Quarterly report pursuant to Section 13 or 15(d)

INVESTMENTS IN WATER, WATER SYSTEMS, LAND AND IMPROVEMENTS

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INVESTMENTS IN WATER, WATER SYSTEMS, LAND AND IMPROVEMENTS
 6 Months Ended
Feb. 28, 2014
Investments In Water Water Systems Land And Improvements  
INVESTMENTS IN WATER, WATER SYSTEMS, LAND AND IMPROVEMENTS

NOTE 3 – INVESTMENTS IN WATER, WATER SYSTEMS, LAND AND IMPROVEMENTS

 

The Company’s water rights and current water and wastewater service agreements are more fully described in Note 4 – Water Assets to the 2013 Annual Report. There have been no significant changes to the Company’s water rights or water and wastewater service agreements during the three and six months ended February 28, 2014.

 

The Company’s water, water systems, land and improvements consist of the following costs and accumulated depreciation and depletion at February 28, 2014 and August 31, 2013:

 

    February 28, 2014     August 31, 2013  
    Costs     Accumulated Depreciation and Depletion     Costs     Accumulated Depreciation and Depletion  
Arkansas River Valley assets   $ 69,112,300     $ (1,488,600 )   $ 69,112,300     $ (1,487,700 )
Rangeview water supply     14,521,600       (7,900 )     14,667,000       (7,700 )
Sky Ranch water rights and other costs     3,929,500       (87,100 )     3,915,100       (79,800 )
Fairgrounds water and water system     2,899,900       (666,600 )     2,899,900       (622,600 )
Rangeview water system     167,700       (75,300 )     167,700       (72,800 )
Water supply – other     756,200       (51,100 )     43,200       (22,400 )
Totals     91,387,200       (2,376,600 )     90,805,200       (2,293,000 )
Net investments in water and water systems   $ 89,010,600             $ 88,512,200          

 

Capitalized terms in this section not defined herein are defined in Note 4 – Water Assets to the 2013 Annual Report.

 

Depletion and Depreciation. The Company recorded $100 of depletion charges during each of the three month periods ended February 28, 2014 and 2013, respectively. The Company recorded $200 of depletion charges during each of the six month periods ended February 28, 2014 and 2013, respectively. This related entirely to the Rangeview Water Supply. No depletion is taken against the Arkansas River water or Sky Ranch Water Supply because the water located at these locations is not yet being utilized for its intended purpose as of February 28, 2014.

 

The Company recorded $45,000 and $76,400 of depreciation expense during the three months ended February 28, 2014 and 2013, respectively. The Company recorded $93,400 and $153,900 of depreciation expense during the six months ended February 28, 2014 and 2013, respectively.

 

Land and Water Shares Held for Sale. During fiscal 2012, management decided to sell certain farms in order to have cash flows sufficient to acquire the notes defaulted upon by HP A&M and to meet the future obligations on the promissory notes the Company issued to purchase the defaulted notes owed by HP A&M. During the six months ended February 28, 2014 the Company sold 512 acres of land along with 416 FLCC shares associated with the land. The Company has entered into agreements to sell an additional 1,117 acres of land along with 2,566 FLCC shares associated with this land. The assets held for sale total $4.6 million, which is the lower of cost or fair value less cost to sell.