PURE CYCLE CORP 10-K

Item 8 – Financial Statements and Supplementary Data Index to Financial Statements and Supplementary Data Page Report of Independent Registered Public Accounting Firm ( Forvis Mazars, LLP , Denver, CO , PCAOB ID 686 ) F-2 Consolidated Balance Sheets F-5 Consolidated Statements of Income F-6 Consolidated Statements of Shareholders’ Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 ​ ​ ​ ​ F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders, Board of Directors, and Audit Committee Pure Cycle Corporation Watkins, Colorado ​ Opinion on the Consolidated Financial Statements ​ We have audited the accompanying consolidated balance sheets of Pure Cycle Corporation (the “Company”) as of August 31, 2025 and 2024, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the two-year period ended August 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 31, 2025 and 2024, and the results of their operations and their cash flows for each of the years in the two-year period ended August 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 include 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 Matters ​ The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ ​ ​ ​ ​ F-2 Table of Contents To the Shareholders, Board of Directors, and Audit Committee Pure Cycle Corporation Revenue Recognition of Lot Sales ​ As described in Note 2 to the consolidated financial statements, the Company accounts for lot sales revenue over time as construction progresses, with progress measured based upon costs incurred to date compared to total expected costs for each particular construction phase. Any revenue in excess of amounts entitled to be billed is reflected on the balance sheet as a contract asset, and amounts received in excess of revenue recognized are recorded as deferred revenue. For the year ended August 31, 2025, the Company recognized approximately $14 million of lot sale revenue, over time, using the percentage of completion method. Auditing lot sales revenue recognized under the percentage of complete method required a high degree of auditor judgment due to the use of significant assumptions developed by the management team, most notably the estimated budgeted cost for any particular phase to be developed and the estimated remaining cost to complete the phase being developed. Our audit procedures related to the revenue recognition of lot sales included the following procedures: ● Obtained an understanding and evaluated the design effectiveness of the Company’s processes over the development of estimated budgeted and remaining cost to complete the phase being developed. ​ ● Evaluated the reasonableness of management’s estimated budgeted and remaining cost to complete the phase being developed by performing the following: ​ o Inspected contracts with customers o Tested a sample of actual costs incurred by phase o Physically observed the development sites o Interviewed the management team to gain an understanding of the budgeting process and project status o Performed a lookback analysis by comparing actual costs incurred to budgeted costs on historical, completed phases for similar projects o Agreed the number of lots to be sold by builder to respective contracts ​ Collectability of Related-party Note Receivable – Reimbursable Public Improvements ​ As described in Note 2 and Note 5 to the consolidated financial statements, the Sky Ranch Community Authority Board (the Sky Ranch CAB) is responsible for building certain public improvements at Sky Ranch, for which the Company provided the funding to the Sky Ranch CAB and which is reimbursable to the Company. The Company has determined the reimbursement of public improvement costs, for which the Company has an enforceable right to payment, are probable of collection. The note receivable from the Sky Ranch CAB reports the balances owed by the Sky Ranch CAB to the Company for public improvements paid for by the Company, project management fees, and interest accrued on the unpaid balances related to the ongoing development of the Sky Ranch master planned community. As of August 31, 2025, the Company’s related-party note receivable – reimbursable public improvements was approximately $44 million. Management’s estimate of collectability and whether the Sky Ranch CAB will have sufficient sources of liquidity to support the payment of the note receivable balance involves a long-term projection of the development of the Sky Ranch master planned community, and