☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Colorado
|
84-0705083
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
34501 E. Quincy Avenue, Bldg. 34, Watkins, CO
|
80137
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(303) 292 – 3456 |
(Registrant’s telephone number, including area code)
|
(Former name, former address and former fiscal year, if changed since last report) |
Large accelerated filer ☐
|
Accelerated filer ☒
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
Common stock, 1/3 of $.01 par value
|
23,796,598
|
|
(Class)
|
(Number of Shares)
|
Page
|
||
3 |
||
3 |
||
3 |
||
4 |
||
5 |
||
6 |
||
7 |
||
22
|
||
34
|
||
34
|
||
35
|
||
35
|
||
36
|
ASSETS:
|
November 30, 2018
|
August 31, 2018
|
||||||
(unaudited)
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
1,115,109
|
$
|
11,565,038
|
||||
Short-term investments
|
11,183,832
|
8,717,967
|
||||||
Trade accounts receivable, net
|
1,568,301
|
1,067,268
|
||||||
Contract asset
|
1,020,146
|
—
|
||||||
Prepaid expenses and other current assets
|
1,511,281
|
1,372,886
|
||||||
Inventories
|
8,551,777
|
5,195,059
|
||||||
Total current assets
|
24,950,446
|
27,918,218
|
||||||
Long-term investments
|
—
|
190,370
|
||||||
Investments in water and water systems, net
|
38,909,715
|
36,721,884
|
||||||
Land and mineral interests
|
4,774,800
|
4,659,569
|
||||||
Notes receivable - related parties, including accrued interest
|
923,121
|
906,199
|
||||||
Other assets
|
854,696
|
777,734
|
||||||
Long-term land investment
|
450,641
|
450,641
|
||||||
Deferred tax asset
|
282,000
|
282,000
|
||||||
Total assets
|
$
|
71,145,419
|
$
|
71,906,615
|
||||
LIABILITIES:
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
168,063
|
$
|
787,662
|
||||
Accrued liabilities
|
259,152
|
849,538
|
||||||
Deferred revenues, current
|
—
|
361,050
|
||||||
Deferred oil and gas lease payment, current
|
55,733
|
55,733
|
||||||
Total current liabilities
|
482,948
|
2,053,983
|
||||||
Deferred revenues, less current portion
|
46,444
|
60,378
|
||||||
Participating Interests in Export Water Supply
|
335,313
|
339,035
|
||||||
Total liabilities
|
864,705
|
2,453,396
|
||||||
SHAREHOLDERS’ EQUITY:
|
||||||||
Preferred stock:
|
||||||||
Series B - par value $.0.001 per share, 25 million shares authorized; 432,513 shares issued and
outstanding (liquidation preference of $432,513)
|
433
|
433
|
||||||
Common stock:
|
||||||||
Par value 1/3 of $.01 per share, 40 million shares authorized; 23,789,098 and 23,764,098 shares
outstanding, respectively
|
79,302
|
79,218
|
||||||
Additional paid-in capital
|
172,012,936
|
171,831,293
|
||||||
Accumulated other comprehensive income
|
78,242
|
66,446
|
||||||
Accumulated deficit
|
(101,890,199
|
)
|
(102,524,171
|
)
|
||||
Total shareholders’ equity
|
70,280,714
|
69,453,219
|
||||||
Total liabilities and shareholders’ equity
|
$
|
71,145,419
|
$
|
71,906,615
|
Three Months Ended November 30,
|
||||||||
2018
|
2017
|
|||||||
Revenues:
|
||||||||
Metered water usage
|
$
|
1,367,851
|
$
|
922,573
|
||||
Wastewater treatment fees
|
8,893
|
11,189
|
||||||
Water tap fees recognized
|
254,826
|
49,948
|
||||||
Lot sales
|
1,381,196
|
—
|
||||||
Other
|
59,783
|
26,422
|
||||||
Total revenues
|
3,072,549
|
1,010,132
|
||||||
Expenses:
|
||||||||
Water service operations
|
(335,164
|
)
|
(351,816
|
)
|
||||
Wastewater service operations
|
(2,722
|
)
|
(5,987
|
)
|
||||
Lot fee construction costs
|
(1,298,324
|
)
|
—
|
|||||
Other
|
(39,133
|
)
|
(16,451
|
)
|
||||
Depletion and depreciation
|
(151,261
|
)
|
(120,599
|
)
|
||||
Total cost of revenues
|
(1,826,604
|
)
|
(494,853
|
)
|
||||
Gross profit
|
1,245,945
|
515,279
|
||||||
General and administrative expenses
|
(638,833
|
)
|
(660,983
|
)
|
||||
Depreciation
|
(88,013
|
)
|
(54,386
|
)
|
||||
Operating income (loss)
|
519,099
|
(200,090
|
)
|
|||||
Other income (expense):
|
||||||||
Oil and gas lease income, net
|
13,933
|
9,289
|
||||||
Oil and gas royalty income, net
|
31,425
|
41,762
|
||||||
Interest income
|
71,162
|
54,462
|
||||||
Other
|
(1,647
|
)
|
(2,034
|
)
|
||||
Income (loss) from operations before income taxes
|
633,972
|
(96,611
|
)
|
|||||
Income tax expense (benefit)
|
—
|
—
|
||||||
Net income (loss)
|
$
|
633,972
|
$
|
(96,611
|
)
|
|||
Unrealized holding gains
|
11,796
|
19,622
|
||||||
Total comprehensive income (loss)
|
$
|
645,768
|
$
|
(76,989
|
)
|
|||
Basic net income (loss) per common share
|
$
|
0.03
|
$
|
*
|
||||
Diluted net income (loss) per common share
|
$
|
0.03
|
$
|
*
|
||||
Weighted average common shares outstanding–basic
|
23,772,431
|
23,754,098
|
||||||
Weighted average common shares outstanding–diluted
|
23,996,393
|
23,754,098
|
Preferred Stock
|
Common Stock
|
Additional
Paid-in
|
Accumulated
Other
Comprehensive
|
Accumulated
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Income (Loss)
|
Deficit
|
Total
|
|||||||||||||||||||||||||
August 31, 2018 balance:
|
432,513
|
$
|
433
|
23,764,098
|
$
|
79,218
|
$
|
171,831,293
|
$
|
66,446
|
$
|
(102,524,171
|
)
|
$
|
69,453,219
|
|||||||||||||||||
Stock option exercises
|
25,000
|
$
|
84
|
$
|
78,167
|
78,251
|
||||||||||||||||||||||||||
Share-based compensation
|
—
|
—
|
—
|
—
|
103,476
|
—
|
—
|
103,476
|
||||||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
—
|
633,972
|
633,972
|
||||||||||||||||||||||||
Unrealized holding gain on investments
|
—
|
—
|
—
|
—
|
—
|
11,796
|
—
|
11,796
|
||||||||||||||||||||||||
November 30, 2018 balance:
|
432,513
|
$
|
433
|
23,789,098
|
$
|
79,302
|
$
|
172,012,936
|
$
|
78,242
|
$
|
(101,890,199
|
)
|
$
|
70,280,714
|
Preferred Stock
|
Common Stock
|
Additional
Paid-in
|
Accumulated
Other
Comprehensive
|
Accumulated
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Income (Loss)
|
Deficit
|
Total
|
|||||||||||||||||||||||||
August 31, 2017 balance:
|
432,513
|
$
|
433
|
23,754,098
|
$
|
79,185
|
$
|
171,431,486
|
$
|
(11,105
|
)
|
$
|
(103,993,900
|
)
|
$
|
67,506,099
|
||||||||||||||||
Stock option exercises
|
—
|
$
|
—
|
$
|
—
|
—
|
—
|
|||||||||||||||||||||||||
Share-based compensation
|
—
|
—
|
—
|
—
|
80,193
|
—
|
—
|
80,193
|
||||||||||||||||||||||||
Adoption of accounting standards
|
—
|
—
|
—
|
—
|
—
|
—
|
1,055,049
|
1,055,049
|
||||||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
—
|
(96,611
|
)
|
(96,611
|
)
|
||||||||||||||||||||||
Unrealized holding gain on investments
|
—
|
—
|
—
|
—
|
—
|
19,622
|
—
|
19,622
|
||||||||||||||||||||||||
November 30, 2017 balance:
|
432,513
|
$
|
433
|
23,754,098
|
$
|
79,185
|
$
|
171,511,679
|
$
|
8,517
|
$
|
(103,035,462
|
)
|
$
|
68,564,352
|
Three Months Ended November 30,
|
||||||||
2018
|
2017
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
633,972
|
$
|
(96,611
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
Depreciation and depletion
|
239,274
|
174,914
|
||||||
Recovery of bad debt expense
|
(31,233
|
)
|
—
|
|||||
Equity loss in Well Enhancement Recovery Systems, LLC
|
2,615
|
2,616
|
||||||
Share-based compensation expense
|
103,476
|
80,193
|
||||||
Interest income and other non-cash items
|
(105
|
)
|
19,517
|
|||||
Interest added to receivable from related parties
|
(9,822
|
)
|
(7,058
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Trade accounts receivable
|
(469,800
|
)
|
(781,217
|
)
|
||||
Prepaid expenses
|
(138,395
|
)
|
117,380
|
|||||
Inventories
|
(3,356,718
|
)
|
—
|
|||||
Contract asset
|
(1,020,146
|
)
|
—
|
|||||
Notes receivable - related parties
|
(7,100
|
)
|
(37,950
|
)
|
||||
Other assets
|
(90,097
|
)
|
—
|
|||||
Accounts payable and accrued liabilities
|
(1,209,985
|
)
|
(321,708
|
)
|
||||
Deferred revenues
|
(361,050
|
)
|
—
|
|||||
Deferred oil and gas lease payment
|
(13,934
|
)
|
157,910
|
|||||
Net cash used in operating activities
|
(5,729,048
|
)
|
(692,014
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Sale and maturities of short-term investments
|
3,705,101
|
—
|
||||||
Purchase of short-term investments
|
(5,968,800
|
)
|
—
|
|||||
Issuance of note receivable - related parties
|
—
|
(885,586
|
)
|
|||||
Investments in water, water systems, and land
|
(2,488,788
|
)
|
(482,082
|
)
|
||||
Purchase of property and equipment
|
(42,923
|
)
|
(26,336
|
)
|
||||
Net cash used in investing activities
|
(4,795,410
|
)
|
(1,394,004
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from note receivable - related parties
|
—
|
215,504
|
||||||
Proceeds from the issuance of stock
|
78,251
|
—
|
||||||
Payments to contingent liability holders
|
(3,722
|
)
|
(952
|
)
|
||||
Net cash provided by financing activities
|
74,529
|
214,552
|
||||||
Net change in cash and cash equivalents
|
(10,449,929
|
)
|
(1,871,466
|
)
|
||||
Cash and cash equivalents – beginning of period
|
11,565,038
|
5,575,823
|
||||||
Cash and cash equivalents – end of period
|
$
|
1,115,109
|
$
|
3,704,357
|
(i) |
Monthly water usage and wastewater treatment fees – Monthly wholesale water usage charges are assessed to the Company’s customers based on actual metered usage each month plus a base monthly service fee assessed per
single family equivalent (“SFE”) unit served. One SFE is a customer, whether residential, commercial or industrial, that imparts a demand on the Company’s water or wastewater systems similar to the demand of a family of four persons
living in a single-family house on a standard-sized lot. One SFE is assumed to have a water demand of approximately 0.4 acre feet per year and to contribute wastewater flows of approximately 300 gallons per day. Water usage pricing
uses a tiered pricing structure. The Company recognizes wholesale water usage revenues at a point in time upon delivering water to its customers or its governmental customers’ end-use customers, as applicable. Revenues recognized by
the Company from the sale of “Export Water” and other portions of its “Rangeview Water Supply” off the “Lowry Range” (described in Note 4 – Water and
Land Assets in Part II, Item 8 of the 2018 Annual Report) are shown gross of royalties to the State of Colorado Board of Land Commissioners (the “Land Board”). The Company is the primary distributor of the Export Water and
sets pricing for the sale of Export Water. Revenues recognized by the Company from the sale of water on the Lowry Range are shown net of royalties paid to the Land Board and amounts retained by the Rangeview District. For water sales
on the Lowry Range, the Rangeview District is directly selling the water and deemed the primary distributor of the water. The Rangeview District sets the price for the water sales on the Lowry Range. See further description of Export
Water, the Lowry Range, and the Rangeview Water Supply in Note 4 – Water and Land Assets under “Rangeview Water Supply and Water System” in
Part II, Item 8 of the 2018 Annual Report.
|
(ii) |
Water and wastewater tap fees/Special Facility funding – The Company recognizes water and
wastewater tap fees as revenue at the time the Company grants a right for the customer to tap into the water or wastewater service line to obtain service. The Company recognized $226,900 and $49,900 of water tap fee revenues during
the three months ended November 30, 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 – Participating
Interests in Export Water Supply below. The Company recognized $28,000 of wastewater tap fee revenues during the three months ended
November 30, 2018. No wastewater taps were sold during the three months ended November 30, 2017.
|
(iii) |
Consulting fees – Consulting fees are fees the Company receives, typically on a monthly
basis, from municipalities and area water providers along the I-70 corridor, for contract operations services over time as services are consumed. Consulting fees are recognized monthly based on a flat monthly fee plus charges for
additional work performed. The Company recognized $47,800 and $26,400 of consulting fees during the three months ended November 30, 2018 and 2017, respectively.
|
(i) |
Sale of finished lots – The Company acquired 931 acres of land zoned as a Master Planned
Community known as Sky Ranch along the I-70 corridor east of Denver, Colorado. The Company has entered into purchase and sale agreements with three separate home builders pursuant to which the Company agreed to sell, and each builder
agreed to purchase, residential lots at the property. The Company began construction of lots on March 1, 2018 and segments its reporting of the activity relating to the costs and revenues from the construction and sale of lots at Sky
Ranch.
|
(ii) |
Construction support activities – The Company performs certain construction activities at Sky
Ranch. The activities performed include construction and maintenance of the grading erosion and sediment control best management practices and other construction-related services. These activities are invoiced upon completion and will
accrue to the reimbursable amount due from the CAB upon issuance of bonds by the CAB. To date, the Company has invoiced the CAB $73,200 for construction support activities.
|
(iii) |
Project management services – The Company entered into two Service Agreements for Project
Management Services with the CAB on May 2, 2018. The CAB was organized by Sky Ranch Metropolitan District Nos. 1 and 5 to construct, operate and maintain certain public facilities and improvements in accordance with the Sky Ranch
Community Authority Board Establishment Agreement and each of the service plans for Sky Ranch Metropolitan District Nos. 1 and 5. The Company has experience in providing the services and is willing to provide such services to the CAB
for reasonable consideration for the project improvements.
|
(iv) |
Reimbursable expenses – The CAB is required to construct certain infrastructure, the costs of
which qualify as reimbursable costs. Reimbursable costs include water distribution systems, sewer collection systems, storm water system, drainage improvements, roads, curb, sidewalks, landscaping, and parks. The Company is obligated
to finance this infrastructure pursuant to its agreements with the CAB (see Note 14 – Related Parties in Part II, Item 8 of the 2018 Annual Report).
