What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-04 compared with 2025-03-05 · 444 added, 459 removed, 613 unchanged (60% of the section changed)

1 unchanged sentence

Index to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM [PCAOB ID:

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

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Utility Plant

TAXES, PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid Expenses and Other Current Assets

Goodwill and Intangible Assets

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We identified the impact of rate regulation as a critical audit matter due to the significant judgments that underlie the Company’s regulatory account balances and disclosures and the high degree of subjectivity involved in assessing the impact of future regulatory orders on the financial statements.

Management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs, and (2) a refund to customers.

Management judgments include assessing the likelihoo d of (1) recovery in future rates of incurred costs, and (2) a refund to customers.

Given that management’s accounting judgments are based on assumptions about the outcome of decisions by the ACC, auditing these judgments required specialized knowledge of accounting for rate regulation and the rate setting process due to its inherent complexities.

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Consolidated Balance Sheets

(in thousands, except share and per share amounts)

December 31, 2024 December 31, 2023

UTILITY PLANT:

(in thousands, except share and per share amounts) December 31, 2025 December 31, 2024

Utility Plant $ 610,766 $ 515,358

Less accumulated depreciation ( 153,614 ) ( 142,367 )

accumulated depreciation ( 168,915 ) ( 153,614 )

Net utility plant 441,851 361,744

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Unbilled revenue 3,409 3,109

Taxes, prepaid expenses and other current assets 4,080 2,494

Prepaid expenses and other current assets 3,388 4,080

Total current assets 14,623 19,469

OTHER ASSETS:

Goodwill 6,512 9,486

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Restricted cash 2,755 2,109

Right-of-use assets 2,157 1,741

Right-of-use assets, net 3,990 2,157

Other noncurrent assets 117 78

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Common stock, $ 0.01 par value, 60,000,000 shares authorized;

24,570,994 and 24,492,918 shares issued as of December 31, 2024 and December 31, 2023, respectively.

Treasury stock, 344,978 and 317,677 shares at December 31, 2024 and December 31, 2023, respectively.

29,116,183 and 24,570,994 shares issued, respectively

Treasury stock, 359,329 and 344,978 shares, respectively

Additional paid-in capital 87,294 47,366

Retained earnings — 797

Retained deficit ( 961 ) —

Total shareholders’ equity

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Other Liabilities

Line of credit — 2,315

Long-term lease liabilities 3,741 1,450

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Wastewater and recycled water service 27,149 26,628

Unregulated revenue — 2,786

Total revenue 55,758 52,692

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General and administrative 17,855 16,882

Depreciation and amortization 12,720 11,437

Depreciation, amortization and accretion 14,998 12,720

Total operating expenses 48,602 43,328

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Consolidated Statements of Shareholders’ Equity

(in thousands, except share and per share amounts)

Common Stock Shares Common Stock Treasury Stock Shares Treasury Stock Additional Paid-in Capital Retained Earnings Total Equity

(in thousands, except share and

per share amounts) Common Stock Shares Common Stock Treasury Stock Shares Treasury Stock Additional Paid-in Capital Retained Earnings (Deficit) Total Equity

BALANCE - December 31, 2023 24,492,918 $ 240 ( 317,677 ) $ ( 2 ) $ 47,585 $ 797 $ 48,620

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— — — — ( 712 ) ( 6,586 ) ( 7,298 )

Issuance of common stock 230,000 1 — — 2,727 — 2,728

Stock option exercise 167,779 — ( 93,584 ) — 239 — 239

Stock compensation — — — — 462 — 462

Share option exercise 5,277 — ( 4,405 ) — 198 — 198

Share-based compensation 72,799 — ( 22,896 ) — 295 — 295

Net income — — — — — 5,789 5,789

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— — — — ( 4,398 ) ( 3,918 ) ( 8,316 )

Stock option exercise 5,277 — ( 4,405 ) — 198 — 198

Stock compensation 72,799 — ( 22,896 ) — 295 — 295

Issuance of common stock, net 4,490,572 45 — — 43,760 — 43,805

Share-based compensation 54,617 — ( 14,351 ) — 566 — 566

Net income — — — — — 2,957 2,957

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Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

(in thousands) 2025 2024

Cash Flows from Operating Activities:

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Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 12,720 11,437

Depreciation, amortization and accretion 14,998 12,720

Share-based compensation 861 1,029

Deferred income tax expense 58 1,473

(Gain) loss on disposal of fixed assets 309 ( 63 )

Right of use amortization 384 324

AFUDC-Equity ( 1,156 ) ( 892 )

Loss on disposal of fixed assets 1,251 309

Operating lease expense 367 384

Other adjustments 254 125

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Cash paid for acquisitions, net of cash acquired ( 8,098 ) ( 150 )

Other cash flows from investing activities ( 4 ) ( 40 )

Other cash flows used in investing activities — ( 4 )

Net cash used in investing activities ( 75,419 ) ( 32,478 )

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Refunds of advances for construction ( 1,427 ) ( 1,355 )

Payments for taxes related to net shares settlement of equity awards ( 265 ) ( 373 )

Principal payments under finance lease ( 401 ) ( 273 )

Repayments of notes payable ( 3,923 ) ( 3,833 )

Line of credit borrowings — 2,315

Line of credit repayments ( 2,315 ) —

Loan borrowings 22,357 260

Debt issuance costs paid ( 418 ) —

Proceeds from sale of stock — 2,748

Other contributions — 6,700

Proceeds from issuance of long-term debt 15,222 22,357

Repayments of long-term debt ( 3,933 ) ( 3,923 )

Revolver borrowings 10,950 —

Revolver repayments ( 10,950 ) ( 2,315 )

Issuance of common stock, net of issuance costs 44,130 —

Financing costs of debt and equity transactions ( 443 ) ( 418 )

Other financing activities ( 182 ) ( 316 )

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Supplemental disclosure of cash flow information:

Year ended December 31,

Years Ended December 31,

(in thousands) 2025 2024

Cash and cash equivalents $ 4,080 $ 9,047

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Description of Business

GWRI is a water resource management company that owns, operates, and manages thirty-two water, wastewater, and recycled water systems in strategically located communities, principally in metropolitan Phoenix and Tucson, Arizona.

GWRI is a water resource management company that owns, operates, and manages thirty-nine water, wastewater, and recycled water systems in strategically located communities, principally in metropolitan Phoenix and Tucson, Arizona.

Serving more than 121,000 people in approximately 40,000 homes within the Company’s 418 square miles of ACC-designated service areas as of December 31, 2025, the Company provides water and wastewater utility service under the regulatory authority of the ACC.

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Certain amounts from prior periods have been reclassified to conform to the current year presentation.

The reclassification had no impact on the Company’s s results of operation, financial position or cash flows.

The reclassification had no impact on the Company’s results of operation, financial position or cash flows.

Significant Accounting Policies

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Certain expenses and credits subject to utility regulation or rate determination normally reflected in income are deferred on the Consolidated Balance Sheets and are later recognized in income as the related amounts are included in customer rates and recovered from or refunded to customers.

The Company’s regulated utilities and certain other balances are subject to regulation by the ACC and are therefore subject to ASC Topic 980, Regulated Operations (“ASC 980”).

The Company’s regulated utilities and certain other balances are subject to regulation by the ACC and are therefore subject to ASC 980.

The Company continually evaluates whether or not our operations are within the scope of ASC 980 and rate regulations.

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Expenditures for maintenance and repairs are charged to expense.

Intangible plant consists of CC&Ns, franchise contract rights and other organizational costs.

A CC&N is a permit issued by the ACC allowing a public service corporation to serve a specified area, and preventing other public service corporations from offering the same water and wastewater service within the specified area.

Franchise contract rights are agreements with governmental entities that allow the Company to place infrastructure in public right-of-way, with permits expected to be renewable indefinitely.

Organizational costs represent fees paid to federal or state governments for the privilege of incorporation and expenditures incident to organizing the corporation and preparing it to conduct business.

The Company’s AROs represent the estimated costs to properly close, decommission, and remediate certain wastewater treatment and related facilities at the end of their useful lives.

These obligations arise from requirements contained in Aquifer Protection Permits issued by the ADEQ, which obligate the Company to remove infrastructure, close permitted units, and restore impacted areas upon permanent cessation of operations.

AROs are recognized when a legal obligation is incurred and can be reasonably estimated, and are initially measured at the present value of the expected future retirement costs.

The recorded AROs are long-term in nature and are expected to be settled only upon closure or retirement of the associated facilities.

ARO liabilities are included in other noncurrent liabilities on the Consolidated Balance Sheets.

Regulated Revenue

Operating revenue is substantially derived from regulated water, wastewater, and recycled water service provided to customers based upon tariff rates approved by the ACC.

The Company’s customers are the recipients of its utility service, and the tariff rates represent a contract with those customers, both of which meet their respective definitions under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) and create enforceable rights and obligations .

Regulated revenue consists of amounts billed to customers based on approved fixed monthly fees and consumption based fees, as well as unbilled revenue, which is estimated revenue from the last meter reading date to the end of the accounting period utilizing historical customer data recorded.

The Company satisfies its performance obligation to provide water, wastewater, and recycled water service over time as service is rendered.

Regulated water and wastewater service may be terminated by the customers at will, and, as a result, no separate financing component is recognized for the Company’s collections from customers, which generally require payment within 15 days of billing.

The Company applies judgment, based principally on historical payment experience, in estimating its customers’ ability to pay.

Total revenue does not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales taxes.

Revenue Recognition—Water Service

Water service revenue is recorded when service is rendered or water is delivered to customers.

However, in addition to the monthly basic service charge, the determination and billing of water sales to individual customers is based on the reading of their meters, which occurs on a systematic basis throughout the month.

At the end of each reporting period, amounts of water delivered to customers since the date of the last meter reading are estimated and the corresponding unbilled revenue is recorded.

In addition to a monthly basic service charge, the measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month.

At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding unbilled revenue is recognized.

The unbilled revenue estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage).

The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice.

The Company has the right to invoice for the volume of consumption, service charge, and other authorized charges.

Water connection fees are the fees associated with the application process to set up a customer to receive utility service on an existing water meter.

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Because the amounts charged for water connection fees are set by the ACC and not negotiated in conjunction with the pricing of ongoing water service, the connection fees represent the culmination of a separate earnings process and are recognized when the service is provided.

For both the years ended December 31, 2024 and 2023, the Company recognized $ 0.3 million in connection fees.

For both years ended December 31, 2025 and 2024, the Company recognized $ 0.3 million in connection fees.

Meter installation fees are the fees charged to developers or builders associated with installing new water meters.

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Revenue Recognition—Unregulated Revenue

Unregulated revenue represent revenue that is not subject to the ratemaking process of the ACC.

Unregulated revenue is limited to revenue resulting from certain ICFAs.

Refer to Note 4 – “Revenue Recognition - Unregulated Revenue” for additional information.

Unregulated revenue represents revenue that is not subject to the ratemaking process of the ACC and is primarily related to the revenue recognized on a portion of ICFA funds received.

Under the terms of ASC 606, each ICFA is a contract, and the counterparty (typically a developer or homebuilder) to the ICFA is the Company’s customer.

Revenue is recognized when (1) the Company has planned, coordinated, and financed the infrastructure as specified in the ICFA contract;

(2) the Company has sufficient capacity in place within the infrastructure to provide water/wastewater services to the counterparty, and (3) based on the totality of the circumstances regarding the entitlement and development of the land, it is more likely than not that the counterparty will move forward with construction of residential, commercial, or industrial development within the next twenty-four months.

