248,781 $ - $ (1,219 ) U.S. treasuries 15,757,133 15,695,690 - 15,757,133 - 61,443 Total $ 17,005,914 $ 16,945,690 $ - $ 17,005,914 $ - $ 60,224 The following table provides information on the assets and liabilities measured at fair value on a recurring basis as of August 31, 2017: 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) Certificates of deposit $ 12,673,700 $ 12,694,500 $ - $ 12,673,700 $ - $ (20,800 ) U.S. treasuries 7,381,700 7,372,000 - 7,381,700 - 9,700 Total $ 20,055,400 $ 20,066,500 $ - $ 20,055,400 $ - $ (11,100 ) |
WATER AND LAND ASSETS (Tables)
WATER AND LAND ASSETS (Tables) | 9 Months Ended |
May 31, 2018 | |
WATER AND LAND ASSETS [Abstract] | |
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 May 31, 2018 and August 31, 2017: May 31, 2018 August 31, 2017 Costs Accumulated Depreciation and Depletion Costs Accumulated Depreciation and Depletion Rangeview water supply $ 14,805,500 $ (12,100 ) $ 14,529,600 $ (10,600 ) Sky Ranch water rights and other costs 7,342,400 (523,100 ) 6,725,000 (436,300 ) Fairgrounds water and water system 2,899,900 (1,040,900 ) 2,899,900 (974,800 ) Rangeview water system 1,652,400 (247,700 ) 1,639,000 (207,000 ) WISE partnership 3,114,100 - 3,114,100 - Water supply – other 1,177,700 (486,700 ) 944,800 (401,300 ) Wild Pointe service rights 1,631,800 (251,400 ) 1,631,700 (213,000 ) Sky Ranch pipeline 4,697,800 (156,600 ) 4,700,000 (39,200 ) Construction in progress 1,006,400 - 673,800 - Totals 38,328,000 (2,718,500 ) 36,857,900 (2,282,200 ) Net investments in water and water systems $ 35,609,500 $ 34,575,700 |
LONG-TERM OBLIGATIONS AND OPE21
LONG-TERM OBLIGATIONS AND OPERATING LEASE (Tables) | 9 Months Ended |
May 31, 2018 | |
LONG-TERM OBLIGATIONS AND OPERATING LEASE [Abstract] | |
Remaining Third Party Obligation | The remaining potential third-party obligation at May 31, 2018, is approximately $1 million. Export Water Proceeds Received Initial Export Water Proceeds to Pure Cycle Total Potential Third-Party Obligation Paticipating Interests Liability Contingency Original balances $ – $ 218,500 $ 31,807,700 $ 11,090,600 $ 20,717,100 Activity from inception until August 31, 2017: 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 110,400 (42,300 ) (68,100 ) (23,800 ) (44,300 ) and The Hills at Sky Ranch Arapahoe County tap fees (1) 533,000 (373,100 ) (159,900 ) (55,800 ) (104,100 ) Export Water sale payments 676,500 (540,300 ) (136,200 ) (47,300 ) (88,900 ) Balance at August 31, 2017 1,319,900 29,691,700 1,014,600 341,600 673,000 Fiscal 2018 activity: Export Water sale payments 51,900 (45,700 ) (6,200 ) (2,200 ) (4,000 ) Balance at May 31, 2018 $ 1,371,800 $ 29,646,000 $ 1,008,400 $ 339,400 $ 669,000 (1) The Arapahoe County tap fees are net of $34,522 in royalties paid to the Land Board. |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 9 Months Ended |
May 31, 2018 | |
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 nine months ended May 31, 2018: Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term Approximate Aggregate Instrinsic Value Oustanding at August 31, 2017 465,500 $ 4.88 6.30 $ 1,007,740 Granted (1) 82,500 8.05 Exercised (10,000 ) 7.50 Forfeited or expired (2,500 ) 7.50 Outstanding at May 31, 2018 535,500 $ 5.31 6.29 $ 2,163,540 Options exercisable at May 31, 2018 379,668 $ 4.66 5.21 $ 1,780,275 (1) Includes 50,000 shares granted to Mr. Harding on September 27, 2017 and 32,500 total shares granted to the board of directors on January 17, 2018. |
Combined Activity and Value of 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 nine months ended May 31, 2018: Number of Options Weighted- Average Grant Date Fair Value Non-vested options oustanding at August 31, 2017 147,500 $ 3.64 Granted 82,500 4.41 Vested (74,168 ) 2.84 Forfeited - - Non-vested options outstanding at February 28, 2018 155,832 $ 3.76 |
