Quarterly report pursuant to Section 13 or 15(d)

Note 3 - Investments in Water, Water Systems, Land and Improvements

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Note 3 - Investments in Water, Water Systems, Land and Improvements
 3 Months Ended
Nov. 30, 2012
Property, Plant and Equipment Disclosure [Text Block]
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 months ended November 30, 2012.

The Company’s water, water systems, land and improvements consist of the following costs and accumulated depreciation and depletion at November 30, 2012 and August 31, 2012:

   
November 30, 2012
   
August 31, 2012
 
   
Costs
   
Accumulated Depreciation and Depletion
   
Costs
   
Accumulated Depreciation and Depletion
 
Arkansas River Valley assets
  $ 69,112,300     $ (1,358,900 )   $ 69,112,300     $ (1,315,900 )
Rangeview water supply
    14,484,400       (7,200 )     14,376,100       (7,100 )
Sky Ranch water rights and other costs
    3,915,100       (58,000 )     3,924,100       (50,800 )
Fairgrounds water and water system
    2,899,900       (556,500 )     2,899,900       (534,500 )
Rangeview water system
    167,700       (68,900 )     167,700       (67,600 )
Water supply – other
    25,600       (19,300 )     25,600       (19,400 )
Totals
    90,605,000       (2,068,800 )     90,505,700       (1,995,300 )
Net investments in water and water systems
  $ 88,536,200             $ 88,510,400          
                                 
Sky Ranch land and improvements
  $ 3,776,000       (10,700 )   $ 3,778,500       (8,100 )
Total net investments in water, water systems, land and improvements
  $ 92,312,200             $ 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 November 30, 2012 and 2011, 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 November 30, 2012.

The Company recorded $77,600 and $75,500 of depreciation and depletion expense during the three months ended November 30, 2012 and 2011, 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.  Management has entered into contracts to sell 1,486 acres of land along with 3,377 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.