Allowance for Credit Losses

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In return, the developers and homebuilders pay the Company an agreed-upon amount per dwelling unit for the land legally described in the agreement or a portion thereof.

Under ICFA agreements, the Company has a contractual obligation

to ensure physical capacity exists through its regulated utilities for the provision of water and wastewater utility service to the land when needed.

Under ICFA agreements, the Company has a contractual obligation to ensure physical capacity exists through its regulated utilities for the provision of water and wastewater utility service to the land when needed.

This obligation persists regardless of connection growth.

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The Company is responsible for assuring that the full HUF tariff, which is the set amount determined by the rate decision, is funded in the HUF liability, even if it results in recording less than 30 % of the overall ICFA funds as deferred revenue.

ICFA revenue is recognized when the Company completes the performance obligations under the agreement.

ICFA revenue is

recognized when the Company completes the performance obligations under the agreement.

The ACC prohibits the Company from entering into any new ICFAs.

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Restricted Cash

Restricted cash represents cash deposited relating to HUF tariffs, to be used towards future infrastructure costs, as well as funds set aside to settle asset retirement obligations.

The following table summarizes the restricted cash balance as of December 31, 2024 and 2023 (in thousands):

December 31, 2024 December 31, 2023

Restricted cash represents cash deposited relating to HUF tariffs, to be used towards future infrastructure costs, as well as funds set aside to settle AROs.

The following table summarizes the restricted cash balance:

(in thousands) December 31, 2025 December 31, 2024

HUF funds $ 591 $ 870

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Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company’s valuation allowance totaled zero as of December 31, 2024 and 2023 (see Note 14 – “Income Taxes”).

The Company had no valuation allowance as of December 31, 2025 and 2024 (see Note 14 – “Income Taxes”).

The Company evaluates uncertain tax positions using a two-step approach.

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The use of a valuation allowance as a substitute for derecognition of tax positions is prohibited, and to the extent that uncertain tax positions exist, expanded disclosures are provided.

Judgment and the use of estimates are required in developing the provision for income taxes and reporting of tax-related assets and liabilities.

The interpretation of tax laws and associated regulations involves uncertainty as taxing authorities may interpret the laws differently.

Goodwill represents the excess purchase price over the fair value of net tangible and identifiable intangible assets acquired through acquisitions.

Goodwill is not amortized, it is instead tested for impairment annually, or more often if circumstances indicate a possible impairment may exist.

As required, the Company evaluates goodwill for impairment annually, and do so as of November 1 of each year, and at an interim date if indications of impairment exist.

When testing goodwill for impairment, the Company may assess qualitative factors, including macroeconomic conditions, industry and market considerations, overall financial performance, and entity specific events to determine whether it is more likely than not that the fair value of an operating and reportable segment is less than its carrying amount.

As required, the Company evaluates goodwill for impairment annually, and does so as of November 1 of each year, and at an interim date if indications of impairment exist.

When testing goodwill for impairment,

the Company may assess qualitative factors, including macroeconomic conditions, industry and market considerations, overall financial performance, and entity specific events to determine whether it is more likely than not that the fair value of an operating and reportable segment is less than its carrying amount.

The Company utilizes internally developed discounted future cash flow models, third-party appraisals, or broker valuations to determine the fair value of the reporting unit.

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Intangible Assets

Intangible assets not subject to amortization consist of certain permits expected to be renewable indefinitely, water rights, and certain service areas acquired in transactions which did not meet the definition of business combinations for accounting purposes, and are considered to have indefinite lives.

Intangible assets with indefinite lives are not amortized but are tested for impairment annually, or more often if certain circumstances indicate a possible impairment may exist.

Amortized intangible assets consist primarily of acquired ICFA and Sonoran contract rights.

Refer to Note 3 – “Regulatory Matters” for additional information about ICFAs.

Intangible assets consist of acquired ICFA and Sonoran contract rights and are amortized when cash is received in proportion to the amount of total cash expected to be received under the underlying agreements.

Due to the uncertainty of the timing of when cash will be received under ICFA agreements and contract rights, the Company cannot reliably estimate when the remaining intangible assets’ amortization will be recorded.

Refer to Note 1 – “Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements — Significant Accounting Policies — ICFAs” for additional information about ICFAs.

Impairment of Long-Lived Assets

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Generally, fair value will be determined using appraisals or valuation techniques such as the present value of expected future cash flows.

The Company has operating and finance leases involving real property, vehicles, and equipment.

The right to use an underlying asset for the lease term is represented by an ROU asset and the ROU lease liability represents the obligations to make lease payments arising from the lease.

ROU lease liabilities and related assets are measured and recorded at the commencement date in accordance with ASC Topic 842, Leases (“ASC 842”), and are initially recorded based on the estimated present value of the discounted remaining lease payments over the lease term.

Lease expense is recognized on a straight-line basis over the lease term.

The Company elected to apply the short-term lease exception for leases with terms of twelve months or less, which are not included on the balance sheet and are expensed on a straight-line basis over the term of the lease.

None of the Company’s lease agreements contain variable lease payments, material residual value guarantees or material restrictive covenants.

Significant assumptions and judgments made as part of the lease standard include determining (i) whether a contract contains a lease, (ii) whether a contract involves an identified asset, and (iii) which party to the contract directs the use of the asset.

The discount rate used to determine the present value of the lease payments is the implicit rate, when readily determinable, or the Company’s incremental borrowing rate.

Leases are included in the Right-of-use assets, net, Leases, current portion and Long-term lease liabilities financial statement line items on the Consolidated Balance Sheets.

Debt Issuance Costs

In connection with the issuance of certain of the Company’s long-term debt, the Company has incurred legal and other costs that are believed to be directly attributable to realizing the proceeds of the debt issued.

In connection with the issuance of certain of the Company’s long-term debt, the Company has incurred legal and other costs that are directly attributable to realizing the proceeds of the debt issued.

These costs are netted against long-term debt and amortized as interest expense using the effective interest method over the term of the respective debt.

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These AIAC are non-interest-bearing and are subject to refund to the developers through annual payments that are computed as a percentage of the total annual gross revenue earned from customers connected to utility service constructed under the agreement over a specified period (generally 22 years).

The refundable AIAC have a carrying value of $ 127.9 million and $ 111.5 million as of December 31, 2024 and 2023, respectively.

The refundable AIAC have a carrying value of $ 157.1 million and $ 127.9 million as of December 31, 2025 and 2024,

respectively.

Upon the expiration of the agreements’ refunding period, the remaining balance of the AIAC becomes nonrefundable and at that time is considered CIAC.

Additionally, the Company accounts for its HUF tariffs as a CIAC once the associated utility plant is placed in service.

Non-cash transfers from HUF to CIAC were $ 3.9 million for the year ended December 31, 2024.

CIAC are amortized as a reduction of depreciation expense over the estimated remaining life of the related

utility plant.

CIAC are amortized as a reduction of depreciation expense over the estimated remaining life of the related utility plant.

For rate-making purposes, utility plant funded by AIAC or CIAC are excluded from rate base.

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Fair Value of Financial Instruments

ASC 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs).

ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs).

The hierarchy consists of three levels, as follows:

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Business Combinations

Business combinations are accounted for as a business combination under ASC Topic 805, Business Combinations, and the purchase price is allocated to the acquired utility assets and liabilities based on the acquisition-date fair values.

Fair values are determined in accordance with ASC Topic 820, Fair Value Measurement (“ASC 820”), which allows for the characteristics of the acquired assets and liabilities to be considered, particularly restrictions on the use of the asset and liabilities.

Acquisitions are accounted for as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) , and the purchase price is allocated to the acquired utility assets and liabilities based on the acquisition-date fair values.

Fair values are determined in accordance with ASC 820, which allows for the characteristics of the acquired assets and liabilities to be considered, particularly restrictions on the use of the asset and liabilities.

Regulation is considered both a restriction on the use of the assets and liabilities, as it relates to inclusion in rate base, and a fundamental input to measuring the fair value in a business combination.

Substantially all the Company’s operations are subject to the rate-setting authority of the ACC and are accounted for pursuant to accounting guidance for regulated operations.

The rate-setting and cost recovery provisions currently in place for the Company’s regulated operations provide revenue derived from costs, including a return on investment of assets and liabilities included in rate base.

The rate-setting and cost recovery provisions currently in place for the Company’s regulated operations provide revenue derived from costs, including a return on rate base.

As such, the fair value of the Company’s assets and liabilities subject to these rate-setting provisions approximates the pre-acquisition carrying values and does not reflect any net valuation adjustments.

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Certain programs are subject to audits of compliance with program commitments and, subject to the outcomes of those assessments, the Company may be required to reimburse the government entity for cash previously received, or, in some cases, pay a penalty.

The Company evaluates each program and establishes a liability under the principles of ASC 450 if it is probable support payments will be recaptured or a penalty will be imposed.

The Company evaluates each program and establishes a liability under the principles of ASC Topic 450, Contingencies (“ASC 450”) , if it is probable support payments will be recaptured or a penalty will be imposed.

In April 2024, the Company’s Global Water - Rincon Water Company, Inc.

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Refer to Note 10 - “ Debt ,” for additional information.

In December 2023, the Company’s GW-Farmers utility was awarded a $ 1.6 million grant from WIFA to replace manual read meters with advanced metering infrastructure smart meters.

In December 2023, the Company’s GW-Farmers utility was awarded a $ 1.6 million grant from WIFA to replace manual read meters with AMI smart meters.

Disbursement of the award occurs through one or more reimbursement requests submitted by the Company for costs incurred and activities performed between July 6, 2022 and June 30, 2026.

Award payments are accounted for as CIAC.

For the year ended December 31, 2024, the Company received $ 0.9 million in award disbursements.

The Company received no award disbursements in 2023.

The Company received $ 0.3 million and $ 0.9 million in award disbursements for the years ended December 31, 2025 and December 31, 2024, respectively.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impacts this amendment will have on its income tax disclosures and intends to adopt the pronouncement for its Annual Report on Form 10-K for the year ending December 31, 2025.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which improves and clarifies the guidance regarding when disclosures should be provided in interim reporting periods.

The standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the impacts this amendment will have on its interim disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities , which establishes authoritative guidance on the accounting for government grants, including grants related to an asset and grants related to income.

This standard specifies the timing of recognition, the two available approaches to record the grant (the deferred income and the cost accumulation approach) and requires disclosure consistent with current disclosure requirements.

The standard is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impacts this amendment will have on its consolidated financial statements and required disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) .

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The standard is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impacts this amendment will have on its required disclosures.

The Company is currently evaluating the impacts this amendment will have on its consolidated financial statements and required disclosures.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures that expands disclosures of significant segment expenses and includes new disclosures for entities with a single reportable segment.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted this pronouncement and the related disclosures for the year ended December 31, 2024 and revised its segment reporting disclosures in Note 18 — “Business Segment Information” on a retrospective basis.

Asset Purchase Agreement with City of Tucson

Effective April 25, 2024, GW-Ocotillo, a wholly owned subsidiary of the Company, entered into an asset purchase agreement with the City of Tucson, pursuant to which GW-Ocotillo agreed to acquire seven isolated public water systems from the City of Tucson serving approximately 2,200 water service connections in an all-cash transaction for a purchase price of $ 8.4 million.

The isolated public water systems are located in and around Pima County.