PRESENTATION OF INTERIM INFOR23
PRESENTATION OF INTERIM INFORMATION, Investments (Details) - USD ($) | May 31, 2018 | Aug. 31, 2017 |
Investments [Abstract] | ||
Held-to-maturity securities | $ 189,800 | $ 188,000 |
PRESENTATION OF INTERIM INFOR24
PRESENTATION OF INTERIM INFORMATION, Notes Receivable (Details) | 9 Months Ended |
May 31, 2018USD ($)Builder | |
CAB [Member] | Water and Wastewater Services [Member] | Notes Receivable [Member] | |
Notes Receivable - Related Parties [Abstract] | |
Interest rate | 6.00% |
PCY Holdings, LLC [Member] | |
Notes Receivable - Related Parties [Abstract] | |
Interest rate | 6.00% |
Number of builders | Builder | 2 |
Threshold period to pay interest | 60 days |
PCY Holdings, LLC [Member] | Minimum [Member] | |
Notes Receivable - Related Parties [Abstract] | |
Progress payment to contractors | $ (136,700) |
PCY Holdings, LLC [Member] | Maximum [Member] | |
Notes Receivable - Related Parties [Abstract] | |
Progress payment to contractors | $ (350,000) |
PRESENTATION OF INTERIM INFOR25
PRESENTATION OF INTERIM INFORMATION, Revenue Recognition (Details) | 3 Months Ended | 9 Months Ended | ||||
May 31, 2018USD ($)a | May 31, 2017USD ($) | May 31, 2018USD ($)aHomeBuilders | May 31, 2017USD ($) | Aug. 31, 2017USD ($) | Nov. 30, 2015a | |
Revenue Recognition [Abstract] | ||||||
Revenue from contract with customer | $ 1,212,119 | $ 134,008 | $ 3,066,911 | $ 570,186 | ||
Land [Abstract] | ||||||
Area of land | a | 931 | 931 | 700 | |||
Number of separate home builders | HomeBuilders | 3 | |||||
Metered Water Usage [Member] | ||||||
Revenue Recognition [Abstract] | ||||||
Revenue from contract with customer | $ 1,162,570 | 47,695 | $ 2,888,913 | 379,462 | ||
Wastewater Treatment Fees [Member] | ||||||
Revenue Recognition [Abstract] | ||||||
Revenue from contract with customer | 11,675 | 6,967 | 32,157 | 30,516 | ||
Water Tap Fee Recognized [Member] | ||||||
Revenue Recognition [Abstract] | ||||||
Revenue from contract with customer | 0 | 46,978 | 49,948 | 54,125 | ||
Special Facility Funding Recognized [Member] | ||||||
Revenue Recognition [Abstract] | ||||||
Revenue from contract with customer | 0 | 10,377 | 0 | 31,131 | ||
Other [Member] | ||||||
Revenue Recognition [Abstract] | ||||||
Revenue from contract with customer | 37,874 | $ 21,991 | $ 95,893 | $ 74,952 | ||
Water Tap and Construction Fee [Member] | ||||||
Revenue Recognition [Abstract] | ||||||
Service life of facilities constructed | 30 years | |||||
Deferred Revenue [Abstract] | ||||||
Deferred revenue | $ 0 | $ 0 | $ 1,055,500 |
PRESENTATION OF INTERIM INFOR26
PRESENTATION OF INTERIM INFORMATION, Oil and Gas Lease Payments (Details) | 3 Months Ended | 9 Months Ended | |||
May 31, 2018USD ($)aWell | May 31, 2017USD ($) | May 31, 2018USD ($)aWell | May 31, 2017USD ($) | Oct. 05, 2017USD ($) | |
Oil and Gas Lease Payments [Abstract] | |||||
Number of drilling wells | Well | 2 | 2 | |||
Oil and gas royalty income, net | $ 61,113 | $ 24,935 | $ 152,653 | $ 164,338 | |
Bison Lease [Member] | |||||
Oil and Gas Lease Payments [Abstract] | |||||
Mineral estate area owned (in acres) | a | 40 | 40 | |||
Up-front payment received | $ 130,000 | $ 130,000 | $ 167,200 | ||
Term period of lease | 3 years | ||||
Deferred lease income recognized related to up-front payment | $ 13,900 | $ 37,200 |
PRESENTATION OF INTERIM INFOR27
PRESENTATION OF INTERIM INFORMATION, Capitalized Costs of Water and Wastewater Systems and Depletion and Depreciation of Water Assets (Details) | 9 Months Ended |
May 31, 2018 | |
Maximum [Member] | |
Capitalized Costs of Water and Wastewater Systems and Depletion and Depreciation of Water Assets [Abstract] | |
Estimated useful lives | 30 years |
PRESENTATION OF INTERIM INFOR28
PRESENTATION OF INTERIM INFORMATION, Share-Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | |
Share-Based Compensation [Abstract] | ||||