the future revenues that will be available for repayment of the note. Auditing this estimate requires complex auditor judgment because of the subjective and long-term nature of the estimation, and the specialized knowledge needed to address the matter. ​ Our audit procedures related to the collectability of the related party note receivable included the following procedures: ​ ● Obtained an understanding and evaluated the design effectiveness of the Company’s processes over the valuation analysis of the notes receivable. ​ ​ F-3 Table of Contents To the Shareholders, Board of Directors, and Audit Committee Pure Cycle Corporation ​ ● Obtained and reviewed a legal analysis of the enforceability of the Company’s right to payment from the Sky Ranch CAB for the reimbursable costs. ​ ● Obtained and reviewed the valuation analysis of note receivable report of management’s outside vendor and challenged management’s review of the appropriateness of the valuation; including but not limited to, testing all critical inputs, reasonableness of assumptions applied, and valuation models utilized by the outside vendor. ​ ● Utilized internal valuation specialists to assist with testing the reasonableness of the valuation analysis of notes receivable. ​ We have served as the Company’s auditor since 2022. /s/ Forvis Mazars, LLP Denver, Colorado November 12, 2025 F-4 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ● ● ● ● ● ● ● ​ ​ ​ ​ PURE CYCLE CORPORATION CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except shares) ​ August 31, 2025 August 31, 2024 ASSETS: ​ ​ ​ ​ ​ ​ Current Assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 21,931 ​ $ 22,113 Accounts receivable, net ​ 1,330 ​ 1,472 Related party notes receivable, including accrued interest, current portion ​ ​ — ​ ​ 10,100 Prepaid expenses and other assets ​ ​ 1,004 ​ ​ 530 Land under development ​ ​ 7,388 ​ ​ 3,647 Total current assets ​ ​ 31,653 ​ ​ 37,862 Restricted cash ​ ​ 6,448 ​ ​ 3,245 Investment in water and wastewater systems, net ​ 67,523 ​ 62,290 Land and mineral rights held for development ​ ​ 4,168 ​ ​ 4,695 Single-family rental units ​ ​ 5,240 ​ ​ 5,330 Related party notes receivable, including accrued interest, less current portion ​ 45,002 ​ 32,085 Other assets ​ ​ 2,245 ​ 1,847 Total assets ​ $ 162,279 ​ $ 147,354 ​ ​ ​ ​ ​ ​ ​ LIABILITIES & SHAREHOLDERS’ EQUITY: ​ ​ ​ ​ ​ ​ Current Liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 3,518 ​ $ 1,948 Accrued and other liabilities ​ ​ 4,335 ​ ​ 5,164 Deferred revenue ​ ​ 3,355 ​ 2,173 Debt, current portion ​ ​ 411 ​ ​ 64 Total current liabilities ​ ​ 11,619 ​ ​ 9,349 Debt, less current portion ​ ​ 6,380 ​ 6,821 Deferred tax liability, net ​ 1,541 ​ 1,395 Lease obligations, less current portion ​ ​ 1 ​ ​ 87 Total liabilities ​ 19,541 ​ 17,652 ​ ​ ​ ​ ​ ​ ​ Series B preferred shares: par value $ 0.001 per share, 25 million authorized; 432,513 issued and outstanding (liquidation preference of $ 432,513 ) ​ — ​ — Common shares: par value 1/3 of $.01 per share, 40.0 million authorized; 24,066,805 and 24,063,894 outstanding , respectively ​ 80 ​ 80 Additional paid-in capital ​ 175,448 ​ 175,125 Accumulated deficit ​ ( 32,790 ) ​ ( 45,503 ) Total shareholders’ equity ​ 142,738 ​ 129,702 ​ ​ $ 162,279 ​ $ 147,354 ​ See accompanying Notes to Consolidated Financial Statements ​ ​ F-5 Table of Contents PURE CYCLE CORPORATION CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (In thousands, except share information) August 31, 2025 August 31, 2024 REVENUES: ​ ​ Water and Wastewater ​ ​ ​ ​ ​ ​ Water and wastewater activities ​ $ 2,997 ​ $ 7,283 Water and wastewater tap fees ​ 7,337 ​ 3,384 Total water and wastewater ​ ​ 10,334 ​ ​ 10,667 Land Development ​ ​ ​ ​ ​ ​ Lot sales ​ 13,691 ​ 15,998 Project management fees ​ ​ 781 ​ ​ 707 Special facility projects and other ​ 785 ​ 894 Total land development ​ ​ 15,257 ​ ​ 17,599 ​ ​ ​ ​ ​ ​ ​ Single-family rentals ​ ​ 496 ​ ​ 481 Total revenues ​ 26,087 ​ 28,747 ​ ​ ​ ​ ​ ​ ​ COST OF REVENUES: ​ ​ ​ ​ ​ ​ Water and wastewater ​ 4,781 ​ 4,426 Lot development ​ 5,100 ​ 4,374 Single-family rental ​ 176 ​ 188 Total cost of revenues ​ 10,057 ​ 8,988 ​ ​ ​ ​ ​ ​ ​ General and administrative expenses ​ 7,770 ​ 6,921 Depreciation ​ 590 ​ 596 Operating income ​ 7,670 ​ 12,242 ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ Interest income ​ ​ 3,272 ​ ​ 2,837 Interest expense ​ ​ ( 426 ) ​ ​ ( 439 ) Oil and gas royalty income, net ​ ​ 6,654 ​ ​ 795 Other, net ​ ​ 300 ​ ​ 197 Income from operations before income taxes ​ 17,470 ​ 15,632 Income tax expense ​ ( 4,360 ) ​ ( 4,019 ) Net income ​ $ 13,110 ​ $ 11,613 ​ ​ ​ ​ ​ ​ ​ Earnings per common share - basic and diluted ​ ​ ​ ​ ​ ​ Basic ​ $ 0.54 ​ $ 0.48 Diluted ​ $ 0.54 ​ $ 0.48 Weighted average common shares outstanding: ​ ​ ​ ​ ​ ​ Basic ​ 24,076,317 ​ ​ 24,083,001 Diluted ​ 24,167,529 ​ ​ 24,140,946 ​ See accompanying Notes to Consolidated Financial Statements ​ ​ F-6 Table of Contents PURE CYCLE CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended August 31, 2025 ​ ​ Preferred Stock ​ Common Stock ​ Additional ​ Accumulated ​ ​ ​ (in thousands, except shares) Shares Amount Shares Amount Paid-in Capital Deficit ​ Total Balance at August 31, 2024 432,513 ​ $ — 24,063,894 ​ $ 80 ​ $ 175,125 ​ $ ( 45,503 ) ​ $ 129,702 Restricted stock grants ​ — ​ ​ — ​ 9,200 ​ ​ — ​ ​ 21 ​ ​ — ​ ​ 21 Stock options exercised ​ — ​ ​ — ​ 13,815 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock granted for services ​ — ​ ​ — ​ 15,396 ​ ​ — ​ ​ 180 ​ ​ — ​ ​ 180 Share-based compensation ​ — ​ — — ​ — ​ 122 ​ — ​ 122 Repurchases of common stock — ​ — ( 35,500 ) ​ — ​ — ​ ( 397 ) ​ ( 397 ) Net income — ​ — — ​ — ​ — ​ 13,110 ​ 13,110 Balance at August 31, 2025 432,513 ​ $ — 24,066,805 ​ $ 80 ​ $ 175,448 ​ $ ( 32,790 ) ​ $ 142,738 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended August 31, 2024 ​ ​ Preferred Stock ​ Common Stock ​ Additional ​ Accumulated ​ ​ ​ (in thousands, except shares) Shares Amount Shares Amount Paid-in Capital Deficit ​ Total Balance at August 31, 2023 432,513 ​ $ — 24,078,720 ​ $ 80 ​ $ 174,689 ​ $ ( 56,535 ) ​ $ 118,234 Stock options exercised ​ — ​ ​ — ​ 17,456 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Restricted stock grants ​ — ​ — 8,000 ​ — ​ 44 ​ — ​ 44 Stock granted for services ​ — ​ ​ — ​ 19,644 ​ ​ — ​ ​ 195 ​ ​ — ​ ​ 195 Share-based compensation — ​ — — ​ — ​ 197 ​ — ​ 197 Repurchases of common stock — ​ — ( 59,926 ) ​ — ​ — ​ ( 581 ) ​ ( 581 ) Net income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 11,613 ​ ​ 11,613 Balance at August 31, 2024 432,513 ​ $ — 24,063,894 ​ $ 80 ​ $ 175,125 ​ $ ( 45,503 ) ​ $ 129,702 ​ See accompanying Notes to Consolidated Financial Statements ​ F-7 Table of Contents PURE CYCLE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (In thousands) August 31, 2025 August 31, 2024 Cash flows from operating activities: ​ ​ Net income ​ $ 13,110 ​ $ 11,613 Adjustments to reconcile net income to net cash used by operating activities: ​ ​ ​ ​ ​ ​ Trade accounts receivable ​ 142 ​ ( 380 ) Depreciation and depletion ​ ​ 2,297 ​ ​ 2,100 Share-based compensation expense ​ 323 ​ 436 Net activity on notes receivable - related party, other ​ ​ 54 ​ ​ 230 Net activity on note receivable - related party, reimbursable public improvements ​ ​ ( 4,248 ) ​ ( 15,230 ) Deferred income taxes ​ 146 ​ 43 Other assets and liabilities ​ ( 170 ) ​ ​ 275 Prepaid expenses ​ ( 474 ) ​ ( 184 ) Accounts payable and accrued liabilities ​ 934 ​ 973 Taxes payable / receivable ​ ​ ( 132 ) ​ ​ 1,993 Deferred revenue ​ 1,182 ​ ​ 443 Net cash provided by operating activities ​ 13,164 ​ 2,312 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Net purchase of property and equipment ​ ( 861 ) ​ ( 458 ) Future land development activity ​ ​ ( 852 ) ​ ​ ( 2,156 ) Single-family rentals activity ​ ​ 494 ​ ​ ( 291 ) Water and wastewater infrastructure activity ​ ( 8,612 ) ​ ( 1,924 ) Sale of land held for sale ​ ​ 179 ​ ​ — Net cash used in investing activities ​ ( 9,652 ) ​ ( 4,829 ) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Payments on notes payable ​ ​ ( 94 ) ​ ​ ( 31 ) Repurchases of common stock ​ ( 397 ) ​ ( 581 ) Net cash used in financing activities ​ ( 491 ) ​ ( 612 ) Net change in cash, cash equivalents and restricted cash ​ 3,021 ​ ( 3,129 ) Cash, cash equivalents and restricted cash – beginning of period ​ 25,358 ​ 28,487 Cash, cash equivalents and restricted cash – end of period ​ $ 28,379 ​ $ 25,358 Cash and cash equivalents ​ $ 21,931 ​ $ 22,113 Restricted cash ​ ​ 6,448 ​ ​ 3,245 Total cash, cash equivalents and restricted cash ​ $ 28,379 ​ $ 25,358 ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for income taxes ​ $ 4,351 ​ $ 2,056 Cash paid for interest ​ $ 413 ​ $ 417 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Change in reimbursable public improvements included in accounts payable and accrued liabilities ​ $ 209 ​ $ 1,232 Change in