Global Water Resources, Inc. 10-K

ITEM 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Consolidated Balance Sheets 56 Consolidated Statements of Operations 57 Consolidated Statements of Cash Flows 59 Notes to the Consolidated Financial Statements 60 1. Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements 60 2. Acquisitions 67 3. Regulatory Matters 68 4. Revenue Recognition 70 5. Earnings Per Share 71 6. Utility Plant 72 7. Prepaid Expenses and Other Current Assets 72 8. Goodwill and Intangible Assets 72 9. Equity 73 10. Debt 73 11. Accrued Expenses and Other Current Liabilities 76 12. Leases 76 13. Fair Value 78 14. Income Taxes 78 15. Share-based Compensation 80 16. Transactions With Related Parties 82 17. Commitments and Contingencies 83 18. Business Segment Information 84 19. Other, Net 85 20. Supplemental Cash Flow Information 86 -53- Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM [PCAOB ID: 34 ] To the shareholders and the Board of Directors of Global Water Resources, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Global Water Resources, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, shareholders' equity, and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Regulatory Matters – Impact of Rate Regulation on the Financial Statements — Refer to Note 3 to the financial statements Critical Audit Matter Description The Company’s regulated utilities are subject to rate regulation by the Arizona Corporation Commission (the “ACC”). The ACC has jurisdiction with respect to the rates charged to water and wastewater service customers in Arizona. Management has determined it meets the requirements under accounting principles generally accepted in the United States of America to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economic effects of rate regulation has a pervasive effect on the financial statements. The ACC establishes rates designed to permit the recovery of the cost of service and a return on investment. Decisions to be made by the ACC in the future will impact the accounting for regulated operations, including decisions about the amount of allowable costs and return on invested capital included in rates and any refunds that may be required. While the Company has indicated it expects to recover costs from customers through regulated rates, there is a risk that the ACC will not approve (1) full recovery of the costs of providing utility service, or (2) full recovery of all amounts invested in the utility business and a reasonable return on that investment. -54- Table of Contents 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 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. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by the ACC included the following, among others: • We read relevant regulatory orders and settlements issued by the ACC for the Company and other public utilities in Arizona, regulatory statutes, procedural memorandums, filings made by interveners and utilities, and other publicly available information to assess the likelihood of recovery in future rates or a future reduction in rates based on precedents of the ACC’s treatment of similar costs under similar circumstances. We evaluated the external information and compared such information to management’s regulatory asset and liability balances for completeness. • We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments. /s/ DELOITTE & TOUCHE LLP Tempe, Arizona March 4, 2026 We have served as the Company's auditor since 2003. -55- Table of Contents GLOBAL WATER RESOURCES, INC. Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2025 December 31, 2024 Assets Utility Plant $ 610,766 $ 515,358 Less: accumulated depreciation ( 168,915 ) ( 153,614 ) Net utility plant 441,851 361,744 Current Assets Cash and cash equivalents 4,080 9,047 Accounts receivable, net of allowance for credit losses of $ 244 and $ 163 , respectively 3,746 3,233 Unbilled revenue 3,409 3,109 Prepaid expenses and other current assets 3,388 4,080 Total current assets 14,623 19,469 Other Assets Goodwill 6,512 9,486 Intangible assets, net 6,062 6,062 Regulatory assets 7,003 4,032 Restricted cash 2,755 2,109 Right-of-use assets, net 3,990 2,157 Other noncurrent assets 117 78 Total other assets 26,439 23,924 Total Assets $ 482,913 $ 405,137 Capitalization and Liabilities Capitalization Common stock, $ 0.01 par value, 60,000,000 shares authorized; 29,116,183 and 24,570,994 shares issued, respectively $ 285 $ 240 Treasury stock, 359,329 and 344,978 shares, respectively ( 2 ) ( 2 ) Additional paid-in capital 87,294 47,366 Retained deficit ( 961 ) — Total shareholders’ equity 86,616 47,604 Long-term debt, net 129,756 118,518 Total Capitalization 216,372 166,122 Current Liabilities Accounts payable 2,251 2,051 Customer and meter deposits 1,725 1,609 Long-term debt, current portion 3,942 3,926 Leases, current portion 850 871 Accrued expenses and other current liabilities 10,457 13,801 Total current liabilities 19,225 22,258 Other Liabilities Long-term lease liabilities 3,741 1,450 Deferred revenue - ICFA 22,772 21,517 Regulatory liabilities 5,214 5,386 Advances in aid of construction 155,414 126,467 Contributions in aid of construction, net 37,857 36,834 Deferred income tax liabilities, net 9,699 9,698 Other noncurrent liabilities 12,619 15,405 Total other liabilities 247,316 216,757 Commitments and contingencies (Refer to Note 17 ) Total Capitalization and Liabilities $ 482,913 $ 405,137 See accompanying notes to the Consolidated Financial