UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May~~November 3130, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 000-08814

PURE CYCLE CORPORATION

(Exact name of registrant as specified in its charter)


Colorado		84-0705083
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

34501 E. Quincy Avenue, Bldg. 1, Suite D, Watkins, CO		80137
(Address of principal executive offices)		(Zip Code)

(303) 292 – 3456

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Common Stock 1/3 of $.01 par value	PCYO	The NASDAQ Stock Market
(Title of each class)	(Trading Symbol(s))	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 24,~~074~~090,~~305~~605 shares of 1/3 of $.01 par value common stock as of ~~July~~January 76, ~~2025~~2026.

Table of Contents

PURE CYCLE CORPORATION

INDEX TO ~~MAY~~NOVEMBER 3130, 2025 FORM 10-Q


		Page

PART I. FINANCIAL INFORMATION		4

	Item 1. Consolidated Financial Statements	4

	Consolidated Balance Sheets: ~~May~~November 3130, 2025 (unaudited) and August 31, ~~2024~~2025	4

	Consolidated Statements of Income (unaudited): For the three ~~and nine~~ months ended ~~May~~November 3130, 2025 and 2024	5

	Consolidated Statements of Shareholders’ Equity (unaudited): For the three ~~and nine~~ months ended ~~May~~November 3130, 2025 and 2024	6

	Consolidated Statements of Cash Flows (unaudited): For the three ~~and nine~~ months ended ~~May~~November 3130, 2025 and 2024	7
	Notes to Consolidated Financial Statements	8

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	3029

	Item 4. Controls and Procedures	3029

PART II. OTHER INFORMATION		3029

	Item 1. Legal Proceedings	3029

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3130

	Item 6. Exhibits	31

SIGNATURES		32

Table of Contents

FORWARD-LOOKING STATEMENTS

Statements that are not historical facts contained in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). The words “anticipate,” “seek,” “project,” “future,” “likely,” “believe,” “may,” “should,” “could,” “will,” “estimate,” “expect,” “plan,” “intend,” “potential” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Forward-looking statements include statements relating to, among other things:

●	future water supply needs in Colorado and how such needs will be met;

●	anticipated revenue from water sales;

●	anticipated increases in residential and commercial demand for water services and competition for these services;

●	estimated population increases in the Denver metropolitan area and the South Platte River basin;

●	demand for single-family rental homes;

●	plans for, and the efficiency of, development of our Sky Ranch property;

●	our competitive advantage;

●	the number of units planned for development at Sky Ranch;

●	the timing of the completion of construction and sale of finished lots at Sky Ranch;

●	the number of lots expected to be delivered in a fiscal period;

●	anticipated financial results, including anticipated increases in customers and revenue, from development of our Sky Ranch property;

●	estimated tap fees to be generated from the development of the various phases of Sky Ranch;

●	anticipated expansion and rental dates for our single-family rental homes;

●	anticipated revenue and cash flows from our single-family rental homes;

●	timing of and interpretation of royalty obligations to the State Board of Land Commissioners;

●	participation in regional water projects, including “WISE” (as defined herein) and the timing and availability of water from, and projected costs related to, WISE;

●	future water or wastewater tap fees;

●	our ability to collect fees and charges from customers and other users;

●	the estimated amount of reimbursable costs for Sky Ranch and the collectability of reimbursables;

●	anticipated timing and amount of, and sources of funding for, (i) capital expenditures to construct infrastructure and increase production capacities, (ii) compliance with water, environmental and other regulations, and (iii) operations, including delivery and treatment of water and wastewater;

●	capital required and costs to develop Sky Ranch;

●	anticipated development of other phases concurrently with the second phase of Sky Ranch;

●	our ability to secure a permit and finance the construction of a new interchange at I-70 for continued development of Sky Ranch;

●	plans to provide water for drilling and hydraulic fracturing of oil and gas wells;

●	changes in oil and gas drilling activity on our property, on the Lowry Ranch, or in the surrounding areas;

●	estimated costs of earthwork, erosion control, streets, drainage and landscaping at Sky Ranch;

●	the anticipated revenue from customers in the Rangeview District, Sky Ranch Districts, and Elbert & Highway 86 District;

●	plans for the use and development of our water assets and potential delays;

●	estimated number of connections we can serve with our existing water rights;

●	factors affecting demand for water;

●	our ability to meet customer demands in a sustainable and environmentally friendly way;

●	our ability to reduce the amount of up-front construction costs for water and wastewater systems;

●	costs and plans for treatment of water and wastewater;

●	expenditures for expenses and capital needs of the Rangeview District;

●	regional cooperation among area water providers in the development of new water supplies and water storage, transmission and distribution systems as the most cost-effective way to expand and enhance service capacities;

●	sufficiency of tap fees to fund infrastructure costs of the Rangeview District;

●	plans to use raw water, effluent water or reclaimed water for agricultural and irrigation uses;

●	factors that may impact labor and material costs;

● our ability to comply with permit requirements and environmental regulations and the cost of such compliance;

Table of Contents

●	our ability to comply with permit requirements and environmental regulations and the cost of such compliance;

●	the impact of water quality, solid waste disposal and environmental regulations on our financial condition and results of operations;

●	our belief that several long-term land development and housing factors remain positive;

●	anticipated mortgage interest rates;

● our belief that Sky Ranch is better positioned to navigate the changing market ~~then~~than competitors;

●	the impact of the homebuilding market and interest rates on our business and financial condition;

●	the recoverability of water and wastewater service costs from rates;

●	forfeitures of option grants, vesting of non-vested options and the fair value of option awards;

●	the sufficiency of our working capital and financing sources to fund our operations;

●	estimated costs of public improvements to be funded by Pure Cycle and constructed on behalf of the Sky Ranch Community Authority Board;

●	service life of constructed facilities;

●	accounting estimates and the impact of new accounting pronouncements;

●	our beliefs regarding the impact of the One Big Beautiful Bill Act; and

●	the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting.

Forward-looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. There are no assurances that any of our expectations will be realized, and actual results could differ materially from those in such statements. Factors that could cause actual results to differ from those contemplated by such forward-looking statements include, without limitation:

●	political and economic instability, whether resulting from natural disasters, wars, terrorism, pandemics, tariffs, trade policies or other sources;

●	our ability to successfully expand our single-family home rental business and rent our single-family homes at rates sufficient to cover our costs;

●	the timing of new home construction and other development in the areas where we may sell our water, which in turn may be impacted by credit availability, inflation and interest rates;

●	population growth;

●	changes in employment levels, job and personal income growth and household debt-to-income levels;

●	changes in consumer confidence generally and confidence of potential home buyers in particular;

● declines in property values which impact tax revenue to the Sky Ranch Community Authority Board ~~which~~and ~~would~~therefore ~~impact~~its ~~their~~ ability to repay us;

●	changes in the supply of available new or existing homes and other housing alternatives, such as apartments and other residential rental property;

●	timing of oil and gas development in the areas where we sell our water;

●	the market price of homes, rental rates, and water, oil and gas prices;

●	changes in customer consumption patterns;

●	changes in applicable statutory and regulatory requirements;

●	changes in governmental policies and procedures, including with respect to land use, environmental, and tax matters;

●	changes in interest rates;

●	changes in tenant relief laws, including laws regulating evictions, rent control laws, and other regulations that limit our ability to increase rental rates;

●	changes in private and federal mortgage financing programs and lending practices;

●	uncertainties in the estimation of water available under decrees;

● uncertainties in the estimation of the number of connections we can service with our existing water supplies;

●	uncertainties in the estimation of costs of delivery of water and treatment of wastewater;

●	uncertainties in the estimation of the service life of our systems;

●	uncertainties in the estimation of costs of construction projects;

●	uncertainties in the amount of reimbursable costs we may ultimately collect;

●	the strength and financial resources of our competitors;

●	our ability to find and retain skilled personnel;

●	climatic and weather conditions, including floods, droughts and freezing conditions;

● turnover of elected and appointed officials and delays caused by political concerns and government procedures;

Table of Contents

●	turnover of elected and appointed officials and delays caused by political concerns and government procedures;

●	availability and cost of labor, material and equipment, including the impact of trade policies and tariffs;

●	engineering and geological problems;

●	environmental risks and regulations;

●	our ability to raise capital;

●	changes in corporate tax rates;

●	our ability to negotiate contracts with customers;

●	uncertainties in water court rulings;

●	security and cyberattacks, including unauthorized access to confidential information on our information technology systems; and

● the factors described under “Risk Factors” in ~~Part~~the I2025 ~~Item IA of our most recent~~ Annual Report on(as ~~Form~~defined ~~10-K~~herein).

We undertake no obligation, and disclaim any obligation, to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. All forward-looking statements are expressly qualified by this cautionary statement.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PURE CYCLE CORPORATION

CONSOLIDATED BALANCE SHEETS


(In thousands, except shares)	~~May~~November 3130, 2025		August 31, ~~2024~~2025
ASSETS:		~~(unaudited)~~
Current assets:
Current Assets:
Cash and cash equivalents	$	1417,~~392~~135	$	21,~~946~~931
Trade accounts receivable, net		1,331		1,472
Accounts receivable, net		2,502		1,330
Income taxes receivable		633		—
Prepaid expenses and other assets		414		1,004
Prepaid expenses and other assets		781		530
Land under development		6,212		7,388
Land under development		8,068		3,647
Total current assets		26,263		31,653
Reimbursable public improvements and project management fees		—		10,100
Restricted cash		6,734		6,448
Total current assets		25,205		37,695
Investment in water and wastewater systems, net		68,708		67,523
Restricted cash		6,065		3,412
Land and mineral rights held for development		4,486		4,168
Investments in water and water systems, net		64,954		60,486
Single-family rental units		7,739		5,240
Construction in progress		2,473		3,161
Related party notes receivable, including accrued interest, less current portion		51,813		45,002
Single-family rental units		4,891		5,059
Other assets		2,326		2,245
Land and mineral rights:
Total assets	$	168,069	$	162,279
Held for development		4,513		3,683
Held for investment purposes		—		451
Held for sale		352		—
Other assets		1,326		1,164
Notes receivable – related parties, including accrued interest
Reimbursable public improvements and project management fees		40,600		30,864
Other		1,222		1,221
Operating leases - right of use assets		138		158
Total assets	$	151,739	$	147,354

LIABILITIES:
LIABILITIES & SHAREHOLDERS’ EQUITY:
Current liabilities:
Current Liabilities:
Accounts payable	$	23,~~607~~284	$	13,~~948~~518
Accrued liabilities		2,303		1,514
Accrued and other liabilities		5,322		4,335
Accrued liabilities – related parties		911		2,208
Deferred revenue		2,442		3,355
Income taxes payable		—		1,442
Debt, current portion		440		411
Deferred lot sales revenue		984		2,173
Total current liabilities		11,488		11,619
Deferred water and other sales revenue		2		—
Debt, less current portion		7,554		6,380
Debt, current portion		346		64
Deferred tax liability, net		1,541		1,541
Total current liabilities		7,153		9,349
Lease obligations, less current portion		—		1
Debt, less current portion		6,512		6,821
Total liabilities		20,583		19,541
Deferred tax liability, net		1,395		1,395

Lease obligations - operating leases, less current portion		4		87
Total liabilities		15,064		17,652
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
Series B preferred shares: par value $0.001 per share, 25 million authorized; 432,513 issued and outstanding (liquidation preference of $432,513)		—		—
Common shares: par value 1/3 of $.01 per share, 40.0 million authorized; 24,074,305 and 24,063,894 outstanding, respectively		80		80
Common shares: par value 1/3 of $.01 per share, 40.0 million authorized; 24,090,605 and 24,066,805 outstanding, respectively		80		80
Additional paid-in capital		175,~~419~~631		175,~~125~~448
Accumulated deficit		(3828,~~824~~225)		(4532,~~503~~790)
Total shareholders’ equity		~~136~~147,~~675~~486		~~129~~142,~~702~~738
Total liabilities and shareholders’ equity	$	151,739	$	147,354
	$	168,069	$	162,279

See accompanying Notes to the Consolidated Financial Statements

Table of Contents

PURE CYCLE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(unaudited)


	Three Months Ended				~~Nine Months Ended~~
(In thousands, except share information)	~~May~~November 3130, 2025		~~May~~November 3130, 2024		~~May 31, 2025~~		~~May 31, 2024~~
Revenues:
REVENUES:
Metered water usage from:
Water and Wastewater
Municipal customers	$	148	$	145	$	507	$	458
Water and wastewater activities	$	812	$	1,391
Commercial customers		149		1,432		1,324		5,045
Water and wastewater tap fees		1,670		1,466
Wastewater treatment fees		102		85		284		258
Total water and wastewater		2,482		2,857
Water and wastewater tap fees		1,700		581		5,292		1,162
Land Development
Lot sales		26,~~526~~024		42,~~795~~319		~~5,981~~		~~7,906~~
Project management fees		~~138~~296		~~221~~253		~~507~~		~~362~~
Single-family rentals		131		123		373		357
Special facility projects and other		202		199
Special facility projects and other		246		222		619		639
Total land development		6,522		2,771
Total revenues		5,140		7,604		14,887		16,187


Single-family rentals		131		124
Cost of revenues:
Total revenues		9,135		5,752
Water service operations		533		564		1,418		1,628

Wastewater service operations		237		173		642		513
COST OF REVENUES:
Land development construction costs		437		1,192		2,060		1,961
Water and wastewater		1,112		1,061
Project management costs		106		154		360		401
Lot development		1,717		956
Single-family rental costs		40		71		133		161
Single-family rental		55		68
Depletion and depreciation		409		410		1,248		1,132
Total cost of revenues		2,884		2,085
Other		121		174		576		406

Total cost of revenues		1,883		2,738		6,437		6,202
General and administrative expenses		1,709		1,792

Depreciation		159		155
General and administrative expenses		1,798		1,647		6,295		5,082
Operating income		4,383		1,720
Depreciation		125		151		429		447

Operating income		1,334		3,068		1,726		4,456
Other income (expense):

Interest income		949		731
Other income (expense):
Interest expense		(94)		(109)
Interest income - related party		417		217		1,223		1,156
Oil and gas royalty income, net		740		2,807
Interest income - Investments		210		279		675		873
Other, net		52		59
Oil and gas royalty income, net		1,140		392		5,857		479
Income from operations before income taxes		6,030		5,208
Oil and gas lease income, net		—		18		—		56
Income tax expense		(1,465)		(1,271)
Other, net		(7)		(13)		115		121
Net income	$	4,565	$	3,937
Interest expense, net		(101)		(109)		(319)		(328)

Income from operations before income taxes		2,993		3,852		9,277		6,813
Earnings per common share - basic and diluted
Income tax expense		(737)		(1,027)		(2,275)		(1,805)
Basic	$	0.19	$	0.16
Net income	$	2,256	$	2,825	$	7,002	$	5,008
Diluted	$	0.19	$	0.16

Weighted average common shares outstanding:
Earnings per common share - basic and diluted
Basic		24,080,086		24,071,907
Basic	$	0.09	$	0.12	$	0.29	$	0.21
Diluted		24,156,378		24,157,347
Diluted	$	0.09	$	0.12	$	0.29	$	0.21
Weighted average common shares outstanding:
Basic		24,076,022		24,087,170		24,077,188		24,085,578
Diluted		24,143,534		24,143,039		24,166,926		24,146,361

See accompanying Notes to the Consolidated Financial Statements

Table of Contents

PURE CYCLE CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited)


	Three Months Ended ~~May~~November 3130, 2025
	Preferred ~~Shares~~Stock			Common ~~Shares~~Stock			Additional		Accumulated
(in thousands, except shares)	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Total
Balance at February 28, 2025	432,513	$	—	24,076,305	$	80	$	175,390	$	(41,058)	$	134,412
Balance at August 31, 2025	432,513	$	—	24,066,805	$	80	$	175,448	$	(32,790)	$	142,738
Share-based compensation	—		—	—		—		29		—		29
Restricted stock grants	—		—	3,800		—		11		—		11
Repurchases of common shares	—		—	(2,000)		—		—		(22)		(22)
Stock options exercised	—		—	10,000		—		40		—		40
Net income	—		—	—		—		—		2,256		2,256
Stock granted for services	—		—	10,000		—		115		—		115
Balance at May 31, 2025	432,513	$	—	24,074,305	$	80	$	175,419	$	(38,824)	$	136,675
Share-based compensation	—		—	—		—		17		—		17
Repurchases of common stock	—		—	—		—		—		—		—
Net income	—		—	—		—		—		4,565		4,565
Balance at November 30, 2025	432,513	$	—	24,090,605	$	80	$	175,631	$	(28,225)	$	147,486