investments in water and water systems included in accounts payable and accrued liabilities ​ $ 1,141 ​ $ 131 Issuance of stock for compensation ​ $ 201 ​ $ 211 ​ See accompanying Notes to Consolidated Financial Statements ​ ​ F-8 Table of Contents PURE CYCLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2025 and 2024 NOTE 1 – ORGANIZATION Pure Cycle Corporation (Company or Pure Cycle) was incorporated in Delaware in 1976 and reincorporated in Colorado in 2008. Pure Cycle currently operates in three reportable business segments: (i) wholesale water and wastewater services, (ii) land development and (iii) its single-family rental business which constructs and leases single-family homes in the Sky Ranch neighborhood. ​ Since its inception, Pure Cycle has accumulated valuable water and land interests and has developed an extensive network of wholesale water production, storage, treatment and distribution systems and wastewater collection and treatment systems which serve domestic, commercial and industrial customers in the Denver metropolitan region. Pure Cycle’s land assets are located along the bustling and high-profile I-70 corridor in the Denver metropolitan region. Through its land development segment, Pure Cycle is developing Sky Ranch, a 930 -acre master planned community located four miles south of Denver International Airport. Sky Ranch is planned to include a mix of 3,200 single-family and multifamily residential units, including more than 200 single-family residential homes owned by the Company for rent, and over two million square feet of commercial, retail, and industrial space. ​ NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements of the Company include the accounts of Pure Cycle Corporation and its two wholly-owned and controlled subsidiaries, PCY Holdings, LLC and PCYO Home Rentals, LLC. Intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for certain items such as revenue recognition, reimbursable costs and expenses, costs of revenue for lot sales, share-based compensation, deferred tax asset valuation, and the useful lives and recoverability of long-lived assets. Actual results could differ from those estimates. The Company has determined the reimbursable public improvements, project management fees and interest income related to the Sky Ranch community being developed by Pure Cycle is probable of collectability. As a result of an established and growing tax base resulting from the success of the initial development, increases in housing values in Colorado, added mill levies, and additional unencumbered fees received by the Sky Ranch CAB, Pure Cycle believes repayment of the public improvements, payment of the project management fees, and interest income are deemed probable. Based on this, Pure Cycle recognizes these items in the consolidated financial statements as they occur. The timing and amount of potential payments have been estimated based on growth trends utilizing current assessed values and historic growth rates which have been projected to current and contracted lot sales through the contractual obligation period. ​ Cash and Cash Equivalents Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less. The Company had no cash equivalents as of August 31, 2025 or 2024. At various times during the fiscal years ended August 31, 2025 and 2024, the Company’s main operating account exceeded federally insured limits. To date, the Company has never suffered a loss due to such excess balance. F-9 Table of Contents Land Under Development The land under development account primarily includes land and land improvements stated at cost which Pure Cycle is developing and plans to sell. Cost incurred on certain public improvements in the Company’s development are included in the Notes Receivable for Sky Ranch CAB explained below. Pure Cycle began developing the Sky Ranch property in 2017. Pure Cycle capitalizes certain legal, engineering, design, permitting, land acquisition, and construction costs related to the development at Sky Ranch that meet the Company’s capitalization criteria for improvements to a lot. These costs are capitalized as incurred. The Company uses the specific identification method for purposes of accumulating land development costs and allocates costs to each lot to determine the cost basis for each lot sold. The land under development accounts primarily contains costs directly attributable to lots to be sold, which will not be reimbursed, but will be expensed as land