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PARTICIPATING INTERESTS IN EXPORT WATER | 12 Months Ended
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Aug. 31, 2013
Participating Interests In Export Water |
PARTICIPATING INTERESTS IN EXPORT WATER | NOTE 5 – PARTICIPATING INTERESTS IN EXPORT WATER The Company acquired its Rangeview Water Supply through various amended agreements entered into in the early 1990’s. The acquisition was consummated with the signing of the CAA in 1996. Upon entering into the CAA, the Company recorded an initial liability of $11.1 million, which represented the cash the Company received from the participating interest holders that was used to purchase the Company’s Export Water (described in greater detail in Note 4 – Water Assets to the 2013 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 investments. 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 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, 35% of each payment remitted to the CAA holders is allocated to the recorded liability account. The remaining portion of each payment, or 65%, is allocated to the contingent obligation, which is recorded on a net revenue basis. From time to time the Company repurchased various portions of the CAA obligations in priority. The Company did not make any CAA acquisitions during the fiscal years ended August 31, 2013 and 2012. As a result of the acquisitions, and due to the sale of Export Water, as detailed in the table below, the remaining potential third party obligation at August 31, 2013, is $3.4 million:
|  | Export Water |  |  | Initial Export |  |  | Total Potential |  |  | Paticipating |  |  |  |
|  | Proceeds |  |  | Water Proceeds |  |  | Third party |  |  | Interests |  |  |  |
|  | Received |  |  | to Pure Cycle |  |  | Obligation |  |  | Liability |  |  | Contingency |
Original balances |  | $ | — |  |  | $ | 218,500 |  |  | $ | 31,807,700 |  |  | $ | 11,090,600 |  |  | $ | 20,717,100 |
Activity from inception until August 31, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisitions |  |  | — |  |  |  | 28,077,500 |  |  |  | (28,077,500 | ) |  |  | (9,790,000 | ) |  |  | (18,287,500 | )
Option payments - Sky Ranch and The Hills at Sky Ranch |  |  | 110,400 |  |  |  | (42,300 | ) |  |  | (68,100 | ) |  |  | (23,800 | ) |  |  | (44,300 | )
Arapahoe County tap fees * |  |  | 533,000 |  |  |  | (373,100 | ) |  |  | (159,900 | ) |  |  | (55,800 | ) |  |  | (104,100 | )
Export Water sale payments |  |  | 111,300 |  |  |  | (77,900 | ) |  |  | (33,400 | ) |  |  | (12,100 | ) |  |  | (21,300 | )
Balance at August 31, 2012 |  |  | 754,700 |  |  |  | 27,802,700 |  |  |  | 3,468,800 |  |  |  | 1,208,900 |  |  |  | 2,259,900 |
Fiscal 2013 activity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Export Water sale payments |  |  | 158,000 |  |  |  | (110,600 | ) |  |  | (47,400 | ) |  |  | (16,000 | ) |  |  | (31,400 | )
Balance at August 31, 2013 |  | $ | 912,700 |  |  | $ | 27,692,100 |  |  | $ | 3,421,400 |  |  | $ | 1,192,900 |  |  | $ | 2,228,500 |
* The Arapahoe County tap fees are less $34,522 in royalties paid to the Land Board. The CAA includes contractually established priorities which call for payments to CAA holders in order of their priority. This means the first three payees receive their full payment before the next priority level receives any payment and so on until full repayment. The Company will receive $5.1 million of the first priority payout (the remaining entire first priority payout totals $7.3 million as of August 31, 2013).

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- Definition The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=18733093&loc=SL4573702-111684 + Details
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