The Company and the CAB have agreed that no payment is required with respect to advances made by the Company or expenses incurred related to construction of improvements unless and until the CAB and/or the Sky Ranch Districts (as
defined in Note 6 – Related Party Transactions) issue bonds in an amount sufficient to reimburse the Company for all or a portion of the
advances made and expenses incurred. Due to this contingency, the reimbursable costs will be included in lot development costs until the point in time when bonding is obtained. At that point, all previously incurred reimbursable costs
will be recorded as a note receivable.
|
November 30, 2018
|
August 31, 2018
|
|||||||
Wholesale water and wastewater services
|
$
|
—
|
$
|
—
|
||||
Land development activities
|
1,020,146
|
—
|
||||||
Corporate
|
—
|
—
|
||||||
Balance, end of period
|
$ |
1,020,146
|
$ |
—
|
November 30, 2018
|
August 31, 2018
|
|||||||
Balance, beginning of period
|
$
|
—
|
$
|
—
|
||||
Recognition of revenue contract asset
|
1,020,146
|
—
|
||||||
Contract asset invoiced
|
—
|
—
|
||||||
Balance, end of period
|
$ |
1,020,146
|
$ |
—
|
November 30, 2018
|
August 31, 2018
|
|||||||
Wholesale water and wastewater services
|
$
|
—
|
$
|
—
|
||||
Land development activities
|
—
|
361,050
|
||||||
Oil and gas leases
|
102,177
|
116,111
|
||||||
Balance, end of period
|
102,177
|
477,161
|
||||||
Oil and gas leases, less current portion
|
(55,733
|
)
|
(55,733
|
)
|
||||
Oil and gas leases, Long term
|
46,444
|
60,378
|
||||||
Total oil and gas leases
|
$
|
102,177
|
$
|
116,111
|
November 30, 2018
|
August 31, 2018
|
|||||||
Balance, beginning of period
|
$
|
477,161
|
$
|
1,055,488
|
||||
Cumulative effect of adoption of ASU 2014-09
|
—
|
(1,055,488
|
)
|
|||||
Deferral of revenue
|
—
|
2,667,200
|
||||||
Recognition of unearned revenue
|
(374,984
|
)
|
(2,190,039
|
)
|
||||
Balance, end of period
|
$ |
102,177
|
$ |
477,161
|
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)
|
|||||||||||||||||||
U.S. Treasury debt securities
|
$
|
10,985,800
|
$
|
10,907,600
|
$
|
—
|
$
|
10,985,800
|
$
|
—
|
$
|
78,200
|
||||||||||||
Total
|
$
|
10,985,800
|
$
|
10,907,600
|
$
|
—
|
$
|
10,985,800
|
$
|
—
|
$
|
78,200
|
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)
|
|||||||||||||||||||
U.S. Treasury debt securities
|
$
|
8,718,000
|
$
|
8,644,900
|
$
|
—
|
$
|
8,718,000
|
$
|
—
|
$
|
66,400
|
||||||||||||
Total
|
$
|
8,718,000
|
$
|
8,644,900
|
$
|
—
|
$
|
8,718,000
|
$
|
—
|
$
|
66,400
|
November 30, 2018
|
August 31, 2018
|
|||||||||||||||
Costs
|
Accumulated
Depreciation
and Depletion
|
Costs
|
Accumulated
Depreciation
and Depletion
|
|||||||||||||
Rangeview water supply
|
$
|
14,818,200
|
$
|
(13,400
|
)
|
$
|
14,813,800
|
$
|
(12,800
|
)
|
||||||
Sky Ranch water rights and other costs
|
7,237,100
|
(602,900
|
)
|
7,171,700
|
(561,400
|
)
|
||||||||||
Fairgrounds water and water system
|
2,899,900
|
(1,084,900
|
)
|
2,899,900
|
(1,062,900
|
)
|
||||||||||
Rangeview water system
|
1,823,700
|
(274,800
|
)
|
1,655,600
|
(261,200
|
)
|
||||||||||
Water supply – other
|
4,431,000
|
(686,400
|
)
|
4,337,200
|
(625,300
|
)
|
||||||||||
Wild Pointe service rights
|
1,631,700
|
(267,700
|
)
|
1,631,700
|
(267,700
|
)
|
||||||||||
Sky Ranch pipeline
|
5,688,900
|
(269,000
|
)
|
5,615,900
|
(222,000
|
)
|
||||||||||
Construction in progress
|
3,578,300
|
—
|
1,609,400
|
—
|
||||||||||||
Totals
|
42,108,800
|
(3,199,100
|
)
|
39,735,200
|
(3,013,300
|
)
|
||||||||||
Net investments in water and water systems
|
$
|
38,909,700
|
$
|
36,721,900
|
Export
Water
Proceeds
Received
|
Initial
Export
Water
Proceeds to
Pure Cycle
|
Total
Potential
Third-Party
Obligation
|
Participating
Interests
Liability
|
Contingency
|
||||||||||||||||
Original balances
|
$
|
—
|
$
|
218,500
|
$
|
31,807,700
|
$
|
11,090,600
|
$
|
20,717,100
|
||||||||||
Activity from inception until August 31, 2018:
|
||||||||||||||||||||
Acquisitions
|
—
|
28,042,500
|
(28,042,500
|
)
|
(9,790,000
|
)
|
(18,252,500
|
)
|
||||||||||||
Relinquishment
|
—
|
2,386,400
|
(2,386,400
|
)
|
(832,100
|
)
|
(1,554,300
|
)
|
||||||||||||
Option payments - Sky Ranch and The Hills at Sky Ranch
|
110,400
|
(42,300
|
)
|
(68,100
|
)
|
(23,800
|
)
|
(44,300
|
)
|
|||||||||||
Arapahoe County tap fees (1)
|
533,000
|
(373,100
|
)
|
(159,900
|
)
|
(55,800
|
)
|
(104,100
|
)
|
|||||||||||
Export Water sale payments
|
737,300
|
(593,900
|
)
|
(143,400
|
)
|
(49,800
|
)
|
(93,600
|
)
|
|||||||||||
Balance at August 31, 2018
|
1,380,700
|
29,638,100
|
1,007,400
|
339,100
|
668,300
|
|||||||||||||||
Fiscal 2018 activity:
|
||||||||||||||||||||
Export Water sale payments
|
89,700
|
(79,000
|
)
|
(10,700
|
)
|
(3,800
|
)
|
(6,900
|
)
|
|||||||||||
Balance at November 30, 2018
|
$
|
1,470,400
|
$
|
29,559,100
|
$
|
996,700
|
$
|
335,300
|
$
|
661,400
|
(1) |
The Arapahoe County tap fees are net of $34,522 in royalties paid to the Land Board.
|
Number
of Options
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
|
Approximate
Aggregate
Intrinsic Value
|
|||||||||||||
Outstanding at August 31, 2018
|
535,500
|
$
|
5.31
|
6.04
|
$
|
3,180,990
|
||||||||||
Granted (1)
|
50,000
|
$
|
11.15
|
|||||||||||||
Exercised
|
(25,000
|
)
|
$
|
3.13
|
||||||||||||
Forfeited or expired
|
—
|
$
|
—
|
|||||||||||||
Outstanding at November 30, 2018
|
560,500
|
$
|
5.93
|
6.40
|
$
|
2,595,100
|
||||||||||
Options exercisable at November 30, 2018
|
408,001
|
$
|
4.96
|
5.44
|
$
|
2,261,300
|
(1) |
Includes 50,000 shares granted to Mr. Harding on September 26, 2018.
|
Number
of Options
|
Weighted Average
Grant Date
Fair Value
|
|||||||
Non-vested options outstanding at August 31, 2018
|
155,833
|
$
|
3.76
|
|||||
Granted
|
50,000
|
5.72
|
||||||
Vested
|
(53,334
|
)
|
3.41
|
|||||
Forfeited
|
—
|
—
|
||||||
Non-vested options outstanding at November 30, 2018
|
152,499
|
$
|
4.53
|
● |
the CAB agreed to repay the amounts owed by Sky Ranch Metropolitan District No. 5 to the Company, and the previous Facilities Funding and Acquisition Agreement entered
into between the Company and Sky Ranch Metropolitan District No. 5 in 2014 was terminated;
|
● |
the PF Agreement and a June 2018 Funding Acquisition Agreement between the CAB and the Company were terminated;
|
● |
the CAB acknowledged all amounts owed to the Company under the terminated agreements, as well as amounts the Company incurred to finance the formation of the CAB; and
|
● |
the Company agreed to fund an agreed upon list of improvements to be constructed by the CAB with an estimated cost of $30,000,000 (including improvements already funded)
on an as-needed basis for calendar years 2018–2023.
|
Three Months Ended November 30,
|
||||||||
2018
|
2017
|
|||||||
Wholesale water and wastewater services
|
$
|
1,691,353
|
$
|
1,010,132
|
||||
Land development activities
|
1,381,196
|
—
|
||||||
Total revenues
|
$ |
3,072,549
|
$ |
1,010,132
|
Three Months Ended November 30,
|
||||||||
2018
|
2017
|
|||||||
Wholesale water and wastewater services
|
$
|
1,163,073
|
$
|
515,279
|
||||
Land development activities
|
82,872
|
—
|
||||||
Corporate
|
(611,973
|
)
|
(611,890
|
)
|
||||
Total pretax income (loss)
|
$ |
633,972
|
$ |
(96,611
|
)
|
November 30, 2018
|
August 31, 2018
|
|||||||
Wholesale water and wastewater services
|
$
|
38,909,715
|
$
|
36,721,884
|
||||
Land development activities
|
12,969,055
|
9,497,106
|
||||||
Corporate
|
19,266,649
|
25,687,625
|
||||||
Total assets
|
$ |
71,145,419
|
$ |
71,906,615
|
● |
Revenue generated from providing water and wastewater services;
|
● |
Expenses associated with developing our water and land assets; and
|
● |
Cash available to continue development of our land, water rights and service agreements.