Share-based compensation expense | $ 83,600 | $ 63,500 | $ 241,209 | $ 168,034 |
PRESENTATION OF INTERIM INFOR29
PRESENTATION OF INTERIM INFORMATION, Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
May 31, 2018 | May 31, 2017 | May 31, 2018 | |
Income Taxes [Abstract] | |||
Decrease in valuation allowance | $ (1,000,000) | ||
Accrued interest of unrecognized tax benefits | $ 0 | 0 | |
Accrued penalties of unrecognized tax benefits | 0 | $ 0 | |
Interest expense on unrecognized tax benefits | $ 0 | $ 0 |
PRESENTATION OF INTERIM INFOR30
PRESENTATION OF INTERIM INFORMATION, Discontinued Operations (Details) | 3 Months Ended | 9 Months Ended | |||||
May 31, 2018USD ($)a | May 31, 2017USD ($) | Nov. 30, 2015USD ($)aFarm | May 31, 2018USD ($)a | May 31, 2017USD ($) | Aug. 31, 2017USD ($) | ||
Discontinued Operations Income Statement [Abstract] | |||||||
Farm revenues | $ 1,000 | $ 600 | $ 2,400 | $ 6,300 | |||
Farm expenses | 0 | 0 | 0 | 0 | |||
Gross profit | 1,000 | 600 | 2,400 | 6,300 | |||
General and administrative expenses | 0 | 11,900 | 0 | 48,300 | |||
Operating profit (loss) | 1,000 | (11,300) | 2,400 | (42,000) | |||
Finance charges | 0 | 0 | 0 | 9,400 | |||
Income (loss) from discontinued operations | 969 | $ (11,275) | 2,390 | $ (32,607) | |||
Assets [Abstract] | |||||||
Trade accounts receivable | 86,800 | 86,800 | $ 110,700 | ||||
Land held for sale | [1] | 450,600 | 450,600 | 450,600 | |||
Total assets | 537,400 | 537,400 | 561,300 | ||||
Liabilities [Abstract] | |||||||
Accrued liabilities | 5,600 | 5,600 | 11,200 | ||||
Total liabilities | $ 5,600 | $ 5,600 | $ 11,200 | ||||
Land [Abstract] | |||||||
Area of land | a | 931 | 700 | 931 | ||||
Discontinued Operation, Assets Held-for-Sale [Abstract] | |||||||
Number of farms purchased | Farm | 3 | ||||||
Payments on purchase of farms | $ (450,600) | ||||||
[1] | Land Held for Sale. During the fiscal quarter ended November 30, 2015, the Company purchased three farms totaling 700 acres for approximately $450,600. The farms were acquired in order to correct dry-up covenant issues related to water only farms in order to obtain the release of the escrow funds related to the Company's farm sale to Arkansas River Farms, LLC. The Company intends to sell the farms in due course and has classified the farms as long-term assets. |
PRESENTATION OF INTERIM INFOR31
PRESENTATION OF INTERIM INFORMATION, Income (Loss) per Common Share (Details) - shares | 9 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Income (Loss) per Common Share [Abstract] | ||
Anti-dilutive securities excluded from calculation of loss per common share (in shares) | 535,500 | 470,600 |
PRESENTATION OF INTERIM INFOR32
PRESENTATION OF INTERIM INFORMATION, Recently Issued Accounting Pronouncements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | Aug. 31, 2017 | ||
Liabilities [Abstract] | ||||||
Deferred oil and gas lease payment, current | $ 55,733 | $ 55,733 | $ 0 | |||
Deferred oil and gas lease payment, less current portion | 74,311 | 74,311 | 0 | |||
Equity [Abstract] | ||||||
Accumulated deficit | (102,880,698) | (102,880,698) | (103,993,900) | |||
Income Statement [Abstract] | ||||||
Net income | 54,601 | $ (554,416) | 58,153 | $ (1,209,680) | ||
ASU 2014-09 [Member] | ||||||
Assets [Abstract] | ||||||
Deferred tax assets (Deferred revenue) | 0 | |||||
Deferred tax assets-valuation allowance (Deferred revenue) | 0 | |||||
Liabilities [Abstract] | ||||||
Deferred revenues, current | 0 | 0 | 0 | |||
Deferred revenues, less current portion | 0 | 0 | 0 | |||
Deferred oil and gas lease payment, current | [1] | 55,733 | 55,733 | |||
Deferred oil and gas lease payment, less current portion | 74,311 | 74,311 | ||||
Equity [Abstract] | ||||||
Accumulated deficit | (102,880,698) | (102,880,698) | (102,938,851) | |||
Income Statement [Abstract] | ||||||