Statements -56- Table of Contents GLOBAL WATER RESOURCES, INC. Consolidated Statements of Operations Years Ended December 31, (in thousands, except share and per share amounts) 2025 2024 Revenue Water service $ 28,609 $ 26,064 Wastewater and recycled water service 27,149 26,628 Total revenue 55,758 52,692 Operating Expenses Operations and maintenance 15,749 13,726 General and administrative 17,855 16,882 Depreciation, amortization and accretion 14,998 12,720 Total operating expenses 48,602 43,328 Operating Income 7,156 9,364 Other Income (Expense) Interest income 446 946 Interest expense ( 5,964 ) ( 6,098 ) Other, net 2,345 3,650 Total other expense ( 3,173 ) ( 1,502 ) Income Before Income Taxes 3,983 7,862 Income Tax Expense ( 1,026 ) ( 2,073 ) Net Income $ 2,957 $ 5,789 Basic earnings per common share $ 0.11 $ 0.24 Diluted earnings per common share $ 0.11 $ 0.24 Dividends declared per common share $ 0.30 $ 0.30 Weighted average number of common shares used in the determination of: Basic 27,028,936 24,204,706 Diluted 27,076,437 24,303,340 See accompanying notes to the Consolidated Financial Statements -57- Table of Contents GLOBAL WATER RESOURCES, INC. 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 (Deficit) Total Equity BALANCE - December 31, 2023 24,492,918 $ 240 ( 317,677 ) $ ( 2 ) $ 47,585 $ 797 $ 48,620 Dividend declared $ 0.30 per share — — — — ( 712 ) ( 6,586 ) ( 7,298 ) Share option exercise 5,277 — ( 4,405 ) — 198 — 198 Share-based compensation 72,799 — ( 22,896 ) — 295 — 295 Net income — — — — — 5,789 5,789 BALANCE - December 31, 2024 24,570,994 240 ( 344,978 ) ( 2 ) 47,366 — 47,604 Dividend declared $ 0.30 per share — — — — ( 4,398 ) ( 3,918 ) ( 8,316 ) 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 BALANCE - December 31, 2025 29,116,183 $ 285 ( 359,329 ) $ ( 2 ) $ 87,294 $ ( 961 ) $ 86,616 See accompanying notes to the Consolidated Financial Statements -58- Table of Contents GLOBAL WATER RESOURCES, INC. Consolidated Statements of Cash Flows Years Ended December 31, (in thousands) 2025 2024 Cash Flows from Operating Activities: Net income $ 2,957 $ 5,789 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and accretion 14,998 12,720 Share-based compensation 861 1,029 Deferred income tax expense 58 1,473 AFUDC-Equity ( 1,156 ) ( 892 ) Loss on disposal of fixed assets 1,251 309 Operating lease expense 367 384 Other adjustments 254 125 Changes in assets and liabilities Accounts receivable and other current assets 85 ( 1,986 ) Accounts payable and other current liabilities 151 ( 915 ) Other noncurrent assets ( 195 ) 565 Other noncurrent liabilities 537 3,184 Net cash provided by operating activities 20,168 21,785 Cash Flows from Investing Activities: Capital expenditures ( 67,321 ) ( 32,324 ) Cash paid for acquisitions, net of cash acquired ( 8,098 ) ( 150 ) Other cash flows used in investing activities — ( 4 ) Net cash used in investing activities ( 75,419 ) ( 32,478 ) Cash Flows from Financing Activities: Dividends paid ( 8,201 ) ( 7,298 ) Advances and contributions in aid of construction 6,165 10,627 Refunds of advances for construction ( 1,427 ) ( 1,355 ) Principal payments under finance lease ( 401 ) ( 273 ) 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 ) Net cash provided by financing activities 50,930 17,086 Increase (Decrease) in cash, cash equivalents, and restricted cash ( 4,321 ) 6,393 Cash, cash equivalents, and restricted cash — Beginning of period 11,156 4,763 Cash, cash equivalents, and restricted cash — End of period $ 6,835 $ 11,156 See accompanying notes to the Consolidated Financial Statements Supplemental disclosure of cash flow information: Years Ended December 31, (in thousands) 2025 2024 Cash and cash equivalents $ 4,080 $ 9,047 Restricted cash 2,755 2,109 Total cash, cash equivalents, and restricted cash $ 6,835 $ 11,156 -59- Table of Contents GLOBAL WATER RESOURCES, INC. Notes to the Consolidated Financial Statements 1. Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements Description of Business 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. Approximately 87.3 % of the active service connections are customers of the Company’s GW-Santa Cruz and GW-Palo Verde utilities, which are located within a single service area. Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements have been prepared in accordance with GAAP and include the accounts of the Company and its subsidiaries. All intercompany account balances and transactions have been eliminated in consolidation. The Company prepares its financial statements in accordance with the rules and regulations of the SEC. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Certain amounts from prior periods have been reclassified to conform to the current year presentation. The reclassification had no impact on the Company’s results of operation, financial position or cash flows. Significant Accounting Policies Regulatory Assets and Liabilities Rate-regulated subsidiaries account for and report assets and liabilities consistent with the economic effect of the way in which regulators establish rates, if the rates established are designed to recover the costs of providing the regulated service and it is probable that such rates can be billed and collected. 