The Company expects to complete the acquisition in the first half of 2025, subject to customary closing conditions.

The estimated rate base of the seven water systems is approximately $ 7.8 million.

Acquisition of Farmers Water Company

On February 1, 2023, the Company acquired all of the equity of Farmers Water Co., an operator of a water utility with service area in Pima County, Arizona, for a total consideration of $ 7.6 million consisting of $ 6.2 million in cash plus a growth premium estimated at $ 1.4 million.

The acquisition added approximately 3,300 active water service connections and approximately 21.5 square miles of service area in Sahuarita, Arizona and the surrounding unincorporated area of Pima County at the time of acquisition.

Under the terms of the purchase agreement, the Company is obligated to pay the seller a growth premium equal to $ 1,000 for each new account established in the service area, up to a total aggregate growth premium of $ 3.5 million.

The obligation period of the growth premium commences on the closing date of the acquisition and ends (i) ten years after the first new account for residential purposes is established on land that is, at the time of the closing date of the acquisition, undeveloped or unplatted and owned by the seller within the service area or (ii) ten years after the date of closing if a new account (as described above) has not been established.

The assumptions and estimates used in determining the contingent consideration related to the growth premium are consistent with previous acquisitions.

As of December 31, 2024, the remaining liability was $ 1.2 million.

The purchase price allocation of the net assets acquired in the transaction is as follows as of the acquisition date (in thousands):

Net assets acquired:

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software , which clarifies and modernizes the accounting for costs related to internal-use software.

The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify (i) the threshold entities apply to begin capitalizing costs and (ii) disclosure requirements.

ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company early adopted this standard on a prospective basis from the adoption date of January 1, 2026 and does not expect a material impact to its consolidated financial statements or disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides entities with a practical expedient when estimating expected credit losses on current accounts receivable and/or current contract assets arising from transactions under Revenue from Contracts with Customers (Topic 606).

The practical expedient allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.

For entities that elect the practical expedient, ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company does not expect a material impact to its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted this pronouncement and the related disclosure for the year ended December 31, 2025 and revised its income tax disclosures in Note 14 — “ Income Taxes ” on a prospective basis.

Acquisition of Water Systems from City of Tucson

On July 8, 2025, the Company’s GW-Ocotillo subsidiary completed the previously announced acquisition of seven water systems from Tucson Water, the City of Tucson’s water utility, in an all-cash transaction for an amended purchase price of approximately $ 8.1 million.

The systems served approximately 2,200 water service connections in and around Pima County with a rate base of approximately $ 7.7 million at the time of acquisition.

The acquisition, which served to grow our footprint in Pima County, was accounted for as a business combination under ASC 805 and the purchase price was allocated to the acquired utility assets and liabilities based on the acquisition-date fair values.

Substantially all the Company’s operations are subject to the rate-setting authority of the ACC and are accounted for pursuant to accounting guidance for regulated operations.

The rate-setting and cost recovery provisions currently in place for the Company’s regulated operations provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base.

As such, the fair value of the acquired utility assets and liabilities subject to these rate-setting provisions approximates the pre-acquisition carrying values and does not reflect any net valuation adjustments.

The purchase price allocation of the net assets acquired in the transaction is as follows as of the acquisition date:

Net assets acquired (in thousands) :

Utility plant, net $ 7,731

Accounts receivable 162

Utility plant (excluding CWIP)

Intangibles (1)

Other taxes ( 35 )

Other accrued liabilities ( 25 )

Developer deposits ( 22 )

AIAC ( 1,481 )

CIAC ( 7,322 )

Total net assets assumed 7,893

Goodwill 5,863

Total purchase price $ 8,123

(1) Intangibles consist of franchise contract rights and organization costs.

Refer to Note 8 — “Goodwill and Intangible Assets” for additional information regarding the intangibles.

The goodwill reflects the value paid primarily for the long-term potential for connection growth as a result of the Company’s increased scale and diversity, opportunities for synergies, and an improved risk profile.

While the Company uses the best available estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, such estimates are inherently uncertain and subject to refinement.

Events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results.

As a result, during the one-year measurement period from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Any adjustments subsequent to the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, will be recorded in the Company’s Condensed Consolidated Statements of Operations.

Regulatory Matters

Regulatory Assets and Liabilities

The Company’s regulatory assets and liabilities consist of the following (in thousands):

Recovery Period December 31, 2024 December 31, 2023

The Company’s regulatory assets and liabilities consisted of the following:

(in thousands) Recovery Period December 31, 2025 December 31, 2024

Regulatory Assets

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Total regulatory assets 7,222 4,032

current portion 219 —

Total noncurrent regulatory assets $ 7,003 $ 4,032

Regulatory Liabilities

Income taxes payable through future rates $ 468 $ 488

Acquired ICFAs $ 4,243 $ 4,243

Income taxes payable through future rates 449 468

Depreciation adjustment 653 675

Total regulatory liabilities 5,345 5,386

current portion 131 —

Total noncurrent regulatory liabilities $ 5,214 $ 5,386

Acquisition Premiums

In Decision No.

79383 (June 20, 2024), the ACC authorized acquisition premiums for the following entities:

GW- Francesca Water Company, Inc., GW- Las Quintas Serenas Water Company, Inc., GW- Lyn Lee Water Company, Inc., GW-Mirabell Water Company, Inc., GW-Rincon Water Company, Inc., and GW- Tortolita Water Company, Inc..

These entities were consolidated to form GW-Saguaro.

The acquisition premiums approved for GW-Saguaro totaled approximately $ 1.8 million at the time of the decision.

79383 also approved a 50 -year amortization period for recovery of the acquisition premiums beginning July 2024.

78644, issued on July 27, 2022, approved acquisition premiums related to the acquisitions of the Company’s GW-Turner utility as well as those of Global Water – Red Rock Water Company, Inc.

(now part of GW-Santa Cruz and GW-Palo

Amortization began in 2022 as the acquisition premiums were included in customer rates as approved in the decision and will continue over a 25 -year period.

The acquisition premium balance relating to these utilities as of December 31, 2024 was approximately $ 0.7 million.

79383 (2024) and 78644 (2022), the ACC approved acquisition premiums of approximately $ 1.8 million to be amortized over a 50 -year period and approximately $ 0.8 million to be amortized over a 25 -year period, respectively.

In Decision No.

80695 (2025), the ACC approved an additional acquisition premium, and deferral of recovery, of approximately $ 3.0 million, which will not begin amortizing until further authorized by the ACC in a future GW-Farmers rate case, subject to the GW-Farmers utility being found viable by the ACC.

Income Taxes Recoverable/Payable Through Future Rates

The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate.

The TCJA required the Company to remeasure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate.

For the Company’s regulated entities, substantially all of the change in deferred income taxes is recorded as an offset to either a regulatory asset or liability because the impact of changes in the rates are expected to be recovered from or refunded to customers.

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Recent ACC Rulings and Activity

2024 GW-Farmers Rate Case

On June 27, 2024, GW-Farmers filed a rate case application with the ACC for increased water rates based on a 2023 test year with updates for changes in post-test year plant through December 31, 2024.

The application requests, among other things, a revenue increase of approximately $ 1.3 million phased-in over two steps and recovery of an acquisition premium related to the Farmers Water Co.

On January 10, 2025, GW-Farmers filed with the ACC a unanimous settlement agreement between GW-Farmers, RUCO and the Utilities Division Staff of the ACC.

Among other elements, the unanimous settlement agreement calls for an increase in GW-Farmers’ annual revenue requirement of $ 1.1 million and a return on equity of 9.6 %, with rates to be phased-in over three periods, starting with 50 % of the increase effective on May 1, 2025, with subsequent 25 % portions of the increase effective November 1, 2025 and May 1, 2026.

In addition to the rate increase, the agreement proposes a deferral of the recovery of an acquisition premium of approximately $ 3 million related to the Company’s acquisition of GW-Farmers, to be recovered in a future rate case.

The unanimous settlement agreement is under advisement with the ALJ, and the Company anticipates a decision in the first half of 2025.

Acquisition of Seven Systems from City of Tucson

In Decision No.

79679 on January 22, 2025, the ACC approved GW-Ocotillo’s Application for a CC&N to provide water service to seven isolated public water systems currently receiving service from the City of Tucson.

The Company expects to complete the acquisition of the seven isolated public water systems from the City of Tucson in the first half of 2025, subject to customary closing conditions.

2025 GW-Santa Cruz and GW-Palo Verde Rate Case

In February 2025, the Company notified the ACC of its intention to file a rate case for its GW-Santa Cruz and GW-Palo Verde utilities in 2025.

The GW-Santa Cruz and GW-Palo Verde rate case will be based on a test year ending December 31, 2024 with updates for changes in post-test year plant.

The Company has begun stakeholder outreach for the rate case.

Southwest Plant Accounting Order and Bill Credit

On July 3, 2023, the Company’s GW-Palo Verde and GW-Santa Cruz utilities filed an application with the ACC for approval of an accounting order to defer and record as a regulatory asset the depreciation expense recorded for the Company’s Southwest Plant, plus the carrying cost at the authorized rate of return set in GW-Palo Verde’s and GW-Santa Cruz’s most recent rate order, until the plant is considered for recovery in the next GW-Palo Verde and GW-Santa Cruz rate case.

The Southwest Plant was substantially constructed prior to 2009 to provide water, wastewater, and recycled water service for the area southwest of

the City of Maricopa.

Due to the unprecedented collapse of the housing market during the Great Recession, the nearly completed plant remained idle for well over a decade.

The total cost of the Southwest Plant was approximately $ 38.4 million.

Since July 2023, construction costs of $ 25.0 million related to the water production plant and a portion of the wastewater processing plant were placed in service, with the remaining parts of the Southwest Plant to be placed in service once sufficient flows, provided by connection growth, are established.

There can be no assurance, however, that the ACC will approve the application as submitted and the ACC could take other actions regarding the application.

On March 5, 2025, GW-Santa Cruz and GW-Palo Verde each filed a general rate case application with the ACC for water and wastewater rates, respectively.

The GW-Santa Cruz and GW-Palo Verde rate case is based on a test year ending December 31, 2024, with updates for changes in post-test year plant.

On October 1, 2025, the ACC Utilities Division (“ACC Staff”) and RUCO filed their respective initial written testimonies with the ACC in the rate case.

Subsequent rebuttal, surrebuttal and rejoinder testimonies were filed by the parties in the fourth quarter of 2025.

The hearing with the ALJ, originally scheduled to begin December 15, 2025, was delayed until August 3, 2026, and an additional round of testimony is scheduled for Q2 2026.

2024 GW-Farmers Rate Case - Decision No.

80695 - Issued April 29, 2025

On June 27, 2024, GW-Farmers filed a rate case application with the ACC for increased water rates based on a 2023 test year, with updates for changes in post-test year plant through December 31, 2024.

On April 29, 2025, the ACC approved GW-Farmers’ rate case application in Decision No.

Among other approvals, Decision No.

80695 approved an increase in GW-Farmers’ annual revenue requirement of $ 1.1 million and a return on equity of 9.6 %, with increased rates to be phased-in over three periods.

50 % of the increase was effective on May 1, 2025, with another 25 % effective on November 1, 2025.

The final 25 % increase will be phased in on May 1, 2026.

In addition to the rate increase, Decision No.

80695 also approved a deferral of the recovery of an acquisition premium of approximately $ 3 million related to the Company’s acquisition of GW-Farmers, which the Company recorded as of March 31, 2025.