Net income | 58,153 | |||||
ASU 2014-09 [Member] | Special Facility Fee [Member] | ||||||
Income Statement [Abstract] | ||||||
Revenue | 0 | |||||
ASU 2014-09 [Member] | Water Tap Fee [Member] | ||||||
Income Statement [Abstract] | ||||||
Revenue | 49,948 | |||||
Amounts That Would Have Been Reported under ASC 605 [Member] | ||||||
Liabilities [Abstract] | ||||||
Deferred revenues, current | 55,800 | 55,800 | ||||
Deferred revenues, less current portion | 957,836 | 957,836 | ||||
Deferred oil and gas lease payment, current | [1] | 55,733 | 55,733 | |||
Deferred oil and gas lease payment, less current portion | 74,311 | 74,311 | ||||
Equity [Abstract] | ||||||
Accumulated deficit | (103,893,896) | (103,893,896) | ||||
Amounts That Would Have Been Reported under ASC 605 [Member] | ASU 2014-09 [Member] | ||||||
Assets [Abstract] | ||||||
Deferred tax assets (Deferred revenue) | 316,400 | |||||
Deferred tax assets-valuation allowance (Deferred revenue) | (316,400) | |||||
Liabilities [Abstract] | ||||||
Deferred revenues, current | 55,800 | |||||
Deferred revenues, less current portion | 999,249 | |||||
Equity [Abstract] | ||||||
Accumulated deficit | (103,993,900) | |||||
Income Statement [Abstract] | ||||||
Net income | 100,004 | |||||
Amounts That Would Have Been Reported under ASC 605 [Member] | ASU 2014-09 [Member] | Special Facility Fee [Member] | ||||||
Income Statement [Abstract] | ||||||
Revenue | 31,131 | |||||
Amounts That Would Have Been Reported under ASC 605 [Member] | ASU 2014-09 [Member] | Water Tap Fee [Member] | ||||||
Income Statement [Abstract] | ||||||
Revenue | 60,669 | |||||
Adjustments Due to ASU 2014-09 [Member] | ASU 2014-09 [Member] | ||||||
Assets [Abstract] | ||||||
Deferred tax assets (Deferred revenue) | (316,400) | |||||
Deferred tax assets-valuation allowance (Deferred revenue) | 316,400 | |||||
Liabilities [Abstract] | ||||||
Deferred revenues, current | (55,800) | (55,800) | (55,800) | |||
Deferred revenues, less current portion | (957,836) | (957,836) | (999,249) | |||
Deferred oil and gas lease payment, current | [1] | 0 | 0 | |||
Deferred oil and gas lease payment, less current portion | 0 | 0 | ||||
Equity [Abstract] | ||||||
Accumulated deficit | $ 1,013,198 | 1,013,198 | $ 1,055,049 | |||
Income Statement [Abstract] | ||||||
Net income | (41,852) | |||||
Adjustments Due to ASU 2014-09 [Member] | ASU 2014-09 [Member] | Special Facility Fee [Member] | ||||||
Income Statement [Abstract] | ||||||
Revenue | (31,131) | |||||
Adjustments Due to ASU 2014-09 [Member] | ASU 2014-09 [Member] | Water Tap Fee [Member] | ||||||
Income Statement [Abstract] | ||||||
Revenue | $ (10,721) | |||||
[1] | Inclusive of the Bison Lease deferred oil and gas lease payment and water tap and construction fee deferred revenues as described in the 2017 Annual Report. |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) | May 31, 2018USD ($)AssetsLiabilities | Aug. 31, 2017USD ($)AssetsLiabilities |
Information on assets and liabilities measured at fair value [Abstract] | ||
Held-to-maturity securities | $ 189,800 | $ 188,000 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Number of assets or liabilities [Abstract] | ||
Number of assets | Assets | 0 | 0 |
Number of liabilities | Liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Number of assets or liabilities [Abstract] | ||
Number of assets | Assets | 16 | 56 |
Significant Unobservable Inputs (Level 3) | ||
Number of assets or liabilities [Abstract] | ||
Number of liabilities | Liabilities | 1 | 1 |
Recurring [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Accumulated unrealized gains and (losses) | $ 60,224 | $ (11,100) |
Recurring [Member] | Certificates of Deposit [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Accumulated unrealized gains and (losses) | (1,219) | (20,800) |