	Three Months Ended ~~May~~November 3130, 2024
	Preferred ~~Shares~~Stock			Common ~~Shares~~Stock			Additional		Accumulated
(in thousands, except shares)	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Total
Balance at February 29, 2024	432,513	$	—	24,088,734	$	80	$	175,014	$	(54,650)	$	120,444
Balance at August 31, 2024	432,513	$	—	24,063,894	$	80	$	175,125	$	(45,503)	$	129,702
Shares granted for services	—		—	1,608		—		15		—		15
Restricted stock grants	—		—	9,200		—		21		—		21
Share-based compensation	—		—	—		—		40		—		40
Stock options exercised	—		—	13,815		—		—		—		—
Repurchases of common shares	—		—	(15,000)		—		—		(141)		(141)
Stock granted for services	—		—	—		—		—		—		—
Net income	—		—	—		—		—		2,825		2,825
Share-based compensation	—		—	—		—		35		—		35
Balance at May 31, 2024	432,513	$	—	24,075,342	$	80	$	175,069	$	(51,966)	$	123,183
Repurchases of common stock	—		—	(10,000)		—		—		(108)		(108)
Net income	—		—	—		—		—		3,937		3,937
Balance at November 30, 2024	432,513	$	—	24,076,909	$	80	$	175,181	$	(41,674)	$	133,587


	Nine Months Ended May 31, 2025
	Preferred Shares			Common Shares			Additional		Accumulated
(in thousands, except shares)	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Total
Balance at August 31, 2024	432,513	$	—	24,063,894	$	80	$	175,125	$	(45,503)	$	129,702
Restricted shares grants	—		—	9,200		—		21		—		21
Stock options exercised	—		—	13,815		—		—		—		—
Shares granted for services	—		—	15,396		—		180		—		180
Share-based compensation	—		—	—		—		93		—		93
Repurchases of common shares	—		—	(28,000)		—		—		(323)		(323)
Net income	—		—	—		—		—		7,002		7,002
Balance at May 31, 2025	432,513	$	—	24,074,305	$	80	$	175,419	$	(38,824)	$	136,675



	Nine Months Ended May 31, 2024
	Preferred Shares			Common Shares			Additional		Accumulated
(in thousands, except shares)	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Total
Balance at August 31, 2023	432,513	$	—	24,078,720	$	80	$	174,689	$	(56,535)	$	118,234
Stock options exercised	—		—	8,000		—		37		—		37
Restricted stock grants	—		—	13,978		—		—		—		—
Stock granted for services	—		—	19,644		—		195		—		195
Share-based compensation	—		—	—		—		148		—		148
Repurchases of common shares	—		—	(45,000)		—		—		(439)		(439)
Net income	—		—	—		—		—		5,008		5,008
Balance at May 31, 2024	432,513	$	—	24,075,342	$	80	$	175,069	$	(51,966)	$	123,183

See accompanying Notes to the Consolidated Financial Statements

Table of Contents

PURE CYCLE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	~~Nine~~Three Months Ended
(In thousands)	~~May~~November 3130, 2025		~~May~~November 3130, 2024
Cash flows from operating activities:
Net income	$	74,~~002~~565	$	53,~~008~~937
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and depletion		1,677		1,579
Trade accounts receivable		(1,172)		(3,521)
Trade accounts receivable		141		(1,211)
Depreciation and depletion		566		526
Accounts payable and accrued liabilities		213		1,353
Share-based compensation expense		183		56
Other assets and liabilities		(166)		315
Net activity on note receivable - related party, other		(25)		(26)
Share-based compensation expense		294		380
Net activity on note receivable - related party, reimbursable public improvements		(5,483)		6,193
Deferred income taxes		—		(122)
Other assets and liabilities		(45)		(18)
Prepaid expenses		~~(251)~~590		~~(234)~~70
Net activity on notes receivable - related party, other		(76)		(90)
Accounts payable and accrued liabilities		(710)		(1,177)
Deferred water sales revenue		2		(56)
Taxes payable / receivable		1,465		1,270
Land under development		(10,161)		(6,550)
Deferred revenue		(913)		(1,636)
Deferred lot sale revenue		(1,189)		(113)
Net cash (used in) provided by operating activities		(979)		5,674
Taxes payable / receivable		(2,075)		1,934
Net activity on note receivable - related party, reimbursable public improvements		8,388		(2,986)
Net cash provided by (used in) operating activities		3,799		(793)
Cash flows from investing activities:
Net Purchase of property and equipment		(282)		(409)
Net purchase of property and equipment		(150)		(281)
Investments in future development phases at Sky Ranch		(1,206)		(1,994)
Future land development activity		(447)		(425)
Construction costs of single-family rentals		(59)		(291)
Single-family rentals activity		(2,560)		(19)
Investments in water, water systems and land		(6,878)		(1,226)
Water and wastewater infrastructure activity		(1,577)		(5,827)
Payments on note receivable - related party, other		75		100
Net cash used in investing activities		(4,734)		(6,552)
Purchase of held-to-maturity investments in U.S. Treasury Bills		-		(171)
Net cash used in investing activities		(8,350)		(3,991)
Cash flows from financing activities:
Payments on notes payable		(27)		(23)
Proceeds from notes payable		1,304		—
Repurchases of common shares		(323)		(439)
Payments on notes payable		(101)		(5)
Net cash used in financing activities		(350)		(462)
Repurchases of common stock		—		(108)
Net change in cash, cash equivalents and restricted cash		(4,901)		(5,246)
Net cash provided by (used in) financing activities		1,203		(113)
Cash, cash equivalents and restricted cash – beginning of period		25,358		28,487
Net change in cash, cash equivalents and restricted cash		(4,510)		(991)
Cash, cash equivalents and restricted cash – end of period	$	20,457	$	23,241
Cash, cash equivalents and restricted cash – beginning of period		28,379		25,358
Cash and cash equivalents	$	14,392	$	20,360
Cash, cash equivalents and restricted cash – end of period	$	23,869	$	24,367
Restricted cash		6,065		2,881
Cash and cash equivalents	$	17,135	$	19,031
Total cash, cash equivalents and restricted cash	$	20,457	$	23,241
Restricted cash		6,734		5,336
Total cash, cash equivalents and restricted cash	$	23,869	$	24,367

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes	$	4,351	$	65
Cash paid for interest	$	94	$	104
Cash paid for interest	$	309	$	312
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Change in reimbursable public improvements included in accounts payable and accrued liabilities	$	~~494~~202	$	~~205~~428
Change in investments in water and water systems included in accounts payable and accrued liabilities	$	90	$	84
Change in fixed assets included in accounts payable and accrued liabilities	$	513	$	237
Issuance of shares for compensation	$	201	$	211
Issuance of stock for compensation	$	126	$	21

See accompanying Notes to the Consolidated Financial Statements

Table of Contents

PURE CYCLE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

~~May~~November 3130, 2025

NOTE 1 – PRESENTATION OF INTERIM INFORMATION

The accompanying unaudited consolidated financial statements have been prepared by Pure Cycle Corporation (the “Company” or “Pure Cycle”) and include all adjustments that are of a normal recurring nature and are in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company as of and for the three ~~and nine~~ months ended ~~May~~November 3130, 2025 and 2024. The August 31, ~~2024~~2025 balance sheet was derived from the Company’s audited consolidated financial statements.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is suggested the accompanying consolidated financial statements and notes be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, ~~2024~~2025 (“~~2024~~2025 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”) on November 1312, ~~2024~~2025. The results of operations for interim periods presented are not necessarily indicative of the operating results expected for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for certain items such as revenue recognition, the dollar amount of reimbursable costs and collectability of reimbursable costs, costs of revenue for lot sales, share-based compensation, certain accrued liabilities, and the useful lives and recoverability of long-lived assets. Actual results could differ from those estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("“FASB"”) issued ASU 2023-07, " “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures"” ("“ASU 2023-~~07"~~7”),. ~~which~~Upon ~~requires~~adoption ~~expanded~~of ~~disclosure~~this ofASU, the Company has disclosed significant segment expenses, the title and ~~other~~position ~~segment~~of ~~items~~the onChief anOperating ~~annual~~Decision Maker (“CODM”), and ~~interim~~an ~~basis.~~explanation ~~ASU~~of ~~2023-07~~how isthe ~~effective~~reported ~~for~~measure ~~the~~of ~~Company~~segment ~~for~~profit ~~annual~~or ~~periods~~loss ~~beginning~~is ~~September~~used 1,by ~~2024,~~the CODM to assess segment performance and ~~interim~~make ~~periods~~resource ~~beginning~~allocation ~~September~~decisions. 1Effective August 31, 2025., ~~The~~the Company isadopted ~~currently~~the ~~evaluating~~provisions ~~the~~of ~~impact~~this ASU ~~2023-07 will have~~ on ~~its~~a ~~consolidated~~retrospective ~~financial~~basis. ~~statement~~See ~~disclosures~~Note 11.

In December 2023, FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires expanded disclosure of ~~our~~the Company’s income rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company for annual periods beginning September 1, 2025. The Company is currently evaluating the impact ASU 2023-09 will have on its consolidated financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” ("ASU 2024-03"), which requires disaggregated disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. ASU 2024-03 is effective for the Company for annual periods beginning September 1, 2027. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on ~~our~~the Company’s consolidated financial statements and related disclosures.

Reclassifications

The Company has reclassified certain prior year information to conform to the current year presentation.

Table of Contents

Changes Affecting Comparability

For the year ended August 31, 2025, the Company made changes to certain categories within its financial statements. These changes were made as part of the Company’s adoption of ASU 2023-07. The changes (i) provide additional details about the Company’s operations by reporting segment and enable the readers of its financial statements to more easily trace the performance of its segments from the financial statements through to the notes and (ii) align its presentation with industry peers.

The Company made changes in the presentation of “Revenues” and “Cost of revenues” categories within the Consolidated Statements of Income. As a result, changes within the Consolidated Statements of Income for the three months ended November 30, 2024 were made to conform to the current period presentation. The changes had no impact on gross margins or net income.

Changes to the Consolidated Statement of Cash Flows for the three months ended November 30, 2024 were made to align with new categories on the Consolidated Balance Sheet. All prior period amounts have been reclassified to conform to the current presentation.

NOTE 2 – REIMBURSABLE PUBLIC IMPROVEMENTS AND NOTE RECEIVABLE FROM THE SKY RANCH COMMUNITY AUTHORITY BOARD

The Sky Ranch Community Authority Board (“Sky Ranch CAB”) and the Company’s agreements with the Sky Ranch CAB are described in greater detail in Notes 5 and 1514 to the ~~2024~~financial statements included in the 2025 Annual Report.

The ~~notes receivable –~~ related party, ~~reimbursable~~notes ~~public~~receivable ~~improvements~~is ~~and~~comprised project management fees are due to the Company from the Sky Ranch CAB and reports the balances owed by the Sky Ranch CAB to the Company for public improvements paid for by Pure Cycle which are reimbursable from the Sky Ranch CAB and include project management fees related to the Company’s management of ~~the~~two ~~construction~~separate ~~of the public improvements~~notes, ~~and~~one ~~interest~~with ~~accrued on~~ the ~~unpaid~~Rangeview ~~balances~~Metropolitan ~~related~~District toand ~~advances~~one from the ~~Company to fund certain public improvements in the ongoing development of the~~ Sky Ranch ~~master planned community (Sky Ranch). Pure Cycle has advanced funds to the Sky Ranch~~ CAB ~~for the cost of constructing certain public improvements at Sky Ranch which are the ultimate responsibility of the Sky Ranch CAB~~. ~~During~~The ~~the~~following ~~three~~table ~~and~~summarizes ~~nine months ended May 31, 2025, Pure Cycle spent $2.9 million and $9.4 million on public improvements which are payable by~~ the ~~Sky~~balances ~~Ranch~~associated ~~CAB~~with ~~to Pure Cycle. Additionally, for~~ the ~~three and nine months ended May 31, 2025, project management fees of $0.1 million and $0.5 million and interest income on the outstanding~~ note receivable ofrelated $0.4 million and $1.2 million were also added to the note receivable. During the three and nine months ended May 31, 2025, the Sky Ranch CAB paid Pure Cycle $0.8 million and $11.4 million pursuant to the note. Pursuant to the agreements with the Sky Ranch CAB, any payments received are initially applied to interest. party:

During the three and nine months ended May 31, 2024, Pure Cycle spent $4.1 million and $7.6 million on public improvements which are payable by the Sky Ranch CAB to Pure Cycle. Since Pure Cycle believes the amounts are probable of collection, they have been added to the note receivable from the Sky Ranch CAB. Additionally, for the three and nine months ended May 31, 2024, project management fees of less than $0.2 million and $0.4 million and interest income on the outstanding note receivable of $0.2 million and $1.2 million were also added to the note receivable. During the three and nine months ended May 31, 2024, the Sky Ranch CAB paid Pure Cycle $0 and $0.3 million, respectively, pursuant to the note. Pursuant to the agreements with the Sky Ranch CAB, any payments received are initially applied to interest.


(In thousands)	November 30, 2025			August 31, 2025
Sky Ranch CAB reimbursable public improvements and project management fees	$	50,622		$	43,835
Rangeview Metro District note receivable		1,191			1,167
Related party notes receivable, including accrued interest	$	51,813		$	45,002

The note from the Sky Ranch CAB reports the balances owed to the Company for public improvements paid for by Pure Cycle that are reimbursable from the Sky Ranch CAB and include project management fees related to the Company’s management of the construction of the public improvements and interest accrued on the unpaid balances related the ongoing development of the Sky Ranch master planned community (Sky Ranch). Pure Cycle has advanced funds to the Sky Ranch CAB for the cost of constructing certain public improvements at Sky Ranch, which are the ultimate responsibility of the Sky Ranch CAB. During the three months ended November 30, 2025, Pure Cycle spent $5.8 million on public improvements that are reimbursable by the Sky Ranch CAB to Pure Cycle. Additionally, for the three months ended November 30, 2025, project management fees of $0.3 million and interest income on the outstanding note receivable of $0.7 million were also added to the note receivable. During the three months ended November 30, 2025, the Sky Ranch CAB made no payments to Pure Cycle.

During the three months ended November 30, 2024, Pure Cycle spent $4.2 million on public improvements that are payable by the Sky Ranch CAB to Pure Cycle. Additionally, for the three months ended November 30, 2024, project management fees of $0.2 million and interest income on the outstanding note receivable of $0.5 million were also added to the note receivable. During the three months ended November 30, 2024, the Sky Ranch CAB paid Pure Cycle $10.3 million on the note. Pursuant to the agreements with the Sky Ranch CAB, any payments received are initially applied to interest.

The following table summarizes the activity and balances associated with the note receivable from the Sky Ranch CAB:


	Three Months Ended
	May 31, 2025		May 31, 2024
Beginning balance	$	38,005	$	28,915
Additions		3,395		4,626
Payments received		(800)		—
Ending balance	$	40,600	$	33,541

	~~Nine~~Three Months Ended
	May 31, 2025		May 31, 2024
(In thousands)	November 30, 2025		November 30, 2024
Beginning balance	$	4043,~~964~~835	$	2440,~~999~~964
Additions		116,~~058~~787		84,~~828~~888
Payments received		~~(11,422)~~—		(~~286~~10,272)
Ending balance	$	4050,~~600~~622	$	3335,~~541~~580

The note receivable from the Sky Ranch CAB accrues interest at 6% per annum. Public improvements which do not qualify for reimbursement at the time of being incurred are considered contract fulfillment costs and are recorded as land development construction costs as incurred. If public improvement costs are deemed qualified for reimbursement, the costs are recognized as notes receivable - related party. The Company assesses the collectability of the note receivable from the Sky Ranch CAB, which includes reimbursable public improvements, project management fees and the related interest income, at each reporting period. The Sky Ranch CAB has an obligation to repay the Company, but the ability of the Sky Ranch CAB to do so before the contractual termination dates is dependent upon the establishment of a tax base or other fee generating activities sufficient to fund reimbursable costs incurred.

Table of Contents

The note receivable from the Sky Ranch CAB accrues interest at 6% per annum. Public improvements that do not qualify for reimbursement at the time of being incurred are considered contract fulfillment costs related to the delivery of lots to the Company’s home builder customers and are recorded as land development construction costs as incurred. If public improvement costs are deemed qualified for reimbursement, the costs are recognized as notes receivable - related party. The Company assesses the collectability of the note receivable from the Sky Ranch CAB, which includes reimbursable public improvements, project management fees and the related interest income, at each reporting period. The Sky Ranch CAB has an obligation to repay the Company, but the ability of the Sky Ranch CAB to do so before the contractual termination dates is dependent upon the establishment of a tax base or other fee generating activities sufficient to fund reimbursable costs incurred.

