What changed in this filing

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Item 1. Business

2025-11-12 compared with 2024-11-13 · 98 added, 106 removed, 388 unchanged (34% of the section changed)

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We provide wholesale water and wastewater services in the Denver, Colorado area, develop land we own into master planned communities, and develop single-family homes for rent.

Each of our businesses, providing water and wastewater services, land development and single-family home rentals generate attractive recurring monthly income.

For more than 30 years, we have accumulated and continue to accumulate a portfolio of valuable water rights and land interests along the Front Range of Colorado.

We have added an extensive network of wholesale water production, storage, treatment and distribution systems, and wastewater collection and treatment systems that we operate and maintain to serve domestic, commercial, and industrial customers in the eastern Denver metropolitan region (the illustration below notes the general area of our land and water assets).

Our primary land asset, known as Sky Ranch, is in one of the most active development areas in the Denver metropolitan region along the rapidly developing I-70 corridor, and we are developing lots at Sky Ranch for residential, commercial, retail, and light industrial uses.

Each of our businesses providing water and wastewater services, land development and single-family home rentals generates attractive recurring monthly income.

For more than 30 years, we have accumulated and continue to accumulate a portfolio of valuable water rights, land interests and single-family rental homes along the Front Range of Colorado.

Our primary land asset, known as Sky Ranch, is in one of the most active development areas in the Denver metropolitan region along the rapidly developing I-70 corridor, where we are developing lots for residential, commercial, retail, and light industrial uses.

Sky Ranch is zoned to include up to 3,200 single-family and multifamily homes, parks, open spaces, trails, recreational centers, schools, and over two million square feet of retail, commercial and light industrial space, all of which will be serviced by our water and wastewater services segment.

Additionally, we have retained lots in our Sky Ranch development for our single-family rental business where we build single-family homes for rent under annual lease agreements.

Additionally, we have retained lots in our Sky Ranch development for our single-family rental business where we contract with national homebuilders to build us single-family homes for rent, typically under annual lease agreements.

With 14 homes currently owned and rented, we continue to expand this new line of business, which may include more than 200 rental homes at Sky Ranch over the next several years.

Through our land development segment, we develop master planned communities creating value and opportunity for homeowners, and businesses who also become water and wastewater customers, along the busy I-70 corridor of the Denver metropolitan area.

Our land development segment was borne from our desire to capitalize on the increase in the value water provides to raw land in the Colorado Front Range.

Our land development segment was borne from our desire to capitalize on the increase in the value our water can provide to raw land in the Colorado Front Range.

Our land development activities provide a strategic complement to our water and wastewater resource and service business, and vice versa.

One of the most significant components of any master planned community in Colorado is its ability to bring high quality domestic

water, irrigation water, and wastewater services to the community.

One of the most significant components of any master planned community in Colorado is its ability to bring high quality domestic water, irrigation water, and wastewater services to the community.

Having control over the water resources in conjunction with developing the land enables us to efficiently build and maintain infrastructure for potable water and irrigation water distribution, wastewater and storm water collection, roads, parks, open spaces, and other investments.

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Our rental homes, water and land assets are designed, constructed, operated, and maintained by us.

Our water, land development and home rental activities are each a distinct line of business which are operated as separate but are cohesive business segments.

We refer to these segments as our water and wastewater resource development segment, our land development segment, and our single-family rental segment, all of which are described in greater detail below.

To date, within our three business segments, we have sold or are actively developing 1,395 finished lots, we have constructed and operated and maintain water and wastewater systems with capacity to serve approximately 2,500 residential equivalent units, and we have constructed and are renting 14 homes.

Water and Wastewater Resource Development Segment

Our water, land development and home rental activities are each a distinct line of business which are operated separately but are cohesive business segments.

these segments as our water and wastewater services segment, our land development segment, and our single-family rental segment, all of which are described in greater detail below.

To date, within our three business segments, we have sold or are in the process of developing 1,529 finished lots, we have constructed and operated and maintain water and wastewater systems with capacity to serve approximately 2,500 residential equivalent units, and we have constructed and are renting 14 homes.

Water and Wastewater Services Segment

We own or control the water supply and infrastructure required to (i) withdraw, treat, store and deliver water (i.e., water rights, wells, diversion structures, pipelines, reservoirs and treatment facilities required to extract and use the water);

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We have the exclusive right to provide water and wastewater services to the Rangeview District’s customers in its exclusive 24,000-acre Lowry Ranch Service Area in the southeastern Denver metropolitan area pursuant to various agreements that are described in greater detail below.

As of August 31, 2024, through the Rangeview District, we provide service to more than 1,400 single-family equivalent (SFE) water connections and more than 952 SFE wastewater connections.

These connections are located mainly in the southeastern metropolitan Denver area on the Lowry Ranch at our Sky Ranch development and other nearby areas where we have acquired service rights.

As of August 31, 2025, through the Rangeview District, we provide service to more than 1,600 single-family equivalent (SFE) water connections and 1,153 SFE wastewater connections.

These connections are located mainly in the southeastern metropolitan Denver area on the Lowry Ranch and at our Sky Ranch development and other nearby areas where we have acquired service rights.

With the water rights we own and control, we believe we can serve an estimated 60,000 SFEs.

An SFE is a customer, whether residential, commercial, or industrial, that imparts a demand on our water or wastewater systems based on the demand of a family of four persons living in a single-family house on a standard sized lot.

An SFE is a customer, whether residential, commercial, or industrial, that imparts a demand on our water or wastewater systems based on the estimated demand of a family of four persons living in a single-family house on a standard sized lot.