|
Three Months Ended November 30,
|
||||||||||||||||
2018
|
2017
|
$ Change
|
% Change
|
|||||||||||||
Millions of gallons of water delivered
|
114.5
|
77.5
|
37.0
|
48
|
%
|
|||||||||||
Metered water usage revenues
|
$
|
1,367,900
|
$
|
922,600
|
$
|
445,300
|
48
|
%
|
||||||||
Operating costs to deliver water (excluding depreciation and depletion)
|
$
|
335,200
|
$
|
351,800
|
$
|
(16,600
|
)
|
(5
|
)%
|
|||||||
Water delivery gross margin %
|
75
|
%
|
62
|
%
|
||||||||||||
Wastewater treatment revenues
|
$
|
8,900
|
$
|
11,200
|
$
|
(2,300
|
)
|
(21
|
)%
|
|||||||
Operating costs to treat wastewater
|
$
|
2,700
|
$
|
6,000
|
$
|
(3,300
|
)
|
(55
|
)%
|
|||||||
Wastewater treatment gross margin %
|
70
|
%
|
46
|
%
|
||||||||||||
Lot fee revenue
|
$
|
1,381,200
|
$
|
-
|
$
|
1,381,200
|
100
|
%
|
||||||||
Lot fee construction costs incurred
|
$
|
1,298,300
|
$
|
-
|
$
|
1,298,300
|
100
|
%
|
||||||||
Lot fee gross margin %
|
6
|
%
|
0
|
%
|
||||||||||||
Other income
|
$
|
59,800
|
$
|
26,400
|
$
|
33,400
|
127
|
%
|
||||||||
Other income costs incurred
|
$
|
39,100
|
$
|
16,500
|
$
|
22,600
|
137
|
%
|
||||||||
Other income gross margin %
|
35
|
%
|
38
|
%
|
||||||||||||
Tap and Special Facility revenues
|
$
|
254,800
|
$
|
49,900
|
$
|
204,900
|
411
|
%
|
||||||||
General and administrative expenses
|
$
|
638,800
|
$
|
661,000
|
$
|
(22,200
|
)
|
(3
|
)%
|
|||||||
Net income (loss)
|
$
|
634,000
|
$
|
(96,600
|
)
|
$
|
730,600
|
756
|
%
|
Three Months Ended November 30,
|
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Customer Type
|
Sales
|
kgal
|
Average
price per
kgal
|
Sales
|
kgal (1)
|
Average
price per
kgal
|
||||||||||||||||||
On Site
|
$
|
64,700
|
6,988.1
|
$
|
9.26
|
$
|
40,700
|
6,983.6
|
$
|
5.83
|
||||||||||||||
Export – Commercial
|
15,500
|
1,830.7
|
8.47
|
33,000
|
2,967.5
|
11.12
|
||||||||||||||||||
Wild Pointe
|
2,600
|
7,581.8
|
0.34
|
2,500
|
5,149.8
|
0.49
|
||||||||||||||||||
Fracking
|
1,285,100
|
98,129.3
|
13.10
|
846,400
|
67,551.4
|
12.53
|
||||||||||||||||||
$
|
1,367,900
|
114,529.9
|
$
|
11.94
|
$
|
922,600
|
82,652.3
|
$
|
11.16
|
Three Months Ended November 30,
|
||||||||||||||||
2018
|
2017
|
$ Change
|
% Change
|
|||||||||||||
Salary and salary-related expenses:
|
||||||||||||||||
Including share-based compensation
|
$
|
335,800
|
$
|
326,500
|
$
|
9,300
|
3
|
%
|
||||||||
Excluding share-based compensation
|
$
|
232,400
|
$
|
246,300
|
$
|
(13,900
|
)
|
(6
|
)%
|
|||||||
Professional fees
|
$
|
100,100
|
$
|
100,900
|
$
|
(800
|
)
|
(1
|
)%
|
|||||||
Fees paid to directors (including insurance)
|
$
|
59,300
|
$
|
40,400
|
$
|
18,900
|
47
|
%
|
||||||||
Public entity related expenses
|
$
|
26,800
|
$
|
30,600
|
$
|
(3,800
|
)
|
(12
|
)%
|
Three Months Ended November 30,
|
||||||||||||||||
2018
|
2017
|
$ Change
|
% Change
|
|||||||||||||
Other income items:
|
||||||||||||||||
Oil and gas lease income, net
|
$
|
13,900
|
$
|
9,300
|
$
|
4,600
|
49
|
%
|
||||||||
Oil and gas royalty income, net
|
$
|
31,400
|
$
|
41,800
|
$
|
(10,400
|
)
|
(25
|
)%
|
|||||||
Interest income
|
$
|
71,200
|
$
|
54,500
|
$
|
16,700
|
31
|
%
|
Three Months Ended November 30,
|
||||||||||||||||
2018
|
2017
|
$ Change
|
% Change
|
|||||||||||||
Cash (used in) provided by:
|
||||||||||||||||
Operating activities
|
$
|
(5,729,000
|
)
|
$
|
(692,000
|
)
|
$
|
(5,037,000
|
)
|
728
|
%
|
|||||
Investing activities
|
$
|
(4,795,400
|
)
|
$
|
(1,394,000
|
)
|
$
|
(3,401,400
|
)
|
244
|
%
|
|||||
Financing activities
|
$
|
74,500
|
$
|
214,600
|
$
|
(140,100
|
)
|
(65
|
)%
|
(i) |
Monthly water usage and wastewater treatment fees – Monthly wholesale water usage charges are assessed to our customers based on actual metered usage each month plus a base monthly service fee assessed per single
family equivalent (“SFE”) unit served. One SFE is a customer, whether residential, commercial or industrial, that imparts a demand on our water or wastewater systems similar to the demand of a family of four persons living in a
single-family house on a standard-sized lot. One SFE is assumed to have a water demand of approximately 0.4 acre feet per year and to contribute wastewater flows of approximately 300 gallons per day. Water usage pricing uses a tiered
pricing structure. We recognize wholesale water usage revenues at a point in time upon delivering water to our customers or our governmental customers’ end-use customers, as applicable. Revenues recognized by us from the sale of
Export Water and other portions of our Rangeview Water Supply off the Lowry Range are shown gross of royalties to the Land Board. We are the primary distributor of the Export Water and set pricing for the sale of Export Water.
Revenues recognized by us from the sale of water on the Lowry Range are shown net of royalties paid to the Land Board and amounts retained by the Rangeview District. For water sales on the Lowry Range, the Rangeview District is
directly selling the water and deemed the primary distributor of the water. The Rangeview District sets the price for the water sales on the Lowry Range.
|
(ii) |
Water and wastewater tap fees/Special Facility funding – We recognize water and wastewater
tap fees as revenue at the time we grant a right for the customer to tap into the water or wastewater service line to obtain service. 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 – Participating Interests in Export Water Supply to the accompanying consolidated financial statements.
|
(iii) |
Consulting fees – Consulting fees are fees we receive, typically on a monthly basis, from
municipalities and area water providers along the I-70 corridor, for contract operations services over time as services are consumed. Consulting fees are recognized monthly based on a flat monthly fee plus charges for additional work
performed.
|
(i) |
Sale of finished lots – We acquired 931 acres of land zoned as a Master Planned Community
known as Sky Ranch along the I-70 corridor east of Denver, Colorado. We have entered into purchase and sale agreements with three separate home builders pursuant to which we agreed to sell, and each builder agreed to purchase,
residential lots at the property. We began construction of lots on March 1, 2018 and segment our reporting of the activity relating to the costs and revenues from the construction and sale of lots at Sky Ranch.
|
(ii) |
Construction support activities – We perform certain construction activities at Sky Ranch.
The activities performed include construction and maintenance of the grading, erosion and sediment control best management practices and other construction-related services. These activities are invoiced upon completion and will
accrue to the reimbursable amount due from the CAB upon issuance of bonds by the CAB.
|
(iii) |
Project management services – We entered into two Service Agreements for Project Management
Services with the CAB on May 2, 2018. Pursuant to these agreements, we act as the project manager and provide any and all services required to deliver the CAB-eligible improvements, including but not limited to CAB compliance,
planning design and approvals, project administration, contractor agreements, construction management and administration, and CAB acceptance. We submit a monthly invoice to the CAB. We are responsible for all expenses we incur in the
performance of the agreements and are not entitled to any reimbursement or compensation except as defined in the agreements, unless otherwise approved in advance by the CAB in writing. The CAB is subject to annual budget and
appropriation procedures and does not intend to create a multiple-fiscal year direct or indirect debt or other financial obligation. The project management fee is five percent (5%) of actual construction costs of CAB-eligible
improvements. The project management fee is based only on the actual costs of the improvements; thus, items such as fees, permits, review fees, consultant or other soft costs, land acquisition, or any other costs that are not directly
related to the cost of construction of CAB-eligible improvements are not included in the calculation of the project management fee. All such costs that are excluded from calculating the project management fee are reimbursable to us as
the project manager, provided that they are exclusively spent on CAB-eligible improvements that are reasonable in comparison to other similar projects in the Denver metropolitan area and approved by the CAB. These services will accrue
to the reimbursable amount due from the CAB upon issuance of bonds by the CAB.
|
(iv) |
Reimbursable expenses – The CAB is required to construct certain infrastructure, the costs of
which qualify as reimbursable costs. Reimbursable costs include water distribution systems, sewer collection systems, storm water system, drainage improvements, roads, curb, sidewalks, landscaping, and parks. We obligated to finance
this infrastructure pursuant to our agreements with the CAB (see Note 6 in Related Parties Transactions to the accompanying consolidated
financial statements). We and the CAB have agreed that no payment is required with respect to advances made by us or expenses incurred related to construction of improvements unless and until the CAB and/or the Sky Ranch Districts
issue bonds in an amount sufficient to reimburse us for all or a portion of the advances made and expenses incurred. Due to this contingency, the reimbursable costs will be included in lot development costs until the point in time
when bonding is obtained. At that point, all previously incurred reimbursable costs will be recorded as a note receivable.
|
● |
the reimbursements of certain costs by the CAB;
|
● |
material changes to unrecognized tax positions;
|
● |
the impact of new accounting pronouncements;
|
● |
the policies and procedures to value certain financial instruments;
|
● |
estimated revenues under the CAA;
|
● |
the timing and impact on our financial statements of new home construction and other development in the areas where we may sell our water;
|
● |
utilization of our water assets;
|
● |
growth in our targeted service area;
|
● |
anticipated AMT refund in future years;
|
● |
plans to continue to provide water and wastewater services to commercial and industrial customers;
|
● |
projected capital spending and projected gross proceeds and margin on lot sales for the first phase of Sky Ranch;
|
● |
timing of delivery of finished lots at Sky Ranch;
|
● |
expected payments to be received from builders;
|
● |
sufficiency of our working capital to fund our operations for the next 12 months;
|
● |
our ability to fund improvements needed to deliver finished lots to home builders at Sky Ranch by phasing construction and delivery of lots and utilizing progress
payments from builders;
|
● |
consistency of director compensation;
|
● |
costs associated with the use of the ECCV system;
|
● |
infrastructure to be constructed over the next several years, including the expected costs thereof;
|
● |
investments over the next five years for the WISE project;
|
● |
estimated transmission pipeline capacity of, and decreed amount of water from, the WISE project upon its completion;
|
● |
estimates associated with revenue recognition, asset impairments, and cash flows from our water assets;
|
● |
variance in our estimates of future tap fees and future operating costs;
|
● |
estimated number of SFE connections that can be served by our water systems;
|
● |
number of new water connections necessary to recover costs;
|
● |
expected vesting and forfeitures of stock options;
|
● |
objectives of our investment activities; and
|
● |
timing of the recognition of income related to the Bison Lease.
|
● |
the timing of new home construction and other development in the areas where we may sell our water;
|
● |
population growth;
|
● |
employment rates;
|
● |
timing of oil and natural gas development in the areas where we sell our water;
|
● |
general economic conditions;
|
● |
the market price of water;
|
● |
the market price of oil and natural gas;
|
● |
changes in customer consumption patterns;
|
● |
changes in applicable statutory and regulatory requirements;
|
● |
changes in governmental policies and procedures;
|
● |
uncertainties in the estimation of water available under decrees;
|
● |
uncertainties in the estimation of costs of delivery of water and treatment of wastewater;
|
● |
uncertainties in the estimation of the service life of our systems;
|
● |
uncertainties in the estimation of costs of construction projects;
|
● |
the strength and financial resources of our competitors;
|
● |
our ability to manage the increasing demands of our expanded operations;
|
● |
our ability to find and retain skilled personnel;
|
● |
climatic and weather conditions, including floods, droughts and freezing conditions;
|
● |
unauthorized access to confidential information and data on our information technology systems and systems and data breaches;
|
● |
labor relations;
|
● |
turnover of elected and appointed officials and delays caused by political concerns and government procedures;
|
● |
availability and cost of labor, material and equipment;
|
● |
delays in anticipated permit and construction dates;
|
● |
engineering and geological problems;
|
● |
environmental risks and regulations;
|
● |
our ability to raise capital;
|
● |
volatility in the price of our common stock;
|
● |
our ability to negotiate contracts with new customers;
|
● |
the outcome of any litigation and arbitration proceedings;
|
● |
uncertainties in water court rulings;
|
● |
our ability to collect on any judgments; and
|
● |
factors described under “Risk Factors” in our 2018 Annual Report.
|
Exhibit
Number
|
Description
|
|
Articles of Incorporation of the Company. Incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A filed on December 14,
2007.
|
||
Bylaws of the Company. Incorporated by reference to Appendix C to the Proxy Statement on Schedule 14A filed on December 14, 2007.
|
||
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
|
||
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
|
||
101.INS
|
XBRL Instance Document. *
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document. *
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document. *
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document. *
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document. *
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document. *
|
* |
Filed herewith.
|
** |
Furnished herewith.