80695 calls for the acquisition premium to be recovered in a future rate case, subject to the GW-Farmers utility being found viable by the ACC.

Refer to Note 8 – “Goodwill and Intangible Assets” for additional information.

2022 GW-Saguaro Rate Case - Decision No.

79383 - Issued June 20, 2024

On June 20, 2024, the ACC issued Decision No.

79383, which related to each of the rate case applications filed by seven of the Company’s regulated water utilities for increased water rates based on a 2022 test year.

79383 approved, among other things, a collective annual revenue increase of approximately $ 351,000 .

The approved rates are being phased-in over five periods with the first increase effective July 1, 2024.

The subsequent four increases will be effective on January 1 of each subsequent year.

The majority of the revenue increase was phased in on January 1, 2025.

Southwest Plant

In January 2024, the Company discovered that approximately $ 7.8 million of construction costs for the Southwest Plant had been prematurely included as “plant in service” for rate making purposes in 2007 and were reflected in the calculation of customer rates in Decision No.

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The ACC issued Decision No.

79424 on July 18, 2024 approving the bill credit with an effective date of August 1, 2024, which will reduce revenue earned subsequent to the order by approximately $ 570,000 annually.

The bill credit will be in place until the conclusion of the next GW-Palo Verde rate case, which Decision No.

79424 requires GW-Palo Verde to file no later than December 31, 2025.

The ACC may take further action during the next GW-Palo Verde rate case.

Such action may include requiring the Company to reduce rates further going forward or taking other actions that would be unfavorable to the Company.

79383 - Issued June 20, 2024 - GW-Saguaro Rate Case

On June 20, 2024, the ACC issued Decision No.

79383 relating to each of the rate case applications filed by seven of the Company’s regulated utilities for increased water rates based on a 2022 test year.

79383 approved, among other things, a collective annual revenue increase of approximately $ 351,000 .

The approved rates will be phased-in over five periods with the first increase effective July 1, 2024.

The subsequent four increases will be effective on January 1 of each subsequent year, with the majority of the revenue increase phased in by January 1, 2025.

The ACC also approved:

(i) the consolidation of water rates to one single rate for the seven utilities;

(ii) acquisition premiums relating to the Company’s acquisitions of its GW-Mirabell, GW-Lyn Lee, GW-Francesca, GW-Tortolita, GW - Rincon, and GW-Las Quintas utilities, each located in Pima County, which increase the rate base for such utilities and result in an increase in the annual collective revenue requirement;

(iii) the Company’s ability to annually adjust rates to flow through certain changes in tax expense, primarily related to income taxes, without the necessity of a rate case proceeding;

(iv) a sustainable water surcharge, which will allow semiannual surcharges to be added to customer bills based on verified costs of new water resources;

(v) a capital structure matching the Company’s previous rate case of 55 % equity with a 9.6 % return on equity;

(vi) a depreciation expense accounting deferral for GW - Rincon (now part of GW-Saguaro).

79424 on July 18, 2024 approving the bill credit with an effective date of August 1, 2024.

The bill credit reduced revenue earned by $ 0.6 million and $ 0.3 million for the years ended December 31, 2025 and 2024, respectively.

Revenue Recognition

Regulated Revenue

Operating revenue is substantially derived from contracts with customers to provide regulated water, wastewater, and recycled water service based upon tariff rates approved by the ACC.

Regulated service revenue consists of amounts billed to customers based on approved fixed monthly fees and consumption based fees, as well as unbilled revenue, which is estimated revenue from the last meter reading date to the end of the accounting period utilizing historical customer data recorded.

The measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month.

At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding unbilled revenue is recognized.

The unbilled revenue estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage).

The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice.

The Company has the right to invoice for the volume of consumption, service charge, and other authorized charges.

The Company satisfies its performance obligation to provide water, wastewater, and recycled water service over time as service is rendered.

The Company applies judgment, based principally on historical payment experience, in estimating its customers’ ability to pay.

Total revenue does not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales taxes.

Unregulated Revenue

Unregulated revenue represents revenue that is not subject to the ratemaking process of the ACC and is primarily related to the revenue recognized on a portion of ICFA funds received.

Under the terms of ASC 606, each ICFA is a contract, and the counterparty (typically a developer or homebuilder) to the ICFA is the Company’s customer.

Revenue is recognized when (1) the Company has planned, coordinated, and financed the infrastructure as specified in the ICFA contract;

(2) the Company has sufficient capacity in place within the infrastructure to provide water/wastewater services to the developer, and (3) based on the totality of the circumstances regarding the entitlement and development of the land, it is more likely than not that the landowner will move forward with construction of residential, commercial, or industrial development within the next twenty-four months.

December 31, 2023 Balance Payments Allocated to Deferred Revenue

Revenue Recognized

December 31, 2024 Balance

Deferred Revenue - ICFA

$ 19,656 $ 1,861 $ — $ 21,517

December 31, 2022 Balance Payments Allocated to Deferred Revenue

Revenue Recognized

December 31, 2023 Balance

Deferred Revenue - ICFA

$ 20,974 $ 1,468 $ ( 2,786 ) $ 19,656

Disaggregated Revenue

For the years ended December 31, 2024 and 2023, disaggregated revenue from contracts with customers by major source and customer class are as follows (in thousands):

Disaggregated revenue from contracts with customers by major source and customer class was as follows:

(in thousands) 2025 2024

Regulated revenue

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Total wastewater and recycled water revenue 27,149 26,628

TOTAL REGULATED REVENUE 52,692 50,242

UNREGULATED REVENUE

ICFA revenue — 2,786

TOTAL UNREGULATED REVENUE — 2,786

Total revenue $ 55,758 $ 52,692

Contract Balances

The Company’s contract assets and liabilities consist of the following (in thousands):

December 31, 2024 December 31, 2023

The Company’s contract assets and liabilities consisted of the following:

(in thousands) December 31, 2025 December 31, 2024

Contract assets

4 unchanged sentences

Total contract liabilities $ 22,772 $ 21,517

Remaining Performance Obligations

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

Deferred revenue - ICFA is recognized as revenue once the obligations specified within the applicable ICFA are met, including construction of sufficient operating capacity to serve the customers for which revenue was deferred.

Due to the uncertainty of future events, the Company is unable to estimate when to expect recognition of deferred revenue - ICFA.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable as of December 31, 2024 and 2023 consist of the following (in thousands):

December 31, 2024 December 31, 2023

Accounts receivable consisted of the following:

(in thousands) December 31, 2025 December 31, 2024

Billed receivables $ 3,990 $ 3,396

Less provision for credit losses ( 163 ) ( 122 )

provision for credit losses ( 244 ) ( 163 )

Accounts receivable, net $ 3,746 $ 3,233

The following table summarizes the allowance for credit loss activity for the years ended December 31, 2024 and 2023 (in thousands):

December 31, 2024 December 31, 2023

The following table summarizes the allowance for credit loss activity:

(in thousands) December 31, 2025 December 31, 2024

Beginning of period $ ( 163 ) $ ( 122 )

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End of period $ ( 244 ) $ ( 163 )

Remaining Performance Obligations

Deferred revenue from ICFAs is recognized as revenue once the obligations specified within the applicable ICFA are met, including construction of sufficient operating capacity to serve the customers for which revenue was deferred.

Due to the uncertainty of future events, the Company is unable to estimate when to expect recognition of deferred revenue from ICFAs.

The following table summarizes the ICFA deferred revenue activity:

(in thousands) December 31, 2025 December 31, 2024

Beginning of period $ 21,517 $ 19,656

Payments allocated to deferred revenue 1,255 1,861

End of period $ 22,772 $ 21,517

Earnings Per Share

Basic earnings per share (“EPS”) in each period of this report were calculated by dividing net income by the weighted-average number of shares during those periods.

Basic EPS in each period of this report were calculated by dividing net income by the weighted-average number of shares during those periods.

Diluted EPS includes additional weighted-average common stock equivalents (options and restricted stock awards), if dilutive.

A reconciliation of the denominator used in Basic and Diluted EPS calculations is show in the following table:

A reconciliation of the denominator used in basic and diluted EPS calculations is shown in the following table:

(In thousands) 2025 2024

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Anti-dilutive shares excluded from earnings per diluted shares 130 —

(1) Shares were excluded from the dilutive-effect calculation because the outstanding awards’ exercise prices were greater than the average market price of the Company’s common stock.

Refer to Note 15 – “Share-based Compensation” for additional information regarding the option and restricted stock grants.

For the year ended December 31, 2025, approximately 130,000 share-based awards were excluded from the computation of diluted EPS because their effect would have been anti-dilutive under the treasury stock method.

Utility Plant

Utility plant as of December 31, 2024 and 2023 consist of the following (in thousands):

December 31, 2024 December 31, 2023

Utility plant consisted of the following:

(in thousands) December 31, 2025 December 31, 2024

Transmission and distribution plant $ 364,270 $ 321,075

2 unchanged sentences

Construction work-in-progress 48,801 54,388

Intangible plant 3,569 2,365

Land 2,897 2,300

1 unchanged sentence

Depreciation expense related to depreciable property was $ 14.5 million and $ 12.0 million for the years ended December 31, 2025 and 2024, respectively.

TAXES, PREPAID EXPENSES AND OTHER CURRENT ASSETS

Taxes, prepaid expenses and other current assets as of December 31, 2024 and 2023 consist of the following (in thousands):

December 31, 2024 December 31, 2023

ICFA receivable $ 1,871 $ —

Buckeye growth premiums receivable 738 807

Asset Retirement Obligations

Changes in the carrying amount of AROs were as follows:

(in thousands) December 31, 2025

Beginning of period $ 697

Accretion expense 148

Change in estimated cash flows ( 374 )

End of period $ 471

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

(in thousands) December 31, 2025 December 31, 2024

Prepaid expense $ 800 $ 648

Prepaid income tax 738 149

Prepaid insurance 625 533

Buckeye growth premiums receivable 564 738

Stop loss medical claims 340 135

Regulatory assets, current 219 —

ICFA receivable — 1,871

Other current assets 102 6

Taxes, prepaid expenses and other current assets $ 4,080 $ 2,494

Prepaid expenses and other current assets $ 3,388 $ 4,080

Goodwill and Intangible Assets

1 unchanged sentence

As of December 31, 2025, there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to the acquisitions.

As a result of Decision No.

79383 issued by the ACC on June 20, 2024, the Company reclassified $ 1.3 million of goodwill to regulatory assets for certain impacted utilities to establish the approved $ 1.8 million of acquisition premiums net of the $ 0.5 million that was previously recorded for Global Water - Rincon Water Company, Inc (now part of GW-Saguaro).

In March 2025, in connection with the 2024 GW-Farmers rate case, the Company reclassified approximately $ 3.0 million of goodwill to regulatory assets to establish an acquisition premium.

Refer to Note 3 – “Regulatory Matters” for additional information.

As of December 31, 2024 and 2023, the goodwill balance consisted of the following (in thousands):

Beginning balance $ 10,820 $ 4,957

In addition, an immaterial adjustment to goodwill was recorded during the second quarter of 2025.

In July 2025, the Company recorded an additional $ 0.2 million of goodwill in connection with the seven water systems acquired from the City of Tucson (refer to Note 2 – Acquisitions for additional information).