For some instances herein, as context dictates, the term “acre-feet” (which is approximately 326,000 gallons) is used to designate an annual decreed amount of water available during a typical year.

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Multiple operators lease more than 135,000 acres in and adjacent to our service area with more than 100 wells and miles of oil and gas collection lines.

Sales of water to industrial customers in the oil and gas industry are unpredictable and fluctuate dramatically but provide a high margin attractive revenue for our water assets.

Beginning in late 2021 and continuing through 2024, we saw a significant recovery in the oil and gas markets, and this resulted in additional water sales to oil and gas clients in our fiscal 2024 and 2023.

Sales of water to industrial customers in the oil and gas industry are unpredictable and fluctuate dramatically but provide high margin revenue for our water assets.

Illustrative map of our main Water Resources and Service Area

Land Development Segment

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We acquired Sky Ranch with the intention of selling lots to home builders to add value to our core water and wastewater operations by adding the ultimate purchasers of the homes as our water customers.

Sky Ranch is being developed in phases over several years, which began in June 2017, when we entered into agreements with three national home builders to sell the initial residential lots at Sky Ranch (referred to as Phase 1) and has continued to expand as we sell lots to national homebuilders now up to 1,395 residential lots.

Sky Ranch is being developed in phases over several years, which began in June 2017, when we entered into agreements with three national home builders to sell the initial residential lots at Sky Ranch (referred to as Phase 1) and has continued to expand as we sell lots, including to additional national homebuilders, in Phase 2.

We divided our land development into phases.

We are now working on Phase 2 which is further divided into subphases that we refer to as Phases 2A, 2B, 2C and 2D to optimize the delivery of infrastructure and lots to our home builder customers on a real time basis without excess inventories of lots and homes.

We are now working on Phase 2 which is further divided into subphases that we refer to as Phases 2A, 2B, 2C, 2D and 2E to optimize the delivery of infrastructure and lots to our home builder customers on a real time basis without excess inventories of lots and homes.

Illustrative map of the Sky Ranch Master Planned Community

As of August 31, 2024, we have delivered to homebuilders 949 finished lots, retaining 31 lots for our single-family rental segment, are under construction on 228 lots (Phase 2C) scheduled for delivery in fiscal 2025, and have an additional 218 lots (Phase 2D) scheduled for delivery in fiscal 2026 at Sky Ranch.

As of August 31, 2025, we have delivered 1,169 finished lots to homebuilders, retaining 71 lots for our single-family rental segment, are under construction on 204 lots (Phase 2D) scheduled for completion in fiscal 2026, and have an additional 148 lots (Phase 2E) scheduled for completion in fiscal 2027 at Sky Ranch.

As of August 31, 2025, homebuilders have built and sold 837 homes at Sky Ranch, with approximately 64 additional homes under construction.

All Phase 1 lots in Sky Ranch are complete and all public improvements (roads, parks, open spaces, storm drain facilities, etc.) have been accepted by the various governmental entities that will control and maintain that infrastructure.

As part of our land development activities, we formed a new Charter School, Sky Ranch Academy, for the purpose of partnering with the Bennett School District 29J to operate a new K-12 Charter School to be located at Sky Ranch.

Sky Ranch Academy has partnered

with National Heritage Academy (NHA) to operate the charter, NHA brings more than 25 years of experience providing educational services at more than 100 schools in nine states, educating more than 60,000 students including five other schools in Colorado.

As part of our land development activities, we formed a new Charter School, Sky Ranch Academy, for the purpose of partnering with the Bennett School District 29J to build and operate a new K-12 Charter School located at Sky Ranch.

Sky Ranch Academy has partnered with National Heritage Academy (NHA) to build and operate the charter, NHA brings more than 25 years of experience providing educational services at more than 100 schools in nine states, educating more than 60,000 students including five other schools in Colorado.

Sky Ranch Academy opened in August 2023 serving grades K-7.

In August of 2024 Sky Ranch Academy added grade 8.

We anticipate that NHA will be opening a high school which will serve grades 9-12 for the school year 2026.

Single-Family Rentals

For several years the housing market and home prices in Colorado grew.

As mortgage rates increased, and the average price of homes in Colorado rose, we believed rental homes would become increasingly attractive to provide affordable housing options to the growing population in Colorado.

Additionally, we saw a shift from people having to rent to people choosing to rent.

In August 2025, NHA broke ground and anticipates opening a high school which will serve grades 9-12 for the 2026-2027 school year.

Single-Family Rental Segment

In recent years, the housing market and home prices in Colorado have grown significantly, mortgage rates have increased, and the average price of homes in Colorado has risen.

As a result of these factors, we believe rental homes will continue to become increasingly attractive to provide affordable housing options to Colorado’s growing population.

Additionally, we have seen a shift from people having to rent to people choosing to rent.

We believe this shift will continue to shape the housing market for the foreseeable future.

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We initially contracted with a local home builder to construct 14 single-family detached homes at Sky Ranch that we retained for use in our rental division.

We are currently under contract with a regional home builder to construct the next 12 single-family detached homes at Sky Ranch.

These rental homes represent our investment in our third operating segment as we expect to add 94 homes in Phase 2 with the ability to add more than 200 homes as Sky Ranch builds out.

Although the rise in home prices has dropped off in the last couple of years, we believe having ongoing recurring rental income, in a community which is experiencing double digit growth in home values and in which we are actively involved adds value to the community and provides tremendous upside for growing our balance sheet and diversifying our recurring revenue streams.

During the fall of 2025 we will bring online five rental townhomes constructed by one of our national homebuilder partners and we are currently under contract with several other national home builders to construct the next 40 single-family detached homes at Sky Ranch for delivery in fiscal 2026.