NOTE 3 – REVENUES, FEES AND OTHER INCOME ITEMS

The Company’s revenue is primarily generated from three unique segments: (1) ~~Sales~~sales of water and wastewater taps, metered water and wastewater usage; (2) the sale of lots to ~~homebuilders~~home builders; and (3) rent collected from its single-family homes. Detailed descriptions of the policies related to revenue recognition are included in Note 2 to the ~~2024~~financial statements included in the 2025 Annual Report.

The following describes significant components of revenue for the three ~~and nine~~ months ended ~~May~~November 3130, 2025 and 2024.

Water and wastewater tap fees – During the three months ended ~~May~~November 3130, 2025 and 2024, the Company sold a total of 4051 and 2038 water taps, respectively, generating $1.4 million and $01.52 million in tap fee revenues, respectively. During the three months ended ~~May~~November 3130, 2025 and 2024, the Company sold a total of 4031 and 1835 wastewater taps, respectively, generating $0.3 million and $0.~~1 million in tap fee revenues, respectively. During the nine months ended May 31, 2025 and 2024, the Company sold a total of 130 and 35 water taps, respectively, generating $4.~~3 million ~~and $0.9 million~~ in tap fee revenues, respectively. ~~During the nine months ended May 31, 2025 and 2024, the Company sold a total of 127 and 33 wastewater taps, respectively, generating $1.0 million and $0.2 million in tap fee revenues, respectively.~~ The water taps were all sold at Sky Ranch and Wild Pointe, and the wastewater taps were all sold at Sky Ranch.

Metered water usage and wastewater treatment fees – During the three months ended ~~May~~November 3130, 2025 and 2024, the Company sold a total of 76147 and ~~394~~301 acre-feet of water, respectively, generating $0.48 million and $1.7 million in metered water and wastewater treatment fees revenue, respectively. During the nine months ended May 31, 2025 and 2024, the Company sold a total of 442 and 1,422 acre-feet of water, respectively, generating $2.1 million ~~and $5.8 million~~ in metered water and wastewater treatment fees revenue, respectively. The Company provides water and wastewater services to customers, ~~for~~and ~~which~~charges ~~the customers are charged~~ monthly usage fees. Water usage fees are assessed to customers based on actual metered usage each month plus a base monthly service fee assessed per single family equivalent (“SFE”) unit served. One SFE is a customer, whether residential, commercial or industrial, that imparts a demand on the Company’s water or wastewater systems similar to the demand of a family of four persons living in a single-family house on a standard-sized lot. Water usage pricing is based on a tiered pricing structure, and certain usage revenues are subject to royalties as described in the ~~2024~~2025 Annual Report. ~~The~~Historically, the Company’s largest customers for water are ~~for~~ industrial users, mainly oil and gas companies using water in drilling and hydraulic fracking processes.

Lot sales – For the three months ended ~~May~~November 3130, 2025 and 2024, the Company recognized $2.5 million and $4.8 million of lot sales revenue, respectively, which was recognized using the percent-of-completion method for the Company’s land development activities at the Sky Ranch Master Planned Community. For the nine months ended May 31, 2025 and 2024, the Company recognized $6.0 million and $72.93 million of lot sales revenue, respectively, which was recognized using the percent-of-completion method for the Company’s land development activities at the Sky Ranch Master Planned Community. As of ~~May~~November 3130, 2025, the first development phase (509 lots) is complete and the second development phase (1,~~032~~031 lots) is being developed in five subphases, referred to as Phase 2A (229 lots), Phase 2B (211 lots), Phase 2C (228 lots), Phase 2D (~~218~~204 lots) and Phase 2E (~~146~~159 lots). These numbers include lots reserved for the Company’s single-family home rental business. As of ~~May~~November 3130, 2025, Phase 2A is 100% complete, Phase 2B is approximately 9698% complete, Phase 2C is approximately 6889% complete, Phase 2D is approximately 2965% complete, and Phase 2E is expected to begin development work in fiscal 2026. ~~Phase~~Phases 2B isand 2C are substantially complete with some landscaping and warranty items remaining. Phase ~~2C is expected to be completed by the end of Pure Cycle’s fiscal 2025, Phase~~ 2D is expected to be completed in fiscal 2026, and Phase 2E is expected to be completed by the end of calendar 2026.

Project management fees – During the three months ended ~~May~~November 3130, 2025 and 2024, the Company recognized $0.13 million and $0.23 million of project management revenue, respectively, from the Sky Ranch CAB, a related party, for managing the Sky Ranch development project. During the nine months ended May 31, 2025 and 2024, the Company recognized $0.5 million and $0.4 million of project management revenue, respectively, from the Sky Ranch CAB, a related party, for managing the Sky Ranch development project.

Single-family rental revenue

As of May 31, 2025, Pure Cycle has 14 single-family detached homes rented under separate lease agreements. Pure Cycle generally rents its single-family properties under non-cancelable one-year lease agreements. For the three months ended May 31, 2025 and 2024, the Company recognized $0.1 million and $0.1 million of rental property revenues, respectively. For the nine months ended May 31, 2025 and 2024, the Company recognized $0.4 million and $0.4 million of rental property revenues, respectively.

Pure Cycle has begun construction on 17 additional rental homes in Phase 2B, all of which the Company believes will be available for rent in fiscal 2026. As of May 31, 2025, the Company had reserved 84 lots in Phases 2B, 2C and 2D of Sky Ranch for future rental

Table of Contents

~~units. When combined with the 14 units already built and rented, these additions will bring the total single~~Single-family ~~rentals~~rental to 98. The Company expects to take approximately three more years to build and rent all these units. Based on these projections, the Company believes this could become a reportable operating segment in the future once its operations become material.revenue

As of November 30, 2025, Pure Cycle has 19 single-family detached homes which are either rented or available to rent under separate lease agreements. Pure Cycle generally rents its single-family properties under non-cancelable one-year lease agreements. For the three months ended November 30, 2025 and 2024, the Company recognized $0.1 million and $0.1 million of rental property revenues, respectively.

Pure Cycle has contracts for the construction of 40 additional rental homes in Phases 2B and 2C, all of which the Company believes will be available for rent in fiscal 2026. As of November 30, 2025, the Company had reserved an additional 36 lots in Phases 2B, 2C and 2D of Sky Ranch for future rental units which are not yet under contract for construction. When combined with the 19 units already built, these additions will bring the total single-family rentals to 95. The Company expects to take approximately two more years to build and rent all these units.

Special facility projects and other revenue

~~Pure~~The Cycle receives fees from customers including municipalities and area water providers for contract operations services. These fees are recognized as earned, typically monthly, plus charges for additional work performed. Additionally, the Company performs certain construction activities at Sky Ranch. The activities performed include construction and maintenance services. The revenue for both types of services are invoiced and recognized as special facility projects revenue. For the three months ended ~~May~~November 3130, 2025 and 2024, the Company recognized $0.2 million and $0.2 million of special facility projects and other revenue, ~~an immaterial amount of~~ which is from work performed for the Sky Ranch CAB, a related party. For the nine months ended May 31, 2025 and 2024, the Company recognized $0.6 million and $0.6 million of special facility projects and other revenue, an immaterial amount of which is from work performed for the Sky Ranch CAB, a related party.

Deferred revenue

Changes and balances of the Company’s deferred revenue accounts by segment are as follows:


	Three Months Ended ~~May~~November 3130, 2025
(In thousands)	Water and Wastewater Resource Development		Land Development		Total
Balance at February 28, 2025	$	-	$	2,048	$	2,048
Balance at August 31, 2025	$	—	$	3,355	$	3,355
Revenue recognized		(1119)		(34,~~540~~780)		(34,~~551~~799)
Revenue deferred		1323		23,~~476~~863		23,~~489~~886
Balance at May 31, 2025	$	2	$	984	$	986
Balance at November 30, 2025	$	4	$	2,438	$	2,442


	Three Months Ended ~~May~~November 3130, 2024
	Water and Wastewater Resource Development		Land Development		Total
Balance at February 29, 2024	$	31	$	2,605	$	2,636
Revenue recognized		(18)		(4,881)		(4,899)
Revenue deferred		-		3,824		3,824
Balance at May 31, 2024	$	13	$	1,548	$	1,561


	Nine Months Ended May 31, 2025
(In thousands)	Water and Wastewater Resource Development		Land Development		Total
Balance at August 31, 2024	$	-—	$	2,173	$	2,173
Revenue recognized		~~(11)~~—		(61,~~027~~659)		(61,~~038~~659)
Revenue deferred		13—		~~4,838~~23		~~4,851~~23
Balance at May 31, 2025	$	2	$	984	$	986
Balance at November 30, 2024	$	—	$	537	$	537


	Nine Months Ended May 31, 2024
(In thousands)	Water and Wastewater Resource Development		Land Development		Total
Balance at August 31, 2023	$	69	$	1,661	$	1,730
Revenue recognized		(164)		(8,058)		(8,222)
Revenue deferred		108		7,945		8,053
Balance at May 31, 2024	$	13	$	1,548	$	1,561

Table of Contents

The Company receives deposits or pre-payments from oil and gas operators to reserve water for use in future well drilling and fracking operations. When the operators use the water, the Company recognizes the revenue for these payments in the metered water usage from the commercial customers’ line on the statement of income.

The Company recognizes lot sales over time as construction activities progress and not necessarily when payment is received. For example, the Company may receive milestone payments before revenue can be recognized (i.e., prior to the Company completing cumulative progress which faithfully represents the transfer of goods and services to the customer), which results in the Company recording deferred revenue. The Company recognizes this revenue into income as construction activities progress, measured based on costs incurred compared to total estimated costs of the project, which management believes is a faithful representation of the transfer of goods and services to the customer.

Revenue allocated to remaining performance obligations such as described above represents contracted revenue that has not yet been recognized, which includes unearned revenue and amounts that will be recognized as revenue in future periods.

Table of Contents

NOTE 4 – FAIR VALUE MEASUREMENTS

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

The carrying value for certain of the Company’s financial instruments (i.e., cash, restricted cash, short term investments, accounts receivable, accounts payable, accrued liabilities, the SFR Notes and the Lost Creek Note, (each as defined in Note 6 below)) ~~materially~~ approximate their fair value because of their short-term nature and generally negligible credit losses.

As of ~~May~~November 3130, 2025 and August 31, ~~2024~~2025, the Company had no assets or liabilities measured at fair value on a recurring basis. As of ~~May~~November 3130, 2025 and August 31, ~~2024~~2025, the Company had one Level 3 asset (notes receivable – related party), measured at fair value on a nonrecurring basis, for which the Company did not record any impairment charges.

There were no transfers between Level 1, 2 or 3 categories during the three ~~and nine~~ months ended ~~May~~November 3130, 2025 and 2024.

NOTE 5 – WATER, LAND AND OTHER FIXED ASSETS

The Company’s water rights and current water and wastewater service agreements, including capitalized terms not defined herein, are more fully described in Note 4 to the ~~2024~~financial statements in the 2025 Annual Report.

Investment in Water and Water Systems

The Company’s Investments in water and water systems consist of the following costs and accumulated depreciation and depletion:


	~~May~~November 3130, 2025				August 31, ~~2024~~2025
			Accumulated				Accumulated
			Depreciation				Depreciation
(In thousands)	Costs		and Depletion		Costs		and Depletion
Rangeview water system	$	31,695	$	(5,644)	$	23,381	$	(3,579)
Rangeview water supply	$	16,305	$	(21)	$	16,273	$	(21)
Rangeview water supply		16,198		(21)		15,889		(20)
Sky Ranch water rights and other costs		7,690		(1,720)		7,690		(1,689)
Water supply – Other		1,300		(1,136)		7,588		(2,307)
Fairgrounds water and water system		2,900		(1,701)		2,900		(1,679)
Sky Ranch water rights and other costs		7,690		(1,661)		7,764		(1,641)
Rangeview water system		31,421		(6,168)		31,421		(5,903)
Sky Ranch pipeline		5,740		(1,510)		5,740		(1,366)
Water supply – Other		1,300		(1,157)		1,300		(1,147)
Lost Creek water supply		10,812		—		7,357		—
Wild Pointe service rights		1,632		(1,508)		1,632		(1,475)
Fairgrounds water and water system		2,900		(1,657)		2,900		(1,591)
Sky Ranch pipeline		5,740		(1,605)		5,740		(1,558)
Wild Pointe service rights		1,632		(1,384)		1,632		(1,261)
Lost Creek water supply		10,846		—		10,836		—
Totals		77,967		(13,013)		72,251		(11,765)
Construction in progress - water and water systems		4,754		—		3,203		—
Net investments in water and water systems	$	64,954			$	60,486
Totals		82,588		(13,880)		80,995		(13,472)
Net investments in water and water systems	$	68,708			$	67,523

12During the three months ended November 30, 2025, there were no additional acquisitions of water rights. Subsequent to November 30, 2025, the Company settled their Water Court case, please see Note 14.

Table of Contents

During the three months ended May 31, 2025 there were no additional acquisitions of water rights. During the nine months ended May 31, 2025, the Company’s Lost Creek water supply increased $3.5 million, primarily from the acquisition of 378 acre-feet of ditch water in the Henrylyn Irrigation District and 220 acre-feet of groundwater rights in the Lost Creek Designated Basin.

The Company, the Rangeview Metropolitan District (“Rangeview District”) and the State Land Board filed a Water Court Application on December 31, 2020 seeking: (1) to adjudicate 1,635 acre feet of water from the Box Elder Creek Alluvial aquifer (a new water right), (2) consolidate and enlarge certain reservoirs on the Lowry Ranch, (3) approve new places of use for existing water rights, (4) approve new places of storage for certain water rights, and (5) approve a new alternate diversion point for certain existing water rights. On February 7, 2025, the Water Court denied our new water right application of 1,635 acre feet of Box Elder Creek Alluvial aquifer water, as well as the consolidation and enlargement of certain reservoirs on the Lowry Ranch. Neither of these rulings impacted our existing water rights or existing reservoir storage sites. The Court sought additional information from the Company and opposing parties regarding the three claims which remain outstanding before continuing the trial. The Company has provided the additional information and is working with opposing parties to reach a settlement agreement.

Construction in Progress

The construction in progress account represents costs incurred on various construction projects currently underway that as of the balance sheet date have not been completed and placed into service. The construction in progress account consists primarily of costs incurred relating to water facilities and Sky Ranch infrastructure being constructed, which Pure Cycle anticipates will be placed in service during the next 12 months. During the three and nine months ended May 31, 2025, the Company incurred $0.7 million and $1.9 million of costs related to construction in Sky Ranch and water and wastewater construction projects. The Company capitalized less than $0.1 million and $2.5 million of costs as projects were completed and placed into service during the three and nine months ended May 31, 2025.

Single-Family Rental Homes

As of ~~May~~November 3130, 2025, Pure Cycle has 1419 single-family ~~detached~~homes, paired homes or townhomes rented or available for rent under separate lease agreements. Pure Cycle has ~~begun~~contracts for the construction onof 1740 additional rental homes in ~~Phase~~Phases 2B and 2C, all of which the Company believes will be available for rent in fiscal 2026. As of ~~May~~November 3130, 2025, the Company had reserved 84an additional 36 lots in Phases 2B, 2C and 2D of Sky Ranch for future rental units, which are not yet under contract for construction. When combined with the 1419 units already built and rented or available for rent, these additions will bring the total single-family rentals to 9895. The Company expects to take approximately ~~three~~two more years to build and rent these units. ~~Based on these projections, the Company believes this could become a reportable operating segment in the future once its operations become material.~~

Table of Contents

NOTE 6 – DEBT AND OTHER LONG-TERM OBLIGATIONS

As of ~~May~~November 3130, 2025, the outstanding principal and deferred financing costs of the Company’s loans are as follows:


(In thousands)	~~May~~November 3130, 2025
Single-Family Rental Home Note Payable	$	3,908
Single-Family Rental Home Notes Payable	$	5,189
Lost Creek Note Payable		32,~~000~~849
Total outstanding principal		68,~~908~~038
Deferred financing costs		(5044)
Less current maturities, net of current deferred financing costs		(~~346~~440)
Debt, less current portion	$	67,~~512~~554

13As of November 30, 2025, the scheduled maturities (i.e., principal payments) of the Company’s loans are as follows:

Table of Contents

As of May 31, 2025, the scheduled maturities (i.e., principal payments) of the Company’s loans are as follows:


(In thousands)	Scheduled principal payments
Within 1 year	$	~~387~~452
Year 2		1,~~357~~327
Year 3		~~318~~3,173
Year 4		~~3,137~~321
Year 5		~~302~~1,516
Thereafter		1,~~407~~249
Total principal payments		68,~~908~~038
Deferred financing costs		(5044)
Total principal payments, net	$	67,~~858~~994

SFR Note 1

On November 29, 2021, PCY Holdings, LLC, a wholly owned subsidiary of the Company, entered a Promissory Note (“SFR Note 1”) with its primary bank to reimburse amounts expended for the construction of the first three single-family rental units. The SFR Note 1 has the following terms:

●

Initial principal amount of $1.0 million

● Floating per annum interest rate equal to the Western Edition of the “Wall Street Journal” Prime Rate plus 0.5%, which has a floor of 3.75% and a ceiling of 4.25% (4.25% as of ~~May~~November 3130, 2025). In the event of default, the interest rate on the SFR Note would be increased by adding an additional 2.0%

●

Maturity date of December 1, 2026

●

Fifty-three principal and interest payments each month which began July 1, 2022, in the amount of $4,600 each and increased to $5,000 each on November 1, 2024

●

Estimated final principal and interest balloon payment of $0.9 million payable on December 1, 2026

●

Secured by three single-family rental homes

● Required minimum debt service coverage ratio of 1.10, measured annually based on audited financial statements (which the Company satisfied as of August 31, ~~2024~~2025), calculated as net operating income less distributions divided by required principal and interest payments, with net operating income defined as net income plus interest, depreciation, and amortization.