|
/s/ Mark W. Harding
|
|
Mark W. Harding
|
|
President and Chief Financial Officer
|
|
January 7, 2019
|
1. |
I have reviewed this quarterly report on Form 10-Q of Pure Cycle Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: January 7, 2019
|
|
/s/ Mark W. Harding
|
|
Mark W. Harding
|
|
Principal Executive Officer and Principal Financial Officer
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Mark W. Harding
|
|
Mark W. Harding
|
|
Principal Executive Officer and Principal Financial Officer
|
|
January 7, 2019
|
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Jan. 04, 2019 |
|
Document And Entity Information | ||
Entity Registrant Name | PURE CYCLE CORP | |
Entity Central Index Key | 0000276720 | |
Current Fiscal Year End Date | --08-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 23,796,598 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 30, 2018 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) (unaudited) - USD ($) |
Nov. 30, 2018 |
Aug. 31, 2018 |
---|---|---|
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) | 23,789,098 | 23,764,098 |
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 | |
Liquidation preference | $ 432,513 | $ 432,513 |
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) - USD ($) |
Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Other Comprehensive Income (Loss) [Member] |
Accumulated Deficit [Member] |
Total |
---|---|---|---|---|---|---|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Adoption of accounting standards | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,055,049 | $ 1,055,049 |
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 | $ 0 | 0 | 0 | |||
Stock option exercises (in shares) | 0 | |||||
Share-based compensation | $ 0 | $ 0 | 80,193 | 0 | 0 | 80,193 |
Net income | 0 | 0 | 0 | 0 | (96,611) | (96,611) |
Unrealized holding gain on investments | 0 | 0 | 0 | 19,622 | 0 | 19,622 |
Balance at Nov. 30, 2017 | $ 433 | $ 79,185 | 171,511,679 | 8,517 | (103,035,462) | 68,564,352 |
Balance (in shares) at Nov. 30, 2017 | 432,513 | 23,754,098 | ||||
Balance at Aug. 31, 2018 | $ 433 | $ 79,218 | 171,831,293 | 66,446 | (102,524,171) | 69,453,219 |
Balance (in shares) at Aug. 31, 2018 | 432,513 | 23,764,098 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock option exercises | $ 84 | 78,167 | 78,251 | |||
Stock option exercises (in shares) | 25,000 | |||||
Share-based compensation | $ 0 | $ 0 | 103,476 | 0 | 0 | 103,476 |
Net income | 0 | 0 | 0 | 0 | 633,972 | 633,972 |
Unrealized holding gain on investments | 0 | 0 | 0 | 11,796 | 0 | 11,796 |
Balance at Nov. 30, 2018 | $ 433 | $ 79,302 | $ 172,012,936 | $ 78,242 | $ (101,890,199) | $ 70,280,714 |
Balance (in shares) at Nov. 30, 2018 | 432,513 | 23,789,098 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Cash flows from operating activities: | ||
Net income (loss) | $ 633,972 | $ (96,611) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and depletion | 239,274 | 174,914 |
Recovery of bad debt expense | (31,233) | 0 |
Equity loss in Well Enhancement Recovery Systems, LLC | 2,615 | 2,616 |
Share-based compensation expense | 103,476 | 80,193 |
Interest income and other non-cash items | (105) | 19,517 |
Interest added to receivable from related parties | (9,822) | (7,058) |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (469,800) | (781,217) |
Prepaid expenses | (138,395) | 117,380 |
Inventories | (3,356,718) | 0 |
Contract asset | (1,020,146) | 0 |
Notes receivable - related parties | (7,100) | (37,950) |
Other assets | (90,097) | 0 |
Accounts payable and accrued liabilities | (1,209,985) | (321,708) |
Deferred revenues | (361,050) | 0 |
Deferred oil and gas lease payment | (13,934) | 157,910 |
Net cash used in operating activities | (5,729,048) | (692,014) |
Cash flows from investing activities: | ||
Sales and maturities of short-term investments | 3,705,101 | 0 |
Purchase of short-term investments | (5,968,800) | 0 |
Issuance of note receivable - related parties | 0 | (885,586) |
Investments in water, water systems, and land | (2,488,788) | (482,082) |
Purchase of property and equipment | (42,923) | (26,336) |
Net cash used in investing activities | (4,795,410) | (1,394,004) |
Cash flows from financing activities: | ||
Proceeds from note receivable - related parties | 0 | 215,504 |
Proceeds from the issuance of stock | 78,251 | 0 |
Payments to contingent liability holders | (3,722) | (952) |
Net cash provided by financing activities | 74,529 | 214,552 |
Net change in cash and cash equivalents | (10,449,929) | (1,871,466) |
Cash and cash equivalents - beginning of period | 11,565,038 | 5,575,823 |
Cash and cash equivalents - end of period | $ 1,115,109 | $ 3,704,357 |
PRESENTATION OF INTERIM INFORMATION |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PRESENTATION OF INTERIM INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PRESENTATION OF INTERIM INFORMATION | NOTE 1 – PRESENTATION OF INTERIM INFORMATION The November 30, 2018 consolidated balance sheet, the consolidated statements of operations and comprehensive income (loss) for the three months ended November 30, 2018 and 2017, the consolidated statements of shareholders’ equity for the three months ended November 30, 2018 and 2017, and the consolidated statements of cash flows for the three months ended November 30, 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 November 30, 2018, and for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2018 (the “2018 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on November 13, 2018. The results of operations for interim periods presented are not necessarily indicative of the operating results for the full fiscal year. The August 31, 2018 balance sheet was derived from the Company’s audited consolidated financial statements. Reclassifications Certain reclassifications have been made to the 2018 financial statements to conform to the consolidated 2019 financial statement presentation. These reclassifications had no effect on net earnings or cash flows previously reported. 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 November 30, 2018, the Company’s main operating account exceeded federally insured limits. The Company has never suffered a loss due to such excess balance. Land Development Inventories Inventories primarily include land held for development and sale. Inventories are stated at cost. 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. The Company capitalizes certain legal, engineering, design, permitting, land acquisition, and construction costs related to the development of lots at Sky Ranch. The Company uses the specific identification method for the purpose of accumulating land development costs and allocates costs to each lot to determine the cost basis for each lot sale. The Company records all land cost of sales over time based on inputs of costs to total costs. In accordance with Accounting Standards Codification ("ASC") Topic 360, Property, Plant and Equipment (“ASC 360”), the Company measures land held for sale at the lower of the carrying value or fair value less estimated costs to sell. In determining fair value, the Company primarily relies upon the most recent negotiated price that is a Level 2 input (see Note 2 – Fair Value Measurements for definitions of fair value inputs). If a negotiated price is not available, the Company will consider several factors, including, but not limited to, current market conditions, recent comparable sales transactions and market analysis studies. If the fair value less estimated costs to sell is lower than the current carrying value, the land is impaired to its estimated fair value less costs to sell. Contract Asset Contract receivables are recorded at the invoiced amount and do not bear interest. Credit is extended based on the evaluation of a customer’s financial condition and collateral is not required. Contract asset is revenue which has been earned but not invoiced. The contract assets are transferred to the receivables when invoiced. Investments Management determines the appropriate classification of its investments in certificates of deposit and U.S. Treasury debt securities at the time of purchase and re-evaluates such determinations each reporting period. Certificates of deposit and U.S. Treasury 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 $191,000 of investments classified as held-to-maturity at November 30, 2018, which represent certificates of deposit with a maturity date prior to November 30, 2019. Securities that the Company does not have the positive intent or ability to hold to maturity, including certificates of deposit and U.S. Treasury debt securities, are classified at their fair value. Changes in value of such securities are recorded as a component of Accumulated other comprehensive income (loss). The cost of securities sold is based on the specific identification method. The Company’s U.S. Treasury debt securities mature at various dates through March 2019. 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 – The Company’s cash and cash equivalents are reported using the values as reported by the financial institution where the funds are held. These securities primarily include balances in the Company’s operating and savings accounts. The carrying amounts of cash and cash equivalents approximate fair value. Trade Accounts Receivable – The Company records accounts receivable net of allowances for uncollectible accounts. Investments – The carrying amounts of investments approximate fair value. Investments are described further in Note 2 – Fair Value Measurements. Accounts Payable – The carrying amounts of accounts payable approximate fair value due to the relatively short period to maturity for these instruments. Long-Term Financial Liabilities – The Comprehensive Amendment Agreement No. 1 (the “CAA”) is comprised of a recorded balance sheet and an off-balance sheet or “contingent” obligation associated with the Company’s acquisition of its “Rangeview Water Supply” (defined in Note 4 – Water and Land Assets in Part II, Item 8 of the 2018 Annual Report). The amount payable is a fixed amount but is repayable only upon the sale of “Export Water” (defined in Note 4 – Water and Land Assets in Part II, Item 8 of the 2018 Annual Report). Because of the uncertainty of the sale of Export Water, the Company has determined that the contingent portion of the CAA does not have a determinable fair value. The CAA is described further in Note 4 – Long-Term Obligations and Operating Lease – Participating Interests in Export Water Supply. Notes Receivable – Related Parties – The market value of the notes receivable – related parties: Rangeview Metropolitan District (the “Rangeview District”), Sky Ranch Metropolitan District No. 5, and the Sky Ranch Community Authority Board (the “CAB”) approximate the market rate for the rates on the notes. Off-Balance Sheet Instruments – The Company’s off-balance sheet instruments consist entirely of the contingent portion of the CAA. Because repayment of this portion of the CAA is contingent on the sale of Export Water, which is not reasonably estimable, the Company has determined that the contingent portion of the CAA does not have a determinable fair value. See further discussion in Note 4 – 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). The Company generates revenues through two lines of business. Revenues are derived through its wholesale water and wastewater business and through the sale of developed land primarily for residential lots, both of which businesses are described below. Wholesale Water and Wastewater Fees The Company generates revenues through its wholesale water and wastewater business predominantly from three sources: (i) monthly wholesale water usage fees and wastewater service fees, (ii) one-time water and wastewater tap fees and construction fees/Special Facility funding, and (iii) consulting fees. Because these items are separately delivered and distinct, the Company accounts for each of the items separately, as described below.
In addition to providing domestic water, the Company provides raw water to industrial customers in the oil and gas industry located in its service areas and adjacent to its service areas for hydraulic fracturing. Frack water deliveries are recognized at a point in time upon delivering water to a customer. The Company delivered 114.5 million and 77.5 million gallons of water to customers during the three months ended November 30, 2018 and 2017, respectively, of which 86% and 87% was used for oil and gas exploration during the three months ended November 30, 2018 and 2017, respectively. The Company recognizes wastewater treatment revenues monthly based on a flat monthly fee and actual usage charges. The monthly wastewater treatment fees are shown net of amounts retained by the Rangeview District. Costs of delivering water and providing wastewater service to customers are recognized as incurred.
The Company recognizes construction fees, including fees received to construct “Special Facilities,” over time as the construction is completed because the customer is generally able to use the property improvement to enhance the value of other assets during the construction period. Special Facilities are facilities that enable water to be delivered to a single customer and are not otherwise classified as a typical wholesale facility or retail facility. Temporary infrastructure required prior to construction of permanent water and wastewater systems or transmission pipelines to transfer water from one location to another are examples of Special Facilities. Management has determined that Special Facilities are separate and distinct performance obligations because these projects are contracted to construct a specific water and wastewater system or transmission pipeline and typically do not include multiple performance obligations in a contract with a customer. No Special Facilities revenue has been recognized during the three months ended November 30, 2018 or 2017.
Land Development Activities The Company generates revenues through the sale of finished lots at its Sky Ranch development primarily from several sources of revenues; (i) the sale of finished lots, (ii) construction support activities, (iii) project management services, and (iv) reimbursable expenses incurred to develop certain infrastructure.
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 of the closing of the sale of a finished lot in which control transfers to the builder and the builder is able to obtain a building permit, 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 receives payments 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 upon the completion of certain infrastructure milestones, and (iii) final payment upon the delivery of the finished lot. Ownership and control of the platted lots pass to the builders once the Company closes the sale of the platted lots. Because the builder (i.e., the customer) takes control of the lot at the first closing and subsequent improvements made by the Company improve the builder’s lot as construction progresses, the Company accounts for revenue over time with progress measured based upon costs incurred to date compared to total expected costs and any revenue in excess of amounts entitled to be billed will be reflected on the balance sheet as a contract asset and amounts received in excess of revenue recognized are recorded as deferred revenue. As of August 31, 2018, the Company received total payments for delivery of 150 platted lots of $2.5 million from two home builders, of which $3.5 million of revenue was recognized to date with progress measured based upon costs incurred to date compared to total expected costs. For the three months ended November 30, 2018, the Company recognized $1,381,200 of lot sales. No revenue was recognized for lot sales for the three months ended November 30, 2017. The Company had a contract asset of $1,020,100 and $0 as of November 30, 2018 and 2017, respectively. The Company does not have any material significant payment terms as all payments are expected to be received within 12 months after the delivery of the platted lot. The Company adopted the practical expedient for financing components and does not need to account for a financing component of these lot sales as the delivery of lot sales is expected to occur within one year or less.
Pursuant to these agreements, the Company acts as the project manager and provides any and all services required to deliver the CAB-eligible improvements, including but not limited to CAB compliance; planning design and approvals; project administration; contractor agreements; construction management and administration; and CAB acceptance. The Company must submit to the CAB a monthly invoice, in a form acceptable to the CAB. Invoices must be submitted no more frequently than once a month. The Company is responsible for all expenses it incurs in the performance of the agreements and is not be entitled to any reimbursement or compensation except as defined in the agreements, unless otherwise approved in advance by the CAB in writing. The CAB is subject to annual budget and appropriation procedures and does not intend to create a multiple-fiscal year direct or indirect debt or other financial obligation. The project management fee is five percent (5%) of actual construction costs of CAB-eligible improvements. The project management fee is based only on the actual costs of the improvements; thus, items such as fees, permits, review fees, consultant or other soft costs, land acquisition, or any other costs that are not directly related to the cost of construction of CAB-eligible improvements are not included in the calculation of the project management fee. All such costs that are excluded from calculating the project management fee are reimbursable to the project manager, provided that they are exclusively spent on CAB-eligible improvements, that are reasonable in comparison to other similar projects in the Denver metropolitan area and approved by the CAB. These activities are being accrued to the reimbursable amount due from the CAB upon issuance of bonds by the CAB. To date, the Company has provided $188,100 in project management services to the CAB.