Changes in the carrying value of goodwill were as follows:

(in thousands) December 31, 2025

December 31, 2024 $ 9,486

Acquisition activity 230

Adjustments ( 1,334 ) —

Ending balance $ 9,486 $ 10,820

Reclassification to regulatory assets ( 2,959 )

Other adjustments ( 245 )

December 31, 2025 $ 6,512

Intangible Assets

As of December 31, 2024 and 2023, intangible assets consisted of the following (in thousands):

Intangible assets consisted of the following:

December 31, 2025 December 31, 2024

(in thousands) Gross

Amount Accumulated

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Amortization Net

INDEFINITE LIVED INTANGIBLE ASSETS:

CP Water Certificate of Convenience & Necessity service area $ 1,532 $ — $ 1,532 $ 1,532 $ — $ 1,532

Franchise contract rights 657 — 657 139 — 139

Other Intangible Assets 176 — 176 176 — 176

Total indefinite lived intangible assets 2,365 — 2,365 1,847 — 1,847

DEFINITE LIVED INTANGIBLE ASSETS:

Intangible assets

Acquired ICFAs $ 17,978 $ ( 17,037 ) $ 941 $ 17,978 $ ( 17,037 ) $ 941

Sonoran contract rights 7,406 ( 2,285 ) 5,121 7,406 ( 2,285 ) 5,121

Total definite lived intangible assets 25,384 ( 19,322 ) 6,062 25,384 ( 18,390 ) 6,994

Total intangible assets $ 25,384 $ ( 19,322 ) $ 6,062 $ 25,384 $ ( 19,322 ) $ 6,062

The CP Water CC&N intangible asset was acquired through the acquisition of CP Water in 2006.

This CC&N permit has no outstanding conditions that would require renewal.

Franchise contract rights relate to the 2018 acquisition of Global Water Red Rock Water Company, Inc.

(now part of GW-Saguaro) and the 2023 acquisition of GW-Farmers.

Franchise contract rights are agreements with Pima and Pinal counties for GW-Saguaro and Pima county and the Town of Sahuarita for GW-Farmers that allow the Company to place infrastructure in public right-of-way and permits expected to be renewable indefinitely.

The organizational costs represent fees paid to federal or state governments for the privilege of incorporation and expenditures incident to organizing the corporation and preparing it to conduct business.

Acquired ICFAs and Sonoran contract rights relate to acquired rights under certain ICFAs through the 2004 acquisition of GW-Santa Cruz and GW-Palo Verde and the 2005 acquisition of Sonoran assets, respectively, which are amortized when cash is received in proportion to the amount of total cash expected to be received under the underlying agreements.

There was $ 0.9 million and $ 1.4 million of amortization recorded for these balances during the years ended December 31, 2024 and 2023, respectively.

Private Placement Offering of Common Stock

On June 8, 2023, the Company entered into a securities purchase agreement for the issuance and sale by the Company of an aggregate of 230,000 shares of the Company’s common stock at a purchase price of $ 12.07 per share in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder.

There was no amortization recorded for these balances during the years ended December 31, 2025 and 2024.

Private Placement of Common Stock

On September 30, 2025, the Company entered into a securities purchase agreement for the issuance and sale by the Company of an aggregate of 1,270,572 shares of the Company’s common stock at a purchase price of $ 10.30 per share in an offering exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder.

The Company received gross proceeds of approximately $ 13.1 million from the offering.

One of the Company’s directors purchased an aggregate of 30,000 shares of common stock in the offering at the purchase price.

The outstanding balances and maturity dates for short-term (including the current portion of long-term debt) and long-term debt as of December 31, 2024 and December 31, 2023 are as follows (in thousands):

December 31, 2024 December 31, 2023

Short-term Long-term Short-term Long-term

NOTES PAYABLE

4.38 % Senior Secured Notes, Series A, maturing June 2028 (“Series A Notes”)

$ — 28,750 $ — $ 28,750

4.58 % Senior Secured Notes, Series B, maturing June 2036 (“Series B Notes”)

3,833 69,000 3,833 72,833

6.91 % Senior Secured Notes, maturing January 2034

Certain existing shareholders, including certain directors and/or their affiliates, purchased an aggregate of 882,223 shares of common stock in the offering at the purchase price.

Public Offering of Common Stock

On March 27, 2025, the Company completed a public offering of 3,220,000 shares of its common stock at a public offering price of $ 10.00 per share, which included 420,000 shares issued and sold to the underwriters following the exercise in full of their option to purchase additional shares of common stock.

Certain existing shareholders, including certain directors and/or their affiliates, purchased an aggregate of 1,439,200 shares of common stock at the public offering price.

The public offering resulted in approximately $ 32.2 million of gross proceeds or $ 30.8 million of net proceeds, after deducting underwriting discounts, commissions and offering expenses paid by the Company.

The outstanding balances and maturity dates for long-term debt were as follows:

(in thousands) Maturity December 31, 2025 December 31, 2024

Long-term debt

7.330 % Loan Payable

May 2028 $ 133 $ 185

4.380 % Series A Notes

June 2028 28,750 28,750

6.910 % Notes

4.911 % WIFA Note, maturing April 2044

January 2034 20,000 20,000

5.490 % Term Loan

December 2035 15,000 —

4.580 % Series B Notes

June 2036 69,000 72,833

4.911 % WIFA Note

3,875 119,148 3,833 101,583

Debt issuance costs — ( 764 ) — ( 426 )

Loan Payable 51 134 47 184

Total debt $ 3,926 $ 118,518 $ 3,880 $ 101,341

Debt is measured at fair value on a recurring basis as of December 31, 2024 and 2023 as follows (in thousands):

December 31, 2024 December 31, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Long-term debt (1)

— 118,702 — 118,702 — 100,746 — 100,746

(1) The fair value of debt was estimated based on interest rates considered available for instruments of similar terms and remaining maturities.

On April 30, 2024, the Company’s Global Water - Rincon Water Company, Inc.

utility (now part of GW-Saguaro) entered into a loan agreement with WIFA for the 4.911 % WIFA Note with a principal amount of $ 2.4 million to improve the utility’s infrastructure, of which $ 0.7 million is forgivable.

The 4.911 % WIFA Note is due on April 1, 2044 and bears an interest rate of 4.911 %.

Funding occurs through one or more draw requests submitted by the Company and the subsequent disbursement of principal by WIFA.

As of December 31, 2024, the Company has received approximately $ 2.1 million in disbursements under this agreement.

April 2044 1,613 1,440

Total long-term debt 134,496 123,208

Unamortized debt issuance costs 798 764

Long-term debt, current portion 3,942 3,926

Total long-term debt, net $ 129,756 $ 118,518

Senior Secured Notes

On June 24, 2016, the Company issued two series of senior secured notes with a total principal balance of $ 115.0 million at a blended interest rate of 4.55 %.

The Series A Notes carry a principal balance of $ 28.8 million and bear an interest rate of 4.38 % over a twelve-year term, with the principal payment due on June 15, 2028.

The Series B Notes carry a principal balance of $ 72.8 million and bear an interest rate of 4.58 % over a 20 -year term, with the principal payment due on June 15, 2036.

The Series B Notes were interest only for the first five years , with $ 1.9 million principal payments paid semiannually in June and December thereafter beginning December 2021.

Additionally, on October 26, 2023, the Company entered into a note purchase agreement for the issuance of an aggregate principal amount of $ 20 million of 6.91 % Senior Secured Notes due on January 3, 2034 (the “ 6.91 % Notes” and collectively with the Series A Notes and the Series B Notes, the “Senior Secured Notes”).

Pursuant to the terms of the 6.91 % Note purchase agreement, the Company issued the 6.91 % Notes on January 3, 2024.

The Series A Notes carry a principal balance of $ 28.8 million and bear an interest rate of 4.38 %, payable semi-annually on June 15 and December 15 of each year, over a twelve-year term, with the principal payment due on June 15, 2028.

The Series B Notes carry a principal balance of $ 69.0 million and bear an interest rate of 4.58 %, payable semi-annually on June 15 and December 15 of each year, over a 20 -year term, with the final principal balance due on June 15, 2036.

The Series B Notes were interest only for the first five years , with $ 1.9 million principal payments paid semi-annually in June and December thereafter beginning December 2021.

Additionally, on January 3, 2024, the Company issued $ 20 million aggregate principal amount of 6.91 % Senior Secured Notes due on January 3, 2034 (the “ 6.91 % Notes” and collectively with the Series A Notes and the Series B Notes, the “Senior Secured Notes”).

The 6.91 % Notes accrue interest at 6.91 % per annum from the date of issuance, payable semi-annually on January 3 and July 3 of each year, beginning on July 3, 2024, with a balloon payment due on January 3, 2034.

The Company maintains a revolving credit facility with The Northern Trust Company, an Illinois banking corporation (“Northern Trust”), pursuant to a loan agreement entered into between the parties (as amended, the “Northern Trust Loan Agreement”).

This Revolver, which may be used to refinance existing indebtedness, to acquire assets to use in and/or expand the Company’s business, and for general corporate purposes, has been amended as recently as July 1, 2024 to, among other things, extend the scheduled maturity date to July 1, 2026.

Pursuant to the Northern Trust Loan Agreement, the maximum principal amount available for borrowing under the Revolver is $ 15.0 million with amounts outstanding bearing interest, payable monthly, at a rate equal to the Secured Overnight Financing Rate (SOFR) plus 2.00 %.

On December 10, 2025, the Company entered into a credit agreement with, and issued a related promissory note to, CoBANK, ACB, a federally-chartered instrumentality of the United States.

Under the terms of the credit agreement and promissory note, the Company was provided term loan borrowings with an aggregate principal amount of $ 15 million.

The Term Loan bears interest at a fixed rate of 5.49 % per annum, payable semi-annually on June 15 and December 15 of each year, beginning on June 15, 2026, with the principal payment due on December 10, 2035, the scheduled maturity date.

As of December 31, 2025, the Term Loan carried a principal balance of $ 15.0 million.

On April 30, 2024, the Company’s Global Water - Rincon Water Company, Inc.

utility (now part of GW-Saguaro) entered into a loan agreement with WIFA for a note with a principal amount of $ 2.4 million to improve the utility’s infrastructure, including enhancements to the fluoride treatment system and other projects, of which $ 0.7 million is forgivable.

The WIFA Note is due on April 1, 2044 and bears an interest rate of 4.911 %.

Funding occurs through one or more draw requests submitted by the Company and the subsequent disbursement of principal by WIFA.

The Company received the final disbursements in May 2025, and as of December 31, 2025 and 2024, the outstanding balance of the WIFA Note was $ 1.6 million and $ 1.4 million, respectively.

In connection with the underlying assets being placed in service, the forgivable portion of the loan was recognized as CIAC in June 2025.

The Company maintains a revolving credit facility with Northern Trust pursuant to a loan agreement entered into between the parties (as amended, the “Northern Trust Loan Agreement”).

On April 14, 2025, the Company and Northern Trust entered into a sixth amendment to the Northern Trust Loan Agreement to, among other things, (i) extend the scheduled maturity date from July 1, 2026 to May 18, 2027 and (ii) increase the maximum principal amount available for borrowing under the Revolver from $ 15.0 million to $ 20.0 million.

Pursuant to the Northern Trust Loan Agreement, the amounts outstanding bear interest, payable

monthly, at a rate equal to the SOFR plus 2.10 %.

Additionally, the Company pays a quarterly facility fee equal to 0.35 % of the average daily unused amount of the Revolver.