Recurring [Member] | US Treasuries [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Accumulated unrealized gains and (losses) | 61,443 | 9,700 |
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) | Certificates of Deposit [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) | US Treasuries [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 17,005,914 | 20,055,400 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) | Certificates of Deposit [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 1,248,781 | 12,673,700 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) | US Treasuries [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 15,757,133 | 7,381,700 |
Recurring [Member] | Significant Unobservable Inputs (Level 3) | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Recurring [Member] | Significant Unobservable Inputs (Level 3) | Certificates of Deposit [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Recurring [Member] | Significant Unobservable Inputs (Level 3) | US Treasuries [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 0 | 0 |
Recurring [Member] | Fair Value [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 17,005,914 | 20,055,400 |
Recurring [Member] | Fair Value [Member] | Certificates of Deposit [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 1,248,781 | 12,673,700 |
Recurring [Member] | Fair Value [Member] | US Treasuries [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 15,757,133 | 7,381,700 |
Recurring [Member] | Cost / Other Value [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 16,945,690 | 20,066,500 |
Recurring [Member] | Cost / Other Value [Member] | Certificates of Deposit [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 1,250,000 | 12,694,500 |
Recurring [Member] | Cost / Other Value [Member] | US Treasuries [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | $ 15,695,690 | $ 7,372,000 |
WATER AND LAND ASSETS (Details)
WATER AND LAND ASSETS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | Aug. 31, 2017 | |
Investment in Water and Water Systems [Abstract] | |||||
Costs | $ 38,328,000 | $ 38,328,000 | $ 36,857,900 | ||
Accumulated depreciation and depletion | (2,718,500) | (2,718,500) | (2,282,200) | ||
Net investments in water and water systems | 35,609,275 | 35,609,275 | 34,575,713 | ||
Depletion and Depreciation [Abstract] | |||||
Depletion | 4,300 | $ 100 | 5,300 | $ 600 | |
Depreciation | 211,000 | $ 148,400 | 554,700 | $ 406,000 | |
Rangeview Water Supply [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 14,805,500 | 14,805,500 | 14,529,600 | ||
Accumulated depreciation and depletion | (12,100) | (12,100) | (10,600) | ||
Sky Ranch Water Rights and Other Costs [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 7,342,400 | 7,342,400 | 6,725,000 | ||
Accumulated depreciation and depletion | (523,100) | (523,100) | (436,300) | ||
Fairgrounds Water and Water System [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 2,899,900 | 2,899,900 | 2,899,900 | ||
Accumulated depreciation and depletion | (1,040,900) | (1,040,900) | (974,800) | ||
Rangeview Water System [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 1,652,400 | 1,652,400 | 1,639,000 | ||
Accumulated depreciation and depletion | (247,700) | (247,700) | (207,000) | ||
WISE Partnership [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 3,114,100 | 3,114,100 | 3,114,100 | ||
Accumulated depreciation and depletion | 0 | 0 | 0 | ||
Water Supply - Other [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 1,177,700 | 1,177,700 | 944,800 | ||
Accumulated depreciation and depletion | (486,700) | (486,700) | (401,300) | ||
Wild Pointe Service Rights [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 1,631,800 | 1,631,800 | 1,631,700 | ||
Accumulated depreciation and depletion | (251,400) | (251,400) | (213,000) | ||