The Company evaluated disaggregation of revenue and has determined that no additional disaggregation of revenue is necessary. Contract asset by segment is as follows:
Changes in contract asset were as follows:
Deferred revenue by segment is as follows:
Changes in deferred revenue were as follows:
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (“contracted not recognized revenue”), which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. At November 30, 2018, the Company had outstanding open contracts for $31,376,000 which primarily related to the sale of 506 lots at Sky Ranch. The Company expects to recognize approximately 36% of such revenue over the next 12 months. Inventories Inventories primarily include land held for development and sale, that the Company has begun developing and are stated at cost. Capitalized lot development costs at Sky Ranch are costs incurred to construct finished lots at Sky Ranch that meet the Company’s capitalization criteria for improvements to a lot and are capitalized as incurred. The Company capitalizes certain legal, engineering, design, permitting, land acquisition, and construction costs related to the development of lots at Sky Ranch. The Company uses the specific identification method for purposes of accumulating land development costs and allocates costs to each lot to determine the cost basis for each lot sale. The Company will record all land cost of sales for those contracts accounted for over time with progress measured based upon costs incurred to date compared to total expected costs. For customer contracts accounted for at a point in time, all costs are accumulated and recognized at the point in time control transfers to the customer, which is generally at closing for each finished lot. Inventory costs include common area costs that the Company funded through the CAB. The Company expects the costs will be reimbursed by the CAB. The Company will record any reimbursements as a reduction of cost once the CAB has the ability to reimburse the costs (i.e., once the CAB has issued bonds). In accordance with ASC 360, the Company measures land held for sale at the lower of the carrying value or fair value less estimated costs to sell. In determining fair value, the Company primarily relies upon the most recent negotiated price that is a Level 2 input (see Note 2 – Fair Value Measurements for definitions of fair value inputs). If a negotiated price is not available, the Company will consider several factors, including, but not limited to, current market conditions, recent comparable sales transactions and market analysis studies. If the fair value less estimated costs to sell is lower than the current carrying value, the land is impaired to its estimated fair value less costs to sell. 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 are invoiced directly by the Rangeview District, and a percentage of such collections are then paid to the Company by the Rangeview District. Water revenue from such sales are shown net of royalties paid to the Land Board and amounts retained by the Rangeview District. Oil and Gas Lease Payments As further described in Note 2 – Summary of Significant Accounting Policies in Part II, Item 8 of the 2018 Annual Report, the Company entered into a Paid-Up Oil and Gas Lease and a Surface Use and Damage Agreement that were subsequently purchased by a wholly owned subsidiary of ConocoPhillips Company. Two wells were drilled within the Company’s mineral interest and placed into service and began producing oil and gas and accruing royalties to the Company. During the three months ended November 30, 2018 and 2017, the Company received $31,400 and $41,800 net of taxes, respectively, in royalties attributable to these two wells. The Company classifies income from oil and gas lease and royalty payments as Other income in the statement of operations and comprehensive income (loss) as the Company does not consider these arrangements to be an operating business activity. Deferred Revenue Deferred revenue as of November 30, 2018, was comprised of unearned revenue from a Paid-Up Oil and Gas Lease between the Company and 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 that the Company owns adjacent to the Lowry Range (the “Bison Lease”). The Company received an up-front payment of $167,200 in fiscal 2018, 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 $9,300 during the three months ended November 30, 2018 and 2017, respectively, related to the up-front payment received pursuant to the Bison Lease. As of November 30, 2018, and August 31, 2018, the Company had deferred revenue of $102,200 and $116,100, respectively, related to the Bison Lease that will be recognized as 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 any 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 $103,500 and $80,200 of share-based compensation expense during the three months ended November 30, 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 November 30, 2018. As a result of H.R.1, commonly known as the Tax Cuts and Jobs Act (the “Tax Act”), signed into law on December 22, 2017, the Company has a $282,000 alternative minimum tax (“AMT”) deferred tax asset for which it did not have a valuation allowance as of November 30, 2018 and August 31, 2018. The Company expects to receive the AMT as a refund in future years. Most, if not all, of this credit will be refundable starting with the filing of the 2018 (fiscal year ending 2019) through 2021 (fiscal year ending 2022) tax returns, subject to limitations of Internal Revenue Code Section 382 (arises with ownership changes) and the sequestration limitation of the Balanced Budget Act of 1997. The Company will continue to evaluate the impact of the Tax Act and will record any resulting tax adjustments during fiscal 2019. 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’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At November 30, 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 November 30, 2018 or 2017. 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 of 223,962 common share equivalents as of November 30, 2018 were included in the calculation of income per common share as dilutive common stock equivalents using the treasury stock method. Common stock options and warrants aggregating 50,000 common share equivalents as of November 30, 2018, have been excluded from the calculation of income per common share as their effect is anti-dilutive. Common stock options and warrants aggregating 515,500 common share equivalents as of November 30, 2017, have been excluded from the calculation of loss per common share as their effect is anti-dilutive. Recently Issued Accounting Pronouncements The Company continually assesses any new accounting pronouncements to determine their applicability. 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 to ensure that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). ASU 2016-02 provides guidance on the recognition, measurement, presentation, and disclosure of leases. The new standard supersedes the present GAAP standard on leases and requires substantially all leases to be reported on the balance sheet as right-of-use assets and lease obligations. This standard is effective for fiscal years beginning after December 15, 2018. The Company is currently assessing the impact of ASU 2016-02. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently assessing the provisions of the standard and the impact of the adoption on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220); Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of the standard. The Company is currently in the process of assessing the impact of this standard on its condensed consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees. This standard expands the scope of ASC Topic 718, Compensation — Stock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASU 2018-07 supersedes ASC Subtopic 505-50, Equity — Equity-Based Payments to Non-Employees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within these fiscal years. The Company is currently in the process of assessing the impact of this ASU on its condensed consolidated financial statements. |
FAIR VALUE MEASUREMENTS |
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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 November 30, 2018 or August 31, 2018. 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 four and seven Level 2 assets as of November 30, 2018 and August 31, 2018, respectively, which consist of U.S. Treasury debt securities. Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. The Company had one Level 3 liability, the contingent portion of the CAA, as of November 30, 2018 and August 31, 2018. 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 – Investments. The Company’s debt securities are the Company’s only financial asset measured at fair value on a recurring basis. The fair value of investment securities is based on the values reported by the financial institutions where the funds are held. Investment securities include U.S. Treasury debt securities. The Company’s non-financial assets measured at fair value on a non-recurring basis when assessing recoverability consist entirely of its investments in water and water systems, and other long-lived assets. See Note 3 – Water and Land Assets below. The following table provides information on the assets and liabilities measured at fair value on a recurring basis as of November 30, 2018:
The following table provides information on the assets and liabilities measured at fair value on a recurring basis as of August 31, 2018:
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 November 30, 2018, the carrying amount of held-to-maturity securities was $191,000 and is included in short-term investments in the accompanying consolidated financial statements. As of August 31, 2018, the carrying amount of held-to-maturity securities was $190,400 and is recorded as long-term investments in the accompanying consolidated financial statements. |
WATER AND LAND ASSETS |
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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 in Part II, Item 8 of the 2018 Annual Report. There have been no significant changes to the Company’s water rights or water and wastewater service agreements during the three months ended November 30, 2018. Investment in Water and Water Systems The Company’s Investments in Water and Water Systems consist of the following costs and accumulated depreciation and depletion at November 30, 2018 and August 31, 2018:
Capitalized terms in this section not defined herein are defined in Note 4 – Water and Land Assets in Part II, Item 8 of the 2018 Annual Report. Depletion and Depreciation The Company recorded depletion charges of $600 and $100 during the three months ended November 30, 2018 and 2017, respectively. The depletion was related entirely to the Rangeview Water Supply. The Company recorded $238,700 and $175,000 of depreciation expense during the three months ended November 30, 2018 and 2017, respectively. These figures include depreciation for other equipment not included in the table above. |
LONG-TERM OBLIGATIONS AND OPERATING LEASE |
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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 Rangeview Water Supply through various amended agreements entered into in the early 1990s. The acquisition was consummated with the signing of the CAA in 1996. Upon entering into the CAA, the Company recorded an initial liability of $11.1 million, which represented the cash that 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 in Part II, Item 8 of the 2018 Annual Report). The Company agreed to remit a total of $31.8 million of proceeds received from the sale of Export Water to the participating interest holders in return for their initial $11.1 million investment. The obligation for the $11.1 million was recorded as debt, and the remaining $20.7 million contingent liability was not reflected on the Company’s balance sheet because the obligation to pay this is contingent on the sale of Export Water, the amounts and timing of which are not reasonably determinable. The CAA obligation is non-interest bearing, and if the Export Water is not sold, the parties to the CAA have no recourse against the Company. If the Company does not sell the Export Water, the holders of the Series B preferred stock 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 liability account), with the balance of the payment being charged to the contingent obligation portion. Because the original recorded liability, which was $11.1 million, was 35% of the original total liability of $31.8 million, approximately 35% of each payment remitted to the CAA holders is allocated to the recorded liability account. The remaining portion of each payment, or approximately 65%, is allocated to the contingent obligation, which is recorded on a net revenue basis. From time to time, the Company 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 November 30, 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 November 30, 2018, is approximately $1 million.
The CAA includes contractually established priorities which call for payments to CAA holders in order of their priority. This means that the first payees receive their full payment before the next priority level receives any payment and so on until full repayment. Of the next approximately $6.5 million of Export Water payouts, which based on current payout 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 In December 2014, the Company, through the Rangeview District, consented to the waiver of all contingencies set forth in the Amended and Restated WISE Partnership – Water Delivery Agreement, dated December 31, 2013 (the “WISE Partnership Agreement”), among the City and County of Denver acting through its Board of Water Commissioners (“Denver Water”), the City of Aurora acting by and through its Utility Enterprise (“Aurora Water”), and the South Metro WISE Authority (“SMWA”). The SMWA was formed by the Rangeview District and nine other governmental or quasi-governmental water providers pursuant to the South Metro WISE Authority Formation and Organizational Intergovernmental Agreement, dated December 31, 2013 (the “SM IGA”), to enable the members of SMWA to participate in the regional water supply project known as the Water Infrastructure Supply Efficiency partnership (“WISE”) created by the WISE Partnership Agreement. The SM IGA specifies each member’s pro rata share of WISE and the members’ rights and obligations with respect to WISE. The WISE Partnership Agreement provides for the purchase of certain infrastructure (i.e., pipelines, water storage facilities, water treatment facilities, and other appurtenant facilities) to deliver water to and among the 10 members of the SMWA, Denver Water and Aurora Water. Certain infrastructure has been constructed, and other infrastructure will be constructed over the next several years. By consenting to the waiver of the contingencies set forth in the WISE Partnership Agreement, pursuant to the terms of the Rangeview/Pure Cycle WISE Project Financing Agreement (the “WISE Financing Agreement”) between the Company and the Rangeview District, the Company has an agreement to fund the Rangeview District’s participation in WISE effective as of December 22, 2014. The Company’s cost of funding the Rangeview District’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 $6.8 million over the next five years. See further discussion in Note 6 – Related Party Transactions. Operating Lease Effective as of 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 |
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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 on April 12, 2014. Executives, eligible employees, consultants and non-employee directors are eligible to receive options and stock grants pursuant to the 2014 Equity Plan. Pursuant to the 2014 Equity Plan, options to purchase shares of stock and 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 in 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 on 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 three months ended November 30, 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 three months ended November 30, 2018:
All non-vested options are expected to vest. Stock-based compensation expense was $103,500 and $80,200 for the three months ended November 30, 2018 and 2017, respectively. At November 30, 2018, the Company had unrecognized expenses totaling $477,100 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 |
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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 (collectively, 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. The Rangeview District On December 16, 2009, the Company entered into a Participation Agreement with the Rangeview District, whereby the Company agreed to provide funding to the Rangeview District in connection with the Rangeview District joining the South Metro Water Supply Authority (“SMWSA”). The Company provides funding pursuant to the Participation Agreement annually 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 $6.8 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 November 30, 2018 is approximately $3.2 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 November 30, 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 $897,200 balance of the notes receivable at November 30, 2018, includes borrowings of $496,200 and accrued interest of $401,000. Sky Ranch Metropolitan Districts No. 1, 3, 4 and 5 The Company has been providing funding to the Sky Ranch Districts. In each year, since 2012, the Company 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 were subject to annual appropriations by the Sky Ranch District in its absolute discretion. The advances by the Company accrued interest at a rate of 8% per annum from the date of the advance. The Operation Funding Agreements have been superseded by the 2018 FFAA as described below. 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 were determined pursuant to a mutually agreed upon budget. Each year in September, the parties were to mutually determine the improvements required for the following year and finalize a budget by the end of October. Each advance or reimbursable expense accrued interest at a rate of 6% per annum. Upon the Sky Ranch District’s ratification of the advances and related expenditures, the amount was reclassified as long-term and is recorded as part of Notes receivable – related parties. During the three months ended November 30, 2017, the Sky Ranch Districts repaid all advances plus accrued interest totaling $215,504, and as of November 30, 2018 and 2017, there was no outstanding balance on the receivable. The Facilities Funding and Acquisition Agreement has been superseded by the 2018 FFAA as described below. Sky Ranch Community Authority Board 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. In November 2017, but effective as of January 1, 2018, the Company entered into a Project Funding and Reimbursement Agreement (“PF Agreement”) with the CAB for the Sky Ranch property. Improvements subject to the PF Agreement were determined pursuant to a mutually agreed upon budget. Each advance or reimbursable expense accrue interest at a rate of 6% per annum. On September 18, 2018, the parties entered into a series of agreements, including a Facilities Funding and Acquisition Agreement with an effective date of November 13, 2017 (the “2018 FFAA”), which supersedes and consolidates the previous agreements pursuant to which
All amounts owed under the 2018 FFAA bear interest at a rate of 6% per annum. No payment is required of the CAB for advances made to the CAB or expenses incurred related to construction of improvements unless and until the CAB and/or Sky Ranch Districts issue bonds in an amount sufficient to reimburse the Company for all or a portion of advances or other expenses incurred. The CAB agrees to exercise reasonable efforts to issue bonds to reimburse the Company subject to certain limitations. In addition, the CAB agrees to utilize any available moneys not otherwise pledged to payment of debt, used for operation and maintenance expenses, or otherwise encumbered, to reimburse the Company. Any advances not paid or reimbursed by the CAB by December 31, 2058, shall be deemed forever discharged and satisfied in full. As of November 30, 2018, the balance of the Company’s advances to the CAB plus accrued interest totaled $7.4 million, which is included in inventory. The advances have been used by the CAB to pay for construction of improvements and have subsequently been recorded as Inventories in the consolidated financial statements. In the event the CAB issues bonds and reimburses the Company, the reimbursement will be a reduction to Inventories or other revenue for lot sales if the sale process of the finished lots has been completed. |
SIGNIFICANT CUSTOMERS |
3 Months Ended |
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Nov. 30, 2018 | |
SIGNIFICANT CUSTOMERS [Abstract] | |
SIGNIFICANT CUSTOMERS | NOTE 7 – SIGNIFICANT CUSTOMERS Water and Wastewater Pursuant to the Rangeview Water Agreements (defined in Note 4 – Water and Land Assets in Part II, Item 8 of the 2018 Annual Report) and an Export Service Agreement entered into with the Rangeview District dated June 16, 2017, the Company provides water and wastewater services on the Rangeview District’s behalf to the Rangeview District’s customers. Sales to the Rangeview District accounted for 5% and 6% of the Company’s total water and wastewater revenues for the three months ended November 30, 2018 and 2017, respectively. The Rangeview District has one significant customer, the Ridgeview Youth Services Center. The Rangeview District’s significant customer accounted for 3% and 4% of the Company’s total water and wastewater revenues for the three months ended November 30, 2018 and 2017, respectively. Revenues from two other customers represented approximately 52% and 42%, respectively, of the Company’s water and wastewater revenues for the three months ended November 30, 2018. These two customers are in the oil and gas industry. Revenues from one other customer directly and indirectly represented approximately 54% of the Company’s water and wastewater revenues for the three months ended November 30, 2017. This customer is in the oil and gas industry. Land Development Revenues from two customers represented 100% of the Company’s land development revenues for the three months ended November 30, 2018. Of the two customers, one customer represented 66% and the second customer represented 34% of the Company’s land development revenues for the three months ended November 30, 2018. No revenues were recognized from the Company’s land development activities for the three months ended November 30, 2017. Accounts Receivable The Company had accounts receivable from the Rangeview District which accounted for 27% and 3% of the Company’s trade receivables balances at November 30, 2018 and August 31, 2018, respectively. The Company had accounts receivable from two other customers of approximately 41% and 29% at November 30, 2018. The Company had accounts receivable from two other customers of approximately 43% and 30% at August 31, 2018. Accounts receivable from the Rangeview District’s largest customer accounted for 1% and 2% of the Company’s water and wastewater trade receivables as of November 30, 2018 and August 31, 2018, respectively. Of the trade receivables from the Rangeview District, approximately 61% is related to water tap sales and 39% is related to water and wastewater service sales. |
ACCRUED LIABILITIES |
3 Months Ended |
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Nov. 30, 2018 | |
ACCRUED LIABILITIES [Abstract] | |
ACCRUED LIABILITIES | NOTE 8 – ACCRUED LIABILITIES At November 30, 2018, the Company had accrued liabilities of $259,200, of which $38,800 was for estimated property taxes, $34,600 was for professional fees, and $185,800 was for operating payables. At August 31, 2018, the Company had accrued liabilities of $849,500, of which $400,000 was for accrued compensation, $29,000 was for estimated property taxes, $59,000 was for professional fees and the remaining $361,500 was related to operating payables. |
COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Nov. 30, 2018 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES The Company has historically been involved in various claims, litigation and other legal proceedings that arise in the ordinary course of its business. The Company records an accrual for a 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 had no contingencies where the risk of loss was reasonably possible as of November 30, 2018 and August 31, 2018. |
SEGMENT INFORMATION |
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SEGMENT INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | NOTE 10 – SEGMENT INFORMATION An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, to evaluate performance and make operating decisions. The Company has identified its CODM as the Chief Executive Officer. During the year 2018, the Company began construction of lots at Sky Ranch, which the Company has identified as a segment. Currently, the Company operates its wholesale water and wastewater services segment and land development activities at Sky Ranch as its two lines of business. The wholesale water and wastewater services business includes selling water service to customers, which water is provided by the Company using water rights owned or controlled by the Company, and developing infrastructure to divert, treat and distribute that water and collect, treat and reuse wastewater. As part of the Company’s land development activities at Sky Ranch, the Company entered into contracts for the sale of lots (see Note 2 – Summary of Significant Accounting Policies in Part II, Item 8 of the 2018 Annual Report). The Company has identified land development and lot sales as a separate segment beginning in the fiscal year 2018. Oil and gas royalties and licenses are a passive activity and not an operating business activity and, therefore, are not classified as a segment. The following table summarizes wholesale water and wastewater services and land development revenue information by segment:
The following table summarizes wholesale water and wastewater services and land development pretax income by segment:
The following table summarizes total assets for the Company’s wholesale water and wastewater services business and land development business by segment. The assets consist of water rights and water and wastewater systems in the Company’s wholesale water and wastewater services segment. The assets consist of land, inventories and deposits in the Company’s land development segment. The Company’s other assets primarily consist of cash and cash equivalents, equipment, mineral rights, related party notes receivables and a deferred tax asset.