These rental homes represent our investment in our third operating segment as we expect to add an additional 76 homes in Phase 2 with the ability to add more than 200 homes as Sky Ranch builds out.

Although the percentage rise in home prices has dropped off in the last year, we believe having ongoing recurring rental income in a community which is experiencing growth in home values and in which we are actively involved adds value to the community and provides tremendous opportunities to growing our balance sheet and diversifying our recurring revenues.

Illustrative map of our active and planned Single-family rental units in Phase 2 of the Sky Ranch Master Planned Community

Our Water Assets

We use our valuable and growing water and land assets within our water and land development operations.

Our water assets are summarized in the table below and further discussed in this section:

Our water assets are summarized in the table below and further discussed in this section (amounts in acre-feet):

Designated Groundwater

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Rangeview Water Supply

Our Rangeview Water Supply consists of 26,924 acre-feet of tributary surface water, non-tributary groundwater, and not non-tributary groundwater, and approximately 26,000 acre-feet of adjudicated reservoir sites.

Terminology typically used in the water industry that may help readers understand water rights are detailed below.

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● Tributary Surface Water – water on the surface of the ground flowing in a stream or river system.

Our Rangeview Water Supply consists of 30,602 acre-feet of tributary surface water, non-tributary groundwater, and not non-tributary groundwater, and approximately 26,000 acre-feet of adjudicated reservoir sites.

The Rangeview Water Supply is principally located in the southeast Denver metropolitan area at the “Lowry Ranch,” which is land owned by the State Board of Land Commissioners (Land Board) and is described below.

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● The 1997 Wastewater Service Agreement between us and Rangeview District (Lowry Wastewater Agreement), which allows us to provide wastewater service to the Rangeview District’s customers on the Lowry Ranch.

● The Option Agreement, dated January 20, 2024, among us, Rangeview District, and the Land Board (ECCV Option), which allows us to add the East Cherry Creek Valley (ECCV) system and 4,000 acre-feet or Arapahoe aquifer groundwater, to the lease described above, subject to the payments of additional rent, effective as of July 8, 2032, the expiration of the ECCV lease, described below under the heading “East Cherry Creek Valley System”.

● The Option Agreement, dated January 20, 2024, among us, Rangeview District, and the Land Board (ECCV Option), which allows us to add the East Cherry Creek Valley (ECCV) system and 4,000 acre-feet or Arapahoe aquifer groundwater to the lease described above, subject to the payments of additional rent, effective as of July 8, 2032, upon the expiration of the ECCV lease, described below under the heading “East Cherry Creek Valley System”.

The Lease, the Lowry Service Agreement, the Export Agreement, the Lowry Wastewater Agreement, and the ECCV Option, are collectively referred to as the “Rangeview Water Agreements.”

We provide wholesale water service and wastewater service to customers located both on and outside of the Lowry Ranch, including customers of the Rangeview District and other governmental entities, and industrial and commercial customers.

Pursuant to service agreements with Rangeview (including the Lowry Service Agreement, the Lowry Wastewater Agreement and the Non-Lowry Service

Agreement described below), we design, construct, operate and maintain the Rangeview District’s water and wastewater systems that are used to provide water and wastewater services to the Rangeview District’s customers located within the Rangeview District’s exclusive service area, and other approved areas.

Pursuant to service agreements with Rangeview (including the Lowry Service Agreement, the Lowry Wastewater Agreement and the Non-Lowry Service Agreement described below), we design, construct, operate and maintain the Rangeview District’s water and wastewater systems that are used to provide water and wastewater services to the Rangeview District’s customers located within the Rangeview District’s exclusive service area, and other approved areas.

Subject to the terms and conditions of our agreements with the Rangeview District, we are the exclusive water and wastewater provider to the Rangeview District’s customers.

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In addition to our valuable water rights, the Rangeview Water Agreements grant us the right to use approximately 26,000 acre-feet of reservoir capacity in two valuable surface reservoir sites to provide water service to customers both on and off the Lowry Ranch.

The Company, Rangeview District and the State Land Board filed a Water Court Application on December 31, 2020 seeking to:

(1) adjudicate 1,635 acre feet of water from the Box Elder Creek Alluvial aquifer (a new water right), (2) consolidate and enlarge certain reservoirs on the Lowry Ranch, (3) approve new places of use for existing water rights, (4) approve new places of storage for certain water rights, and (5) approve a new alternate diversion point for certain existing water rights.

On February 7, 2025, the Water Court denied our new water right application of 1,635 acre feet of Box Elder Creek Alluvial aquifer water as well as the consolidation and enlargement of certain reservoirs on the Lowry Ranch.

Neither of these rulings impacted our existing water rights or existing reservoir storage sites.

The Court sought additional information from the Company and opposing parties regarding the three claims which remain outstanding before continuing the trial.

The Company is working with opposing parties to reach a settlement agreement for all five claims in the Water Court Application.

Fairgrounds Water

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As part of the acquisition of the Sky Ranch land in 2010, we also acquired the 828 acre-feet of water located beneath the property.

The water is being used as part of our overall water distribution system, which includes providing services to the Sky Ranch Master Planned Community.

The water is being used as part of our overall water system, which includes providing services to the Sky Ranch Master Planned Community.

Lost Creek Water Supply

The “Lost Creek Water” is comprised of water rights we acquired in 2019 and 2022 in the Lost Creek Designated Ground Water Basin.

The “Lost Creek Water” is comprised of water rights we acquired in 2019, 2022 and 2024 in the Lost Creek Designated Ground Water Basin in Weld County Colorado.