SFR Note 2

On August 30, 2023, PCY Holdings, LLC, a wholly owned subsidiary of the Company, entered a Promissory Note (“SFR Note 2”) with its primary bank to reimburse amounts expended for the construction of the next 11 single-family rental homes. The SFR Note 2 has the following terms:

●

Initial principal amount of $3.0 million

●

An interest rate of 7.51%. In the event of default, the interest rate on the SFR Note 2 would be increased by adding an additional 5.0%

●

Maturity date of August 30, 2028

Table of Contents

●

Fifty-nine principal and interest payments each month beginning September 30, 2023, in the amount of $21,200 each

●

Estimated final principal and interest balloon payment of $2.9 million payable on August 30, 2028

●

Secured by 11 single-family rental homes

● Required minimum EBITDA of $3.0 million, measured annually at each fiscal year end (which the Company satisfied as of August 31, ~~2024~~2025).

Lost Creek Note

On June 28, 2022, the Company entered a loan with its primary bank to fund the acquisition of 370 acre-feet of water rights the Company acquired on June 27, 2022, in the Lost Creek Designated Groundwater Basin area of Colorado (the “Lost Creek Note”). The Lost Creek Note has an original principal balance of $3.0 million, a ten-year maturity, monthly interest only payments averaging $12,000 per month for thirty-six months which began on July 28, 2022, twenty-four monthly principal and interest payments of $42,000 beginning on July 28, 2025, fifty-nine monthly principal and interest payments of $32,000 beginning on July 28, 2027, and a balloon payment of less than $0.8 million plus unpaid and accrued interest due on June 28, 2032. The Lost Creek Note has a thirty-year amortization period and a fixed per annum interest rate equal to 4.90%. The Lost Creek Note is secured by the Lost Creek Water rights acquired with the note and any fees derived from the use of the Lost Creek Water rights. The Lost Creek Note does not contain any financial covenants.

Table of Contents

for thirty-six months which began on July 28, 2022, twenty-four monthly principal and interest payments of $42,000 beginning on July 28, 2025, fifty-nine monthly principal and interest payments of $32,000 beginning on July 28, 2027, and a balloon payment of less than $0.8 million plus unpaid and accrued interest due on June 28, 2032. The Lost Creek Note has a thirty-year amortization period and a fixed per annum interest rate equal to 4.90%. The Lost Creek Note is secured by the Lost Creek Water rights acquired with the note and any fees derived from the use of the Lost Creek Water rights. The Lost Creek Note does not contain any financial covenants.

SFR Facility Agreement

On September 29, 2025, PCY Holdings, LLC and PCYO Home Rentals, LLC, each a wholly owned subsidiary of the Company, entered into a debt Facility Agreement (Facility Agreement) with a new banking partner. The Facility Agreement provides up to $10 million to finance new single-family rental homes. Under the Facility Agreement the Company guarantees payment and performance by its subsidiaries of obligations due under the Facility Agreement and related lending documents, which are secured by the single-family homes financed under the Facility Agreement. The Facility Agreement allows for flexibility to close on multiple single-family rental homes over a short duration with a variable per annum interest rate equal to the Western Edition of the Wall Street Journal as Prime Rate, with a floor of 4.55%. Under the Facility Agreement the Company and its subsidiaries have the option to consolidate multiple single-family rental homes into term loans, which would bear interest at a rate per annum equal to current 5-year US Constant Maturity Treasury rate plus a margin of 2.75% at the time of conversion. The term loan will be amortized over 25 years with a 5-year balloon-payment. The Facility Agreement contains financial covenants that require the Company to maintain a minimum Tangible Net Worth of $75 million, maintain liquidity in an amount not less than $5 million, and maintain a minimum Debt Service Coverage Ratio (as each term is defined in the Facility Agreement) of 1.00 to 1.00 for PCYO Home Rentals, LLC and 1.30 to 1.00 for the Company. The Company was in compliance with all covenants and requirements as of November 30, 2025. As of November 30, 2025, the Company has drawn $1.3 million on one term loan with a fixed per annum interest rate equal to 6.34%. The term loan has fixed monthly principal and interest payments of approximately $8,800 and a balloon payment due on October 21, 2030, of $1.2 million.

Working Capital Line of Credit

On January 31, 2024, the Company entered a Business Loan Agreement (“Working Capital LOC”) with its primary bank to provide a $5.0 million operating line of credit. The Working Capital LOC has a two-year maturity, monthly interest -only payments if the line is drawn upon with unpaid principal and interest due at maturity, and a floating per annum interest rate equal to the Wall Street Journal Prime Rate (7.5% as of ~~May~~November 3130, 2025), which has a floor of 5.00%. In the event of default, the interest rate on the Working Capital LOC would be increased by an additional 2.0%. As of ~~May~~November 3130, 2025, the Company has not drawn on the Working Capital LOC.

Letters of Credit

At ~~May~~November 3130, 2025, the Company had 1112 Irrevocable Letters of Credit (“LOCs”) outstanding. The LOCs are to guarantee the Company’s performance related to certain construction projects at Sky Ranch relating to the delivery of finished lots and as collateral for payment obligations outlined in the construction contract for certain single-family rental homes in ~~Phase~~Phases 2B and 2C. The Company has the intent and ability to perform on the contracts, after which, the ~~LOC’s~~LOCs will expire at various dates from ~~November~~March ~~2025~~2026 through ~~June~~December 2026. As of ~~May~~November 3130, 2025, the LOCs totaled $6.7 million, which are secured by cash balances maintained in restricted cash accounts at the Company’s bank, renew annually at various dates and have a 1% annual fee.

Table of Contents

NOTE 7 – EMPLOYEE STOCK PLANS

The Company reserved 2.0 million shares of common stock for issuance to employees and directors pursuant to the Company’s 2024 Equity Incentive Plan (the “2024 Equity Plan”). As of ~~May~~November 3130, 2025, there were 1,~~973~~929,~~796~~996 shares available for grant under the 2024 Equity Plan. Prior to the effective date of the 2024 Equity Plan, the Company granted options and stock awards to eligible participants under its 2014 Equity Plan (the “2014 Equity Plan”), which expired on April 12, 2024.

The following table summarizes the combined stock option activity for the 2014 Equity Plan and 2024 Equity Plan for the periods noted:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Approximate Aggregate Intrinsic Value (in thousands)
Outstanding at August 31, 2024	524,500	$	9.42	4.7	$	877
Outstanding at August 31, 2025	489,500	$	9.54	3.7	$	598
Granted	—30,000		—10.75
Net settlement exercised	(35,000)		7.89
Exercised	(10,000)		4.05
Forfeited / Expired	—		—
Outstanding at May 31, 2025	489,500	$	9.52	4.0	$	769
Outstanding at November 30, 2025	509,500		9.70	4.0		1,003
Options exercisable at May 31, 2025	472,500	$	9.54	4.0	$	741
Options exercisable at November 30, 2025	479,500	$	9.64	3.6	$	984


Outstanding at August 31, 2023	563,000	$	9.15	5.5	$	1,221
Outstanding at August 31, 2024	524,500	$	9.42	4.7	$	877
Granted	—		—
Net settlement exercised	(3235,000)		57.6689
Forfeited / Expired	—		—
Outstanding at May 31, 2024	531,000	$	9.36	4.9	$	472
Outstanding at November 30, 2024	489,500	$	9.52	3.4	$	2,455

15During the three months ended November 30, 2025, the Company issued 10,000 shares pursuant to the exercise of stock options for cash. During the three months ended November 30, 2024, the Company issued 13,815 shares pursuant to the net settlement of stock options, whereby the optionee did not pay cash for the options exercised but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise, with 21,185 options being cancelled as a result of those net in settlements.

Table of Contents

During the nine months ended May 31, 2025 and 2024, the Company had net settlement exercises of stock options, whereby the optionee did not pay cash for the options exercised but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise. During the three months ended May 31, 2025 and 2024, there were no net settlement exercises. During the nine months ended May 31, 2025, net settlement exercises resulted in 13,815 shares being issued and 21,185 options being cancelled in settlement of the shares issued. During the nine months ended May 31, 2024, net settlement exercises resulted in 13,978 shares being issued and 18,022 options being cancelled in settlement of the shares issued.

The following table summarizes the activity and value of non-vested options under the 2014 Equity Plan and 2024 Equity Plan for the periods presented:


	Number of Options	Weighted Average Grant Date Fair Value
Non-vested options outstanding at August 31, 2024	59,000	$	4.45
Non-vested options outstanding at August 31, 2025	17,000	$	3.93
Granted	—30,000		—4.12
Vested	(4217,000)		43.6693
Forfeited / Expired	—		—
Non-vested options outstanding at May 31, 2025	17,000	$	3.93
Non-vested options outstanding at November 30, 2025	30,000	$	4.12

Non-vested options outstanding at August 31, 2023	111,000	$	4.43
Non-vested options outstanding at August 31, 2024	59,000	$	4.45
Granted	—		—
Vested	(5242,000)		4.4166
Forfeited	—		—
Non-vested options outstanding at May 31, 2024	59,000	$	4.45
Non-vested options outstanding at November 30, 2024	17,000	$	3.93

All non-vested options are expected to vest.

On ~~January~~September 1517, 2025, the Company~~’s six non-employee~~ ~~Board~~issued ~~members~~certain ~~were~~employees ~~each granted 2~~5,~~566~~ 000 shares of ~~unrestricted~~restricted stock. ~~The~~These ~~fair~~shares ~~market~~vested ~~value~~20% at the September 17, 2025 grant date, and 20% will vest on each anniversary of the ~~unrestricted~~grant ~~shares~~date for ~~share-based~~four ~~compensation~~years ~~expense~~subject isto ~~equal~~continued toemployment. ~~the~~On ~~closing~~September ~~price~~17, of2025, the Company's ~~common~~also ~~stock~~issued onan ~~the~~employee ~~date~~10,000 ofunrestricted ~~grant~~shares of ~~$11~~common stock.~~69.~~ ~~There~~The isshares noare ~~vesting~~eligible ~~requirement~~to ~~for~~vote ~~the~~and ~~unrestricted~~participate in any dividend or stock ~~grants~~splits approved by the Company. On November 20, 2025, the Company issued an employee

On September 18, 2024, the Company issued certain employees 8,000 shares of restricted stock. These shares vested 20% at the September 18, 2024 grant date, and 20% will vest on each anniversary of the grant date for four years subject to continued employment. On September 18, 2024, the Company also issued an employee 1,200 shares of restricted stock. These shares vest 1/3 at the September 18, 2024 grant date, and 1/3 will vest on each anniversary of the grant date for two years subject to continued employment. The shares are eligible to vote and participate in any dividend or stock splits approved by the Company. 15

On May 22, 2024, the Company issued a non-employee Board member 1,608 shares of unrestricted stock. The fair market value of the unrestricted shares for share-based compensation expense is equal to the closing price of the Company's common stock on the date of grant of $9.33. There is no vesting requirement for the unrestricted stock grants.

On January 17, 2024, the Company’s six non-employee Board members were each granted 3,006 shares of unrestricted stock. The fair market value of the unrestricted shares for share-based compensation expense is equal to the closing price of the Company's common stock on the date of grant of $9.98. There is no vesting requirement for the unrestricted stock grants.

On September 19, 2023, the Company issued certain employees 8,000 shares of restricted stock. These shares vested 20% at the September 19, 2023 grant date, and 20% vest each anniversary of the grant date for four years. The shares are eligible to vote and participate in any dividend or stock splits approved by the Company.

For the three and nine months ended May 31, 2025, the Company recognized less than $0.1 million and $0.3 million of stock-based compensation expense. For the three and nine months ended May 31, 2024, the Company recognized $0.2 million and $0.3 million of stock-based compensation expense.

At May 31, 2025, the Company had unrecognized compensation expenses totaling $0.1 million relating to non-vested options and restricted stock that are expected to vest. The weighted-average period over which these options and shares of restricted stock are expected to vest is approximately two years.

Table of Contents

a stock options to purchase 30,000 shares of common stock with a grant-date fair value of $4.12 per share and a three-year vesting term which expires ten years from the grant date.

On September 18, 2024, the Company issued certain employees 8,000 shares of restricted stock. These shares vested 20% at the September 18, 2024 grant date, and 20% will vest on each anniversary of the grant date for four years subject to continued employment. On September 18, 2024, the Company also issued an employee 1,200 shares of restricted stock. One third of these shares vested at the September 18, 2024 grant date, and the remaining shares will vest in one-third increments on each anniversary of the grant date for two years subject to continued employment. The shares are eligible to vote and participate in any dividend or stock splits approved by the Company.

For the three months ended November 30, 2025, the Company recognized $0.1 million of stock-based compensation expense. For the three months ended November 30, 2024, the Company recognized less than $0.1 million of stock-based compensation expense.

At November 30, 2025, the Company had unrecognized compensation expenses totaling $0.2 million relating to non-vested options and restricted stock that are expected to vest. The weighted-average period over which these options and shares of restricted stock are expected to vest is approximately two years.

NOTE 8 – RELATED PARTY TRANSACTIONS

The Rangeview Metropolitan District

The Rangeview District and the Company’s agreements with the Rangeview District are described in greater detail in Note 1514 to the ~~2024~~financial statements in the 2025 Annual Report.

The Rangeview District and the Company have entered into two loan agreements. In 1995, the Company extended a loan to the Rangeview District for borrowings of up to $0.3 million, which is unsecured, and bears interest based on the prevailing prime rate plus 2% (9.50% at ~~May~~November 3130, 2025). The maturity date of the loan is December 31, 2025, at which time it automatically renews through December 31, 2026. Beginning in January 2014, the Rangeview District and the Company entered into a funding agreement that allows the Company to continue to provide funding to the Rangeview District for day-to-day operations and accrue the funding into a note that bears interest at a rate of 8% per annum and remains in full force and effect for so long as the 2014 Amended and Restated Lease Agreement among the Rangeview District, the Company, and the State Board of Land Commissioners remains in effect. At ~~May~~November 3130, 2025, the balance inof ~~notes receivable -~~the related ~~parties,~~party ~~other~~notes receivable totaled $1.2 million, which included borrowings of $1.2 million and accrued interest of less than $0.1 million. As of August 31, ~~2024~~2025, the principal and interest on both loan agreements totaled $1.2 million, which included $1.2 million of borrowings and less than $0.1 million of accrued interest. During the three ~~and nine~~ months ended ~~May~~November 3130, 2025, ~~the Company received interest~~ and ~~principal payments totaling $0 and $0.1 million from the Rangeview District. During the three and nine months ended May 31,~~ 2024, the Company ~~received~~did not receive any interest and principal payments ~~totaling $0 and $0.1 million~~ from the Rangeview District.

