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LONG-TERM OBLIGATIONS AND OPERATING LEASE | 12 Months Ended
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Aug. 31, 2021
LONG-TERM OBLIGATIONS AND OPERATING LEASE [Abstract] |
LONG-TERM OBLIGATIONS AND OPERATING LEASE | NOTE 7 – LONG-TERM OBLIGATIONS AND OPERATING LEASE As of August 31, 2021 and 2020, the Company had no debt. During the year August 31, 2021, the Company entered four Irrevocable Letters of Credit (the “LOCs”). The LOCs are to guarantee the Company’s performance related to certain construction projects at Sky Ranch. As long as the Company performs on the contracts, which the Company has the full intent and ability to perform on the contracts, the LOC’s will expire at various dates from December 2023 through July 2024. As of August 31, 2021, these four LOCs totaled $2.3 million, which are secured by cash balances maintained in restricted cash accounts at the Company’s bank. The Participating Interests in Export Water Supply are obligations of the Company that have no scheduled maturity dates. Therefore, these liabilities are not disclosed in tabular format. However, the Participating Interests in Export Water Supply are described in Note 5 – Participating Interests in Export Water. WISE Partnership During 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. Pursuant to the terms of the Rangeview/Pure Cycle WISE Project Financing and Service 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. During the years ended August 31, 2021 and 2020, the Company, through the Rangeview District, purchased 120 acre-feet and 49 acre-feet of WISE water for $0.6 million and $0.1 million. See further discussion in Note 14 – Related Party Transactions. Lease Commitments Operating lease expense is generally recognized evenly over the term of the lease. Effective February 2018, the Company entered an operating lease for more than 11,000 square-feet of office and warehouse space in Watkins, Colorado. The lease had an initial 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. In February 2021, the Company exercised its option and extended the lease until February 2023, and its monthly lease payments effective March 1, 2021 are $7,100 per month. As of September 1, 2019, the company adopted ASU No. 2016-02, Leases (“Topic 842”). Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. Prior to September 1, 2019, leases were accounted for under the previous guidance in Accounting Standard Codification 840. The Company did not enter into any new leases in fiscal 2020. For the years ended August 31, 2021 and 2020, rent expense consisted of operating lease expense of $85,200 and $85,200. The Company paid $85,200 against Lease obligations — operating leases during fiscal 2021. Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheet. For lease agreements entered into or reassessed in the future, the Company will be required to combine the lease and non-lease components in determining the lease liabilities and right-of-use (“ROU”) assets. The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rate of six percent (6%) on September 1, 2019, for all leases that commenced prior to that date. The Company elected the hindsight practical expedient to determine the lease term for existing leases, which resulted in the lengthening of the lease term related to the Company’s office lease. ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the consolidated balance sheet as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | As of August 31, 2021 |  | ​ | As of August 31, 2020 |
​ | ​ | (In thousands) | ​
Operating leases - ROU assets |  | $ | 122 |  | ​ | $ | 196 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Accrued liabilities | ​ | $ | 84 | ​ | ​ | $ | 74 | ​
Lease obligations - operating leases, net of current portion | ​ |  | 37 | ​ | ​ |  | 120 | ​
Total lease liability | ​ | $ | 121 | ​ | ​ | $ | 194 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average remaining lease term (in years) | ​ |  | 1.4 | ​ | ​ |  | 2.4 | ​
Weighted average discount rate | ​ |  | 6 | % | ​ |  | 6 | %
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