I. Contingent Payments |
9 Months Ended |
|---|---|
Mar. 31, 2017 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Contingent Payments |
Contingent land payment of $686,700 at March 31, 2017 represents the net present value of $800,000 of estimated contingent land payments due under an agreement whereby Alanco Energy Services, Inc. (AES) acquired 160 acres of land known as Indian Mesa. The maximum total of $800,000 of contingent land payments is based upon 10% of quarterly revenues in excess of operating expenses up to $200,000 per quarter for activity at both the Deer Creek and Indian Mesa locations. The payments were projected considering current operating plans as approved by the Alanco Board of Directors, with the payments discounted at a rate of 3% per annum. Accretion expense is being imputed at 3% per annum, increasing the fair value of the contingent land payment during the nine months ended March 31, 2017 by $14,000. During the nine months ended March 31, 2017, no contingent land payment was earned or payable under the contingency formula. The contingent land payment is an obligation of the Company which will not be transferred to a buyer of the Indian Mesa land and associated permits discussed in Note D Assets Held for Sale and Discontinued Operations. The Company will maintain the liability for contingent payments resulting from future revenues on the Indian Mesa land resulting from the buyers operations.
The Company also has a contingent purchase price liability with TC Operating, LLC (TCO) under the original agreement executed in April 2012 which transferred the Deer Creek facility land lease to the Company. TCO can earn additional purchase price payments based upon a percentage of the net cumulative EBITDA (net of all related AES capital investments) over a period of approximately 10 years (contingent purchase price), approximately the initial term of the lease. As of March 31, 2017 and June 30, 2016, the Company had no liability recorded for the contingent purchase price based on the probability of the contingent payment being realized. |