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 980. The Company continually evaluates whether or not our operations are within the scope of ASC 980 and rate regulations. As part of that analysis, the Company evaluates probability of recovery for its regulatory assets. In management’s opinion, the Company’s regulated subsidiaries will be subject to regulatory accounting for the foreseeable future. Regulatory assets are amortized over the future periods that the costs are expected to be recovered. Final determination of whether a regulatory asset can be recovered is decided by the ACC in regulatory proceedings. If the Company determines that a portion of the regulatory assets is not recoverable in customer rates, the Company would be required to recognize the loss of the assets disallowed. If costs expected to be incurred in the future are currently being recovered through rates, the Company records those expected future costs as regulatory liabilities. For further discussion of regulatory assets and liabilities, see Note 3 – “Regulatory Matters.” Utility Plant Utility plant is stated at cost less accumulated depreciation provided on a straight-line basis (See Note 6 – “Utility Plant”). Depreciation rates for asset classes of utility plant are established by the ACC. The cost of additions, including betterments and replacements of units of utility fixed assets are charged to utility plant. When units of utility property are replaced, renewed, or retired, their disposal costs, less salvage proceeds, is charged to accumulated depreciation. -60- Table of Contents Depreciation of utility plant is computed based on the estimated useful lives as follows: Useful Lives Equipment 3 to 30 years Office buildings and other structures 30 years Transmission and distribution plant 10 to 50 years In addition to third party costs, direct personnel costs and indirect construction overhead costs may be capitalized. AFUDC incurred during the construction period is also capitalized as a component of the cost of the constructed assets, which represents the cost of debt and equity associated with construction activity. 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. AROs 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. 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. -61- Table of Contents 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. These fees are approved by the ACC through the regulatory process and are set based on the costs incurred to establish service including the application process, billing setup, initial meter reading, and service transfer. 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 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. Certain fees for meters are regulated by the ACC and are refundable to the end customer over a period of time. Refundable meter installation fees are recorded as an AIAC liability upon receipt. Revenue Recognition—Wastewater and Recycled Water Service Wastewater and recycled water service revenue is generally recognized when service is rendered. Wastewater service is billed at a fixed monthly amount per connection, and recycled water service is billed monthly based on volumetric fees. Revenue Recognition—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 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 Provisions are made for doubtful accounts due to the inherent uncertainty around the collectability of accounts receivable. The allowance for credit losses is recorded as bad debt expense and is classified as general and administrative expense. The allowance for credit losses is determined considering the age of the receivable balance, type of customer (e.g., residential or commercial), payment history, as well as specific identification of any known or expected collectability issues (see Note 4 – “Revenue Recognition - Accounts Receivable and Allowance for Credit Losses”). ICFAs ICFAs are agreements with developers and homebuilders where the Company, which owns the operating utilities, provides service to plan, coordinate and finance the water and wastewater infrastructure that would otherwise be required to be performed or subcontracted by the developer or homebuilder. Service provided within these agreements include coordination of construction service for water and wastewater treatment facilities as well as financing, arranging and coordinating the provision of utility service. 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. This obligation persists regardless of connection growth. Fees for this service are typically a negotiated amount per equivalent dwelling unit for the land legally described in the agreement, or a portion thereof. Payments are generally due in installments, with a portion due upon signing of the agreement, a portion due upon completion of certain milestones, and the final payment due upon final plat approval or sale of the subdivision. The payments are non-refundable. The agreements are generally recorded against the land with the appropriate recorder’s office and must be assumed in the event of a sale or transfer of the land. The regional planning and coordination of the infrastructure in the various service areas has been an important part of the Company’s business model. Payments for ICFAs are usually received in advance. The ACC requires a HUF tariff to be established for all ICFAs that come due and are paid to the Company, which is a set amount per equivalent dwelling unit determined by the ACC based on the utility and meter size. As payments are received, 70 % of the payment must be recorded as a HUF liability until the HUF liability is fully funded, with the remaining amount initially recorded to deferred revenue until earned. 