Note 9 - Discontinued Operations

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

9 . DISCONTINUED OPERATIONS

In

December 2019,

the Company entered into an Asset Purchase Agreement to sell the PUC-regulated assets of Kapalua Water Company, Ltd. and Kapalua Waste Treatment Company, Ltd. located in the Kapalua Resort for a purchase price of approximately

$3.8

million in addition to a potential Capital Expenditures Adjustment, as defined in the agreement, to be determined at closing. The sale is subject to certain closing conditions, including completion of due diligence and PUC approval. As part of the agreement, the purchaser commits to serve the future expansion areas of Kapalua as they are developed. Furthermore, the Company agrees to deliver water from its wells and ditches to certain delivery points at defined rates over an initial period of

20

years.

Under terms of the agreement, the purchase price will

not

include approximately

$3.6

million of water system infrastructure and other related assets conveyed to the Company by the owner of a

125

-acre portion of the Kapalua Mauka project. Accordingly, upon classification of the Kapalua Water Company and Kapalua Waste Treatment Company assets as held for sale at

December 31, 2019,

these assets were written-down to fair value and included as part of the Company’s discontinued operations for the year ended

December 31, 2019.

The fair value of the assets was measured using Level

3

inputs, including the provisions set forth in the agreement

Upon entering the agreement, the Company classified the following assets as Assets Held for Sale:

	December 31
	2019		2018
	(in thousands)
Property, net	$	4,425	$	7,696
Deferred development costs		78		-
Total Assets	$	4,503	$	7,696

The results related to the operation of these assets have been reported as discontinued operations in

2019

and

2018

as follows:

	2019			2018
	(in thousands)
Operating revenues	$	2,415		$	2,177
Operating costs and expenses		(1,875	)		(1,746	)
Depreciation expense		(283	)		(280	)
Loss from classification to held for sale		(3,614	)		-
Income (loss) from discontinued operations	$	(3,357	)	$	151

Capital expenditures in discontinued operations were

$626,000

and

$155,000

in

2019

and

2018,

respectively.