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PRESENTATION OF INTERIM INFORMATION (Policies) |
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PRESENTATION OF INTERIM INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications | Reclassifications Certain reclassifications have been made to the 2018 financial statements to conform to the consolidated 2019 financial statement presentation. These reclassifications had no effect on net earnings or cash flows previously reported. |
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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. |
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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 November 30, 2018, the Company’s main operating account exceeded federally insured limits. The Company has never suffered a loss due to such excess balance. |
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Land Development Inventories | Land Development Inventories Inventories primarily include land held for development and sale. Inventories are stated at cost. 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. The Company capitalizes certain legal, engineering, design, permitting, land acquisition, and construction costs related to the development of lots at Sky Ranch. The Company uses the specific identification method for the purpose of accumulating land development costs and allocates costs to each lot to determine the cost basis for each lot sale. The Company records all land cost of sales over time based on inputs of costs to total costs. In accordance with Accounting Standards Codification ("ASC") Topic 360, Property, Plant and Equipment (“ASC 360”), the Company measures land held for sale at the lower of the carrying value or fair value less estimated costs to sell. In determining fair value, the Company primarily relies upon the most recent negotiated price that is a Level 2 input (see Note 2 – Fair Value Measurements for definitions of fair value inputs). If a negotiated price is not available, the Company will consider several factors, including, but not limited to, current market conditions, recent comparable sales transactions and market analysis studies. If the fair value less estimated costs to sell is lower than the current carrying value, the land is impaired to its estimated fair value less costs to sell. |
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Contract Asset | Contract Asset Contract receivables are recorded at the invoiced amount and do not bear interest. Credit is extended based on the evaluation of a customer’s financial condition and collateral is not required. Contract asset is revenue which has been earned but not invoiced. The contract assets are transferred to the receivables when invoiced. |
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Investments | Investments Management determines the appropriate classification of its investments in certificates of deposit and U.S. Treasury debt securities at the time of purchase and re-evaluates such determinations each reporting period. Certificates of deposit and U.S. Treasury 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 $191,000 of investments classified as held-to-maturity at November 30, 2018, which represent certificates of deposit with a maturity date prior to November 30, 2019. Securities that the Company does not have the positive intent or ability to hold to maturity, including certificates of deposit and U.S. Treasury debt securities, are classified at their fair value. Changes in value of such securities are recorded as a component of Accumulated other comprehensive income (loss). The cost of securities sold is based on the specific identification method. The Company’s U.S. Treasury debt securities mature at various dates through March 2019. |
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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 – The Company’s cash and cash equivalents are reported using the values as reported by the financial institution where the funds are held. These securities primarily include balances in the Company’s operating and savings accounts. The carrying amounts of cash and cash equivalents approximate fair value. Trade Accounts Receivable – The Company records accounts receivable net of allowances for uncollectible accounts. Investments – The carrying amounts of investments approximate fair value. Investments are described further in Note 2 – Fair Value Measurements. Accounts Payable – The carrying amounts of accounts payable approximate fair value due to the relatively short period to maturity for these instruments. Long-Term Financial Liabilities – The Comprehensive Amendment Agreement No. 1 (the “CAA”) is comprised of a recorded balance sheet and an off-balance sheet or “contingent” obligation associated with the Company’s acquisition of its “Rangeview Water Supply” (defined in Note 4 – Water and Land Assets in Part II, Item 8 of the 2018 Annual Report). The amount payable is a fixed amount but is repayable only upon the sale of “Export Water” (defined in Note 4 – Water and Land Assets in Part II, Item 8 of the 2018 Annual Report). Because of the uncertainty of the sale of Export Water, the Company has determined that the contingent portion of the CAA does not have a determinable fair value. The CAA is described further in Note 4 – Long-Term Obligations and Operating Lease – Participating Interests in Export Water Supply. Notes Receivable – Related Parties – The market value of the notes receivable – related parties: Rangeview Metropolitan District (the “Rangeview District”), Sky Ranch Metropolitan District No. 5, and the Sky Ranch Community Authority Board (the “CAB”) approximate the market rate for the rates on the notes. Off-Balance Sheet Instruments – The Company’s off-balance sheet instruments consist entirely of the contingent portion of the CAA. Because repayment of this portion of the CAA is contingent on the sale of Export Water, which is not reasonably estimable, the Company has determined that the contingent portion of the CAA does not have a determinable fair value. See further discussion in Note 4 – Long-Term Obligations and Operating Lease – Participating Interests in Export Water Supply. |
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Revenue Recognition | Revenue Recognition The Company disaggregates revenue by major product line as reported on the consolidated statements of operations and comprehensive income (loss). The Company generates revenues through two lines of business. Revenues are derived through its wholesale water and wastewater business and through the sale of developed land primarily for residential lots, both of which businesses are described below. Wholesale Water and Wastewater Fees The Company generates revenues through its wholesale water and wastewater business predominantly from three sources: (i) monthly wholesale water usage fees and wastewater service fees, (ii) one-time water and wastewater tap fees and construction fees/Special Facility funding, and (iii) consulting fees. Because these items are separately delivered and distinct, the Company accounts for each of the items separately, as described below.
In addition to providing domestic water, the Company provides raw water to industrial customers in the oil and gas industry located in its service areas and adjacent to its service areas for hydraulic fracturing. Frack water deliveries are recognized at a point in time upon delivering water to a customer. The Company delivered 114.5 million and 77.5 million gallons of water to customers during the three months ended November 30, 2018 and 2017, respectively, of which 86% and 87% was used for oil and gas exploration during the three months ended November 30, 2018 and 2017, respectively. The Company recognizes wastewater treatment revenues monthly based on a flat monthly fee and actual usage charges. The monthly wastewater treatment fees are shown net of amounts retained by the Rangeview District. Costs of delivering water and providing wastewater service to customers are recognized as incurred.
The Company recognizes construction fees, including fees received to construct “Special Facilities,” over time as the construction is completed because the customer is generally able to use the property improvement to enhance the value of other assets during the construction period. Special Facilities are facilities that enable water to be delivered to a single customer and are not otherwise classified as a typical wholesale facility or retail facility. Temporary infrastructure required prior to construction of permanent water and wastewater systems or transmission pipelines to transfer water from one location to another are examples of Special Facilities. Management has determined that Special Facilities are separate and distinct performance obligations because these projects are contracted to construct a specific water and wastewater system or transmission pipeline and typically do not include multiple performance obligations in a contract with a customer. No Special Facilities revenue has been recognized during the three months ended November 30, 2018 or 2017.
Land Development Activities The Company generates revenues through the sale of finished lots at its Sky Ranch development primarily from several sources of revenues; (i) the sale of finished lots, (ii) construction support activities, (iii) project management services, and (iv) reimbursable expenses incurred to develop certain infrastructure.
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 of the closing of the sale of a finished lot in which control transfers to the builder and the builder is able to obtain a building permit, 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 receives payments 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 upon the completion of certain infrastructure milestones, and (iii) final payment upon the delivery of the finished lot. Ownership and control of the platted lots pass to the builders once the Company closes the sale of the platted lots. Because the builder (i.e., the customer) takes control of the lot at the first closing and subsequent improvements made by the Company improve the builder’s lot as construction progresses, the Company accounts for revenue over time with progress measured based upon costs incurred to date compared to total expected costs and any revenue in excess of amounts entitled to be billed will be reflected on the balance sheet as a contract asset and amounts received in excess of revenue recognized are recorded as deferred revenue. As of August 31, 2018, the Company received total payments for delivery of 150 platted lots of $2.5 million from two home builders, of which $3.5 million of revenue was recognized to date with progress measured based upon costs incurred to date compared to total expected costs. For the three months ended November 30, 2018, the Company recognized $1,381,200 of lot sales. No revenue was recognized for lot sales for the three months ended November 30, 2017. The Company had a contract asset of $1,020,100 and $0 as of November 30, 2018 and 2017, respectively. The Company does not have any material significant payment terms as all payments are expected to be received within 12 months after the delivery of the platted lot. The Company adopted the practical expedient for financing components and does not need to account for a financing component of these lot sales as the delivery of lot sales is expected to occur within one year or less.
Pursuant to these agreements, the Company acts as the project manager and provides any and all services required to deliver the CAB-eligible improvements, including but not limited to CAB compliance; planning design and approvals; project administration; contractor agreements; construction management and administration; and CAB acceptance. The Company must submit to the CAB a monthly invoice, in a form acceptable to the CAB. Invoices must be submitted no more frequently than once a month. The Company is responsible for all expenses it incurs in the performance of the agreements and is not be entitled to any reimbursement or compensation except as defined in the agreements, unless otherwise approved in advance by the CAB in writing. The CAB is subject to annual budget and appropriation procedures and does not intend to create a multiple-fiscal year direct or indirect debt or other financial obligation. The project management fee is five percent (5%) of actual construction costs of CAB-eligible improvements. The project management fee is based only on the actual costs of the improvements; thus, items such as fees, permits, review fees, consultant or other soft costs, land acquisition, or any other costs that are not directly related to the cost of construction of CAB-eligible improvements are not included in the calculation of the project management fee. All such costs that are excluded from calculating the project management fee are reimbursable to the project manager, provided that they are exclusively spent on CAB-eligible improvements, that are reasonable in comparison to other similar projects in the Denver metropolitan area and approved by the CAB. These activities are being accrued to the reimbursable amount due from the CAB upon issuance of bonds by the CAB. To date, the Company has provided $188,100 in project management services to the CAB.