In August 2019, we purchased 300 acre-feet of designated groundwater and 220 acre-feet of groundwater and ditch water.

In June 2022, we purchased 370 acre-feet of designated groundwater.

All the Lost Creek Water has been changed for use as municipal/industrial/agricultural water, additionally we have filed an application with the Colorado Water Court to use the Lost Creek Water to augment our municipal/industrial water supplies at the Lowry Ranch.

In October 2024, we purchased 300 acre-feet of designated groundwater and 378 acre-feet of groundwater and ditch water.

All the Lost Creek Water will be changed for use as municipal/industrial/agricultural water as needed.

In addition, we have filed an application with the Colorado Water Court, as described under Item 3 – Legal Proceedings, to use the Lost Creek Water to augment our municipal/industrial water supplies at the Lowry Ranch.

Our plans are to consolidate our Lost Creek Water with our Rangeview Water Supply to provide service to the Rangeview District’s customers both on and off the Lowry Ranch.

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Escalated royalties will be owed if we sell our Export Water outright rather than delivering water service.

We do not currently anticipate selling our Export Water.

We do not currently anticipate selling our Export Water Rights.

Annual Production Fee – We are also required to pre-pay the Land Board a minimum annual water royalty of approximately $46,000 per year, which is credited against earned royalties each year.

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WISE provides for the purchase and construction of infrastructure (such as pipelines, water storage facilities, water treatment facilities, and other appurtenant facilities) to deliver water to and among the 10 members of the South Metro WISE Authority (SMWA), consisting of the Rangeview District and nine other SMWSA members, from the City and County of Denver acting through its Board of Water Commissioners (Denver Water) and the City of Aurora acting by and through its utility enterprise (Aurora Water).

In exchange for funding the Rangeview District’s WISE obligations, we have the exclusive right to use and reuse the Rangeview District’s share of WISE water (approximately 9%) and infrastructure to provide water service to the Rangeview District’s customers and to receive the revenue from providing those services.

Our current WISE subscription entitles us to approximately three million gallons per day of transmission pipeline capacity and increasing acre-feet of water per year as noted below.

(June 1 - May 31)

2026 and thereafter

In exchange for funding the Rangeview District’s WISE obligations, we have the exclusive right to use and reuse the Rangeview District’s 900 acre-feet of WISE water (approximately 9%) and infrastructure to provide water service to the Rangeview District’s customers and to receive the revenue from providing those services.

Our current WISE subscription entitles us to approximately three million gallons per day of transmission pipeline capacity while staying within our annual subscription of 900 acre-feet between June 1 st and May 31st.

The cost of the water to the members is based on the water rates charged by Aurora Water and can be adjusted each January 1.

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If a WISE member, including the Rangeview District, does not need its WISE water each year or a member needs additional water, the members can trade and/or buy and sell water amongst themselves.

For the year ended August 31, 2024, we, through the Rangeview

District, purchased a total of just over 134 acre-feet of WISE water for $0.4 million.

For the year ended August 31, 2025, we, through the Rangeview District, purchased a total of just under 156 acre-feet of WISE water for $0.4 million.

During the years ended August 31, 2024 and 2023, we provided $0.6 million each year of financing to the Rangeview District to fund the Rangeview District’s obligation to purchase WISE water rights and pay for operational and construction charges.

For the year ended August 31, 2024, we, through the Rangeview District, purchased a total of just over 134 acre-feet of WISE water for $0.4 million.

During the years ended August 31, 2025 and 2024, we provided $1.0 million and $0.6 million of financing to the Rangeview District to fund the Rangeview District’s obligation to purchase WISE water rights and pay for operational and construction charges.

Ongoing funding requirements are dependent on the WISE water subscription amount and the Rangeview District’s allocable share of the operational and overhead costs of SMWA and construction activities related to delivery of WISE water.

East Cherry Creek Valley System

Pursuant to a 1983 lease, ECCV Water and Sanitation District’s leased the right to develop infrastructure to pump up to 4,000 acre feet of groundwater from the Arapahoe aquifer below the Lowry Range (ECCV Lease).

Pursuant to a 1983 lease, ECCV Water and Sanitation District leased the right to develop infrastructure to pump up to 4,000 acre feet of groundwater from the Arapahoe aquifer below the Lowry Range (ECCV Lease).

ECCV’s system is comprised of eight wells and more than ten miles of buried water pipeline located on the Lowry Ranch.

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● Construction and special facility funding fees;

● Consulting fees, and

● Consulting fees;

● Industrial – oil and gas operations fees.

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Water usage fees are based on a tiered pricing structure that provides for higher prices as customers use greater amounts of water.

The water usage fees for customers on the Lowry Ranch are noted in the tables below:

The water usage fees for customers in the Lowry Ranch are noted in the tables below:

Current Lowry Ranch tiered potable water usage pricing structure

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These fees are known as tap fees.

The tap fee is a non-refundable fee that is payable typically at the time a building permit is granted for construction of a home or business and authorizes the property to connect to the water or wastewater system.

The tap fee is a non-refundable fee that is typically payable at the time a building permit is granted for construction of a home or business and authorizes the property to connect to the water or wastewater system.

Once granted, the right stays with the property.

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Wells, treatment plants, pump stations, tanks, reservoirs, transmission pipelines, and major sewage lift stations are typical examples of wholesale facilities.

In exchange for providing water and wastewater service to the Rangeview District’s customers using the Rangeview Water Supply and wastewater facilities, we receive 100% of Rangeview District’s water and wastewater tap fees after payment of a 2% royalty to the Land Board for the sale of water taps (other than taps to Sky Ranch which are exempt from royalties).