cost of sales as lots are being completed and sold on a lot-by-lot basis. Additionally, land under development may contain accruals related to retention on development contracts which may be eligible for reimbursement once paid. The Company measures land under development costs as a current asset at the lower of the carrying value or net realizable value. In determining net realizable value, the Company primarily relies upon the most recent comparable sales prices. If recent sales prices are not available, the Company will consider several factors, including, but not limited to, current market conditions, nearby recent sales transactions, and market analysis studies. If the net realizable value is lower than the current carrying value, the land is written down to its net realizable value and disclosed if material. Notes Receivable – Sky Ranch CAB As noted above and described in greater detail in Note 5, the Sky Ranch CAB is responsible for building certain public improvements at Sky Ranch. Through various funding agreements, the Company is obligated to provide funding to the Sky Ranch CAB for public improvements, which is reimbursable to the Company. The Company has determined the reimbursement of public improvement costs, for which the Company has an enforceable right to payment, are probable of collection. Therefore, the Company recognizes the reimbursable public improvements costs incurred to date at Sky Ranch in the Notes receivable – related party, reimbursable public improvements and project management fees account on the accompanying consolidated balance sheet. The Company performs a quantitative impairment assessment by estimating the fair value of the Notes receivable – related party using the discounted cash flow method. Concentration of Credit Risk and Fair Value Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and investments. From time to time, the Company places its cash in money market instruments, certificates of deposit and U.S. government treasury obligations. To date, the Company has not experienced significant losses on any of these investments. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value. The Company uses a fair value hierarchy that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of significant input to determine where within the fair value hierarchy the measurement falls. The estimated fair value measurements in Note 2 are based on Level 2 of the fair value hierarchy. Cash and cash equivalents – The Company’s cash and cash equivalents are reported using the values as reported by the financial institution where the funds are held. These securities primarily include balances in the Company’s operating and savings accounts. The carrying amount of cash and cash equivalents approximate fair value. Trade accounts receivable – Trade accounts receivable are reported net of allowances for uncollectible accounts and the carrying values approximate fair value due to the short-term nature of the receivables. Restricted cash – The Company has entered into 12 separate cash-secured performance standby letter of credit agreements with its primary banks to provide assurance the Company will perform on various construction agreements. As of August 31, 2025, the 12 letters of credit totaled $ 6.4 million, which are fully secured by cash held in restricted accounts at the banks, which approximates its fair value is cash is held in savings accounts. F-10 Table of Contents Notes receivable – related parties – The carrying amounts of the notes receivable – related parties with the Rangeview Metropolitan District (Rangeview District) and the Sky Ranch CAB approximate their fair value because the interest rates on the notes currently approximate market rates. Accounts payable – The carrying amounts of accounts payable approximate fair value due to the relatively short period to maturity for these instruments. Debt – The carrying amounts of the Company’s debt approximate fair value because the rates are floating rates based on the prime lending rate, which approximates market rates. Trade Accounts Receivable The Company records accounts receivable net of expected credit losses. The Company has recorded expected credit losses for uncollectible accounts receivables from continuing operations totaling less than $ 0.1 million and $ 0.1 million for the periods ended August 31, 2025 and 2024. The expected credit losses for uncollectible accounts were determined based on lifetime expected credit