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
 9 Months Ended
May 31, 2013
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 2012 Annual Report. There have been no significant changes to the Company’s water rights or water and wastewater service agreements during the three and nine months ended May 31, 2013.

The Company’s water, water systems, land and improvements consist of the following costs and accumulated depreciation and depletion at May 31, 2013 and August 31, 2012:

   
May 31, 2013
    
August 31, 2012
  
   
Costs
    
Accumulated Depreciation and Depletion
    
Costs
    
Accumulated Depreciation and Depletion
  
Arkansas River Valley assets
   $ 69,112,300     $ (1,444,800 )   $ 69,112,300     $ (1,315,900 )
Rangeview water supply
     14,667,000       (7,500 )     14,376,100       (7,100 )
Sky Ranch water rights and other costs
     3,930,500       (72,600 )     3,924,100       (50,800 )
Fairgrounds water and water system
     2,899,900       (600,600 )     2,899,900       (534,500 )
Rangeview water system
     167,700       (71,400 )     167,700       (67,600 )
Water supply – other
     26,900       (21,300 )     25,600       (19,400 )
Totals
     90,804,300       (2,218,200 )     90,505,700       (1,995,300 )
                                 
Net investments in water and water systems
   $ 88,586,100             $ 88,510,400          
Sky Ranch land and improvements, net
   $ 3,770,600             $ 3,778,500          
Total net investments in water, water systems, land and improvements
   $ 92,356,700             $ 92,288,900          

Capitalized terms in this section not defined herein are defined in Note 4 – Water Assets to the 2012 Annual Report.

Depletion and Depreciation. The Company recorded $100 of depletion charges during each of the three month periods ended May 31, 2013 and 2012, respectively. The Company recorded $300 of depletion charges during each of the nine month periods ended May 31, 2013 and 2012. 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 May 31, 2013.

The Company recorded $77,600 of depreciation expense during each of the three months ended May 31, 2013 and 2012. The Company recorded $231,500 and $230,100 of depreciation expense during the nine months ended May 31, 2013 and 2012, 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. The Company has entered into or is in the process of negotiating agreements to sell 1,471 acres of land along with 3,397 FLCC shares associated with this land. The assets held for sale total $5.7 million, which is the lower of cost or fair value less cost to sell.