Additionally, the Company provides funding to the Rangeview District for the Rangeview District’s participation in the “Wise Partnership.” The WISE Partnership and capitalized terms related to WISE not defined herein are defined in Note 87 to the ~~2024~~financial ~~Annual~~statements ~~Report.~~included ~~During~~in the ~~three months ended May 31,~~ 2025 ~~and~~Annual ~~2024, the Company, through the Rangeview District, received 28 and 32 acre-feet of WISE water, paying $0~~Report.1 ~~million and $0.1 million for this water.~~ During the ~~nine~~three months ended ~~May~~November 3130, 2025 and 2024, the Company, through the Rangeview District, received ~~metered~~66 ~~water deliveries of 58 acre-feet~~ and 9830 acre-feet of WISE water, paying $0.12 million and $0.31 million for this water. The cost of WISE water to the members is based on the water rates charged by Aurora Water and can be adjusted each January 1. As of January 1, 2025, WISE water was approximately $7.23 per thousand gallons and such rate will remain in effect through calendar year 2025. The WISE water rate for calendar year 2026 has not been set as of the date of this filing.

Sky Ranch Community Authority Board

The Sky Ranch CAB and the Company’s agreements with the Sky Ranch CAB are described in greater detail in Note 1514 to the ~~2024~~financial statements included in the 2025 Annual Report.

The Sky Ranch Districts and the Sky Ranch CAB are quasi-municipal corporations and political subdivisions of Colorado formed for the purpose of providing service to Sky Ranch. The Sky Ranch CAB was formed to, among other things, design, construct, finance, operate and maintain certain public improvements for the benefit of the property within the boundaries and/or service area of the Sky Ranch Districts. For the public improvements to be constructed and/or acquired, it is necessary for each Sky Ranch District, directly or through the Sky Ranch CAB, to be able to fund the improvements and pay its ongoing operations and maintenance expenses related to the provision of services that benefit the property. To fund these improvements, the Company and the Sky Ranch CAB entered into various funding agreements obligating the Company to advance funds to the Sky Ranch CAB for specified public improvements constructed starting in 2018. All amounts owed under the agreements bear interest at a rate of 6% per annum. Any advances not paid or reimbursed by the Sky Ranch CAB by December 31, 2058, for the first phase and December 31, 2060 for the second phase shall be deemed forever discharged and satisfied in full. The Company has received cumulative, project-to-date payments of $47.7 million from the Sky Ranch CAB for payments on the note receivable including both principal and interest payments.

As of May 31, 2025, the balance of the Company’s advances to the Sky Ranch CAB for improvements, including interest, net of reimbursements from the Sky Ranch CAB total $40.6 million. The advances have been used by the Sky Ranch CAB to pay for construction of public improvements. The Company submits specific costs for reimbursement to the Sky Ranch CAB that have been certified by an independent third-party. The Company anticipates providing additional funding of approximately $5.2 million for construction of public improvements to the Sky Ranch CAB during the remainder of fiscal 2025 related to Phase 2B, Phase 2C, Phase 2D and Phase 2E of the Sky Ranch development. Payments from Sky Ranch CAB are made based on available cashflow from operations or from proceeds from the issuance of bonds. 16

Table of Contents

Inthe ~~fiscal~~provision ~~2022,~~of ~~through~~services athat ~~competitive~~benefit ~~bidding process,~~ the ~~Sky~~property. ~~Ranch~~To ~~CAB~~fund ~~awarded~~these improvements, the Company aand ~~contract to construct fencing around Phase 2A of~~ the Sky Ranch ~~Master~~CAB ~~Planned~~entered ~~Community.~~into ~~The~~various ~~contracted~~funding ~~bid~~agreements ~~price~~obligating ~~is $0.4 million, which is being recognized as revenue as~~ the ~~construction~~Company ofto ~~the~~advance ~~fence~~funds ~~progresses.~~to ~~Through~~ the ~~same process, the~~ Sky Ranch CAB ~~awarded~~for ~~the~~specified ~~Company~~public inimprovements ~~fiscal~~constructed ~~2024,~~starting ain ~~contract~~2018. toAll ~~construct~~amounts ~~fencing~~owed ~~around~~under ~~Phase 2B of~~ the ~~Sky~~agreements ~~Ranch~~bear ~~Master~~interest ~~Planned~~at ~~Community. The~~a ~~contracted~~rate ~~bid~~of ~~price~~6% isper $0annum.2 ~~million,~~Any ~~which~~advances isnot ~~being~~paid ~~recognized~~or asreimbursed ~~revenue~~by as the ~~construction~~Sky ofRanch ~~the~~CAB ~~fence~~by ~~progresses. During~~December 31, ~~the~~2058, ~~three~~for ~~months~~the ~~ended~~first ~~May~~phase and December 31, ~~2025~~2060 ~~and~~for ~~2024,~~ the ~~Company~~second ~~recognized~~phase $0shall ofbe ~~revenue~~deemed ~~related~~forever todischarged ~~these~~and ~~contracts~~satisfied in full. The ~~During~~Company ~~the~~has ~~nine~~received ~~months~~cumulative, ~~ended~~project-to-date ~~May~~payments ~~31,~~of ~~2025~~$51.5 ~~and~~million ~~2024,~~from the ~~Company~~Sky ~~recognized~~Ranch ~~$0.1~~CAB ~~and~~for ~~less~~payments ~~than~~on ~~$0.1~~the ~~million~~note ofreceivable ~~revenue~~including ~~related~~both toprincipal ~~these~~and ~~contracts~~interest payments.

~~Nelson~~As ~~Pipeline~~of ~~Constructors~~November ~~LLC~~30, 2025, the balance of the Company’s advances to the Sky Ranch CAB for improvements, including interest, net of reimbursements from the Sky Ranch CAB total $50.6 million. The advances have been used by the Sky Ranch CAB to pay for construction of public improvements. The Company submits specific costs for reimbursement to the Sky Ranch CAB that have been certified by an independent third party. The Company anticipates providing additional funding of approximately $4.8 million for construction of public improvements to the Sky Ranch CAB during the remainder of fiscal 2026 related to Phase 2C, Phase 2D and Phase 2E of the Sky Ranch development. Payments from Sky Ranch CAB are made based on available cashflow from operations or from proceeds from the issuance of bonds.

~~Through~~In fiscal 2022, through a competitive bidding process, the Sky Ranch CAB awarded ~~Nelson~~the ~~Pipeline~~Company ~~Constructors, LLC (“Nelson”),~~ a contract to construct ~~the~~fencing ~~wet~~around ~~utility pipelines in~~ Phase 2A of the Sky Ranch Master Planned Community. ~~During~~The ~~the~~contracted ~~three~~bid ~~months~~price ~~ended~~is ~~May~~$0.4 31million, ~~2025~~which ~~and~~is ~~2024,~~being recognized as revenue as the ~~Sky~~construction ~~Ranch~~of ~~CAB~~the ~~paid~~fence ~~Nelson~~progresses. $0Through ~~related~~the tosame ~~this~~process, ~~contract.~~in ~~During~~fiscal 2024 the ~~nine~~Sky ~~months~~Ranch ~~ended~~CAB ~~May~~awarded ~~31,~~the ~~2025~~Company ~~and~~a ~~2024,~~contract to construct fencing around Phase 2B of the Sky Ranch ~~CAB~~Master ~~paid~~Planned ~~Nelson~~Community. The $0contracted ~~and~~bid price is $0.12 million, ~~related~~which tois ~~this~~being ~~contract.~~recognized ~~Nelson~~as isrevenue ~~majority~~as ~~owned~~the byconstruction of the ~~chair~~fence ofprogresses. During the three months ended November 30, 2025 and 2024, the Company’s ~~Board~~recognized $0 and $0.1 million of ~~Directors~~revenue related to these contracts.

NOTE 9 – SIGNIFICANT CUSTOMERS

The Company has significant customers ~~in its operations~~. The tables below present the percentage of total revenue for the reported customers for the ~~nine~~three months ended ~~May~~November 3130, 2025 and 2024. For water and wastewater customers, the Company provides services on behalf of the Rangeview District, for which the significant end users include Sky Ranch CAB and two oil &and gas operators. The home builders at Sky Ranch account for lot purchase revenue ~~but~~and also for water and wastewater tap fee revenues.


	~~Nine~~Three Months Ended
% of Total Revenue Generated From:	~~May~~November 3130, 2025		~~May~~November 3130, 2024
KB Home	20	%	12	%
Oakwood	36	%	—	%
Lennar	21	%	24	%
Melody (DR Horton)	15	%	11	%
Melody (DR Horton)	12	%	6	%
Pulte Group	13	%	—	%
Two oil & gas operators	6	%	30	%
Sky Ranch CAB	11	%	10	%
Challenger	7	%	10	%
Lennar	8	%	25	%
Sky Ranch CAB	8	%	7	%
Taylor Morrison	6	%	—	%
KB Home	2	%	16	%
Two oil & gas operators	3	%	15	%

As of May 31, 2025, 77% of the reported trade accounts receivable balance, excluding oil and gas royalty receivable, is owed to Pure Cycle by the Rangeview District for tap fees, water usage and wastewater treatment fees.

NOTE 10 – ACCRUED LIABILITIES


(In thousands)	~~May~~November 3130, 2025			August 31, ~~2024~~2025
Accrued compensation	$	~~999~~583		$	~~1,045~~683
Other operating payables		~~409~~777			~~147~~607
Property taxes		~~346~~812			~~206~~742
Operating lease obligation, current		1110			7312
Professional fees		~~500~~62	~~(a)~~		5500
Rental deposits		3842			38
Total accrued liabilities	$	2,303		$	1,514
Taxes Payable		2,775			1,310

Land development costs due to the Sky Ranch CAB		251			415
Land development costs due to the Sky Ranch CAB	$	621		$	1,556
Due to Rangeview Metropolitan District		10			28
Due to Rangeview Metropolitan District		290			652
Total accrued and other liabilities	$	5,322		$	4,335
Total accrued liabilities - related parties	$	911		$	2,208

(a) As of May 31, 2025, the Company has accrued an estimated $0.5 million in legal expenses associated with expenses relating to the water court’s ruling in February 2025 and potential settlement negotiations regarding its remaining three claims.17

Table of Contents

NOTE 11 – SEGMENT INFORMATION

The Company reports ~~two~~three operating segments which meet segment disclosure requirements, the water and wastewater resource development segment, ~~and~~ the land development segment~~. The single-family rentals~~, ~~although not currently material to operations~~ and ~~not a required segment disclosure, is presented within~~ the ~~operating~~single-family ~~segment~~rental ~~information below for informational purposes~~segment.

The water and wastewater resource development segment includes providing water and wastewater services to customers. The Company delivers these services by using water rights owned or controlled by the Company and developing, operating, and maintaining infrastructure to divert, treat and distribute that water and collect, treat and reuse reclaimed wastewater. The land development segment includes all activities necessary to develop and sell finished lots, which for the three ~~and nine~~ months ended ~~May~~November 3130, 2025 and 2024, was done exclusively at the Company’s Sky Ranch Master Planned Community. The single-family rental business includes the monthly rental fees received from the renters under ~~the~~ non-cancelable annual leases.

The tables below present the measure of profit and assets ~~used~~as towell ~~assess~~as the ~~performance~~interest ofincome ~~the~~and ~~two~~expense ~~required~~that ~~segments and~~ the ~~single-family~~CODM ~~rentals~~uses ~~that~~to assess the ~~Company~~performance ~~believes~~of ~~will~~the ~~become~~segments ~~a segment~~ for the periods presented:


	Three Months Ended ~~May~~November 3130, 2025
(In thousands)	Water and wastewater resource development		Land development		Single-family rental		~~Total~~Corporate		Total
Total revenue	$	2,~~345~~482	$	26,~~664~~522	$	131	$	~~5,140~~—	$	9,135

Cost of revenue		~~891~~705		~~543~~1,717		4055		~~1,474~~—		2,477
Depreciation and depletion		~~409~~407		—		—		~~409~~—		407
Total cost of revenue		1,~~300~~112		~~543~~1,717		4055		~~1,883~~—		2,884

Segment profit	$	1,~~045~~370	$	24,~~121~~805	$	9176	$	~~3,257~~—	$	6,251


Interest income	$	—	$	—	$	—	$	949	$	949
	~~Three Months Ended May 31, 2024~~
(In thousands)	Water and wastewater resource development		Land development		Single-family rental		Total
Interest expense	$	37	$	—	$	57	$	—	$	94
Total revenue	$	2,465	$	5,016	$	123	$	7,604

	Three Months Ended November 30, 2024
Cost of revenue		911		1,346		71		2,328
(In thousands)	Water and wastewater resource development		Land development		Single-family rental		Corporate		Total
Depreciation and depletion		410		—		—		410
Total revenue	$	2,857	$	2,771	$	124	$	—	$	5,752
Total cost of revenue		1,321		1,346		71		2,738


Cost of revenue		690		956		68		—		1,714
Segment profit	$	1,144	$	3,670	$	52	$	4,866
Depreciation and depletion		371		—		—		—		371
Total cost of revenue		1,061		956		68		—		2,085

Segment profit	$	1,796	$	1,815	$	56	$	—	$	3,667

Interest income	$	—	$	—	$	—	$	731	$	731

Interest expense	$	38	$	—	$	69	$	2	$	109


	Nine Months Ended May 31, 2025
(In thousands)	Water and wastewater resource development		Land development		Single-family rental		Total
Total revenue	$	8,026	$	6,488	$	373	$	14,887

Cost of revenue		2,636		2,420		133		5,189
Depreciation and depletion		1,248		—		—		1,248
Total cost of revenue		3,884		2,420		133		6,437

Segment (loss) profit	$	4,142	$	4,068	$	240	$	8,450


	Nine Months Ended May 31, 2024
(In thousands)	Water and wastewater resource development		Land development		Single-family rental		Total
Total revenue	$	7,562	$	8,268	$	357	$	16,187

Cost of revenue		2,547		2,362		161		5,070
Depreciation and depletion		1,132		—		—		1,132
Total cost of revenue		3,679		2,362		161		6,202

Segment profit	$	3,883	$	5,906	$	196	$	9,985

Table of Contents

The following table summarizes the Company’s total assets by segment. The assets consist of water rights and water and wastewater systems in the Company’s water and wastewater resource development segment; land, land development costs and deposits in the Company’s land development segment; and the cost of the homes in the single-family rental segment. The Company’s other assets (Corporate) primarily consist of cash, short term investments, restricted cash, equipment, and related party notes receivable.


(In thousands)	~~May~~November 3130, 2025		August 31, ~~2024~~2025
Water and wastewater resource development	$	6870,~~588~~436	$	6469,~~616~~366
Land development		1110,~~497~~976		811,~~521~~121
Single-family rental		57,~~272~~815		5,~~371~~280
Corporate		6678,~~382~~842		6876,~~846~~512
Total assets	$	~~151~~168,~~739~~069	$	~~147~~162,~~354~~279

NOTE 12 – EARNINGS PER SHARE

Earnings per share (“EPS”) is calculated by dividing net income attributable to common shareholders by the weighted-average shares of common stock outstanding during the period. Certain outstanding options are excluded from the diluted EPS calculation because they are anti-dilutive (i.e., their assumed conversion into common stock would increase rather than decrease EPS). For the three months ended ~~May~~November 3130, 2025 and 2024, the Company excluded ~~421~~433,~~988~~208 options and ~~475~~404,~~130~~060 options ~~because their impact was anti-dilutive. For the nine months ended May 31~~, ~~2025 and 2024~~respectively, ~~the Company excluded 399,762 options and 470,217 options~~ because their impact was anti-dilutive.

Three Months Ended

~~Nine Months Ended~~

(In thousands, except share and per share amounts)

~~May~~November 3130, 2025

~~May~~November 3130, 2024

~~May 31, 2025~~

~~May 31, 2024~~

Net income

24,~~256~~565

23,~~825~~937

~~7,002~~

~~5,008~~

Basic weighted average common shares

24,~~076~~080,~~022~~086

24,~~087~~071,~~170~~907

~~24,077,188~~

~~24,085,578~~

Effect of dilutive securities

6776,~~512~~292

5585,~~869~~440

~~89,738~~

~~60,783~~

Weighted average shares applicable to diluted earnings per share

24,~~143~~156,~~534~~378

24,~~143~~157,~~039~~347

~~24,166,926~~

~~24,146,361~~

Earnings per share - basic

0.0919

0.1216

~~0.29~~

~~0.21~~

Earnings per share - diluted

0.0919

0.1216

~~0.29~~

~~0.21~~

NOTE 13 – INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items. As of ~~May~~November 3130, 2025, the Company is estimating an annual effective tax rate of approximately 2524%. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to various factors.

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year considering any items requiring discrete recognition.

The effective income tax rate for the three ~~and nine~~ months ended ~~May~~November 3130, 2025, was impacted by adjustments related to reconciling items between the Company’s books and tax returns.