The Company evaluated disaggregation of revenue and has determined that no additional disaggregation of revenue is necessary. Contract asset by segment is as follows:
Changes in contract asset were as follows:
Deferred revenue by segment is as follows:
Changes in deferred revenue were as follows:
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (“contracted not recognized revenue”), which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. At November 30, 2018, the Company had outstanding open contracts for $31,376,000 which primarily related to the sale of 506 lots at Sky Ranch. The Company expects to recognize approximately 36% of such revenue over the next 12 months. |
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Inventories | Inventories Inventories primarily include land held for development and sale, that the Company has begun developing and are stated at cost. Capitalized lot development costs at Sky Ranch are costs incurred to construct finished lots at Sky Ranch that meet the Company’s capitalization criteria for improvements to a lot and are capitalized as incurred. The Company capitalizes certain legal, engineering, design, permitting, land acquisition, and construction costs related to the development of lots at Sky Ranch. The Company uses the specific identification method for purposes of accumulating land development costs and allocates costs to each lot to determine the cost basis for each lot sale. The Company will record all land cost of sales for those contracts accounted for over time with progress measured based upon costs incurred to date compared to total expected costs. For customer contracts accounted for at a point in time, all costs are accumulated and recognized at the point in time control transfers to the customer, which is generally at closing for each finished lot. Inventory costs include common area costs that the Company funded through the CAB. The Company expects the costs will be reimbursed by the CAB. The Company will record any reimbursements as a reduction of cost once the CAB has the ability to reimburse the costs (i.e., once the CAB has issued bonds). In accordance with ASC 360, the Company measures land held for sale at the lower of the carrying value or fair value less estimated costs to sell. In determining fair value, the Company primarily relies upon the most recent negotiated price that is a Level 2 input (see Note 2 – Fair Value Measurements for definitions of fair value inputs). If a negotiated price is not available, the Company will consider several factors, including, but not limited to, current market conditions, recent comparable sales transactions and market analysis studies. If the fair value less estimated costs to sell is lower than the current carrying value, the land is impaired to its estimated fair value less costs to sell. |
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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 are invoiced directly by the Rangeview District, and a percentage of such collections are then paid to the Company by the Rangeview District. Water revenue from such sales are shown net of royalties paid to the Land Board and amounts retained by the Rangeview District. |
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Oil and Gas Lease Payments | Oil and Gas Lease Payments As further described in Note 2 – Summary of Significant Accounting Policies in Part II, Item 8 of the 2018 Annual Report, the Company entered into a Paid-Up Oil and Gas Lease and a Surface Use and Damage Agreement that were subsequently purchased by a wholly owned subsidiary of ConocoPhillips Company. Two wells were drilled within the Company’s mineral interest and placed into service and began producing oil and gas and accruing royalties to the Company. During the three months ended November 30, 2018 and 2017, the Company received $31,400 and $41,800 net of taxes, respectively, in royalties attributable to these two wells. The Company classifies income from oil and gas lease and royalty payments as Other income in the statement of operations and comprehensive income (loss) as the Company does not consider these arrangements to be an operating business activity. |
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Deferred Revenue | Deferred Revenue Deferred revenue as of November 30, 2018, was comprised of unearned revenue from a Paid-Up Oil and Gas Lease between the Company and 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 that the Company owns adjacent to the Lowry Range (the “Bison Lease”). The Company received an up-front payment of $167,200 in fiscal 2018, 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 $9,300 during the three months ended November 30, 2018 and 2017, respectively, related to the up-front payment received pursuant to the Bison Lease. As of November 30, 2018, and August 31, 2018, the Company had deferred revenue of $102,200 and $116,100, respectively, related to the Bison Lease that will be recognized as income ratably through September 2020. |
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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. |
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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 any 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. |
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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 $103,500 and $80,200 of share-based compensation expense during the three months ended November 30, 2018 and 2017, respectively. |
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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 November 30, 2018. As a result of H.R.1, commonly known as the Tax Cuts and Jobs Act (the “Tax Act”), signed into law on December 22, 2017, the Company has a $282,000 alternative minimum tax (“AMT”) deferred tax asset for which it did not have a valuation allowance as of November 30, 2018 and August 31, 2018. The Company expects to receive the AMT as a refund in future years. Most, if not all, of this credit will be refundable starting with the filing of the 2018 (fiscal year ending 2019) through 2021 (fiscal year ending 2022) tax returns, subject to limitations of Internal Revenue Code Section 382 (arises with ownership changes) and the sequestration limitation of the Balanced Budget Act of 1997. The Company will continue to evaluate the impact of the Tax Act and will record any resulting tax adjustments during fiscal 2019. 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’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At November 30, 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 November 30, 2018 or 2017. |
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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 of 223,962 common share equivalents as of November 30, 2018 were included in the calculation of income per common share as dilutive common stock equivalents using the treasury stock method. Common stock options and warrants aggregating 50,000 common share equivalents as of November 30, 2018, have been excluded from the calculation of income per common share as their effect is anti-dilutive. Common stock options and warrants aggregating 515,500 common share equivalents as of November 30, 2017, have been excluded from the calculation of loss per common share as their effect is anti-dilutive. |
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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 to ensure that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). ASU 2016-02 provides guidance on the recognition, measurement, presentation, and disclosure of leases. The new standard supersedes the present GAAP standard on leases and requires substantially all leases to be reported on the balance sheet as right-of-use assets and lease obligations. This standard is effective for fiscal years beginning after December 15, 2018. The Company is currently assessing the impact of ASU 2016-02. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, these amendments require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently assessing the provisions of the standard and the impact of the adoption on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220); Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Act and will improve the usefulness of information reported to financial statement users. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of the standard. The Company is currently in the process of assessing the impact of this standard on its condensed consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees. This standard expands the scope of ASC Topic 718, Compensation — Stock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASU 2018-07 supersedes ASC Subtopic 505-50, Equity — Equity-Based Payments to Non-Employees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within these fiscal years. The Company is currently in the process of assessing the impact of this ASU on its condensed consolidated financial statements. |
PRESENTATION OF INTERIM INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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PRESENTATION OF INTERIM INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Contract Asset and Deferred Revenue | The Company evaluated disaggregation of revenue and has determined that no additional disaggregation of revenue is necessary. Contract asset by segment is as follows:
Changes in contract asset were as follows:
Deferred revenue by segment is as follows:
Changes in deferred revenue were as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30, 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 November 30, 2018:
The following table provides information on the assets and liabilities measured at fair value on a recurring basis as of August 31, 2018:
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WATER AND LAND ASSETS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 November 30, 2018 and August 31, 2018:
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LONG-TERM OBLIGATIONS AND OPERATING LEASE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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LONG-TERM OBLIGATIONS AND OPERATING LEASE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Remaining Third Party Obligation | The remaining potential third-party obligation at November 30, 2018, is approximately $1 million.
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SHAREHOLDERS' EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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SHAREHOLDERS' EQUITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity | The following table summarizes the combined stock option activity for the 2004 Incentive Plan and 2014 Equity Plan for the three months ended November 30, 2018:
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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 three months ended November 30, 2018:
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SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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SEGMENT INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information by Segments | The following table summarizes wholesale water and wastewater services and land development revenue information by segment:
The following table summarizes wholesale water and wastewater services and land development pretax income by segment:
The following table summarizes total assets for the Company’s wholesale water and wastewater services business and land development business by segment. The assets consist of water rights and water and wastewater systems in the Company’s wholesale water and wastewater services segment. The assets consist of land, inventories and deposits in the Company’s land development segment. The Company’s other assets primarily consist of cash and cash equivalents, equipment, mineral rights, related party notes receivables and a deferred tax asset.
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PRESENTATION OF INTERIM INFORMATION, Investments (Details) - USD ($) |
Nov. 30, 2018 |
Aug. 31, 2018 |
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Investments [Abstract] | ||
Held-to-maturity securities | $ 191,000 | $ 190,400 |
PRESENTATION OF INTERIM INFORMATION, Revenue Recognition (Details) |
3 Months Ended | 12 Months Ended | ||
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Nov. 30, 2018
USD ($)
a
BusinessLine
Source
HomeBuilders
Agreement
acre ft
gal
|
Nov. 30, 2017
USD ($)
gal
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Aug. 31, 2018
USD ($)
HomeBuilders
Lot
|
Aug. 31, 2017
USD ($)
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Revenue Recognition [Abstract] | ||||
Number of business lines | BusinessLine | 2 | |||
Number of revenue sources | Source | 3 | |||
Total revenues | $ 3,072,549 | $ 1,010,132 | ||
Contract asset | $ 1,020,146 | $ 0 | $ 0 | |
Land [Abstract] | ||||
Area of land (in acres) | a | 931 | |||
Number of home builders | HomeBuilders | 3 | |||
Contract revenues recognized | $ 374,984 | 2,190,039 | ||
Construction support amount invoiced | $ 73,200 | |||
Wastewater Treatment Fees [Member] | ||||
Revenue Recognition [Abstract] | ||||
Assumed annual water demand (in acre feet) | acre ft | 0.4 | |||
Assumed daily contribution of wastewater flows (in gallons per day) | gal | 300 | |||
Water delivered to customers | gal | 114,500,000 | 77,500,000 | ||
Percentage of water used for oil and gas exploration | 86.00% | 87.00% | ||
Total revenues | $ 8,893 | $ 11,189 | ||
Water Tap Fees Recognized [Member] | ||||
Revenue Recognition [Abstract] | ||||
Total revenues | 254,826 | 49,948 | ||
Water Tap Fees Recognized excluding Wastewater Tap Fee [Member] | ||||
Revenue Recognition [Abstract] | ||||
Total revenues | 226,900 | 49,948 | ||
Wastewater Tap Fee [Member] | ||||
Revenue Recognition [Abstract] | ||||
Total revenues | 28,000 | 0 | ||
Special Facility Funding Recognized [Member] | ||||
Revenue Recognition [Abstract] | ||||
Total revenues | 0 | 0 | ||
Consulting Fees [Member] | ||||
Revenue Recognition [Abstract] | ||||
Total revenues | 47,800 | 26,400 | ||
Lot Sales [Member] | ||||
Revenue Recognition [Abstract] | ||||
Total revenues | 1,381,196 | 0 | ||
Contract asset | $ 1,020,100 | $ 0 | ||
Land [Abstract] | ||||
Proceeds from sale of lots | $ 2,500,000 | |||
Number of home builders | HomeBuilders | 2 | |||
Number of platted lots sold | Lot | 150 | |||
Contract revenues recognized | $ 3,500,000 | |||
Lot Sales [Member] | Maximum [Member] | ||||
Land [Abstract] | ||||
Expected delivery period for lots sold | 1 year | |||
Project Management Services [Member] | ||||
Land [Abstract] | ||||
Number of service agreements | Agreement | 2 | |||
Project management fee percentage | 5.00% | |||
Project management services revenues | $ 188,100 |
PRESENTATION OF INTERIM INFORMATION, Disaggregation of Revenue (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Nov. 30, 2018
USD ($)
Lot
|
Aug. 31, 2018
USD ($)
|
|
Changes in Contract Asset [Abstract] | ||
Balance, beginning of period | $ 0 | $ 0 |
Recognition of revenue contract asset | 1,020,146 | 0 |
Contract asset invoiced | 0 | 0 |
Balance, end of period | 1,020,146 | 0 |
Deferred Revenue Current and Noncurrent [Abstract] | ||
Oil and gas leases, less current portion | (55,733) | (55,733) |
Oil and gas leases, Long term | 46,444 | 60,378 |
Changes in Deferred Revenue [Abstract] | ||
Balance, beginning of period | 477,161 | 1,055,488 |
Deferral of revenue | 0 | 2,667,200 |
Recognition of unearned revenue | (374,984) | (2,190,039) |
Balance, end of period | 102,177 | 477,161 |
Sky Ranch [Member] | ||
Revenue, Performance Obligation [Abstract] | ||
Contracted not recognized revenue amount | $ 31,376,000 | |
Number of lots sold | Lot | 506 | |
Contracted not recognized revenue percentage | 36.00% | |
ASU 2014-09 [Member] | ||
Changes in Deferred Revenue [Abstract] | ||
Cumulative effect of adoption of ASU 2014-09 | $ 0 | (1,055,488) |
Corporate [Member] | ||
Changes in Contract Asset [Abstract] | ||
Balance, beginning of period | 0 | |
Balance, end of period | 0 | 0 |
Wholesale Water and Wastewater Services [Member] | ||
Changes in Contract Asset [Abstract] | ||
Balance, beginning of period | 0 | |
Balance, end of period | 0 | 0 |
Changes in Deferred Revenue [Abstract] | ||
Balance, beginning of period | 0 | |
Balance, end of period | 0 | 0 |
Land Development Activities [Member] | ||
Changes in Contract Asset [Abstract] | ||
Balance, beginning of period | 0 | |
Balance, end of period | 1,020,146 | 0 |
Changes in Deferred Revenue [Abstract] | ||
Balance, beginning of period | 361,050 | |
Balance, end of period | 0 | 361,050 |
Oil and Gas Leases [Member] | ||