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 -62- Table of Contents recognized when the Company completes the performance obligations under the agreement. The ACC prohibits the Company from entering into any new ICFAs. The Company accounts for the portion of ICFA funds allocated to the HUF liability as a CIAC once the associated utility plant is placed in service. However, in accordance with the ACC directives, the CIAC is not deducted from rate base until the HUF funds are expended for utility plant. Such funds are restricted and segregated in a separate bank account and used for plant. For facilities required under a HUF or ICFA, the utilities must first use the HUF moneys received, after which, it may use debt or equity financing for the remainder of construction. As these arrangements are with developers and not with the end water or wastewater customer, revenue recognition coincides with the completion of the Company’s performance obligations under the agreement with the developer and its regulated utilities’ ability to provide fitted capacity for water and wastewater service. The Company exercises judgment when estimating the number of equivalent dwelling units that its regulated utilities have capacity to serve. The Company believes that service provided within these agreements is not distinct in the context of the contract because it is highly interdependent with its regulated utilities’ ability to provide fitted capacity for water and wastewater service. The Company concluded that the goods and service provided under ICFA contracts constitute a single performance obligation. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments in debt instruments with an original maturity of three months or less. 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 AROs. The following table summarizes the restricted cash balance: (in thousands) December 31, 2025 December 31, 2024 HUF funds $ 591 $ 870 Certificates of deposit 2,164 1,239 $ 2,755 $ 2,109 Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 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 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. Recognition (step one) occurs when it is concluded that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more-likely-than-not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determine that a tax position no longer meets the more-likely-than-not threshold of being sustained. 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 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 does so as of November 1 of each year, and at an interim date if indications of impairment exist. When testing goodwill for impairment, -63- Table of Contents 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. Under the discounted cash flow approach, the Company utilizes various assumptions requiring judgment, including projected future cash flows, discount rates, and capitalization rates. The estimated future cash flows are based on historical data, internal estimates, and external sources. The estimated fair value is then compared to the carrying value. If the carrying value is in excess of the fair value, an impairment charge is recorded to asset impairments within the Company’s consolidated statement of operations in the amount by which the reporting unit’s carrying value exceeds its fair value, limited to the carrying value of goodwill. Refer to Note 8 — “Goodwill and Intangible Assets” for additional information about goodwill. Intangible Assets 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 Management evaluates the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If an indicator of possible impairment exists, an undiscounted cash flow analysis would be prepared to determine whether there is an actual impairment. Measurement of the impairment loss is based on the fair value of the asset. Generally, fair value will be determined using appraisals or valuation techniques such as the present value of expected future cash flows. Leases 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 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. Amortization of debt issuance costs and discounts were less than $ 0.1 million for both the years ended December 31, 2025 and 2024. AIAC and CIAC The Company has various agreements with developers, whereby funds, water line extensions, or wastewater line extensions are provided to the Company by the developers and are considered refundable AIAC. 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 $ 157.1 million and $ 127.9 million as of December 31, 2025 and 2024, -64- Table of Contents 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. 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. There was no AIAC balance transferred to CIAC for the years ended December 31, 2025 or December 31, 2024. Fair Value of Financial Instruments 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: • Level 1 - Quoted market prices in active markets for identical assets or liabilities. • Level 2 - Inputs other than Level 1 that are either directly or indirectly observable. • Level 3 - Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that the Company believes market participants would use. The carrying values of cash equivalents, accounts receivables, and accounts payable approximate fair value due to the short-term maturities of these instruments. See Note 10 – “ Debt ” for information as to the fair value of long-term debt. Portions of these non-interest-bearing instruments are payable annually through 2048 and amounts not paid by the contract