Sky Ranch Pipeline [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 4,697,800 | 4,697,800 | 4,700,000 | ||
Accumulated depreciation and depletion | (156,600) | (156,600) | (39,200) | ||
Construction in Progress [Member] | |||||
Investment in Water and Water Systems [Abstract] | |||||
Costs | 1,006,400 | 1,006,400 | 673,800 | ||
Accumulated depreciation and depletion | $ 0 | $ 0 | $ 0 |
LONG-TERM OBLIGATIONS AND OPE35
LONG-TERM OBLIGATIONS AND OPERATING LEASE, Long-Term Obligations (Details) | 9 Months Ended | 257 Months Ended | |
May 31, 2018USD ($)Member | Aug. 31, 2017USD ($) | ||
LONG-TERM OBLIGATIONS AND OPERATING LEASE [Abstract] | |||
Percentage of original recorded liability compared to original total liability | 35.00% | ||
Percentage of payment remitted to CAA holders allocated to recorded liability account | 35.00% | ||
Percentage of payment remitted to CAA holders allocated to contingent obligation | 65.00% | ||
Percentage of net proceeds from sale of export water allocated | 88.00% | ||
Export Water Proceeds Received [Roll Forward] | |||
Balance at beginning of period | $ 1,319,900 | $ 0 | |
Acquisitions | 0 | ||
Relinquishment | 0 | ||
Option payments - Sky Ranch and The Hills at Sky Ranch | 110,400 | ||
Arapahoe County tap fees | [1] | 533,000 | |
Export water sale payments | 51,900 | 676,500 | |
Balance at end of period | 1,371,800 | 1,319,900 | |
Initial Export Water Proceeds To Pure Cycle [Roll Forward] | |||
Balance at beginning of period | 29,691,700 | 218,500 | |
Acquisitions | 28,042,500 | ||
Relinquishment | 2,386,400 | ||
Option payments - Sky Ranch and The Hills at Sky Ranch | (42,300) | ||
Arapahoe County tap fees | [1] | (373,100) | |
Export water sale payments | (45,700) | (540,300) | |
Balance at end of period | 29,646,000 | 29,691,700 | |
Total Potential Third-Party Obligation [Roll Forward] | |||
Balance at beginning of period | 1,014,600 | 31,807,700 | |
Acquisitions | (28,042,500) | ||
Relinquishment | (2,386,400) | ||
Option payments | (68,100) | ||
Arapahoe County tap fees | [1] | (159,900) | |
Export water sale payments | (6,200) | (136,200) | |
Balance at end of period | 1,008,400 | 1,014,600 | |
Participating Interests Liability [Roll Forward] | |||
Balance at beginning of period | 341,558 | 11,090,600 | |
Acquisitions | (9,790,000) | ||
Relinquishment | (832,100) | ||
Option payments - Sky Ranch and The Hills at Sky Ranch | (23,800) | ||
Arapahoe County tap fees | [1] | (55,800) | |
Export water sale payments | (2,200) | (47,300) | |
Balance at end of period | 339,406 | 341,558 | |
Contingency [Roll Forward] | |||
Balance at beginning of period | 673,000 | 20,717,100 | |
Acquisitions | (18,252,500) | ||
Relinquishment | (1,554,300) | ||
Option payments - Sky Ranch and The Hills at Sky Ranch | (44,300) | ||
Arapahoe County tap fees | [1] | (104,100) | |
Export water sale payments | (4,000) | (88,900) | |
Balance at end of period | 669,000 | $ 673,000 | |
Royalties [Abstract] | |||
Royalties paid to Land Board | (34,522) | ||
Export Water [Abstract] | |||
Expected future export water payouts | 6,600,000 | ||
Revenue receivables from sale of export water | 5,800,000 | ||
Expected proceeds from sale of export water after deduction of Land Board royalty | $ 220,000 | ||
SMWA [Member] | |||
WISE Partnership [Abstract] | |||
Number of other governmental or quasi-governmental water providers | Member | 9 | ||
Number of members | Member | 10 | ||
Rangeview District [Member] | WISE Partnership [Member] | |||
WISE Partnership [Abstract] | |||
Projected cost | $ 5,200,000 | ||
Projected financing period | 5 years | ||
[1] | The Arapahoe County tap fees are net of $34,522 in royalties paid to the Land Board. |
LONG-TERM OBLIGATIONS AND OPE36
LONG-TERM OBLIGATIONS AND OPERATING LEASE, Operating Lease (Details) | 4 Months Ended |
May 31, 2018USD ($)ft² | |
Operating Lease [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% |