Deferred Revenue Current and Noncurrent [Abstract] | ||
Oil and gas leases, less current portion | (55,733) | (55,733) |
Oil and gas leases, Long term | 46,444 | 60,378 |
Changes in Deferred Revenue [Abstract] | ||
Balance, beginning of period | 116,111 | |
Balance, end of period | $ 102,177 | $ 116,111 |
PRESENTATION OF INTERIM INFORMATION, Oil and Gas Lease Payments (Details) |
3 Months Ended | |
---|---|---|
Nov. 30, 2018
USD ($)
Well
|
Nov. 30, 2017
USD ($)
|
|
Oil and Gas Lease Payments [Abstract] | ||
Number of drilling wells | Well | 2 | |
Oil and gas royalty income, net | $ | $ 31,425 | $ 41,762 |
PRESENTATION OF INTERIM INFORMATION, Deferred Revenue (Details) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2018
USD ($)
a
|
Nov. 30, 2017
USD ($)
|
Aug. 31, 2018
USD ($)
|
Aug. 31, 2017
USD ($)
|
|
Land [Abstract] | ||||
Contract revenues recognized | $ (374,984) | $ (2,190,039) | ||
Deferred revenue | 102,177 | 477,161 | $ 1,055,488 | |
Oil and Gas [Member] | ||||
Land [Abstract] | ||||
Deferred revenue | $ 102,177 | 116,111 | ||
Bison Oil and Gas LLP [Member] | ||||
Land [Abstract] | ||||
Mineral estate area owned (in acres) | a | 40 | |||
Billings | 167,200 | |||
Term period of lease | 3 years | |||
Contract revenues recognized | $ (13,900) | $ (9,300) | ||
Bison Oil and Gas LLP [Member] | Oil and Gas [Member] | ||||
Land [Abstract] | ||||
Deferred revenue | $ 102,177 | $ 116,111 |
PRESENTATION OF INTERIM INFORMATION, Capitalized Costs of Water and Wastewater Systems and Depletion and Depreciation of Water Assets (Details) |
3 Months Ended |
---|---|
Nov. 30, 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 INFORMATION, Share-Based Compensation (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Share-Based Compensation [Abstract] | ||
Share-based compensation expense | $ 103,476 | $ 80,193 |
PRESENTATION OF INTERIM INFORMATION, Income Taxes (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Aug. 31, 2018 |
|
Income Taxes [Abstract] | |||
Deferred tax assets (AMT) | $ 282,000 | $ 282,000 | |
Accrued interest of unrecognized tax benefits | 0 | ||
Accrued penalties of unrecognized tax benefits | 0 | ||
Interest expense on unrecognized tax benefits | $ 0 | $ 0 |
PRESENTATION OF INTERIM INFORMATION, Income (Loss) per Common Share (Details) - shares |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Income (Loss) per Common Share [Abstract] | ||
Incremental common shares attributable to dilutive effect of share-based payment arrangements (in shares) | 223,962 | |
Anti-dilutive securities excluded from calculation of loss per common share (in shares) | 50,000 | 515,500 |
FAIR VALUE MEASUREMENTS (Details) |
Nov. 30, 2018
USD ($)
Assets
Liabilities
|
Aug. 31, 2018
USD ($)
Assets
Liabilities
|
---|---|---|
Information on assets and liabilities measured at fair value [Abstract] | ||
Held-to-maturity securities | $ 191,000 | $ 190,400 |
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 | 4 | 7 |
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) | $ 78,200 | $ 66,400 |
Recurring [Member] | U.S. Treasury and Debt Securities [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Accumulated unrealized gains and (losses) | 78,200 | 66,400 |
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) | U.S. Treasury and Debt Securities [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 | 10,985,800 | 8,718,000 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) | U.S. Treasury and Debt Securities [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 10,985,800 | 8,718,000 |
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) | U.S. Treasury and Debt Securities [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 | 10,985,800 | 8,718,000 |
Recurring [Member] | Fair Value [Member] | U.S. Treasury and Debt Securities [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 10,985,800 | 8,718,000 |
Recurring [Member] | Cost / Other Value [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | 10,907,600 | 8,644,900 |
Recurring [Member] | Cost / Other Value [Member] | U.S. Treasury and Debt Securities [Member] | ||
Information on assets and liabilities measured at fair value [Abstract] | ||
Available-for-sale securities | $ 10,907,600 | $ 8,644,900 |
WATER AND LAND ASSETS (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Aug. 31, 2018 |
|
Investment in Water and Water Systems [Abstract] | |||
Costs | $ 42,108,800 | $ 39,735,200 | |
Accumulated depreciation and depletion | (3,199,100) | (3,013,300) | |
Net investments in water and water systems | 38,909,715 | 36,721,884 | |
Depletion and Depreciation [Abstract] | |||
Depreciation | 238,700 | $ 175,000 | |
Rangeview Water Supply [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 14,818,200 | 14,813,800 | |
Accumulated depreciation and depletion | (13,400) | (12,800) | |
Depletion and Depreciation [Abstract] | |||
Depletion | 600 | $ 100 | |
Sky Ranch Water Rights and Other Costs [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 7,237,100 | 7,171,700 | |
Accumulated depreciation and depletion | (602,900) | (561,400) | |
Fairgrounds Water And Water System [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 2,899,900 | 2,899,900 | |
Accumulated depreciation and depletion | (1,084,900) | (1,062,900) | |
Rangeview Water System [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 1,823,700 | 1,655,600 | |
Accumulated depreciation and depletion | (274,800) | (261,200) | |
Water Supply Other [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 4,431,000 | 4,337,200 | |
Accumulated depreciation and depletion | (686,400) | (625,300) | |
Wild Pointe Service Rights [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 1,631,700 | 1,631,700 | |
Accumulated depreciation and depletion | (267,700) | (267,700) | |
Sky Ranch Pipeline [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 5,688,900 | 5,615,900 | |
Accumulated depreciation and depletion | (269,000) | (222,000) | |
Construction in Progress [Member] | |||
Investment in Water and Water Systems [Abstract] | |||
Costs | 3,578,300 | 1,609,400 | |
Accumulated depreciation and depletion | $ 0 | $ 0 |
LONG-TERM OBLIGATIONS AND OPERATING LEASE, Long-Term Obligations (Details) |
3 Months Ended | 269 Months Ended | |||
---|---|---|---|---|---|
Nov. 30, 2018
USD ($)
Member
|
Aug. 31, 2018
USD ($)
|
||||
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 | $ 1,380,700 | $ 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 | 89,700 | 737,300 | |||
Balance at end of period | 1,470,400 | 1,380,700 | |||
Initial Export Water Proceeds To Pure Cycle [Roll Forward] | |||||
Balance at beginning of period | 29,638,100 | 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 | (79,000) | (593,900) | |||
Balance at end of period | 29,559,100 | 29,638,100 | |||
Total Potential Third-Party Obligation [Roll Forward] | |||||
Balance at beginning of period | 1,007,400 | 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 | (10,700) | (143,400) | |||
Balance at end of period | 996,700 | 1,007,400 | |||
Participating Interests Liability [Roll Forward] | |||||
Balance at beginning of period | 339,035 | 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 | (3,800) | (49,800) | |||
Balance at end of period | 335,313 | 339,035 | |||
Contingency [Roll Forward] | |||||
Balance at beginning of period | 668,300 | 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 | (6,900) | (93,600) | |||
Balance at end of period | 661,400 | $ 668,300 | |||
Royalties [Abstract] | |||||
Royalties paid to Land Board | (34,522) | ||||
Export Water [Abstract] | |||||
Expected future export water payouts | 6,500,000 | ||||
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 | $ 6,800,000 | ||||
Projected financing period | 5 years | ||||
|
LONG-TERM OBLIGATIONS AND OPERATING LEASE, Operating Lease (Details) |
3 Months Ended |
---|---|
Nov. 30, 2018
USD ($)
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 and Equity Plan, and Combined Stock Option Activity (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Sep. 26, 2018 |
Nov. 30, 2018 |
Aug. 31, 2018 |
|||
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) | 535,500 | ||||
Granted (in shares) | [1] | 50,000 | |||
Exercised (in shares) | (25,000) | ||||
Forfeited or expired (in shares) | 0 | ||||
Outstanding, end of period (in shares) | 560,500 | 535,500 | |||
Options exercisable (in shares) | 408,001 | ||||
Weighted Average Exercise Price [Roll Forward] | |||||
Outstanding, beginning of period (in dollars per share) | $ 5.31 | ||||
Granted (in dollars per share) | 11.15 | ||||
Exercised (in dollars per share) | 3.13 | ||||
Forfeited or expired (in dollars per share) | 0 | ||||
Outstanding, end of period (in dollars per share) | 5.93 | $ 5.31 | |||
Options exercisable (in dollars per share) | $ 4.96 | ||||
Stock Options, Additional Disclosure [Abstract] | |||||
Weighted average remaining contractual term | 6 years 4 months 24 days | 6 years 14 days | |||
Weighted average remaining contractual term options exercisable | 5 years 5 months 8 days | ||||
Approximate aggregate intrinsic value | $ 2,595,100 | $ 3,180,990 | |||
Approximate aggregate intrinsic value options exercisable | $ 2,261,300 | ||||
2004 Incentive Plan and 2014 Equity Plan [Member] | Mr. Harding [Member] | |||||
Number of Options [Roll Forward] | |||||
Granted (in shares) | 50,000 | ||||
|
SHAREHOLDERS' EQUITY, Combined Activity and Value of Non-vested Options (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|||
Stock Options, Additional Disclosure [Abstract] | ||||
Share-based compensation expense | $ 103,476 | $ 80,193 | ||
2004 Incentive Plan and 2014 Equity Plan [Member] | ||||
Number of Options [Roll Forward] | ||||
Non-vested options outstanding, beginning of period (in shares) | 155,833 | |||
Granted (in shares) | [1] | 50,000 | ||
Vested (in shares) | (53,334) | |||
Forfeited (in shares) | 0 | |||
Non-vested options outstanding, end of period (in shares) | 152,499 | |||
Weighted Average Grant Date Fair Value [Abstract] | ||||
Non-vested options outstanding, beginning of period (in dollars per share) | $ 3.76 | |||
Granted (in dollars per share) | 5.72 | |||
Vested (in dollars per share) | 3.41 | |||
Forfeited (in dollars per share) | 0 | |||
Non-vested options outstanding, end of period (in dollars per share) | $ 4.53 | |||
Stock Options, Additional Disclosure [Abstract] | ||||
Share-based compensation expense | $ 103,500 | $ 80,200 | ||
Unrecognized expenses | $ 477,100 | |||
Weighted-average period for options expected to vest | 2 years | |||
|
RELATED PARTY TRANSACTIONS (Details) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2018
USD ($)
Employee
BoardMember
|
Nov. 30, 2017
USD ($)
|
Aug. 31, 2018
USD ($)
|
Aug. 31, 2017
USD ($)
|
|
Sky Ranch Community Authority Board [Member] | ||||
Related Party Transactions [Abstract] | ||||
Notes receivable, accrued interest | $ 7,400,000 | |||
Facilities Funding and Acquisition Agreement [Member] | ||||
Related Party Transactions [Abstract] | ||||
Interest rate | 6.00% | |||
Estimated cost | $ 30,000,000 | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | ||||
Related Party Transactions [Abstract] | ||||
Number of employee board of directors | Employee | 3 | |||
Number of independent board of directors | BoardMember | 2 | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | Loans Receivable [Member] | ||||
Related Party Transactions [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 Transactions [Abstract] | ||||
Loan extended, maximum capacity | $ 250,000 | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | Loans Receivable [Member] | Prime Rate [Member] | ||||
Related Party Transactions [Abstract] | ||||
Basis spread on variable rate | 2.00% | |||
Rangeview District [Member] | Water and Wastewater Services [Member] | Notes Receivable [Member] | ||||
Related Party Transactions [Abstract] | ||||
Interest rate | 8.00% | |||
Notes receivable | $ 897,200 | |||
Notes receivable, principal | 496,200 | |||
Notes receivable, accrued interest | 401,000 | |||
Rangeview District [Member] | WISE Partnership [Member] | ||||
Related Party Transactions [Abstract] | ||||
Funding pursuant to participation agreement | $ 22,200 | $ 198,200 | ||
Projected cost | $ 6,800,000 | |||
Projected financing period | 5 years | |||
Investments in the WISE assets | $ 3,200,000 | |||
Sky Ranch District [Member] | Water and Wastewater Services [Member] | Notes Receivable [Member] | ||||
Related Party Transactions [Abstract] | ||||
Interest rate | 8.00% | |||
Repayment of advances and accrued interest | $ 215,504 | |||
Loan outstanding | $ 0 | $ 0 |
SIGNIFICANT CUSTOMERS (Details) - Customer |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
Aug. 31, 2018 |
|
Sales [Member] | Rangeview District [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 5.00% | 6.00% | |
Revenue [Member] | Ridgeview Youth Services Center [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 3.00% | 4.00% | |
Number of customers | 1 | 1 | |
Revenue [Member] | Customers One and Two [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Number of customers | 2 | ||
Revenue [Member] | Customers One and Two [Member] | Land Development [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 100.00% | ||
Number of customers | 2 | ||
Revenue [Member] | Customer One [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 52.00% | ||
Revenue [Member] | Customer One [Member] | Land Development [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 66.00% | ||
Revenue [Member] | Customer Two [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 42.00% | ||
Revenue [Member] | Customer Two [Member] | Land Development [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 34.00% | ||
Revenue [Member] | Customer Three [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 54.00% | ||
Number of customers | 1 | ||
Accounts Receivable [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Number of customers | 2 | 2 | |
Accounts Receivable [Member] | Rangeview District [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 27.00% | 3.00% | |
Accounts Receivable [Member] | Rangeview District [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 39.00% | ||
Accounts Receivable [Member] | Rangeview District [Member] | Water Tap Fees Recognized [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 61.00% | ||
Accounts Receivable [Member] | Ridgeview Youth Services Center [Member] | Water and Wastewater Services [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 1.00% | 2.00% | |
Accounts Receivable [Member] | Customer Four [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 41.00% | 43.00% | |
Accounts Receivable [Member] | Customer Five [Member] | |||
Concentration Risk Percentage [Abstract] | |||
Concentration risk percentage | 29.00% | 30.00% |
ACCRUED LIABILITIES (Details) - USD ($) |
Nov. 30, 2018 |
Aug. 31, 2018 |
---|---|---|
ACCRUED LIABILITIES [Abstract] | ||
Accrued liabilities | $ 259,152 | $ 849,538 |
Accrued compensation | 400,000 | |
Estimated property taxes | 38,800 | 29,000 |
Professional fees | 34,600 | 59,000 |
Operating payables | $ 185,800 | $ 361,500 |
SEGMENT INFORMATION, Revenue by Segments (Details) |
3 Months Ended | |
---|---|---|
Nov. 30, 2018
USD ($)
BusinessLine
|
Nov. 30, 2017
USD ($)
|
|
SEGMENT INFORMATION [Abstract] | ||
Number of business lines | BusinessLine | 2 | |
Revenues [Abstract] | ||
Total revenues | $ 3,072,549 | $ 1,010,132 |
Wholesale Water and Wastewater Services [Member] | ||
Revenues [Abstract] | ||
Total revenues | 1,691,353 | 1,010,132 |
Land Development Activities [Member] | ||
Revenues [Abstract] | ||
Total revenues | $ 1,381,196 | $ 0 |
SEGMENT REPORTING, Wholesale Water and Wastewater Services and Land Development Pretax Income (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Nov. 30, 2018 |
Nov. 30, 2017 |
|
Pretax income (loss) [Abstract] | ||
Total pretax income (loss) | $ 633,972 | $ (96,611) |
Corporate [Member] | ||
Pretax income (loss) [Abstract] | ||
Total pretax income (loss) | (611,973) | (611,890) |
Wholesale Water and Wastewater Services [Member] | ||
Pretax income (loss) [Abstract] | ||
Total pretax income (loss) | 1,163,073 | 515,279 |
Land Development Activities [Member] | ||
Pretax income (loss) [Abstract] | ||
Total pretax income (loss) | $ 82,872 | $ 0 |
SEGMENT REPORTING, Corporate Assets (Details) - USD ($) |
Nov. 30, 2018 |
Aug. 31, 2018 |
---|---|---|
Assets [Abstract] | ||
Total assets | $ 71,145,419 | $ 71,906,615 |
Corporate [Member] | ||
Assets [Abstract] | ||
Total assets | 19,266,649 | 25,687,625 |
Wholesale Water and Wastewater Services [Member] | ||
Assets [Abstract] | ||
Total assets | 38,909,715 | 36,721,884 |
Land Development Activities [Member] | ||
Assets [Abstract] | ||
Total assets | $ 12,969,055 | $ 9,497,106 |
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