The Rangeview District’s 2025 water tap fees are $34,200 per SFE and its wastewater tap fees are $8,240.

The Rangeview District assesses its tap and usage fees annually and adjusts the rates as necessary.

In exchange for providing water service to the Rangeview District’s customers using the Rangeview Water Supply (other than taps to Sky Ranch, which are exempt), we receive 98% of the Rangeview District’s tap fees and the Land Board receives the remaining two percent as a royalty.

In exchange for providing wastewater services, whether to customers on or off the Lowry Ranch, we receive 100% of the Rangeview District’s wastewater tap fees.

Construction and Special Facility Funding Fees

Construction and Special Facility Funding fees are fees we receive, typically in advance, from developers for us to build infrastructure that is normally the responsibility of the developer because the facilities service only the developer’s property.

Those type of facilities may include retail facilities, which distribute water to and collect wastewater from an individual subdivision or a community, and special facilities, which are required to extend services to an individual development and are not otherwise classified as a typical wholesale facility or retail facilities.

These types of facilities may include retail facilities, which distribute water to and collect wastewater from an individual subdivision or a community, and special facilities, which are required to extend services to an individual development and are not otherwise classified as a typical wholesale facility or retail facilities.

Temporary infrastructure required prior to construction of permanent water and wastewater systems or transmission pipelines to transfer water from one location to another are examples of special facilities.

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Oil and gas drilling in our area is affected by the price of oil and state, local and federal government regulations.

The number of wells drilled vary from year to year.

Each well utilizes between 10 and 20 million gallons of water during the hydraulic fracturing process, which equates to selling water to between approximately 100 and 200 homes for an entire year.

The number of wells drilled varies from year to year.

Each well utilizes between 10 and 20 million gallons of water during the hydraulic fracturing process, which equates to selling water between approximately 100 and 200 homes for an entire year.

With a large percentage of the acreage surrounding the Lowry Ranch in Arapahoe, Adams, Elbert, and portions of Douglas Counties already leased by oil companies, we anticipate continuing to provide water for drilling and hydraulic fracturing in the future.

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This includes the design, construction, operation and maintenance of water and wastewater systems to serve the Rangeview District’s customers located outside the Lowry Ranch Service Area (for example Wild Pointe and Sky Ranch) (Non-Lowry Service Agreement).

In exchange for providing water and wastewater services to the Rangeview District’s customers that are not on the Lowry Ranch, we receive 100% of water and wastewater tap fees, 98% of the water usage fees, and 90% of the monthly wastewater service and usage fees received by the Rangeview District from these customers, after deduction of royalties due to the Land Board, if applicable (i.e., if we use a portion of the Rangeview Water Supply, such as the Export Water, to provide service to such customers).

We are currently not using the Rangeview Water Supply at Sky Ranch, but we may do so in the future, in which case water usage fees to be collected for such service would become subject to the Land Board royalty.

Sky Ranch Water and Wastewater Service – As described in more detail below, we are developing approximately 930 acres of land as a Master Planned Community known as Sky Ranch.

Pursuant to the Non-Lowry Service Agreement, we are the exclusive provider of water and wastewater services to all current and future residents, businesses, and other water users at the Sky Ranch development.

Wild Pointe – Elbert & Highway 86 Commercial Metropolitan District – In 2017, we entered into an agreement with the Rangeview District, which had entered into an agreement with Elbert & Highway 86 Commercial Metropolitan District (Elbert 86 District), to operate and maintain a water system for residential and commercial customers at the Wild Pointe development in Elbert County.

In exchange for providing water and wastewater services to the Rangeview

District’s customers that are not on the Lowry Ranch, we receive 100% of water and wastewater tap fees, 98% of the water usage fees, received by the Rangeview District from these customers, after deduction of royalties due to the Land Board, if applicable (i.e., if we use a portion of the Rangeview Water Supply, such as the Export Water, to provide service to such customers), and 90% of the monthly wastewater service and usage fees received by the Rangeview District from customers.

Sky Ranch Water and Wastewater Service – Pursuant to the Non-Lowry Service Agreement, we are the exclusive provider of water and wastewater services to all current and future residents, businesses, and other water users at the Sky Ranch development.

Wild Pointe – Elbert & Highway 86 Commercial Metropolitan Distric t – In 2017, we entered into an agreement with the Rangeview District, which had entered into an agreement with Elbert & Highway 86 Commercial Metropolitan District (Elbert 86 District) to operate and maintain a water system for residential and commercial customers at the Wild Pointe development in Elbert County.

The water system includes two deep water wells, a pump station, treatment facility, storage facility, over eight miles of transmission lines, and over 450 acre-feet of water rights serving Wild Pointe.

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The total sales price for the 792 lots sold and to be sold to the homebuilders in Phase 2 is approximately $69.9 million, which is subject to price escalations depending on development timing which are not included in that figure.

The total sales price for the 219 lots in Phase 2A is $18.4 million, which were completed in fiscal year 2022.

Total sales price for the 194 lots in Phase 2B is $17.3 million.

See below for a description of the conditions that may limit our ability to receive reimbursables and a definition of the Sky Ranch CAB.

As the land developer, we are obligated to provide finished lots (i.e.

lots ready for building permits to construct homes) to each of the home builders as part of our agreements with them.

We build, or contract to build, the roads, curbs, wet and dry utilities, storm drains, parks, open spaces, and other related improvements as part of a master planned community as part of our agreement with the Sky Ranch CAB.