~~NOTE 14 – SUBSEQUENT EVENTS~~19

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, as of the date of enactment, and during the three months ended August 31, 2025, the Company will evaluate all deferred tax balances under the newly enacted tax law and identify any other changes required to its financial statements as a result of the OBBBA. The Company is still evaluating the impact of the OBBBA and the results of such evaluations will be reflected on the Company's Form 10-K for the year ended August 31, 2025.

Table of Contents

NOTE 14 – SUBSEQUENT EVENTS

The Company, Rangeview District and the State Land Board filed a Water Court Application on December 31, 2020 seeking to: (1) adjudicate 1,635 acre feet of water from the Box Elder Creek Alluvial aquifer (a new water right), (2) consolidate and enlarge certain reservoirs on the Lowry Ranch, (3) approve new places of use for existing water rights, (4) approve new places of storage for certain water rights, and (5) approve a new alternate diversion point for certain existing water rights. On February 7, 2025, the Water Court initially denied the application regarding the new water rights and the reservoir enlargement. While this ruling did not impact the Company’s existing water rights or reservoir storage sites, the Company accrued an estimated $0.5 million liability for probable legal expense reimbursement claims from opposing parties. The Company and all opposing parties continued to work together on a resolution and reached a settlement agreement, which was approved by the Water Court on December 9, 2025. The settlement replaces the February 7, 2025 court ruling and grants the Company and the Rangeview Metropolitan District the new water rights, with certain stipulated conditions, and approves the remaining requests in their application.

Under the terms of the settlement, the Company agreed to pay $0.9 million to the opposing parties to cover certain costs relating to the water court. As of November 30, 2025, the Company reversed the previously recorded $0.5 million legal accrual, as the payment of opposing parties' legal expenses is no longer probable outside of the agreed settlement terms. The Company will record the new water asset in the second quarter of fiscal 2026, capitalizing the $0.9 million settlement payment as part of the cost basis of the new water right, coinciding with the Company obtaining the legal right to use the adjudicated water.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), “we,” “us,” “our” and "Pure Cycle" refer to Pure Cycle Corporation and all entities owned or controlled by Pure Cycle Corporation. You should read the following discussion in conjunction with our consolidated financial statements and accompanying notes, related MD&A and discussion of our business included in our Annual Report on Form 10-K for the year ended August 31, ~~2024~~2025 (~~2024~~the “2025 Annual Report”) filed with the United States (U.S.) Securities and Exchange Commission (the “SEC”) and the unaudited consolidated financial statements and accompanying notes included in this Form 10-Q. The results of operations reported and summarized below are not necessarily indicative of future operating results, and future results could differ materially from those anticipated in forward-looking statements (refer to “Disclosure Regarding Forward-Looking Statements” in this Form 10-Q; and Part I, Item 1A. “Risk Factors” in our ~~2024~~2025 Annual Report for further discussion).

We are a diversified water and wastewater service provider, land developer, and home rental company. We provide wholesale water and wastewater services in the Denver, Colorado area, develop land we own into master planned communities, and develop single-family homes for rent. Each of our businesses, providing water and wastewater services, land development and single-family home rentals generate attractive recurring monthly income.

Recent Developments and Economic Conditions

The housing market stabilized in 2024 as the Federal Reserve shifted from anaggressively ~~aggressive~~increasing ~~monetary~~interest ~~policy~~rates in 2023 to a ~~more~~ balanced approach that ~~has~~maintained ~~continued into 2025 with~~ relatively consistent interest rates through the first half of 2025. In the ~~first~~second half of 2025, the ~~housing~~Federal ~~market~~Reserve ~~faced~~pivoted ~~additional~~from ~~challenges~~primarily ascombating ~~consumer~~inflation ~~demand~~to ~~was~~supporting ~~influenced~~labor bymarket ~~ongoing~~stability ~~affordability~~and ~~challenges~~economic ~~and~~activity, ~~uncertainty~~implementing ~~occurring~~a ~~from~~series ~~federal~~of ~~trade~~interest ~~policies~~rate reductions that continued through December 2025. ~~Elevated~~ While these actions have begun to moderate mortgage interest rates, ~~have~~the ~~kept~~housing ~~the~~market ~~30-year~~continues ~~fixed~~to ~~mortgage~~face ~~rates~~headwinds. atConsumer ~~their~~demand ~~highest~~remains ~~level~~constrained inby ~~over~~cumulative 15affordability ~~years~~challenges and heightened economic uncertainty. ~~Additionally~~ Furthermore, volatility in the ~~housing~~broader ~~market~~macroeconomic ~~has~~environment—driven ~~faced~~in ~~volatility~~part ~~due~~by tofederal ~~other~~trade ~~macroeconomic~~policies ~~and~~affecting ~~geopolitical~~the ~~conditions,~~cost ~~including~~of ~~weakened~~imported construction materials and fluctuating consumer confidence.—continues to impact builder sentiment and the pace of new home sales.

Although higher mortgage interest rates and volatile macroeconomic and geopolitical conditions may persist for some time, homebuilders' strategic use of interest rate buydowns as incentives has played a crucial role in driving sales ~~during higher levels of interest rates~~. Despite ~~higher~~current interest ~~rate~~rates and recent market uncertainty stemming from actual and anticipated U.S. governmental policy changes, we maintain a positive long-term outlook on land development and the housing market based on fundamental factors remaining positive. These include favorable demographics, the lot and housing supply-demand imbalance resulting from a decade-plus of underproduction of new homes in relation to population growth, and low resale home inventory. While we remain confident in the long-term growth prospects for the industry given these factors, the current demand for new homes is subject to continued uncertainty due to many factors. The combination of higher mortgage interest rates since early 2022, several years of rising housing prices, elevated inflation, and various other macroeconomic and geopolitical concerns ~~has~~have been moderating housing demand. Although interest rates ~~have~~may ~~been stabilizing~~decline, we expect moderate to lower demand to continue throughout ~~2025 and into early~~ 2026. Given current conditions, we continue to monitor market dynamics and surrounding community performance and will adjust the timing of additional construction expenditures at Sky Ranch as warranted. We believe our segment pricing (entry level) lots and the low inventory of entry level housing in the Denver market will help Sky Ranch navigate a ~~changing~~cyclical market better than other surrounding and significantly higher priced communities.

Our future performance and the strategies we implement (and adjust or refine as necessary or appropriate) will depend significantly on the prevailing ~~economics~~economic environment, the homebuilding industry, capital, credit and financial market conditions and ~~a stable and constructive~~ political and regulatory ~~environment~~factors (particularly regarding housing and mortgage loan financing policies and trade policies impacting the cost of construction and building materials). The continuing impact of ~~the~~ Federal Reserve’s ~~policies~~actions ~~for the federal funds interest rate and other measures~~ to moderate persistent U.S. inflation and the uncertainty inregarding future Federal Reserve monetary policy are expected to be ongoing headwinds for the housing market in ~~2025 and beyond~~2026. Prolonged supply chain disruptions, labor shortages, increased costs as a result of tariffs or other factors and other production-related challenges could extend or delay our construction cycle times and intensify construction-related cost pressures beyond ~~our~~those ~~experience~~we experienced in 2025. In addition, consumer demand for our homes and our ability to grow and scale, revenue and returns in fiscal ~~2025 and~~ 2026 could be materially and negatively affected by the above-described monetary policy impacts or other factors that curtail mortgage loan availability, employment or income growth or consumer confidence in the U.S. orand in the Colorado markets. The potential extent and effect of these factors on our business is highly uncertain, unpredictable and outside our control, and our past performance, including in fiscal 2024, should not be considered indicative of future results.

Table of Contents

Our Business Strategy

For more than 30 years, we have accumulated and continue to accumulate a portfolio of valuable water rights, land interests and single-family rental homes along the Front Range of Colorado. We have added an extensive network of wholesale water production, storage, treatment and distribution systems, and wastewater collection and treatment systems that we operate and maintain to serve domestic, commercial, and industrial customers in the eastern Denver metropolitan region. Our primary land asset, known as Sky Ranch, is in one of the most active ~~development~~Master ~~areas~~Planned Communities in the Denver metropolitan region along the rapidly developing I-70 corridor, where we are developing lots for residential, commercial, retail, and light industrial uses. Sky Ranch is zoned to include up to 3,200 single -family and multifamily homes, parks, open spaces, trails, recreational centers, schools, and over two million square feet of retail, commercial and light industrial space, all of which will be serviced by our water and wastewater services segment. Additionally, we have retained lots in our Sky Ranch development for our single-family rental business where we contract with national home builders to build single-family homes ~~for~~we rent, typically under annual lease agreements. With 1419 homes currently owned ~~and rented~~, we continue to expand this new line of business, which may include more than 200 rental homes at Sky Ranch over the next several years.

Although we report our results of operations through our water and wastewater resource development segment, ~~and~~ our land development segment, and our single-family rental segment, we operate these segments as a cohesive business designed to provide a cost effective, sustainable, and value-added business enterprise.

Water and Wastewater

Water resources throughout the western U.S., and particularly in Colorado, are a scarce and valuable resource. Our owned and/or controlled portfolio of more than 30,000 acre-feet of water is comprised of groundwater, designated basin groundwater, and surface water supplies. Our other significant water assets include 26,000 acre-feet of adjudicated reservoir sites, two wastewater reclamation facilities, water treatment facilities, potable and raw water storage facilities, wells and water production facilities, and roughly 50 miles of water distribution and wastewater collection lines. Our water supplies and wholesale facilities are primarily located in southeast Denver, an area which is limited in both water availability and infrastructure to produce, treat, store, and distribute water and wastewater. We believe this provides us with a unique competitive advantage in offering these services.

We provide wholesale water and wastewater service to local governments for both residential and commercial customers. The local governments we serve include the Rangeview Metropolitan District (“Rangeview District”), Arapahoe County, the Sky Ranch Community Authority Board and related metropolitan districts (“Sky Ranch CAB”), and the Elbert and Highway 86 Commercial Metropolitan District (“Elbert 86 District”). Our mission is to provide sustainable, reliable, high-quality water to our customers and collect, treat, and reuse wastewater using advanced water treatment systems, which produce high quality reclaimed water we can reuse for outdoor irrigation and industrial demands. By using and reusing our water supplies, we proactively manage our valuable water rights in the water-scarce Denver, Colorado region, which dramatically reduces the environmental impact of our water resource operations. We design, permit, construct, operate and maintain wholesale water and wastewater systems that we own or operate on behalf of governmental entities. We also design, permit, construct, operate, and maintain retail distribution and collection systems that we own or exclusively operate on behalf of our governmental customers. Additionally, we handle administrative functions, including meter reading, billing and collection of monthly water and wastewater revenues, regulatory water quality monitoring, sampling, testing, and reporting requirements to the Colorado Department of Public Health and Environment.

Revenues for our water operations are dependent on us growing the number of customers we serve. If we are unable to add customers to our systems and sell taps to builders, our revenues could be negatively impacted. We currently are the developer of the Sky Ranch Master Planned Community, which is the main driver of our tap sales. Prolonged periods of hot and dry weather generally cause increased water usage for watering lawns, washing cars, and keeping parks irrigated. ~~Additionally~~Conversely, prolonged periods of dry weather could lead to drought restrictions and limited water availability. Despite our substantial water supply, customers may be required to conserve water usage under such drought restrictions, which would negatively impact metered usage revenues. We have addressed some of this vulnerability by instituting minimum customer charges, which are intended to cover fixed costs of operations under all likely weather conditions.

Table of Contents

Land Development

Our Land Development segment is primarily focused on developing the Sky Ranch Master Planned Community located along the booming I-70 corridor. We develop and sell residential, commercial, retail, and light industrial lots. Sky Ranch is zoned to include up to 3,200 single-family and multifamily homes, parks, open spaces, trails, recreational centers, and schools. Additionally, Sky Ranch is zoned to include over two million square feet of retail, commercial, and light industrial space, which is the equivalent of approximately 1,800 residential units, meaning the Sky Ranch community at build-out will include a total of roughly 5,000 residential and equivalent units. Our land development activities include the design, permitting, and construction of all the horizontal infrastructure, including, storm water, drainage, roads, curbs, sidewalks, parks, open space, trails, and other infrastructure to deliver “ready to build” finished lots to home builders and commercial customers. Our land development activities generate revenue from the sale of finished lots as well as construction revenues from activities where we construct infrastructure on behalf of others. Land development revenues come from our home builder customers under specific agreements for the delivery of finished lots. Additionally, pursuant to certain agreements with the Sky Ranch CAB and its related metropolitan districts, on their behalf we construct public infrastructure such as roads, curbs, storm water, drainage, sidewalks, parks, open space, trails, ~~etc.~~and other amenities, the costs of which are reimbursed to us by the Sky Ranch CAB through funds generated from property taxes, fees or the issuance of municipal bonds.

Our land development activities provide a strategic complement to our water and wastewater activities because a significant component of any master planned community is providing high quality domestic water, irrigation water, and wastewater services to the community. Having control over the land and the water and wastewater services enables us to build infrastructure for potable water and irrigation distribution, wastewater and storm water collection, roads, parks, open spaces, and other investments efficiently and to manage delivery of these investments to match take-down commitments from our home builder customers without significant excess capacity in any of these investments.

We have been developing the Sky Ranch community ~~since 2017~~ in phases since 2017. We believe it will take approximately eight to ten more years to fully develop Sky Ranch. In 2017, we began the initial development phase of Sky Ranch when we entered separate contracts with several national ~~homebuilders~~home builders, pursuant to which we sold a total of 505 single-family, detached residential lots at Sky Ranch. Pursuant to these agreements, we were obligated to construct infrastructure and other public improvements as well as wholesale infrastructure improvements (i.e., a wastewater reclamation facility and wholesale water facilities). Since starting, multiple phases of the Sky Ranch development are complete, and revenue and costs have been recognized.

During our fiscal 2021, we began construction on the second development phase at Sky Ranch. For this phase, we entered separate contracts with several national ~~homebuilders~~home builders to sell ~~938~~the first 872 single-family attached and detached residential lots atin Phase 2 of Sky Ranch, and we retained approximately 9491 lots (through such contracts and subsequent amendments) for use in our single-family home rental business. The second development phase is approximately 250 acres and is being completed in five sub-phases (referred to as Phase 2A, 2B, 2C, 2D and 2E). Due to our strong performance in the first phase of the Sky Ranch project, we were able to realize an approximate 7653% increase in our average lot prices in Phase 2. For example, we increased our sales price for a 45’ foot lot from an average of $75,000 to $~~132~~115,000 ~~and added an escalation clause that increases the prices depending on timing of payments~~. The timing of cash flows includes certain milestone deliveries such as the completion of governmental approvals for final plats, installation of wet utilities, and final completion of lot deliveries.

In February 2021, we began construction activities in Phase 2A at Sky Ranch, which has 229 residential lots, 10 of which we have retained for use in our single-family rental business. Contracts with three of the four ~~homebuilders~~home builders included milestone payments as construction progressed, with the fourth ~~homebuilder~~home builder contract making one payment due upon the transfer of title to the finished lots. As of ~~May~~November 3130, 2025, Phase 2A of the Sky Ranch development is 100% complete, and we have received all $18.4 million of payments related to the sale of the 219 lots in Phase 2A.

In March 2023, we began construction activities in Phase 2B at Sky Ranch, which is platted for 211 residential lots, 17 of which we retained for use in our single-family rental business. Contracts with three of the four ~~homebuilders~~home builders in Phase 2B included milestone payments as construction progressed, with the fourth ~~homebuilder~~home builder making one payment due upon the transfer of title to the finished lots. As of ~~May~~November 3130, 2025, Phase 2B of the Sky Ranch development is approximately 9698% complete, and we have received all $17.3 million of payments related to the sale of the 211 lots in Phase 2B.

Table of Contents

In February 2024, we began construction activities in Phase 2C at Sky Ranch, which is platted for 228 residential lots, 40 of which we have retained for use in our single-family rental business. Contracts with three of the four ~~homebuilders~~home builders in Phase 2C include milestone payments as construction progresses, with the fourth ~~homebuilder~~home builder having one payment due upon the transfer of title to the finished lots. As of ~~May~~November 3130, 2025, Phase 2C of the Sky Ranch development is approximately 6889% complete~~. As of May 31~~, ~~2025,~~and we have received all $617.73 million, ~~which consists~~ of ~~the first and second milestone~~ payments ~~from~~related to the ~~three~~sale ~~builders with milestone payment contracts. We expect all~~ of the ~~finished~~228 ~~lot~~lots ~~payments~~in ~~from the four homebuilders for~~ Phase 2C~~, which totals $10~~.~~5 million, to be received over the next 3 months.~~

In December 2024, we began construction activities in Phase 2D at Sky Ranch, which is platted for ~~218~~204 residential lots, 2724 of which we have retained for use in our single-family rental business. We are contracted with ~~one~~two ~~homebuilder~~home ~~and~~builders ~~are~~ in ~~negotiations with other homebuilders in~~ Phase 2D to include milestone payments as construction progresses. We are contracted with a third ~~homebuilder~~home builder having one payment due upon the transfer of title to the finished lots. As of ~~May~~November 3130, 2025, Phase 2D of the Sky Ranch development is approximately 2965% complete. As of ~~May~~November 3130, 2025, we received $1.4.5 million, which ~~consists~~represents of the first and second milestone ~~payment~~payments from the first builder and a partial first milestone payment for the second builder with a milestone payment contract. We expect all remaining milestone payments and finished lot payments for Phase 2D, which total $1714.5 million, to be received over the next 12 months.