SHAREHOLDERS' EQUITY, Incentive
SHAREHOLDERS' EQUITY, Incentive and Equity Plan, and Combined Stock Option Activity (Details) - USD ($) | Jan. 17, 2018 | Sep. 27, 2017 | May 31, 2018 | Aug. 31, 2017 | |
2014 Equity Plan [Member] | |||||
Stock Option Activity [Abstract] | |||||
Reserved shares of common stock for issuance (in shares) | 1,600,000 | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | |||||
Number of Options [Roll Forward] | |||||
Outstanding, beginning of period (in shares) | 465,500 | ||||
Granted (in shares) | [1] | 82,500 | |||
Exercised (in shares) | (10,000) | ||||
Forfeited or expired (in shares) | (2,500) | ||||
Outstanding, end of period (in shares) | 535,500 | 465,500 | |||
Options exercisable (in shares) | 379,668 | ||||
Weighted Average Exercise Price [Roll Forward] | |||||
Outstanding, beginning of period (in dollars per share) | $ 4.88 | ||||
Granted (in dollars per share) | 8.05 | ||||
Exercised (in dollars per share) | 7.50 | ||||
Forfeited or expired (in dollars per share) | 7.50 | ||||
Outstanding, end of period (in dollars per share) | 5.31 | $ 4.88 | |||
Options exercisable (in dollars per share) | $ 4.66 | ||||
Stock Options, Additional Disclosure [Abstract] | |||||
Weighted average remaining contractual term | 6 years 3 months 14 days | 6 years 3 months 18 days | |||
Weighted average remaining contractual term options exercisable | 5 years 2 months 16 days | ||||
Approximate aggregate intrinsic value | $ 2,163,540 | $ 1,007,740 | |||
Approximate aggregate intrinsic value options exercisable | $ 1,780,275 | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | Mr. Harding [Member] | |||||
Number of Options [Roll Forward] | |||||
Granted (in shares) | 50,000 | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | Board of Directors [Member] | |||||
Number of Options [Roll Forward] | |||||
Granted (in shares) | 32,500 | ||||
[1] | Includes 50,000 shares granted to Mr. Harding on September 27, 2017 and 32,500 total shares granted to the board of directors on January 17, 2018. |
SHAREHOLDERS' EQUITY, Combined
SHAREHOLDERS' EQUITY, Combined Activity and Value of Non-vested Options (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | ||
Stock Options, Additional Disclosure [Abstract] | |||||
Share-based compensation expense | $ 83,600 | $ 63,500 | $ 241,209 | $ 168,034 | |
2004 Incentive Plan and 2014 Equity Plan [Member] | |||||
Number of Options [Roll Forward] | |||||
Non-vested options outstanding, beginning of period (in shares) | 147,500 | ||||
Granted (in shares) | [1] | 82,500 | |||
Vested (in shares) | (74,168) | ||||
Forfeited (in shares) | 0 | ||||
Non-vested options outstanding, end of period (in shares) | 155,832 | 155,832 | |||
Weighted Average Grant Date Fair Value [Abstract] | |||||
Non-vested options outstanding, beginning of period (in dollars per share) | $ 3.64 | ||||
Granted (in dollars per share) | 4.41 | ||||
Vested (in dollars per share) | 2.84 | ||||
Forfeited (in dollars per share) | 0 | ||||
Non-vested options outstanding, end of period (in dollars per share) | $ 3.76 | $ 3.76 | |||
Stock Options, Additional Disclosure [Abstract] | |||||
Share-based compensation expense | $ 83,600 | $ 63,500 | $ 241,209 | $ 168,034 | |
Unrecognized expenses | $ 378,400 | $ 378,400 | |||
Weighted-average period for options expected to vest | 2 years | ||||
[1] | Includes 50,000 shares granted to Mr. Harding on September 27, 2017 and 32,500 total shares granted to the board of directors on January 17, 2018. |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 9 Months Ended | 12 Months Ended |
May 31, 2018USD ($)EmployeeBoardMember | Aug. 31, 2017USD ($) | |
Rangeview District [Member] | Water and Wastewater Services [Member] | ||
Related Party Transaction [Abstract] | ||
Number of employee board of directors | Employee | 3 | |