We build, or contract to build, the roads, curbs, wet and dry utilities, storm drains, parks, open spaces, and other related improvements as part of a master planned community pursuant to our agreement with the Sky Ranch CAB.

Each builder is required to purchase water and wastewater taps for each lot from the Rangeview District at the time a building permit is issued.

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Pursuant to the Non-Lowry Service Agreement, we receive all the water and wastewater tap fees from tap sales at Sky Ranch and 98% of the ongoing monthly water and 90% of ongoing monthly wastewater service revenue.

Public improvements, such as roads, parks, and water and sanitary sewer mains, storm sewer, and drainage improvements, that are shared by all homeowners in the development and not specific to any private finished lot are ultimately owned by the governmental metropolitan district or other municipality that is responsible for the maintenance of the improvements.

Public improvements, such as roads, parks, water and sanitary sewer mains, storm sewer, and drainage improvements, that are shared by all homeowners in the development and are not specific to any private finished lot are ultimately owned by the governmental metropolitan district or other municipality that is responsible for the maintenance of the improvements.

Upon completion and acceptance of certain public improvements by the “Sky Ranch Districts” or the Sky Ranch CAB (both of which are defined below), we are entitled to receive reimbursement for the verified public improvement costs.

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As of August 31, 2025, we have completed the required wholesale facilities and other infrastructure to provide water and wastewater for over 2,000 homes at Sky Ranch.

The most significant wholesale facility built was the wastewater reclamation facility, which cost $10.2 million and has a designed capacity to provide wastewater for more than 2,000 single-family homes before requiring expansion.

The most significant wholesale facility built was the wastewater

reclamation facility, which cost $10.2 million and has a designed capacity to provide wastewater for more than 2,000 single-family homes before requiring expansion.

This allows the treatment facility to process wastewater for several development phases at Sky Ranch before additional investment is needed to increase its capacity.

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The Rangeview District, through us as its exclusive service provider, agreed to provide water and wastewater services to the Sky Ranch property.

We have installed over 23 miles of water delivery and wastewater collection infrastructure at a cost of $7.9 million, which is reimbursable by the Sky Ranch CAB as outlined in Note 5 to the accompanying consolidated financial statements.

We have installed roughly 29 miles of water delivery and wastewater collection infrastructure at a cost of $10.5 million, which is reimbursable by the Sky Ranch CAB as outlined in Note 5 to the accompanying consolidated financial statements.

We have also leased the oil and gas minerals underlying the property to a major independent exploration and production company.

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Lehman (our employee), Dirk Lashnits (our employee), and two independent board members.

Colorado law, directors may receive $100 for each board meeting they attend, up to a maximum of $1,600 per year.

Pursuant to Colorado law, directors may receive $100 for each board meeting they attend, up to a maximum of $1,600 per year.

Harding, Spezialy, Lehman, and Lashnits have all elected to forego these payments.

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1 in 2014 and later with the Sky Ranch CAB, that require us to fund expenses related to the construction of an agreed upon list of public improvements for the Sky Ranch Master Planned Community.

We and the Sky Ranch CAB entered into a Facilities Funding and Acquisition Agreement (FFAA) effective November 2017, obligating us to advance funding to the Sky Ranch CAB for specified public improvements constructed from 2018 to 2024.

All amounts owed under the FFAA bear interest at a rate of 6% per annum.

Any advances not paid or reimbursed by the Sky Ranch CAB by December 31, 2058, for Phase 1 and December 31, 2060, for Phase 2A, shall be deemed forever discharged and satisfied in full.

We and the Sky Ranch CAB entered into a Facilities Funding and Acquisition Agreement (FFAA) for Phase 1 effective November 2017 and amended on September 2024, obligating us to advance funding to the Sky Ranch CAB for specified public improvements.

We and the Sky Ranch CAB entered into a Phase 2 Facilities Funding and Acquisition Agreement (FFAA2) for Phase 2 effective December 2020, obligating us to advance funding to the Sky Ranch CAB for specified public improvements.

All amounts owed under the FFAA and FFAA2 bear interest at a rate of 6% per annum.

Any advances not paid or reimbursed by the Sky Ranch CAB by December 31, 2058, for Phase 1 and December 31, 2060, for Phase 2, shall be deemed forever discharged and satisfied in full.

Advances and verified costs expended by us for expenses related to the construction of the agreed-upon public improvements are reimbursable to us by the Sky Ranch CAB.

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Unpaid advances accrue interest at the rate of 6% annually.

The Sky Ranch CAB agrees to exercise reasonable efforts to issue bonds to reimburse us subject to certain limitations.

In addition, the Sky Ranch CAB agrees to utilize any available moneys not otherwise pledged to payment of debt or used for operation and maintenance expenses to reimburse us.

The Sky Ranch CAB has agreed to exercise reasonable efforts to issue bonds to reimburse us subject to certain limitations.

In addition, the Sky Ranch CAB has agreed to utilize any available moneys not otherwise pledged to payment of debt or used for operation and maintenance expenses to reimburse us.

Since 2017, we have advanced the Sky Ranch CAB a total of $85.6 million for funding the construction of the public improvements.

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● In fiscal 2024, the Sky Ranch CAB repaid $0.8 million from unencumbered funds resulting from a budget surplus;

● In October 2024, the Sky Ranch CAB refinanced the 2019 bonds and repaid $10.1 million;

● In fiscal 2025, the Sky Ranch CAB repaid $5.1 million from unencumbered funds resulting from a budget surplus.

Due to continued growth and the continued belief the Sky Ranch CAB can repay amounts we spend on public improvements, Phase 2 reimbursable public improvements, along with the project management revenue, and interest income are being recorded as a note receivable from the Sky Ranch CAB as incurred.