As of December 31, 2024, the Company had no outstanding borrowings under the Revolver.

As of December 31, 2023, the outstanding borrowings on the Revolver were approximately $ 2.3 million.

There were less than $ 0.1 million of unamortized debt issuance costs as of both December 31, 2024 and 2023.

The Company had no outstanding borrowings under the Revolver as of both December 31, 2025 and 2024.

The Revolver had no unamortized debt issuance costs as of December 31, 2025 and less than $ 0.1 million of unamortized debt issuance costs as of December 31, 2024.

Debt Covenants

The Company’s Senior Secured Notes and Revolver (collectively, the “debt securities”) are collateralized by a security interest in the Company’s equity interest in its subsidiaries, including all payments representing profits and qualifying distributions.

The debt securities also have certain restrictive covenants that limit, among other things, the Company’s ability to:

The Company’s Senior Secured Notes, Term Loan and Revolver (collectively, the “debt instruments”) are collateralized by a security interest in the Company’s equity interest in its subsidiaries, including all payments representing profits and qualifying distributions.

The debt instruments also have certain restrictive covenants that limit, among other things, the Company’s ability to:

create liens and other encumbrances;

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and change the nature of the business.

The Company’s Senior Secured Notes and Revolver (collectively, the “debt securities”) require the Company to maintain a debt service coverage ratio of consolidated EBITDA to consolidated debt service of at least 1.10 to 1.00.

The debt instruments require the Company to maintain a debt service coverage ratio of consolidated EBITDA to consolidated debt service of at least 1.10 to 1.00.

Consolidated EBITDA is calculated as net income plus depreciation and amortization, taxes, interest and other non-cash charges net of non-cash income.

The debt securities also contain a provision limiting the payment of dividends if the Company falls below a debt service ratio of 1.25 .

Further, the foregoing covenants are subject to various qualifications and limitations as set forth in each of the debt securities’ respective agreements.

The debt securities are subject to certain customary events of default after which they could be declared due and payable if not cured within the grace period or, in certain circumstances, could be declared due and payable immediately.

As of December 31, 2024, the Company was in compliance with its financial debt covenants under the Senior Secured Notes and the Northern Trust Loan Agreement.

At December 31, 2024, the remaining aggregate annual maturities of debt obligations are as follows (in thousands):

The debt instruments also contain a provision limiting the payment of dividends if the Company falls below a debt service ratio of 1.25 .

Further, the foregoing covenants are subject to various qualifications and limitations as set forth in each of the debt instruments’ respective agreements.

The debt instruments are subject to certain customary events of default after which they could be declared due and payable if not cured within the grace period or, in certain circumstances, could be declared due and payable immediately.

As of December 31, 2025, the Company was in compliance with its financial debt covenants under the debt instruments.

At December 31, 2025, the remaining aggregate annual maturities of debt obligations were as follows:

(in thousands) Debt

Thereafter 86,140

Subtotal 134,496

amount representing unamortized discount and debt issuance costs 764

debt issuance costs 798

Total $ 133,698

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of December 31, 2024 and 2023 consist of the following (in thousands):

December 31, 2024 December 31, 2023

Accrued project liabilities $ 5,858 $ 858

Other taxes 1,648 1,438

Accrued expenses and other current liabilities consisted of the following:

(in thousands) December 31, 2025 December 31, 2024

Project liabilities $ 1,650 $ 5,858

AIAC refunds, current portion 1,685 1,431

Other taxes 1,496 1,648

Interest 1,242 1,180

Accrued payroll 991 767

Dividend payable 614 606

Payroll 943 991

Customer prepayments 781 556

Accrued license fees 353 343

Liability for share-based compensation arrangements 190 239

Dividend payable 728 614

License fees 349 353

Professional fees 277 66

Medical claims 237 157

Other accrued liabilities 1,069 947

Total accrued expenses $ 13,801 $ 7,129

The Company measures the lease liability at the present value of future lease payments, excluding variable payments based on usage or performance, and calculates the present value using implicit rates.

Leases with an initial term of twelve months or less are not recorded on the balance sheet.

For the years ended December 31, 2024, the Company entered into twenty new vehicle finance leases with 48 -month terms and an aggregate total of approximate $ 0.8 million, all of which include a purchase option, and one new office lease with a 129 -month term that is classified as an operating lease.

For the year ended December 31, 2023, the Company entered into five new vehicle finance leases with 48 -month terms and an aggregate total of approximately $ 0.2 million, all of which include a purchase option, and one new office equipment lease with a 60 -month term for approximately $ 21,000 .

Rent expense arising from operating leases totaled approximately $ 403,000 and $ 394,000 for the years ended December 31, 2024 and 2023, respectively.

The ROU assets recorded represents the Company’s right to use an underlying asset for the lease term and ROU lease liability represents the Company’s obligation to make lease payments arising from the lease.

Lease ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments.

ROU assets at December 31, 2024 and 2023 consist of the following (in thousands):

December 31, 2024 December 31, 2023

Total accrued expenses and other current liabilities $ 10,457 $ 13,801

The Company is the lessee for substantially all of its leasing activity, which includes operating and finance leases.

As of December 31, 2025, the Company has two operating leases for office space with remaining terms between 6 and 9 years with neither lease containing options to renew.

The Company currently leases 44 finance leases for vehicles with remaining terms between 8 and 45 months with an option to renew.

The Company also has 3 finance leases for office equipment with remaining terms between 1 and 4 years, all of which have one-year options to renew.

Renewal options are not reasonably certain and are not included in in lease assets and liabilities.

In the third quarter of 2025, the Company remeasured one of its operating leases for office space as a result of extending the termination date from April 30, 2027 to April 30, 2032.

The lease remeasurement resulted in an increase in the lease liability and ROU asset of approximately $ 2.1 million on the Consolidated Balance Sheets.

The lease remeasurement did not materially impact the Consolidated Statements of Operations.

Information regarding ROU lease assets and liabilities were as follows:

(in thousands) December 31, 2025 December 31, 2024

Finance leases $ 1,282 $ 1,141

Operating leases 2,708 1,016

Total $ 2,157 $ 1,741

Lease liabilities at December 31, 2024 and 2023 consist of the following (in thousands):

December 31, 2024 December 31, 2023

Total lease assets $ 3,990 $ 2,157

Lease liabilities

Finance leases $ 452 $ 377

Operating leases 398 494

Total $ 2,321 $ 1,923

Lease costs for the years ended December 31, 2024 and 2023 were as follows (in thousands):

December 31, 2024 December 31, 2023

Finance lease cost

Amortization of right-of-use assets $ 198 $ 84

Interest on lease liabilities 44 19

Total finance lease cost 242 103

Finance leases 727 759

Operating leases 3014 691

Total lease cost $ 619 $ 477

On the consolidated statements of operations, amortization of right-of-use assets is included in Depreciation and amortization, interest on finance lease liabilities is included in Interest expense and operating leases are included in both Operations and maintenance and General and administrative expenses, depending on the primary use of the leased asset.

Other pertinent information related to leases was as follows:

Total lease liabilities $ 4,591 $ 2,321

December 31, 2025 December 31, 2024

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Operating leases 6.5 % 4.0 %

At December 31, 2024, the maturity analysis of lease liabilities is as follows (in thousands):

Finance Lease Obligations Operating Lease Obligations

(in thousands) December 31, 2025 December 31, 2024

Finance lease cost

Amortization of ROU assets $ 355 $ 198

Interest on lease liabilities 59 44

Total finance lease cost 414 242

Operating leases 490 377

Total lease cost $ 904 $ 619

(in thousands) 2025 2024

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows used for finance leases $ 59 $ 44

Operating cash flows used for operating leases 405 264

Financing cash flows used for finance leases 401 273

Right-of-use assets obtained in exchange for lease obligations

Finance leases 443 818

Operating leases — 136

Operating lease remeasurement 2,095 —

On the Consolidated Statements of Operations, amortization of ROU assets is included in Depreciation, amortization and accretion, interest on finance lease liabilities is included in Interest expense and operating leases are included in both Operations and maintenance and General and administrative expenses, depending on the primary use of the leased asset.

The maturity analysis of lease liabilities as of December 31, 2025 was as follows:

(in thousands) Finance Lease Obligations Operating Lease Obligations

2026 $ 506 $ 609

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Total $ 1,179 $ 3,412

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023 were as follows (in thousands):

Fair Value Measurements

Recurring Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis were as follows:

December 31, 2025 December 31, 2024

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

HUF funds - restricted cash

$ 870 $ — $ — $ 870 $ 822 $ — $ — $ 822

Certificates of deposit - restricted

1,239 — — 1,239 — 854 — 854

Demand deposit

— — — — 1 — — 1

$ 2,109 $ — $ — $ 2,109 $ 823 $ 854 $ — $ 1,677

(in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Contingent Consideration $ — $ — $ 1,908 $ 1,908 $ — $ — $ 1,942 $ 1,942

$ — $ — $ 1,942 $ 1,942 $ — $ — $ 2,113 $ 2,113

Total $ — $ — $ 1,908 $ 1,908 $ — $ — $ 1,942 $ 1,942

HUF Funds - restricted cash and Certificates of deposit - restricted are presented on the Restricted cash line item of the Company’s consolidated balance sheets and are valued at amortized cost, which approximates fair value.

As part of the Global Water - Red Rock Water Company, Inc.

(now part of GW-Saguaro) acquisition, the Company is required to pay to the seller a growth premium equal to $ 750 (not in thousands) for each new account established within specified growth premium areas, commencing in each area on the date of the first meter installation and ending on the earlier of ten years after such first installation date, or twenty years from the acquisition date.

The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions.

Significant inputs used in the fair value calculation are as follows:

year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate.

The estimated fair value of the remaining liability was $ 0.7 million and $ 0.8 million as of December 31, 2024 and 2023, respectively.

In addition, as part of the GW-Farmers acquisition, the Company is required to pay the seller a growth premium equal to $ 1,000 (not in thousands) for each new account established in the service area, up to a total aggregate growth premium of $ 3.5 million.

The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions.

Significant inputs used in the fair value calculation are as follows:

year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate.

The estimated fair value of the remaining liability was $ 1.2 million and $ 1.3 million as of December 31, 2024 and 2023, respectively.

Contingent consideration is included within Other noncurrent liabilities on the Consolidated Balance Sheets.

Refer to Note 17 — “Commitments and Contingencies” for additional information about contingent consideration.

Judgment and the use of estimates are required in developing the provision for income taxes and reporting of tax-related assets and liabilities.

The interpretation of tax laws and associated regulations involves uncertainty as taxing authorities may interpret the laws differently.

Other Fair Value Disclosures for Financial Instruments

HUF Funds - restricted cash and Certificates of Deposit - Restricted are presented on the Restricted cash line item of the Company’s Consolidated Balance Sheets and are valued at amortized cost, which approximates fair value.

The fair value of outstanding long-term debt is estimated based on interest rates considered available for instruments of similar terms and remaining maturities.

Certain premium costs associated with the early settlement of long-term debt are not taken into consideration in determining fair value.

These fair value measurements are classified within Level 2 of the fair value hierarchy.