Number of independent board of directors | BoardMember | 2 | |
Rangeview District [Member] | Water and Wastewater Services [Member] | Loans Receivable [Member] | ||
Related Party Transaction [Abstract] | ||
Interest rate | 6.75% | |
Debt instrument maturity date | Dec. 31, 2020 | |
Rangeview District [Member] | Water and Wastewater Services [Member] | Loans Receivable [Member] | Maximum [Member] | ||
Related Party Transaction [Abstract] | ||
Loan extended, maximum capacity | $ 250,000 | |
Rangeview District [Member] | Water and Wastewater Services [Member] | Loans Receivable [Member] | Prime Rate [Member] | ||
Related Party Transaction [Abstract] | ||
Basis spread on variable rate | 2.00% | |
Rangeview District [Member] | Water and Wastewater Services [Member] | Notes Receivable [Member] | ||
Related Party Transaction [Abstract] | ||
Interest rate | 8.00% | |
Loan extended to related party amount | $ 862,800 | |
Notes receivable | 470,300 | |
Accrued interest | 392,500 | |
Rangeview District [Member] | WISE Partnership [Member] | ||
Related Party Transaction [Abstract] | ||
Funding pursuant to participation agreement | 22,200 | $ 198,200 |
Projected cost | $ 5,200,000 | |
Projected financing period | 5 years | |
Investments in the WISE assets | $ 3,100,000 | |
Sky Ranch District [Member] | Water and Wastewater Services [Member] | ||
Related Party Transaction [Abstract] | ||
Loan extended to related party amount | $ 0 | |
Sky Ranch District [Member] | Water and Wastewater Services [Member] | Notes Receivable [Member] | ||
Related Party Transaction [Abstract] | ||
Interest rate | 8.00% | |
Repayment of advances and accrued interest | $ 215,504 | |
CAB [Member] | Water and Wastewater Services [Member] | Notes Receivable [Member] | ||
Related Party Transaction [Abstract] | ||
Interest rate | 6.00% | |
Loan extended to related party amount | $ 1,512,500 | |
Notes receivable | 1,490,000 | |
Accrued interest | $ 22,500 |
SIGNIFICANT CUSTOMERS (Details)
SIGNIFICANT CUSTOMERS (Details) - Customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2018 | May 31, 2017 | Aug. 31, 2017 | |
Sales [Member] | Rangeview District [Member] | |||||
Concentration Risk Percentage [Abstract] | |||||
Concentration risk percentage | 9.00% | 75.00% | 5.00% | 33.00% | |
Revenue [Member] | Ridgeview Youth Services Center [Member] | |||||
Concentration Risk Percentage [Abstract] | |||||
Concentration risk percentage | 4.00% | 59.00% | 4.00% | 26.00% | |
Number of customers | 1 | 1 | 1 | 1 | |
Revenue [Member] | Oil and Gas Industry [Member] | |||||
Concentration Risk Percentage [Abstract] | |||||
Concentration risk percentage | 87.00% | 91.00% | 0.00% | 55.00% | |
Number of customers | 1 | 3 | 1 | 1 | |
Accounts Receivable [Member] | Rangeview District [Member] | |||||
Concentration Risk Percentage [Abstract] | |||||
Concentration risk percentage | 26.00% | 50.00% | |||
Accounts Receivable [Member] | Ridgeview Youth Services Center [Member] | |||||
Concentration Risk Percentage [Abstract] | |||||
Concentration risk percentage | 55.00% | 46.00% | |||
Number of customers | 1 | 1 | |||
Accounts Receivable [Member] | Largest Customer [Member] | |||||
Concentration Risk Percentage [Abstract] | |||||
Concentration risk percentage | 15.00% | 19.00% |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | May 31, 2018 | Aug. 31, 2017 |
ACCRUED LIABILITIES [Abstract] | ||
Accrued liabilities | $ 379,336 | $ 380,852 |
Estimated property taxes | 4,900 | 5,000 |
Professional fees | 68,000 | 48,500 |
Accrued compensation | 265,000 | |
Operating payables | $ 306,400 | $ 62,400 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Millions | 9 Months Ended |
May 31, 2018USD ($)BusinessLine | |
SEGMENT INFORMATION [Abstract] | |
Number of business lines | BusinessLine | 2 |
Real estate inventory and reimbursable costs | $ | $ 3.7 |