We recognize revenue earned under contracts with milestone payments over time using the percentage of completion method which aligns the recognition of revenue with the requisite progress made on construction activities. During the three months ended ~~May~~November 3130, 2025 and 2024, due to the construction progress in Phase 2A2B through 2D, we recognized $26.50 million and $42.83 million ~~of lot sales revenue related to construction at Sky Ranch. During the nine months ended May 31~~, ~~2025 and 2024~~respectively, ~~due to the construction progress in Phase 2A through 2D, we recognized $6.0 million and $7.9 million~~ of lot sales revenue related to construction at Sky Ranch. ~~Due~~We ~~to construction progress, we~~ have recognized a total of $18.4 million of lot sales revenue since construction began on Phase 2A, $16.59 million of lot sales revenue since construction began on Phase 2B, $615.83 million of lot sales revenue since construction began on Phase 2C and $16.20 million of lot sales revenue since construction began on Phase 2D as of ~~May~~November 3130, 2025. We expect to recognize the remaining $02.80 million of revenue ~~for Phase 2B over the next 3 months, the remaining $10.6 million of revenue~~ from all four ~~homebuilders~~home builders for Phase 2C over the next 126 months, and the remaining $1713.60 million of revenue from our ~~homebuilders~~home builders for Phase 2D before the end of our fiscal 2026.

We expect to begin construction activities in Phase 2E in fiscal 2026, with the completion of approximately ~~146~~159 lots in calendar 2026 but will plan to pace construction to match builder absorption.

~~Remaining~~In ~~payments~~addition ~~for~~to the lot sales described above, from the start of development at Sky Ranch through November 30, 2025, we have received $33.8 million of water and wastewater tap fees from the ~~related~~home ~~revenue~~builders, which is for all 509 taps sold in Phase 2D1 ~~will~~(with befour ~~recognized~~being asallocated ~~construction~~to our single-family rentals), all 229 taps sold in Phase 2A (with 10 being allocated to our single-family rentals), 195 of ~~that~~211 ~~phase~~taps ~~occurs.~~sold Wein ~~believe~~Phase it2B ~~will~~(with ~~take~~17 ~~approximately~~allocated ~~two~~to ~~more~~our ~~years~~single-family rentals), 119 of 228 taps sold in Phase 2C (with 40 allocated to ~~complete~~our ~~construction~~single-family rentals) and ~~sell~~6 ~~the~~of ~~finished~~204 ~~lots~~taps sold in ~~all~~Phase ~~five~~2D. ~~subphases~~The ~~depending~~timing of tap sales is dependent on ~~market~~when ~~conditions~~home builders request building permits. Fees charged per water tap are dependent on lot sizes and ~~the~~average ~~permitting~~water ~~process~~usage across a broad range of housing product types, including duplexes and townhomes. For Phase 2 in total, we estimate water and wastewater tap fees will exceed $19.0 million.

In addition to the lot sales described above, from the start of development at Sky Ranch through May 31, 2025, we have received $30.0 million of water and wastewater tap fees from the homebuilders, which is for all 509 taps sold in Phase 1 (with four being allocated to our single-family rentals), all 229 taps sold in Phase 2A (with 10 being allocated to our single-family rentals), 187 of 211 taps sold in Phase 2B (with 17 allocated to our single-family rentals) and 10 of 228 taps sold in Phase 2C. The timing of tap sales is dependent on when homebuilders request building permits. Fees charged per water tap are dependent on lot sizes and average water usage across a broad range of housing product types including duplexes and townhomes. For Phase 2 in total, we estimate water and wastewater tap fees will exceed $20.0 million.

Single-Family Rentals

During our fiscal 2021, we launched a new line of business we are referring to as our single-family rental business. During Phase 1 of Sky Ranch, we retained ownership of four residential lots for use in this business. As of ~~May~~November 3130, 2025, we have completed 1419 single-family homes on these lots which we own, maintain, and have ~~leased~~available to ~~qualified~~lease ~~renters~~ under one-year lease terms. We expect to expand our single-family rentals in our second development phase of Sky Ranch by building homes on lots we did not sell to our home builder partners, which we will rent out once completed. As of ~~May~~November 3130, 2025, we reserved approximately 9491 lots in Phase 2, 10 of which are in Phase 2A and are completed and rented as of ~~May~~November 3130, 2025. Additionally, we have reserved 17 lots in Phase 2B, which we anticipate completing in fiscal 2026.

Table of Contents

We capitalize the costs of the homes and when applicable depreciate the costs over periods not exceeding thirty-years. Lease income is recorded monthly as earned, and renters are typically under a one-year lease. We began recognizing monthly lease income for the first three rental units on November 1, 2021.

Table of Contents

Results of Operations

Executive Summary

For the three months ended ~~May~~November 3130, 2025 and 2024, we generated net income of $24.35 million and $23.89 million, respectively. The ~~decrease~~increase was primarily due to aan ~~decrease~~increase in land development revenue. ~~The~~There was a decrease in water sales to oil and gas operators for drilling purposes in 2025, which was offset by an increase in water and wastewater tap fee revenue ~~and an increase in oil and gas royalty income~~. Lot sales revenue is recognized using the percentage of completion method, which is based on progress of construction. Despite increased challenges in the housing market, our land development activities continue to perform well, as we continue construction on ~~Phase 2B,~~ 2C and 2D at Sky Ranch.

~~For the nine months ended May 31, 2025 and 2024, we generated net income of $7.0 million and $5.0 million, respectively.~~ The ~~increase~~tables ~~was~~below ~~primarily~~present due to an increase in oil and gas royalty income. Total revenue decreased over the two periods due to a decrease in land development. Lot sales revenue is recognized using the percentage of completion method, which is based on progress of construction. Despite increased challenges in the housing market, our ~~land~~consolidated ~~development~~results ~~activities continue to perform well; however, land development activities have decreased resulting in a decreased lot sales revenue compared to our historically high level~~ of ~~Lot~~operations ~~sales~~for ~~revenue in~~ the ~~prior~~three ~~year~~months ~~period.~~ended WeNovember ~~are continuing construction on Phase 2B~~30, 2C and 2D at Sky Ranch and expect to align the timing to begin development activities on Phase 2E with market demand for additional lots at Sky Ranch. The increase in cost of revenue was due to an increase in estimated cost for Phase 2B as well as increased property tax due to our accelerated development schedule. The decrease in water sales to oil and gas operators for drilling purposes in 2025 ~~was offset by an increase in water~~ and ~~wastewater tap fee revenue and an increase in oil and gas royalty income~~2024.

The tables below present our consolidated results of operations for the three and nine months ended May 31, 2025 and 2024.


	Three Months Ended
(In thousands, except for water deliveries and taps sold)	November 30, 2025			November 30, 2024		$ Change		% Change
Water and Wastewater
Water and wastewater activities	$	812		$	1,391	$	(579)	(42)	%
Water and wastewater tap fees		1,670			1,466		204	14	%
Total water and wastewater		2,482			2,857		(375)	(13)	%
Land development revenue
Lot sales		6,024			2,319		3,705	160	%
Project management fees		296			253		43	17	%
Special facility projects and other		202			199		3	2	%
Single-family rental		131			124		7	6	%
Total revenue		9,135			5,752		3,383	59	%

Water and wastewater resource cost of revenue		1,112			1,061		51	5	%
Land development cost of revenue		1,717			956		761	80	%
Single-family rental cost of revenue		55			68		(13)	(19)	%
Total cost of revenue		2,884			2,085		799	38	%

General and administrative expense and depreciation		1,868			1,947		(79)	(4)	%
Operating income		4,383			1,720		2,663	155	%
Other income, net		1,647			3,488		(1,841)	(53)	%
Income tax expense		(1,465)			(1,271)		194	15	%
Net income	$	4,565		$	3,937	$	628	16	%

Basic EPS	$	0.19		$	0.16	$	0.03	19	%
Diluted EPS	$	0.19		$	0.16	$	0.03	19	%

Water delivered (acre-feet)		147			301		(154)	(51)	%
Water taps sold		51			38		13	34	%
Wastewater taps sold		31			35		(4)	(11)	%


	Three Months Ended
(In thousands, except for water deliveries and taps sold)	May 31, 2025		May 31, 2024		$ Change		% Change
Water and wastewater resource development revenue	$	2,345	$	2,465	$	(120)	(5)	%
Land development revenue:
Lot sales		2,526		4,795		(2,269)	(47)	%
Project management fees		138		221		(83)	(38)	%
Single-family rental		131		123		8	7	%
Total revenue		5,140		7,604		(2,464)	(32)	%

Water and wastewater development cost of revenue		1,300		1,321		(21)	(2)	%
Land development cost of revenue		543		1,346		(803)	(60)	%
Single-family rental cost of revenue		40		71		(31)	(44)	%
Total cost of revenue		1,883		2,738		(855)	(31)	%

General and administrative expense and depreciation		1,923		1,798		125	7	%
Operating income (loss)		1,334		3,068		(1,734)	(57)	%
Other income, net		1,659		784		875	112	%
Income taxes		(737)		(1,027)		(290)	(28)	%
Net income	$	2,256	$	2,825	$	(569)	(20)	%

Basic EPS	$	0.09	$	0.12	$	(0.03)	(25)	%
Diluted EPS	$	0.09	$	0.12	$	(0.03)	(25)	%

Water delivered (acre-feet)		76		394		(318)	(81)	%
Water taps sold		40		20		20	100	%
Wastewater taps sold		40		18		22	122	%
Lots delivered		—		—		—	—	%

Three Months Ended November 30, 2025 Results Compared to 2024

For the three months ended November 30, 2025, total revenue increased as compared to the same period in 2024, primarily due to an increase in land development activity. When we transfer title to lots to home builders under contracts where we remain obligated to deliver finished lots, the sales of such lots are recognized using the percentage of completion method. The decrease in water sales was driven by a decline in oil and gas drilling activities within our service area in the 2025 period. This was offset by an increase in water and wastewater tap fee revenue. Tap fee revenue timing depends on the timing of builders filing for building permits, which has increased with the development of Phase 2C and 2D in 2026.

For the three months ended November 30, 2025, total costs of revenue increased as compared to the same period in 2024, due to increased revenue.

Table of Contents


	Nine Months Ended
(In thousands, except for water deliveries and taps sold)	May 31, 2025		May 31, 2024		$ Change		% Change
Water and wastewater resource revenue	$	8,026	$	7,562	$	464	6	%
Land development revenue
Lot sales		5,981		7,906		(1,925)	(24)	%
Project management fees		507		362		145	40	%
Single-family rental		373		357		16	4	%
Total revenue		14,887		16,187		(1,300)	(8)	%

Water and wastewater resource cost of revenue		3,884		3,679		205	6	%
Land development cost of revenue		2,420		2,362		58	2	%
Single-family rental cost of revenue		133		161		(28)	(17)	%
Total cost of revenue		6,437		6,202		235	4	%

General and administrative expense and depreciation		6,724		5,529		1,195	22	%
Operating income		1,726		4,456		(2,730)	(61)	%
Other income, net		7,551		2,357		5,194	220	%
Income tax expense		(2,275)		(1,805)		470	26	%
Net income	$	7,002	$	5,008	$	1,994	40	%

Basic EPS	$	0.29	$	0.21	$	0.08	38	%
Diluted EPS	$	0.29	$	0.21	$	0.08	38	%

Water delivered (acre-feet)		443		1,422		(979)	(69)	%
Water taps sold		130		35		95	271	%
Wastewater taps sold		127		33		94	285	%

For the three months ended November 30, 2025, general and administrative expense increased slightly as compared to the same period in 2024 due to normal inflationary increases in operating expenses. The increase was offset by a reversal of a legal expense in 2025 in the amount of $0.5 million.

For the three months ended November 30, 2025, other income decreased as compared to the 2024 period primarily due to a decline in royalty revenues from our oil and gas mineral interest at Sky Ranch.

~~Three~~For ~~and~~the ~~Nine~~three ~~Months~~months ~~Ended~~ended ~~May~~November 3130, 2025, ~~Results~~water ~~Compared~~deliveries decreased as compared to the 2024 period primarily due to a decrease in water sales to oil and gas operators.

For the three and nine months ended May 31, 2025, total revenue decreased as compared to 2024, primarily due to a decline in land development activity. When we transfer title to lots to homebuilders under contracts where we remain obligated to deliver finished lots, the sales of such lots are recognized using the percentage of completion method. The decrease in water sales was driven by a decline in oil and gas drilling activities within our service area in 2025. This was offset by an increase in water and wastewater tap fee revenue and oil and gas royalties. Tap fee revenue timing depends on the timing of builders filing for building permits, which has increased with the development of Phase 2B and 2C in 2025.

For the three months ended May 31, 2025, total costs of revenue decreased as compared to 2024, due to decreased revenue. For the nine months ended May 31, 2025, total costs of revenue increased as compared to 2024, primarily due to an increase in our water and wastewater system overhead as we continue to expand our system capacity, an increase in the estimated cost for Phase 2B and increased property tax due to our accelerated development schedule.

For the three months ended May 31, 2025, general and administrative expense increased as compared to 2024, due to increased expenses associated with additional employees hired in 2025. For the nine months ended May 31, 2025, general and administrative expense increased as compared to 2024, due to an accrual for legal fees booked in 2025 and increased expenses associated with additional employees hired in 2025.

For the three and nine months ended May 31, 2025, other income increased as compared to 2024 primarily due to royalty revenues from our oil and gas mineral interest at Sky Ranch, from the completion of an additional six wells in 2024, which began producing during this fiscal year.

For the three and nine months ended May 31, 2025, water deliveries decreased as compared to 2024 primarily due to a decrease of water sales to oil and gas operators.

Table of Contents

Water and Wastewater Resource Development Results of Operation


	Three Months Ended
(In thousands, except for water deliveries)	~~May~~November 3130, 2025		~~May~~November 3130, 2024		$ Change		% Change
Metered water usage from:
Municipal water usage	$	~~148~~211	$	~~145~~230	$	3(19)	2(8)	%
Commercial water usage		~~149~~452		1,~~432~~014		(~~1,283~~562)	(9055)	%
Wastewater treatment fees		~~102~~113		8589		1724	2027	%
Water and wastewater tap fees		1,~~700~~670		~~581~~1,466		~~1,119~~204	~~193~~14	%
Other revenue		~~246~~36		~~222~~58		24(22)	11(38)	%
Total segment revenue		2,~~345~~482		2,~~465~~857		(~~120~~375)	(513)	%

Water service costs		533		564		(31)	(5)	%
Water service cost		488		483		5	1	%
Wastewater service costs		237		173		64	37	%
Wastewater service cost		204		179		25	14	%
Depreciation		~~409~~407		~~410~~371		~~(1)~~36	~~(0)~~10	%
Other		~~121~~13		~~174~~28		(5315)	(3054)	%
Total expenses		1,~~300~~112		1,~~321~~061		~~(21)~~51	~~(2)~~5	%
Segment operating income	$	1,~~045~~370	$	1,~~144~~796	$	(99426)	(924)	%

Water deliveries (acre-feet)
Export - Commercial		1		1		—	—	%
On Site		7		1		6	600	%
Sky Ranch		56		45		11	24	%
Commercial sales - export water and other		5		1		4	400	%
Wild Pointe		17		18		(1)	(6)	%
Sky Ranch		103		93		10	11	%
O&G operations		2		330		(328)	(99)	%
Wild Pointe		24		29		(5)	(17)	%
Total water deliveries		76		394		(318)	(81)	%
O&G operations		8		177		(169)	(95)	%
Total water deliveries		147		301		(154)	(51)	%


	Nine Months Ended
(In thousands, except for water deliveries)	May 31, 2025		May 31, 2024		$ Change		% Change
Metered water usage from:
Municipal water usage	$	507	$	458	$	49	11	%
Commercial water usage		1,324		5,045		(3,721)	(74)	%
Wastewater treatment fees		284		258		26	10	%
Water and wastewater tap fees		5,292		1,162		4,130	355	%
Other revenue		619		639		(20)	(3)	%
Total segment revenue		8,026		7,562		464	6	%

Water service costs		1,418		1,628		(210)	(13)	%
Wastewater service costs		642		513		129	25	%
Depreciation		1,248		1,132		116	10	%
Other		576		406		170	42	%
Total expenses		3,884		3,679		205	6	%
Segment operating income	$	4,142	$	3,883	$	259	7	%

Water deliveries (acre-feet)
On Site		1		2		(1)	(50)	%
Commercial sales - export water and other		2		3		(1)	(33)	%
Sky Ranch		199		145		54	37	%
Wild Pointe		55		52		3	6	%
O&G operations		186		1,220		(1,034)	(85)	%
Total water deliveries		443		1,422		(979)	(69)	%

For the three months ended November 30, 2025, municipal water usage was consistent with the 2024 period. Commercial water usage revenue decreased for the three months ended November 30, 2025 compared to the 2024 period due to decreased water sales to oil and gas operators.