expiration dates become nonrefundable. Their relative fair values cannot be accurately estimated because future refund payments depend on several variables, including new customer connections, customer consumption levels, and future rate increases. However, the fair value of these amounts would be less than their carrying value due to the non-interest-bearing feature. Business Combinations 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 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. Governmental Funding & Assistance Occasionally, the Company participates in various U.S. federal, state and local programs under which governmental funding is received to offset certain specified costs of the Company associated with water conservation efforts, the provision of utility service or facilities in designated locations (such as unserved or underserved rural areas), and the replacement and upgrading of outdated equipment with advanced metering infrastructure. In certain instances, our receipt of awarded governmental funds may be conditioned on the Company meeting specified progress and inspection milestones during construction of associated utility infrastructure projects. 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 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. utility (now part of GW-Saguaro) entered into a loan agreement with WIFA to improve the utility’s infrastructure, including enhancements to the fluoride treatment system and other projects. A portion of the loan is forgivable, which the Company accounts for as CIAC. 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 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. 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. -65- Table of Contents Recent Accounting Pronouncements Recently Issued Accounting Pronouncements 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) . This pronouncement requires disaggregated disclosure of income statement expenses for public business entities. In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , which clarified the effective date of this standard. This standard requires disclosure in tabular format of disaggregation of relevant expense captions presented on the income statement by certain natural expense categories with certain related qualitative disclosures within the notes to the financial statements. The ASU does not change the expense captions an entity presents on the income statement. 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 consolidated financial statements and required disclosures. Recently Adopted Accounting Pronouncements 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. -66- Table of Contents 2. Acquisitions 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. 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 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 Cash 25 Accounts receivable 162 Other accrued liabilities ( 25 ) Total net assets assumed 7,893 Goodwill 230 Total purchase price $ 8,123 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. -67- Table of Contents 3 . Regulatory Matters Regulatory Assets and Liabilities The Company’s regulatory assets and liabilities consisted of the following: (in thousands) Recovery Period December 31, 2025 December 31, 2024 Regulatory Assets Acquisition premiums 25 or 50 years $ 5,478 $ 2,589 Income taxes recoverable through future rates Various 1,247 1,326 Other regulatory assets Various 497 117 Total regulatory assets 7,222 4,032 Less: current portion 219 — Total noncurrent regulatory assets $ 7,003 $ 4,032 Regulatory Liabilities 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 Less: current portion 131 — Total noncurrent regulatory liabilities $ 5,214 $ 5,386 Acquisition Premiums In Decision No. 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 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. Acquired ICFAs The ICFA regulatory liability, established in compliance with a 2014 settlement agreement with the ACC, relates to the offset of intangible assets related to ICFA contracts obtained in connection with the GW-Santa Cruz, GW-Palo Verde, and Sonoran acquisitions. When funds are received related to the acquired ICFA intangible asset, a portion of these funds reduce the acquired ICFA regulatory liability and partially offset the amortization expense recognition of the related intangible asset. The regulatory liability is classified as long term due to the long term nature of these arrangements and the uncertainty of the timing of receipt of funds to be received against the acquired ICFA intangible asset. Depreciation Decision No. 78644 (2022) approved an adjustment to update previously approved depreciation rates. The adjustment was incorporated into rates in accordance with the rate decision. -68- Table of Contents Recent ACC Rulings and Activity 2025 GW-Santa Cruz and GW-Palo Verde Rate Case 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. 80695. 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. Decision No. 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. Decision No. 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. 71878 (September 15, 2010). Those costs were also included as “plant in service” in Decision No. 74364 (February 26, 2014) and Decision No. 78644 (July 27, 2022). The Company disclosed this circumstance to the ACC on March 1, 2024, and on April 25, 2024, GW-Palo Verde filed an application with the ACC requesting a monthly bill credit for customers that would be in place until the conclusion of the next GW-Palo Verde rate case. The ACC issued Decision No. 