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Costs incurred will be recognized as land under development costs or notes receivable – related party, depending on whether collectability is deemed to be considered probable.

In addition to the note receivable balance, the Sky Ranch CAB refunded $0.5 million for the reimbursement of construction costs from the Southeast Metropolitan Storm Water Authority (SEMSWA).

These costs were distributed to the Sky Ranch CAB upon the acceptance of the stormwater infrastructure by SEMSWA during our fiscal 2022.

The current directors of the Sky Ranch CAB are Mark W.

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Oil and Gas Leases

In 2011, we entered into an Oil and Gas Lease (Sky Ranch O&G Lease) and Surface Use and Damage Agreement and received an up-front payment and a 20% of gross proceeds royalty (less certain taxes) from the sale of any oil and gas produced from the mineral estate we own at Sky Ranch.

In 2011, we entered into an Oil and Gas Lease (Sky Ranch O&G Lease) and Surface Use and Damage Agreement and received an up-front payment and a 20% of gross proceeds royalty (less certain taxes) from the sale of oil and gas produced from the mineral estate we own at Sky Ranch.

The Sky Ranch O&G Lease is now held by production, and we have been receiving royalties from the oil and gas production from six wells drilled within our mineral interest.

During fiscal year ending August 31, 2024, seven new wells were drilled on Sky Ranch and placed into operations.

During the years ended August 31, 2025 and 2024, we received $6.7 million and $0.8 million in royalties attributable to these wells.

In July 2019, we entered into an Agreement on Locations of Oil and Gas Operations covering approximately 16 acres at Sky Ranch with the operator of the Sky Ranch O&G Lease (OGOA).

The Company received an up-front payment of $0.6 million in fiscal 2019 for the OGOA, which was recognized as income on a straight-line basis over three years (the term of the OGOA).

In July 2022, the operator had not spud at least one well on the oil and gas operations area.

To extend its rights under the OGOA for one additional year, the oil and gas operator paid us $75,000, which is being recognized into income over the term of the extension.

In July 2023, the operator paid us an additional $75,000 to extend its rights under the OGOA for one additional year, which is being recognized into income over the term of the extension.

This was the final extension allowed under the OGOA for a total of five years.

During fiscal year ending August 31, 2024, seven new wells were drilled on the pad site and placed into operations.

Arkansas River Land and Minerals

We own approximately 700 acres of land in the Arkansas River Valley in southeastern Colorado.

We currently lease all these acres for dry land grazing.

We intend to sell the land in due course and have classified it as a long-term investment.

As of August 31, 2025 and 2024, the Company owned 544 acres and 698 acres of land in the Arkansas River valley which is classified as held for sale as we intend to sell the remaining 544 acres in due course.

We also own approximately 13,900 acres of mineral interests in the Arkansas River Valley, which has no carrying value on our books due to an impairment charge of $1.4 million we recorded in fiscal 2020.

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This enables us to incrementally develop infrastructure to produce, treat and deliver water to customers based on their growing demands.

During fiscal 2024 and 2023, combined, we invested over $5.1 million in infrastructure, including wells, pipelines, appurtenances for the WISE, and Sky Ranch water and wastewater systems to provide water and wastewater services to our growing customers at Sky Ranch and elsewhere.

During fiscal 2025 and 2024, combined, we invested nearly $8.2 million in infrastructure, including wells, pipelines, appurtenances for the WISE and Sky Ranch water and wastewater systems to provide water and wastewater services to our growing number of customers at Sky Ranch and elsewhere.

We expect to continue to invest in water rights and facilities as our customer demands grow.

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Phase 2B, which broke ground in March 2023, incurred a total of $18.5 million of construction costs to deliver the lots (of which we estimate $14.5 million is for public improvements to be repaid by the Sky Ranch CAB).

During the years ended August 31, 2024 and 2023, we sold 69 and 90 water and wastewater taps at Sky Ranch to homebuilders, which generated $2.6 million and $2.7 million of tap fees.

The Company sold an additional 4 and 14 water taps during the years ended August 31, 2024 and 2023, which generated $0.8 million and $0.4 million.

As of August 31, 2024, we have sold 777 water and wastewater taps at Sky Ranch in Phases 1, 2A, and 2B.

Phase 2C, which broke ground in January 2024, incurred a total of $17.0 million of construction costs to deliver the lots (of which we estimate $15.9 million is for public improvements to be repaid by the Sky Ranch CAB).

During the years ended August 31, 2025 and 2024, we sold 179 and 69 water and wastewater taps at Sky Ranch to homebuilders, respectively, which generated $7.1 million and $2.6 million of tap fees.

The Company sold an additional three and four water taps during the years ended August 31, 2025 and 2024, respectively, which generated $0.2 million and $0.8 million.

As of August 31, 2025, we have sold 956 water and wastewater taps at Sky Ranch in Phases 1, 2A, 2B, and 2C.

Based on current prices and engineering estimates, we believe Phase 2 of Sky Ranch will produce additional tap fee revenue of $19.1 million in water and wastewater tap fee revenue and cash over the next three years.

Our first three rental homes at Sky Ranch were completed and rented in November 2021.

During fiscal 2023, an additional 11 homes were completed and rented as they became available.

We currently have 14 rental home leases and our next five rentals, townhomes in Phase 2B, are in the finishing stages of construction and will be rented by the end of calendar 2025.

We plan to build 76 additional rental homes over the next several years in Phases 2B-D.

We anticipate building these homes concurrent with construction of homes in Phase 2.