For the three ~~and nine~~ months ended ~~May~~November 3130, 2025, ~~municipal~~wastewater ~~water~~treatment ~~usage~~fees ~~was~~increased ~~consistent~~slightly ~~with~~as ~~2024. Commercial~~compared ~~water~~to ~~usage revenue decreased for~~ the ~~three~~2024 ~~and~~period ~~nine~~primarily ~~months ended May 31, 2025 compared to 2024~~ due to ~~decreased~~new ~~water~~Sky ~~sales~~Ranch ~~to oil and gas operators~~customers.

For the three months ended November 30, 2025, water and wastewater tap sales increased compared to the 2024 period due to the timing of finished lots at Sky Ranch in 2025. Tap sales are driven by builders obtaining building permits in anticipation of home closings.

~~For the three and nine months ended May 31, 2025, wastewater treatment fees increased slightly as compared to 2024 primarily due to new Sky Ranch customers.~~26

Table of Contents

For the three and nine months ended May 31, 2025, water and wastewater tap sales increased compared to 2024 due to the timing of finished lots at Sky Ranch in 2025. Tap sales are driven by builders obtaining building permits in anticipation of home closings.

Land Development Results of Operations


		Three Months Ended
(In thousands)	November 30, 2025		November 30, 2024		$ Change		% Change
Lot sales	$	6,024	$	2,319	$	3,705	160	%
Project management fees		296		253		43	17
Special facility projects and other		202		199		3	2
Total revenue		6,522		2,771		3,751	135	%

	Three Months Ended
Land development construction and project management cost		1,717		956		761	80	%
(In thousands)	May 31, 2025		May 31, 2024		$ Change		% Change
Lot sales	$	2,526	$	4,795	$	(2,269)	(47)	%
Project management revenue		138		221		(83)	(38)
Total revenue		2,664		5,016		(2,352)	(47)	%

Land development construction and project management costs		543		1,346		(803)	(60)	%
Segment operating income	$	4,805	$	1,815	$	2,990	165	%

Segment operating income	$	2,121	$	3,670	$	(1,549)	(42)	%


		Nine Months Ended
(In thousands)	May 31, 2025		May 31, 2024		$ Change		% Change
Lot sales	$	5,981	$	7,906	$	(1,925)	(24)	%
Project management revenue		507		362		145	40	%
Total revenue		6,488		8,268		(1,780)	(22)	%

Land development construction and project management costs		2,420		2,362		58	2	%

Segment operating income	$	4,068	$	5,906	$	(1,838)	(31)	%

For the three months ended November 30, 2025, lot sales revenue increased as compared to the 2024 period due primarily to the timing of platted lot deliveries. When we transfer title to lots to home builders under contracts where we remain obligated to deliver finished lots, the sales of such lots are recognized using the percentage of completion method. Therefore, revenue will fluctuate due to the number of lots under the percentage of completion accounting method throughout Phase 2 which increased in the 2025 period.

For the three ~~and nine~~ months ended ~~May~~November 3130, 2025, ~~lot~~total ~~sales~~costs of revenue ~~decreased~~increased as compared to ~~2024 due primarily to~~ the ~~timing~~2024 ~~of finished lot deliveries. When we transfer title to lots to homebuilders under contracts where we remain obligated to deliver finished lots~~period, ~~the sales of such lots are recognized using the percentage of completion method. Therefore, revenue will fluctuate~~ due to ~~timing~~increased ofrevenue ~~construction~~recognition ~~activities~~from asour ~~well as the number of lots under the~~ percentage of completion ~~accounting~~revenue ~~method throughout Phase 2~~recognition.

For the three months ended May 31, 2025, total costs of revenue decreased as compared to 2024, due to decreased revenue recognition from our percentage of completion revenue recognition and the timing of finished lot deliveries. For the nine months ended May 31, 2025, total costs of revenue increased as compared to 2024, primarily due to an increase in estimated cost for Phase 2B as well as increased property tax due to our accelerated development schedule.

Single-Family Rental Results of Operations

In fiscal 2021, we began construction on homes for our single-family rental business. Each home is rented under a one-year non-~~cancelable~~cancellable lease agreement. The costs reflected as cost of sales for the rental units include a pro-rata share of the annual property taxes and insurance related specifically to the rental units as well as immaterial fees related to the operations and maintenance assessments from the Sky Ranch CAB that are assessed to every home in Sky Ranch. Our tenants are responsible for all other utilities, including water and wastewater services that are paid to us through the Rangeview District. For the three months ended November 30, 2025, rental revenue and cost increased as compared to the 2024 period due to an increase in the number of rental units. As of ~~May~~November 3130, 2025, the Company had a total of 1419 units rented. or available for rent.



		Three Months Ended
(In thousands)	November 30, 2025			November 30, 2024		$ Change		% Change
Single-family rentals revenue	$	131		$	124	$	7	6	%

Single-family rentals cost		55			68		(13)	(19)	%

Segment operating income	$	76		$	56	$	20	36	%

~~Table of Contents~~

Liquidity, Capital Resources and Financial Position

As of ~~May~~November 3130, 2025, our working capital, defined as current assets less current liabilities, was $1814.17 million, which included $1417.41 million in cash and cash equivalents. All our cash is maintained at high-credit quality institutions, and we follow a diversified investment approach for our cash and cash equivalents by maintaining such funds with a portfolio of banks in high quality, highly liquid, short-term deposits and investments to mitigate banking concentration risk. We believe that as of ~~May~~November 3130, 2025, and as of the date of the filing of this Quarterly Report on Form 10-Q, we have sufficient working capital to fund our operations for the next 12 months. Our expected obligations for the next 12 months are described below.

Sky Ranch Development

Phase 1 of the Sky Ranch development is complete,. Development of Phase 2, which began in February 2021, ~~which~~ is being done in five subphases, of which Phase 2A ~~is completed~~ and Phase 2B, are substantially completed and Phase 2C and Phase 2D are being actively developed as of ~~May~~November 3130, 2025. We expect to begin development work on Phase 2E in fiscal 2026. We estimate total costs to complete the infrastructure (including public improvements) for all ~~886~~591 lots in the ~~first~~last ~~four~~three subphases of Phase 2 to total $8121.1 million. Of this, we anticipate spending up to $18.4 million in the next 12 months, and we anticipate receiving approximately $28.0 million in milestone and finished lot payments from our builder customers. Additionally, we expect to receive tap fee payments from our builder customers over the same period. The amounts we expect to spend and receive in the next 12 months are dependent on the pace of construction in Phase 2B, Phase 2C and Phase 2D. We believe water and wastewater tap fees as well as progress payments from our homebuilder customers and our existing cash balances will fund our obligations for the next 12 months.

Table of Contents

anticipate spending up to $10.8 million in the next 12 months, and we anticipate receiving approximately $17.5 million in milestone and finished lot payments from our builder customers. Additionally, we expect to receive tap fee payments from our builder customers over the same period. The amounts we expect to spend and receive in the next 12 months are dependent on the pace of construction in Phase 2C, Phase 2D and Phase 2E. We believe water and wastewater tap fees as well as progress payments from our home builder customers and our existing cash balances will fund our obligations for the next 12 months.

Single-Family Rental Construction Contract

As of ~~May~~November 3130, 2025, we have entered into contracts with national home builders to construct 17the remaining 12 rental units at Sky Ranch in Phase 2B and 628 of the 40 rental units at Sky Ranch in Phase 2C. The contracted construction costs for all 1740 units in Phase 2B and 22C C will be approximately $612.4 million. As of ~~May~~November 3130, 2025, we had incurred $01.35 million of these construction costs. We anticipate financing the majority of the remaining cost for Phase 2B and 2C rental units in fiscal 2026.

South Metropolitan Water Supply Authority (“SMWSA”) and the Water Infrastructure Supply Efficiency Partnership (“WISE”)

We have entered into a financing agreement that obligates us to fund the Rangeview District’s cost of participating in WISE. We anticipate investing up to $02.50 million in total over the next 12 months to fund the Rangeview District’s obligation to purchase water and fund development of infrastructure for WISE, and its obligations related to SMWSA. In exchange for funding the Rangeview District’s obligations in WISE, we have the sole right to use and reuse the Rangeview District’s 9% share of the WISE water and infrastructure to provide water service to the Rangeview District’s customers and to receive the revenue from such service. Our current WISE subscription entitles us to approximately 3.0 million gallons per day of transmission pipeline capacity and up to 900 acre-feet per year of water.

Summary Cash Flows Table

~~Nine~~Three Months Ended

(In thousands)

~~May~~November 3130, 2025

~~May~~November 3130, 2024

$ Change

% Change

Cash (used) provided by:

Operating activities

~~3,799~~(979)

~~(793)~~5,674

4(6,~~592~~653)

~~579~~(117)

Investing activities

(84,~~350~~734)

(36,~~991~~552)

(41,~~359)~~818

~~(109)~~28

Financing activities

~~(350)~~1,203

(~~462~~113)

~~112~~1,316

241,165

Net Change in cash

(4,~~901~~510)

(~~5,246~~991)

~~345~~(3,519)

7(355)

For the ~~nine~~three months ended ~~May~~November 3130, 2025, we used cash as follows:

● Operating activities ~~provided~~used $31.80 million in cash, mainly from ~~a partial reimbursement of the Company’s Note Receivable from the Sky Ranch CAB. This was offset by~~ normal operations to fund construction activities (including the public improvements) at Sky Ranch and payments to vendors. We anticipate continuing to spend cash for the construction activities at Sky Ranch for the foreseeable future.

29● Investing activities used $4.7 million in cash, mainly for the construction of single-family rentals and construction of additional water and wastewater infrastructure.

●	Financing activities provided $1.2 million of cash from the financing of our single-family rentals.

Table of Contents

● Investing activities used $8.4 million in cash, mainly for the purchase of land and water rights. We also continued our investing in future phases of Sky Ranch and construction of additional water delivery infrastructure.

● Financing activities used $0.4 million of cash, mainly for the repurchase of common stock.

Critical Accounting Policies and Use of Estimates

Our critical accounting policies and estimates are described in “Critical Accounting Policies and Estimates” within Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 of the financial statements included in our ~~2024~~2025 Annual Report. The accounting policies and estimates used in preparing our interim consolidated financial statements for the three ~~and nine~~ months ended ~~May~~November 3130, 2025, are the same as those described in our ~~2024~~2025 Annual Report. There have been no changes to our critical accounting policies during the three ~~and nine~~ months ended ~~May~~November 3130, 2025. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from the interim financial statements included in this Quarterly Report on Form 10-Q pursuant to the rules and regulations of the SEC, although we believe that the disclosures made are adequate to make the information not misleading. The unaudited consolidated financial statements and other information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto in our ~~2024~~2025 Annual Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. The President and the Chief Financial Officer evaluated the effectiveness of disclosure controls and procedures as of ~~May~~November 3130, 2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based on this evaluation, the President and the Chief Financial Officer each concluded that as of ~~May~~November 3130, 2025, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Changes in Internal Control Over Financial Reporting

No changes were made to our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~The Company, Rangeview~~ District ~~and~~1 ~~the State Land Board filed a~~ Water Court ~~Application~~- ~~in Colorado Water Court Division 1 on December 31,~~ 2020, seeking: (1) to adjudicate 1,635 acre feet of water from the Box Elder Creek Alluvial aquifer (a new water right), (2) consolidate and enlarge certain reservoirs on the Lowry Ranch, (3) approve new places of use for existing water rights, (4) approve new places of storage for certain water rights, and (5) approve a new alternate diversion point for certain existing water rights. On February 7, 2025, the Water Court denied our new water right application of 1,635 acre feet of Box Elder Creek Alluvial aquifer water, as well as the consolidation and enlargement of certain reservoirs on the Lowry Ranch. Neither of these rulings impacted our existing water rights or existing reservoir storage sites. The Court sought additional information from the Company and opposing parties regarding the three claims which remain outstanding before continuing the trial. The Company has provided the additional information and is working with opposing parties to reach a settlement agreement.Application

The Company, Rangeview District and the State Land Board filed a Water Court Application in Colorado Water Court Division 1 on December 31, 2020 seeking to: (1) adjudicate 1,635 acre feet of water from the Box Elder Creek Alluvial aquifer (a new water right), (2) consolidate and enlarge certain reservoirs on the Lowry Ranch, (3) approve new places of use for existing water rights, (4) approve new places of storage for certain water rights, and (5) approve a new alternate diversion point for certain existing water rights. On February 7, 2025, the Water Court initially denied the application regarding the new water rights and the reservoir enlargement. Neither of these rulings impacted our existing water rights or existing reservoir storage sites. The Company and all opposing parties continued to work together on a resolution and reached a settlement agreement, which was approved by the Water Court on December 9, 2025. The settlement replaced the February 7, 2025 court ruling and grants the Company and the Rangeview Metropolitan District the new water rights, with certain stipulated conditions, and approves the remaining requests in the application. As of the date of this filing, the Company has reversed its accrual for this matter.

Table of Contents

Colorado Interstate Gas Company, L.L.C. v. Rangeview Metropolitan District, Pure Cycle Corporation, et al.

On December 11, 2025, Colorado Interstate Gas Company, L.L.C. ("CIG") filed a complaint against the Company, Rangeview Metropolitan District, and Prosper Farms Investments, LLC in the District Court of Arapahoe County, Colorado. The complaint alleges that the Company’s proposed construction and operation of the Rangeview water pipeline on the Prosper Farms property encroaches upon CIG’s existing natural gas pipeline easements and interferes with CIG's ability to comply with federal safety regulations.

CIG seeks injunctive relief to limit the Company from constructing the water pipeline within 25 feet of CIG's pipelines, a mandatory injunction to remove any related facilities or fill within that zone, and a declaratory judgment establishing a fixed 25-foot easement width for its pipelines. Additionally, CIG seeks unspecified monetary damages for alleged trespass and breach of easement.

The Company believes these claims are without merit and intends to vigorously defend its rights to construct and operate Rangeview’s water pipeline within the easement under the approved parameters. As of the date of this filing, the Company has not recorded an accrual for this matter, as management does not believe a loss is probable or that potential damages, if any, are reasonably estimable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 2, 2022, our Board of Directors approved a stock repurchase program. The program is open-ended and authorizes repurchases of up to an aggregate of 200,000 shares of common stock in the open market. ~~During~~The ~~the~~Company ~~quarter~~did ~~ended~~not ~~May~~repurchase ~~31,~~shares ~~2025,~~during the ~~Company~~quarter ~~repurchased~~ended 2November 30,~~000~~ ~~shares of common stock under the repurchase program~~2025. The following table summarizes the purchase of our common stock ~~during~~subsequent ~~the~~to quarter ~~ended~~end ~~May~~and 31through January 6, ~~2025~~2026:


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchase as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 2025		2,000		10.19		2,000		112,074
December 2025		4,600		10.99		4,600		99,974
Total		2,000	$	10.19		2,000		112,074
January 2026		2,500		10.70		2,500		97,474
Total		7,100	$	10.85		7,100		97,474

Table of Contents

Item 6. Exhibits


Exhibit Number		Description

31.1		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2		Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1		Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

32.2		Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

101.INS		Inline XBRL Instance Document. *

101.SCH		Inline XBRL Taxonomy Extension Schema Document. *

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document. *

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document. *

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document. *

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document. *

104		Cover page formatted as inline XBRL and contained in Exhibit 101

*	Filed herewith.

**	Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PURE CYCLE CORPORATION


/s/ Marc S. Spezialy
Marc S. Spezialy
Vice President and Chief Financial Officer

July 9, 2025
January 7, 2026

Filing Compare · PURE CYCLE CORP