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. -69- Table of Contents 4. Revenue Recognition Disaggregated Revenue Disaggregated revenue from contracts with customers by major source and customer class was as follows: Years Ended December 31, (in thousands) 2025 2024 Regulated revenue Water Service Residential $ 19,948 $ 18,612 Irrigation 4,084 3,332 Commercial 1,945 1,551 Multi-family 439 320 Construction 1,156 1,140 Other water revenue 1,037 1,109 Total water revenue 28,609 26,064 Wastewater and recycled water service Residential 23,803 23,404 Commercial 1,186 1,195 Multi-family 300 174 Recycled water revenue 1,501 1,500 Other wastewater revenue 359 355 Total wastewater and recycled water revenue 27,149 26,628 Total revenue $ 55,758 $ 52,692 Contract Balances The Company’s contract assets and liabilities consisted of the following: (in thousands) December 31, 2025 December 31, 2024 Contract assets Accounts receivable, net $ 3,746 $ 3,233 Total contract assets $ 3,746 $ 3,233 Contract liabilities Deferred revenue - ICFA $ 22,772 $ 21,517 Total contract liabilities $ 22,772 $ 21,517 Accounts Receivable and Allowance for Credit Losses 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 ( 244 ) ( 163 ) Accounts receivable, net $ 3,746 $ 3,233 -70- Table of Contents The following table summarizes the allowance for credit loss activity: (in thousands) December 31, 2025 December 31, 2024 Beginning of period $ ( 163 ) $ ( 122 ) Credit loss expense ( 193 ) ( 103 ) Write offs 123 90 Recoveries ( 11 ) ( 28 ) End of period $ ( 244 ) $ ( 163 ) 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 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 5. Earnings Per Share 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 shown in the following table: Years Ended December 31, (In thousands) 2025 2024 Basic weighted average common shares outstanding 27,029 24,205 Effect of dilutive securities: Option grants 22 78 Restricted stock awards 25 20 Total dilutive securities 47 98 Diluted weighted average common shares outstanding 27,076 24,303 Anti-dilutive shares excluded from earnings per diluted shares 130 — 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. -71- Table of Contents 6. Utility Plant Utility plant consisted of the following: (in thousands) December 31, 2025 December 31, 2024 Transmission and distribution plant $ 364,270 $ 321,075 Equipment 102,700 67,917 Office buildings and other structures 88,529 67,313 Construction work-in-progress 48,801 54,388 Intangible plant 3,569 2,365 Land 2,897 2,300 Total utility plant $ 610,766 $ 515,358 Depreciation expense related to depreciable property was $ 14.5 million and $ 12.0 million for the years ended December 31, 2025 and 2024, respectively. 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 7. 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 Prepaid expenses and other current assets $ 3,388 $ 4,080 8. Goodwill and Intangible Assets The Company’s goodwill is related to historical acquisitions. 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. 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. 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). -72- Table of Contents Changes in the carrying value of goodwill were as follows: (in thousands) December 31, 2025 December 31, 2024 $ 9,486 Acquisition activity 230 Reclassification to regulatory assets ( 2,959 ) Other adjustments ( 245 ) December 31, 2025 $ 6,512 Intangible Assets Intangible assets consisted of the following: December 31, 2025 December 31, 2024 (in thousands) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount 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 intangible assets $ 25,384 $ ( 19,322 ) $ 6,062 $ 25,384 $ ( 19,322 ) $ 6,062 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. 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. There was no amortization recorded for these balances during the years ended December 31, 2025 and 2024. 9. Equity 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. 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. 10. Debt -73- Table of Contents 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 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 April 2044 1,613 1,440 Total long-term debt 134,496 123,208 Less: Unamortized debt issuance costs 798 764 Less: 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 %, 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. Term Loan 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. WIFA Note 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. Revolver 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 -74- Table of Contents 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. 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, 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; incur additional indebtedness; merge, liquidate or consolidate with another entity; dispose of or transfer assets; make distributions or other restricted payments; engage in certain affiliate transactions; and change the nature of the business. 