We design and price rental homes closer to the cost of construction.

We anticipate building these homes concurrently with construction of homes in Phase 2.

The 14 homes constructed to date have an average construction cost of approximately $350,000 and have a market value of more than $500,000 each.

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Colorado continues to grow.

According to the 2021 census report, Colorado added over 744,000 residents from 2010 to 2021, a growth of 14.8%, bringing the Colorado population to nearly 5.8 million, which is projected to grow to more than 8.7 million by 2050.

According to the latest census report from 2021, Colorado added over 744,000 residents from 2010 to 2021, a growth of 14.8%, bringing the Colorado population to nearly 5.8 million, which is projected to grow to more than 8.7 million by 2050.

A Statewide Water Supply Initiative report by the Colorado Water Conservation Board estimates that the South Platte River basin, which includes the Denver metropolitan region (and our Sky Ranch community), could require an additional 400,000 acre-feet of water by the year 2030 due to continued growth.

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We believe our ability to pair our water to our land and our in-house expertise for operating our systems allowed us to provide home builders with an affordable and sustainable master planned community that allowed our builders to quickly satisfy the increased demand from home buyers.

We believe our affordable community will continue to grow through cyclical housing markets such as we experienced in fiscal 2024 and continue to experience in fiscal 2025.

We believe our affordable community will continue to grow through cyclical housing markets such as we experienced in fiscal 2024 and fiscal 2025.

Growth in the Denver area has trended east with significant activity occurring along the I-70 corridor, an area which enjoys excellent transportation infrastructure with I-70, rail access, and Denver International Airport (DIA).

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As the demand for more single-family rental properties grows, an increasing number of larger investors are expanding their investment strategy to include the product.

The single-family rental market is estimated at $3.4 trillion, compared to $3.5 trillion for the multifamily market, and institutional investors make up less than 2% of the market compared to 55% for the multifamily market.

Recently, the single-family rental market was estimated at $3.4 trillion, compared to $3.5 trillion for the multifamily market, and institutional investors make up less than 2% of the market compared to 55% for the multifamily market.

As more young families, families with children, and retirees look to rent single-family homes with yards and recreational amenities on a long-term basis, more investors are looking to the single-family rental markets to expand their portfolios and grow their capital.

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Colorado’s future water needs will be met through conservation, reuse, and the development of new supplies.

The Rangeview District’s rules and regulations for water and wastewater service call for adherence to strict conservation measures, including low-flow water fixtures, high efficiency appliances, and advanced irrigation control devices.

The Rangeview District’s rules and regulations for water and wastewater service call for adherence to strict conservation measures, including low-flow water

fixtures, high efficiency appliances, and advanced irrigation control devices.

Additionally, our systems are designed and constructed using a dual-pipe water distribution system to segregate the delivery of high-quality potable drinking water to customers through one system and a second system to supply raw or reclaimed water for irrigation demands in parks and open spaces.

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We competitively bid contracts for infrastructure improvements (grading, utilities, roads, water, and wastewater infrastructure) at Sky Ranch.

Many of our contractors enter fixed priced contracts where the contractor is at risk for cost overruns prior to completion of improvements.

Many of our contractors enter fixed-price contracts where the contractor is at risk for cost overruns prior to completion of improvements.

Under these fixed-price contracts, the contract prices are established in part based on fixed, firm subcontractor quotes on contracts and on cost and scheduling estimates.

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Increased costs or shortages of skilled labor, concrete, steel, pipe, and other materials could cause increases in development costs and delays.

These shortages and delays may result in delays

in the delivery of the lots under development or the completion of water or wastewater facilities, increase costs for us or other contractors on our projects, reduce gross margins from sales, or subject us to penalties or defaults under our agreements.

These shortages and delays may result in delays in the delivery of the lots under development or the completion of water or wastewater facilities, increase costs for us or other contractors on our projects, reduce gross margins from sales, or subject us to penalties or defaults under our agreements.

While we contract with third parties for our labor and materials at a fixed price, which we believe allows us the ability to mitigate the risks associated with shortages of and increases in the cost of labor and building materials, other unforeseen factors may arise which could increase our costs.

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Residential developers sell to home builders, who in turn compete based on location, price/value, market segmentation, product design, and reputation.

Commercial, retail, and industrial developers sell to and/or compete with other developers, owners, and operators of real estate for a limited number of potential buyers.

Commercial, retail, and industrial developers sell to and/or compete

with other developers, owners, and operators of real estate for a limited number of potential buyers.

We believe we have exceeded the market’s expectations with the delivery of our lots at Sky Ranch and have demonstrated the ability and expertise to continue to deliver lots in a large-scale master planned community.

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Approximately 41 percent are employed in our water and wastewater segment, approximately 34 percent are employed in our land development segment and approximately 25 percent are employed for support and other functions.

We are committed to creating a strong team environment where employees always treat customers and each other with respect, and where each of us practices the basic principles of integrity, flexibility, honesty, trust, and stewardship:

We are committed to creating a strong team environment where employees always treat customers and each other with respect, and where each

of us practices the basic principles of integrity, flexibility, honesty, trust, and stewardship:

principles we believe go hand-in-hand with achieving success.

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We offer employees the opportunity to give back through volunteering or Company donations to approved causes.

For more information on our diversity and inclusion and community involvement initiatives, please see our ESG page on our website at www.purecyclewater.com.

For more information on our diversity and inclusion and community involvement initiatives, please see our Sustainability Page and our Environmental, Social, and Governance (ESG) report on our website at www.purecyclewater.com.

Other Information

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

What changed 10-K

Item 1. Business