The carrying amount and estimated fair values of these financial instruments were as follows:

December 31, 2025 December 31, 2024

(in thousands) Carrying Value Fair Value Carrying Value Fair Value

Long-term debt $ 133,698 $ 130,840 $ 118,518 $ 118,702

Income Tax Expense

The components of income tax expense for the years ended December 31, 2024 and 2023 were as follows (in thousands):

The components of income tax expense were as follows:

(in thousands) 2025 2024

Current income tax expense

Federal $ 820 $ 460

State 148 140

Total current 968 600

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Federal 45 1,294

State 179 429

Total deferred 58 1,473

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The following table represents a reconciliation of income tax expense at the statutory federal income tax rate to the actual income tax expense from continuing operations:

For the Years Ended

(in thousands) 2025 2024

Book income before taxes $ 3,983 $ 7,862

Computed federal tax expense (benefit) at statutory rate 1,651 21.0 % 2,274 21.0 %

Computed federal tax expense at statutory rate 836 21.0 % 1,651 21.0 %

State income taxes - net of federal tax benefit 158 4.0 % 318 4.0 %

Nontaxable or nondeductible items

Tax regulatory asset amortization 37 0.9 % 37 0.5 %

Installment interest 26 0.3 % 39 0.4 %

Equity compensation 25 0.3 % 98 0.9 %

Other 18 0.5 % 10 0.1 %

Other differences ( 23 ) ( 0.6 ) % 57 0.8 %

Income tax expense $ 1,026 25.8 % $ 2,073 26.4 %

All of the Company’s income before income taxes and income tax expense for the years ended December 31, 2025 and 2024 were attributable to domestic operations.

The Company had no foreign income or income tax expense during these periods.

Further, the Company operates solely in the state of Arizona, therefore all state income tax expense pertains to Arizona.

Components of Net Deferred Income Tax Liability

The following table summarizes the Company’s temporary differences between book and tax accounting that give rise to the deferred tax assets and deferred tax liabilities, as of December 31, 2024 and 2023 (in thousands):

December 31, 2024 December 31, 2023

The following table summarizes the Company’s temporary differences between book and tax accounting that give rise to the deferred tax assets and deferred tax liabilities:

(in thousands) December 31, 2025 December 31, 2024

Deferred tax assets

Net operating loss carry forwards $ — $ 1,451

Balterra intangible asset acquisition 224 224

Deferred gain on ICFA funds received $ 5,664 $ 5,352

AIAC 4,248 4,248

Balterra intangible asset acquisition 224 224

Other 2,247 1,353

Total deferred tax assets 12,383 11,177

Net deferred tax asset 11,177 11,896

Deferred tax liabilities

Utility plant ( 18,720 ) ( 17,983 )

Regulatory liability ( 199 ) ( 214 )

1 unchanged sentence

ICFA intangible asset ( 452 ) ( 452 )

Utility plant

( 17,983 ) ( 17,398 )

Gain on condemnation of Valencia ( 140 ) ( 184 )

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Net deferred tax liability $ ( 9,699 ) $ ( 9,698 )

As of December 31, 2024, the Company has no remaining net operating loss carry forwards and no uncertain tax positions.

As of December 31, 2025, the Company has no net operating loss carry forwards and no uncertain tax positions.

Cash Paid For Taxes

Income taxes paid, net of refunds received were as follows:

(in thousands) Years Ended

Cash paid for income taxes

Federal $ 1,542 $ 107

Total taxes paid, net of refunds $ 1,732 $ 107

Share-based Compensation

2017 stock option grant

The Company’s shareholders approved the Global Water Resources, Inc.

2020 Omnibus Incentive Plan on May 7, 2020 and the first amendment on May 9, 2024 (collectively the “2020 Omnibus Plan”).

A total of 967,010 shares of common stock may be issued under the 2020 Omnibus Plan.

As of December 31, 2025, 514,625 shares remain available for issuance under the plan.

The 2020 Omnibus Plan provides that grants of awards may be in incentive stock options, non-qualified stock options, SARs, RSUs, RSAs, share awards, and other share-based awards and dividend equivalents.

RSUs and RSAs granted under the 2020 Omnibus Plan vest based on continued employment with the Company.

Dividend equivalents may be granted only on RSUs or other share-based awards.

The 2020 Omnibus Plan expires in 2030.

Share-based compensation to both employees and non-employees were as follows:

(in thousands) 2025 2024

Employee - RSA $ 540 $ 562

Employee - RSU 299 329

Total employee share-based compensation 839 891

Non-employee - RSA 173 205

Non-employee - RSU ( 151 ) ( 69 )

Total non-employee share-based compensation 22 136

Total share-based compensation $ 861 $ 1,027

Employee stock options

In August 2017, GWRI’s board of directors granted stock options to acquire 465,000 shares of GWRI’s common stock to employees throughout the Company.

3 unchanged sentences

As of December 31, 2025, 125,750 options have been exercised and 70,925 options have been forfeited with 268,325 options outstanding.

2019 stock option grant

In August 2019, GWRI’s board of directors granted stock options to acquire 250,000 shares of GWRI’s common stock to employees throughout the Company.

2 unchanged sentences

As of August 2023, these options were fully expensed.

Stock-based compensation expense of $ 92,000 was recorded for the year ended December 31, 2023.

As of December 31, 2025, 55,994 options have been exercised and 64,976 options have been forfeited with 129,030 options outstanding.

A summary of stock option activity is as follows (in thousands, except option prices and years):

Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value

A summary of stock option activity was as follows:

(in thousands, except option prices and years) Number of Options Weighted Average Remaining Contractual Life Aggregate Intrinsic Value

Options Outstanding at December 31, 2024 399 3.6 $ 595.8

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Options Vested at December 31, 2025 397 2.3 $ —

Phantom stock units and Restricted stock units

Restricted stock units (“RSUs”) are granted in the first quarter based on the prior year’s performance and vest over a three-year period.

Restricted stock units

RSUs are granted annually in the first quarter based on the prior year’s performance, and vest over a three-year period.

The units vest ratably each month and the vested units are cash-settled quarterly based on the closing price of the Company’s common stock for the respective quarter.

The following table details total units granted and outstanding as of December 31, 2024, along with the amounts paid to holders of the phantom stock units (“PSUs”) and/or RSUs for the years ended December 31, 2024 and 2023 (in thousands, except unit amounts):

The following table details total units granted and outstanding as of December 31, 2025, along with the amounts paid to holders of the RSUs:

(in thousands, except unit amounts) Years Ended

Grant Date Units Granted Units Outstanding 2025 2024

22,481 — $ — $ 24

Q1 2022 22,262 — $ 20 $ 87

3 unchanged sentences

Total 119,656 33,246 $ 316 $ 329

(1) Pursuant to the Global Water Resources, Inc.

2020 Omnibus Incentive Plan, effective May 7, 2020, long-term incentive awards are no longer granted in the form of PSUs and are granted as RSUs instead.

The non-vested RSUs have a non-forfeitable right to dividend equivalents, with immaterial amounts paid in the years ended December 31, 2025 and 2024.

The following table is a summary of the RSU award transactions for the year ended December 31, 2024 (in shares, except per unit amounts):

Restricted Stock Units Weighted Average Award Date Fair Value per Unit ($)

The following table is a summary of the RSU award transactions for the year ended December 31, 2025:

(in shares, except per unit amounts) Restricted Stock Units Weighted Average Award Date Fair Value per Unit ($)

Non-vested at December 31, 2024 29,664 $ 12.33

4 unchanged sentences

As these are liability awards, fluctuations in the Company’s stock price can lead to similar fluctuations in cumulative compensation expense (i.e., increases in stock price lead to additional compensation expense and decreases in stock price lead to reductions in compensation expense) in a given period.

Based on GWRI’s closing share price on December 31, 2024 (the last trading date of the year), deferred compensation expense to be recognized over future periods is estimated for the years ending December 31 as follows (in thousands):

Restricted Stock Units

Stock appreciation rights

Stock appreciation rights (“SARs”) were granted to certain members of management and are fully vested.

The following table details the grant date, units granted, exercise price, outstanding units as of December 31, 2024 and amounts paid during the years ended December 31, 2024 and 2023 (in thousands, except unit and per unit amounts):

Grant Date Units Granted Exercise Price Units Outstanding 2024 2023

299,000 $ 4.26 — $ 90 $ 399

103,000 $ 9.40 — — 33

33,000 $ 8.99 8,250 — —

Total 435,000 8,250 $ 90 $ 432

(1) The exercise price was determined to be the fair market value of one share of GWR Global Water Resources Corp.

stock on the grant date of February 11, 2015.

(2) The exercise price was determined to be the fair market value of one share of GWRI stock on the grant date of August 10, 2017.

(3) The exercise price was determined to be the fair market value of one share of GWRI stock on the grant date of March 12, 2018.

Based on GWRI’s closing share price on December 31, 2025 (the last trading date of the year), share-based compensation expense to be recognized over future periods is estimated for the years ending December 31 as follows:

(in thousands) Restricted Stock Units

Restricted stock awards

On May 7, 2020, the Company’s stockholders approved the Global Water Resources, Inc.

2020 Omnibus Incentive Plan, which allows restricted stock awards as a form of compensation.

A restricted stock award (“RSA”) represents the right to receive a share of the Company’s common stock.

RSAs vest over two to three years , beginning on the date of the grant.

A RSA represents the right to receive a share of the Company’s common stock.

Depending on the terms of the awards, RSAs may vest over one to four years , beginning on the date of the grant.

The Company assumes that forfeitures will be minimal and recognizes forfeitures as they occur, which results in a reduction in compensation expense.

The following table details the compensation expense related to the grant and partial vesting of previously granted RSAs for the years ended December 31, 2024 and 2023 (in thousands):

Compensation expense $ 562 $ 972

The following table is a summary of the restricted stock award transactions for the year ended December 31, 2024 (in shares, except per unit amounts):

Restricted Stock Awards Weighted Average Award Date Fair Value per Unit ($)

The following table is a summary of the RSA transactions for the year ended December 31, 2025:

(in shares, except per unit amounts) Restricted Stock Awards Weighted Average Award Date Fair Value per Unit ($)

Non-vested at December 31, 2024 50,835 $ 14.04

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Non-employee director awards

Non-employee director compensation is awarded on a quarterly basis, with one-half of the compensation awarded in the form of RSAs granted under the Global Water Resources, Inc.

2020 Omnibus Incentive Plan, effective May 7, 2020.

The following table details the non-employee director compensation expense related to the grant and vesting of RSAs for the years ended December 31, 2024 and 2023 (in thousands):

Non-employee director compensation expense $ 205 $ —

The following table is a summary of the non-employee director restricted stock award transactions for the year ended December 31, 2024 (in shares, except per unit amounts):

Restricted Stock Awards Weighted Average Award Date Fair Value per Unit ($)

Non-employee director compensation is awarded on a quarterly basis, with one-half of the compensation awarded in the form of RSAs granted under the 2020 Omnibus Plan, effective May 7, 2020.

The following table is a summary of the non-employee director RSA transactions for the year ended December 31, 2025:

(in shares, except per unit amounts) Restricted Stock Awards Weighted Average Award Date Fair Value per Unit ($)

Non-vested at December 31, 2024 — $ —

3 unchanged sentences

Non-vested at December 31, 2025 — $ —

Stock appreciation rights

SARs were granted to certain members of management and are fully vested.

The following table details the grant date, units granted, exercise price, outstanding units as of December 31, 2025 and amounts paid:

(in thousands, except unit and per unit amounts) Years Ended

Grant Date Units Granted Exercise Price Units Outstanding 2025 2024

299,000 $ 4.26 — $ — $ 90

33,000 $ 8.99 8,250 — —

Total 332,000 8,250 $ — $ 90

(1) The exercise price was determined to be the fair market value of one share of GWR Global Water Resources Corp.

stock on the grant date of February 11, 2015.