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 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 2026 $ 3,942 2027 3,950 2028 32,665 2029 3,898 2030 3,901 Thereafter 86,140 Subtotal 134,496 Less: debt issuance costs 798 Total $ 133,698 -75- Table of Contents 11. Accrued Expenses and Other Current Liabilities 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 Payroll 943 991 Customer prepayments 781 556 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 and other current liabilities $ 10,457 $ 13,801 12. Leases 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 Lease assets Finance leases $ 1,282 $ 1,141 Operating leases 2,708 1,016 Total lease assets $ 3,990 $ 2,157 Lease liabilities Current Finance leases $ 452 $ 377 Operating leases 398 494 Noncurrent Finance leases 727 759 Operating leases 3014 691 Total lease liabilities $ 4,591 $ 2,321 -76- Table of Contents December 31, 2025 December 31, 2024 Weighted average remaining lease term (years) Finance leases 2.8 3.1 Operating leases 2.6 3.1 Weighted average discount rate Finance leases 5.3 % 4.5 % Operating leases 6.5 % 4.0 % (in thousands) December 31, 2025 December 31, 2024 Lease Costs 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 Years Ended December 31, (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 Other 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 2027 410 607 2028 271 618 2029 97 636 2030 — 656 Thereafter — 1,129 Subtotal 1,284 4,255 Less: amount representing interest 105 843 Total $ 1,179 $ 3,412 -77- Table of Contents 13. Fair Value 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 (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Liabilities: Contingent Consideration $ — $ — $ 1,908 $ 1,908 $ — $ — $ 1,942 $ 1,942 Total $ — $ — $ 1,908 $ 1,908 $ — $ — $ 1,942 $ 1,942 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. 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 14. Income Taxes Income Tax Expense The components of income tax expense were as follows: Years Ended December 31, (in thousands) 2025 2024 Current income tax expense Federal $ 820 $ 460 State 148 140 Total current 968 600 Deferred income tax expense Federal 45 1,294 State 13 179 Total deferred 58 1,473 Income tax expense $ 1,026 $ 2,073 -78- Table of Contents Statutory Rate Reconciliation 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 December 31, (in thousands) 2025 2024 Book income before taxes $ 3,983 $ 7,862 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 % 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: (in thousands) December 31, 2025 December 31, 2024 Deferred tax assets 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 Deferred tax liabilities Utility plant ( 18,720 ) ( 17,983 ) Regulatory liability ( 199 ) ( 214 ) CP Water intangible asset acquisition ( 381 ) ( 381 ) ICFA intangible asset ( 452 ) ( 452 ) Gain on condemnation of Valencia ( 140 ) ( 184 ) Other Liabilities ( 2,190 ) ( 1,661 ) Total deferred tax liabilities ( 22,082 ) ( 20,875 ) Net deferred tax liability $ ( 9,699 ) $ ( 9,698 ) As of December 31, 2025, the Company has no net operating loss carry forwards and no uncertain tax positions. -79- Table of Contents Cash Paid For Taxes Income taxes paid, net of refunds received were as follows: (in thousands) Years Ended December 31, 2025 2024 Cash paid for income taxes Federal $ 1,542 $ 107 State 190 — Total taxes paid, net of refunds $ 1,732 $ 107 15. Share-based Compensation 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: Years Ended December 31, (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. The options were granted with an exercise price of $ 9.40 , the market price of the Company’s common shares on the NASDAQ Global Market at the close of business on August 10, 2017. The options are fully vested and expire 10 years from the grant date. As of August 2021, these options were fully expensed. As of December 31, 2025, 125,750 options have been exercised and 70,925 options have been forfeited with 268,325 options outstanding. 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. The options were granted with an exercise price of $ 11.26 , the market price of the Company’s common shares on the NASDAQ Global Market at the close of business on August 13, 2019. The options are fully vested and expire 10 years from the grant date. As of August 2023, these options were fully expensed. As of December 31, 2025, 55,994 options have been exercised and 64,976 options have been forfeited with 129,030 options outstanding. -80- Table of Contents 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 Granted — Exercised — Forfeited ( 2 ) Cancelled — Options Outstanding at December 31, 2025 397 2.3 — Options Vested at December 31, 2025 397 2.3 $ — 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, 2025, along with the amounts paid to holders of the RSUs: (in thousands, except unit amounts) Years Ended December 31, Grant Date Units Granted Units Outstanding 2025 2024 Q1 2022 22,262 — $ 20 $ 87 Q1 2023 30,366 — 100 117 Q1 2024 32,093 9,963 106 125 Q1 2025 34,935 23,283 90 — Total 119,656 33,246 $ 316 $ 329 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, 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 Granted 36,373 11.08 Forfeited ( 256 ) 10.31 Vested ( 32,535 ) 9.83 Non-vested at December 31, 2025 33,246 $ 11.71 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, 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 2026 $ 184 2027 99 Total $ 283 -81- Table of Contents Restricted stock awards 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 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 Granted 53,000 10.47 Forfeited ( 2,000 ) 11.55 Vested ( 30,501 ) 15.68 Non-vested at December 31, 2025 71,334 $ 10.76 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 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 — $ — Granted 20,366 9.87 Forfeited — — Vested ( 20,366 ) 9.87 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 December 31, Grant Date Units Granted Exercise Price Units Outstanding 2025 2024 Q1 2015 (1) 299,000 $ 4.26 — $ — $ 90 Q1 2018 (2) 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. 16. 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 $ 2.6 million and $ 1.6 million for the years ended December 31, 2025 and 2024, respectively. -82- Table of Contents 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. 17. Commitments and Contingencies Commitments 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 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 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, 2025 and December 31, 2024 and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. -83- Table of Contents The Company has certain contractual obligations requiring payments at specified periods. 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 (in thousands) Total 2026 2027 2028 2029 2030 Thereafter AIAC refunds (1) $ 157,099 $ 1,685 $ 1,500 $ 1,500 $ 1,500 $ 1,500 $ 149,414 Long term debt 134,496 3,942 3,950 32,665 3,898 3,901 86,140 Interest payments on long-term debt (2) 47,943 6,644 6,484 5,673 4,864 4,685 19,593 Finance leases (3) 1,284 506 410 271 97 — — Operating leases (4) 4,255 609 607 618 636 656 1,129 Total $ 345,077 $ 13,386 $ 12,951 $ 40,727 $ 10,995 $ 10,742 $ 256,276 (1) The Company pays annual refunds on AIAC over a specific period of time based on operating revenue generated from developer-installed infrastructure. The refund amounts are considered an investment in infrastructure and eligible for inclusion in future rate base. The refund amounts and timing are dependent upon several variables, including new customer connections, customer consumption levels and future rate increases, which are difficult to accurately estimate. 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, 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. (4) Operating lease payments are inclusive of interest payments totaling less than $ 0.8 million. The Company has entered into various purchase and service agreements whereby it is contractually obligated to make certain minimum payments in future periods. This includes purchase obligations for plant equipment, typically for water and wastewater treatment, with long lead times that require payments made over time. Contingencies 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. 18. Business Segment Information 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 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. The Company’s CODM is the Chief Executive Officer. While the Company reports revenue disaggregated by service type on the face of its Consolidated Financial Statements, the Company does not manage the business based on any performance measure at the individual revenue stream level. The CODM uses consolidated financial information, as outlined below, to evaluate performance against budget and peers and to make all significant decisions regarding the allocation of the Company’s resources, and communicate results and performance to the Company’s board of directors. 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 CODM uses GAAP net income in the assessment of performance and to make strategic decisions regarding resource allocation predominantly in the annual budget. -84- Table of Contents The CODM reviews the following significant expense categories: Years Ended December 31, (in thousands) 2025 2024 Segment Revenue $ 55,758 $ 52,692 Segment Expenses Personnel costs - operations and maintenance 5,637 5,014 Utilities, chemicals and repairs 4,671 3,927 Other operations and maintenance expenses 5,441 4,785 Personnel costs - general and administrative 9,119 9,173 Professional fees 1,899 1,687 Other general and administrative expenses 6,837 6,022 Depreciation, amortization and accretion 14,998 12,720 Other Income (Expense) Buckeye growth premiums 2,412 2,916 Other segment income and expenses ( 5,585 ) ( 4,418 ) Income tax expense ( 1,026 ) ( 2,073 ) Net Income $ 2,957 $ 5,789 Other operations and maintenance and other general and administrative expenses include contract services, business development, board compensation, rent, insurance and taxes other than income taxes. Other segment income expenses include interest income, interest expense, AFUDC, and gains and losses on disposal of assets. The Company does not have any customers that contribute more than 10% to the Company’s revenue or revenue streams. 19. Other, Net Other, net consisted of the following: Years Ended December 31, (in thousands) 2025 2024 Buckeye growth premiums (1) $ 2,412 $ 2,916 AFUDC-Equity 1,156 892 Loss on disposal of assets ( 1,251 ) ( 309 ) Other 28 151 Total Other, net $ 2,345 $ 3,650 (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. An aggregate of $ 16.1 million in growth premiums have been received to date. -85- Table of Contents 20. Supplemental Cash Flow Information The following is supplemental cash flow information: Years Ended December 31, (in thousands) 2025 2024 Supplemental cash flow information: Cash paid for interest - net of amounts capitalized $ 5,693 $ 5,176 Non-cash financing and investing activities: Capital expenditures included in accounts payable and accrued liabilities 2,789 7,201 Utility Plant constructed by developers and conveyed 26,015 10,829 HUF transferred to CIAC 1,295 3,909 -86- Table of Contents ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.