(2) The exercise price was determined to be the fair market value of one share of GWRI stock on the grant date of March 12, 2018.

Transactions With Related Parties

The Company provides medical benefits to employees through its participation in a pooled plan sponsored by an affiliate of a significant shareholder and director of the Company.

Medical claims paid to the plan were approximately $ 1.6 million for the year ended December 31, 2024 and $ 1.0 million for the year ended December 31, 2023.

Additionally, one of the Company’s directors purchased an aggregate of 30,000 shares of common stock at the purchase price of a private placement offering in 2023.

Medical claims paid to the plan were approximately $ 2.6 million and $ 1.6 million for the years ended December 31, 2025 and 2024, respectively.

Certain directors and/or their affiliates purchased an aggregate of 1,439,200 shares of common stock at the public offering price in the Company’s public offering of common stock in March 2025.

In addition, certain directors and/or their affiliates purchased an aggregate of 882,223 shares of common stock at a purchase price of $ 10.30 in the Company’s private placement offering of common stock in September 2025.

Refer to Note 9 — “Equity,” for additional information.

Commitments and Contingencies

The Company has operating and finance leases for vehicles, office equipment, and office space.

Refer to Note 12 – “Leases” for additional information.

On February 1, 2023, the Company acquired all of the equity of Farmers Water Co., an operator of a water utility with service area in Pima County, Arizona.

Under the terms of the purchase agreement, the Company is obligated to pay the seller a growth premium for each new account established within the specified growth premium areas.

As of December 31, 2024, the obligation period of the growth premium has not yet started.

The estimated fair value of the remaining liability was $ 1.2 million and $ 1.3 million as of December 31, 2024 and 2023, respectively, and is included in Other noncurrent liabilities on the consolidated balance sheets.

Refer to Note 2 — “Acquisitions” for additional information about the Farmers growth premium obligation.

As part of the Global Water -Red Rock Water Company, Inc.

(now part of GW-Saguaro) acquisition, the Company is obligated to pay to the seller a growth premium for each new account established within specified growth premium areas.

During the year ended December 31, 2024, the Company revised the fair value of the estimated liability of the contingent consideration based on modified building plans from the landowners in the growth premium areas, which resulted in a net $ 0.1 million gain on remeasurement, which is included in Other, net on the consolidated statements of operations for the years ended December 31, 2024.

Under the terms of the purchase agreement, the Company is obligated to pay the seller a growth premium equal to $ 1,000 (not in thousands) for each new account established within the specified growth premium areas, up to a maximum total aggregate growth premium of $ 3.5 million.

The obligation period of the growth premium commenced on the closing date of the acquisition and ends (i) ten years after the first new account for residential purposes is established on land that was, at the time of the closing date of the acquisition, undeveloped or unplatted and owned by the seller within the service area;

or (ii) ten years after the date of closing if a new account (as previously described) has not been established.

As of December 31, 2025, no new account was established on land that was undeveloped or unplatted at the closing date of the acquisition.

The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions.

Significant inputs used in the fair value calculation are as follows:

year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate.

The estimated fair value of the remaining liability was $ 1.2 million as of both December 31, 2025 and December 31, 2024 and is included in Other noncurrent liabilities on the Consolidated Balance Sheets.

Within the service area of its GW-Saguaro utility, the Company is required to pay a growth premium equal to $ 750 (not in thousands) for each new account established within specified growth premium areas, commencing in each area on the date of the first meter installation and ending on the earlier of ten years after such first installation date, or twenty years from the acquisition date.

As of December 31, 2025, no meters have been installed and no accounts have been established in any of the specified growth premium areas.

The carrying value of the remaining liability was $ 0.7 million and $ 0.8 million as of December 31, 2024 and 2023, respectively, and is included in Other noncurrent liabilities on the consolidated balance sheets.

Refer to Note 13 — “Fair Value” for additional information about contingent consideration.

The fair value of the contingent consideration was calculated using a discounted cash flow technique which utilized unobservable inputs developed using the Company’s estimates and assumptions.

Significant inputs used in the fair value calculation are as follows:

year of the first meter installation, total new accounts per year, years to complete full build out, and discount rate.

The fair value of the remaining liability was $ 0.7 million as of both December 31, 2025 and December 31, 2024 and is included in Other noncurrent liabilities on the Consolidated Balance Sheets.

The Company has previously received certain ICFA advances related to its CP Water utility, which the Company is obligated to repay in the form of specified future ICFA fee reductions when those ICFA fees are due.

The liability was $ 0.9 million as of both December 31, 2024 and 2023 and is included in Accrued Expenses and Other Current Liabilities on the consolidated balance sheets.

The liability was $ 0.9 million as of both December 31, 2025 and December 31, 2024 and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

The Company has certain contractual obligations requiring payments at specified periods.

The obligations include AIAC refunds, long-term debt, lease obligations and The following table summarizes the Company’s contractual cash obligations as of December 31, 2024 (in thousands):

The obligations include AIAC refunds, long-term debt and lease obligations.

T he following table summarizes the Company’s contractual cash obligations as of December 31, 2025:

Payments Due By Period

Total 2025 2026 2027 2028 2029 Thereafter

(in thousands) Total 2026 2027 2028 2029 2030 Thereafter

AIAC refunds (1)

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Portions of these refund amounts are payable annually over the next two decades, and amounts not paid by the contract expiration dates become nonrefundable and are transferred to CIAC.

(2) Interest on the long-term debt is based on the fixed rates of the Company’s Series A Notes, Series B Notes and 6.91 % Senior Secured Notes.

(2) Interest on the long-term debt is based on the fixed rates of the Company’s Series A Notes, Series B Notes, 6.91 % Senior Secured Notes, WIFA Note, Term Loan, and an immaterial loan payable.

(3) Finance lease payments are inclusive of interest payments totaling $ 0.1 million.

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From time to time, in the ordinary course of business, the Company may be subject to pending or threatened lawsuits in which claims for monetary damages are asserted.

The Company intends to continue to defend itself vigorously in such matters.

The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements.

An estimated loss contingency is accrued in its financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Based on the Company’s assessment, it currently does not have any amount accrued related to legal matters.

Management is not aware of any legal proceeding of which the ultimate resolution could materially affect the Company’s financial position, results of operations, or cash flows.

Business Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluate regularly by the CODM in deciding how to allocate resources and in assessing operating performance.

At December 31, 2025, the Company is organized and operated as one operating and reportable segment as the Company is not organized around specific products and services, geographic regions, or regulatory environments.

Further, the Company currently operates in one geographic region within the State of Arizona, wherein each operating utility operates within the same regulatory environment.

Operating revenue is substantially derived from contracts with customers to provide regulated water, wastewater, and recycled water service based upon tariff rates approved by the ACC.

Further, the Company currently operates solely within the state of Arizona.

Operating revenue is substantially derived from regulated water, wastewater, and recycled water service provided to customers based upon tariff rates approved by the ACC.

Refer to Note 4 — “Revenue Recognition” for additional information on the Company’s sources of revenue, and refer to the Consolidated Financial Statements for measures of profit and loss, total assets, and capital expenditures of the Company.

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The CODM regularly reviews the results of the Company based on GAAP net income as well as non-GAAP measures, EBITDA and Adjusted EBITDA.

The Company defines EBITDA as net income before interest, income taxes, depreciation, and amortization and Adjusted EBITDA as EBITDA excluding the gain or loss related to (i) nonrecurring events;

(ii) option expense related to awards made to management;

(iii) restricted stock expense related to awards made to employees and the board of directors;

(iv) disposal of assets;

and (v) ICFA revenue recognition, as applicable.

Management believes that EBITDA, and Adjusted EBITDA are useful supplemental measures of our operating performance and provide our investors meaningful measures of overall corporate performance.

EBITDA is also presented because management believes that it is frequently used by investment analysts, investors, and other interested parties as a measure of financial performance.

Adjusted EBITDA is also presented because management believes that it provides our investors an additional measure of our recurring core business.

A reconciliation of net income to EBITDA and Adjusted EBITDA for the years ended December 31, 2024 and 2023 is as follows (in thousands):

Net Income 5,789 7,982

Income tax expense 2,073 2,872

Interest income ( 946 ) ( 52 )

Interest expense 6,098 4,882

Depreciation and amortization 12,720 11,437

EBITDA 25,734 27,121

ICFA revenue — ( 2,786 )

Management option expense — 92

Loss (gain) on disposal of fixed assets 308 ( 63 )

Restricted stock expense 767 972

Acquisition gain resulting from regulatory decision ( 37 ) —

Gain on adjustment of contingent consideration liability ( 119 ) —

EBITDA adjustments 919 ( 1,785 )

Adjusted EBITDA 26,653 25,336

The CODM uses GAAP net income in the assessment of performance and to make strategic decisions regarding resource allocation predominantly in the annual budget.

The CODM reviews the following significant expense categories:

(in thousands) 2025 2024

Segment Revenue $ 55,758 $ 52,692

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Other general and administrative expenses 6,837 6,022

Depreciation and amortization 12,720 11,437

Total operating expenses 43,328 40,742

Operating income 9,364 12,286

Depreciation, amortization and accretion 14,998 12,720

Other Income (Expense)

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Other segment income and expenses ( 5,585 ) ( 4,418 )

Total other expense ( 1,502 ) ( 1,432 )

Income tax expense ( 1,026 ) ( 2,073 )

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The Company does not have any customers that contribute more than 10% to the Company’s revenue or revenue streams.

Other, net for the year ended December 31, 2024 and 2023 consists of the following (in thousands):

Other, net consisted of the following:

(in thousands) 2025 2024

Buckeye growth premiums (1)

Allowance for equity funds used during construction 892 981

Gain/(Loss) on Disposal of Assets ( 309 ) 63

Other 151 ( 70 )

$ 2,412 $ 2,916

AFUDC-Equity 1,156 892

Loss on disposal of assets ( 1,251 ) ( 309 )

Total Other, net $ 2,345 $ 3,650

Stipulated Condemnation of the Operations and Assets of Valencia

(1) The City of Buckeye is obligated to pay the Company a growth premium equal to $ 3,000 for each new water meter installed within Valencia’s prior service areas in the City of Buckeye, for a 20-year period ending December 31, 2034, subject to a maximum payout of $ 45.0 million over the term of the agreement.

The Company received growth premiums of $ 2.9 million and $ 2.4 million for the years ended December 31, 2024 and 2023, respectively.

An aggregate of $ 16.1 million in growth premiums have been received to date.

The growth premiums are included in “Other, net” on the Company’s consolidated statements of operations.

Supplemental Cash Flow Information

The following is supplemental cash flow information for the years ended December 31, 2024 and 2023 (in thousands):

The following is supplemental cash flow information:

(in thousands) 2025 2024

Supplemental cash flow information:

Cash paid for interest - net of amounts capitalized $ 5,693 $ 5,176

Cash paid for income taxes 107 706

Non-cash financing and investing activities:

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Utility Plant constructed by developers and conveyed 26,015 10,829

Business acquisition through issuance of contingent consideration payable — 1,330

Finance lease additions 818 240

Operating lease additions 136 18

Operating cash flows used for finance leases 44 19

Operating cash flows used for operating leases 264 241

Financing cash flows for finance leases 273 232

HUF transferred to CIAC 1,295 3,909

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data