losses using an aging schedule for each pool of trade accounts receivable. Pools are determined based on risk characteristics by the type of customer. Recoverability of Long-Lived Assets The Company evaluates its long-lived assets for impairment if the Company determines events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Estimates of future cash flows and timing of events for evaluating long-lived assets for impairment are based upon management’s assumptions and market conditions. If any of its long-lived assets are deemed to be impaired, the amount of impairment to be recognized is the excess of the carrying amount of the assets over its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the years ended August 31, 2025 and 2024, the Company recognized less than $ 0.1 million and $ 0 . ​ Capitalized Costs of Water and Wastewater Systems and Depreciation and Depletion Charges Costs to construct water and wastewater systems that meet the Company’s capitalization criteria are capitalized as incurred, including interest, if applicable, and depreciated on a straight-line basis over their estimated useful lives of up to 30 years . The Company capitalizes design and construction costs related to construction activities, and it capitalizes certain legal, engineering and permitting costs relating to the adjudication and improvement of its water assets. The Company depletes its water assets that are being utilized based on units produced (i.e., acre-feet sold) divided by the total volume of water adjudicated pursuant to the water decrees. Revenue Recognition The Company disaggregates revenue by major product line as reported on the consolidated statements of income. The Company currently generates revenues through its three business segments. Revenues are derived through its wholesale water and wastewater business and through the sale of developed land primarily for residential lots, both of which businesses are described below. Water and Wastewater Resource Development Segment Revenue Pure Cycle generates revenue through its wholesale water and wastewater business predominantly from the items described below. Because these items are separately delivered and distinct, Pure Cycle accounts for each of the items separately. Monthly water usage and wastewater treatment fees – Pure Cycle provides water and wastewater services to customers, for which the customers are charged monthly usage fees. Water usage fees are assessed to customers based on actual metered usage each month plus a base monthly service fee assessed per single-family equivalent (SFE) unit served. One SFE is a customer, whether residential, commercial or industrial, that imparts a demand on the Company’s water or wastewater systems similar to the demand of a family of four persons living in a single-family house on a standard-sized lot. Water usage pricing is based on a tiered pricing structure. Pure F-11 Table of Contents Cycle recognizes wholesale water usage revenue at a point in time upon delivering water to its governmental customers’ end-use customers. Revenue recognized by Pure Cycle from the sale of “Export Water” and other portions of its “Rangeview Water Supply” off the “Lowry Ranch” are reported net of royalties to the State of Colorado Board of Land Commissioners (Land Board). Pure Cycle is the distributor of the Export Water and sets pricing for the sale of Export Water. Revenue recognized by Pure Cycle from the sale of water on the Lowry Ranch are shown net of royalties paid to the Land Board and amounts retained by the Rangeview District. For water sales on the Lowry Ranch, the Rangeview District is directly selling the water and is deemed to be the primary distributor of the water. The Rangeview District sets the price for the water sales on the Lowry Ranch. See further description of “Export Water,” the “Lowry Ranch,” and the “Rangeview Water Supply” in Note 4 under “Rangeview Water Supply and Water System.” Pure Cycle also sells raw water for industrial uses, mainly to oil and gas companies for use in the drilling processes (referred to as “O&G operations”). O&G operations revenue is recognized at a point in time upon delivering water to its end-use customers, unless other special arrangements are made. During the years ended August 31, 2025 and 2024, the Company delivered 639 acre-feet and 1,818 acre-feet of water to customers. Of this, 30 % and 77 % was sold to O&G operators. Pure Cycle recognizes wastewater treatment revenue monthly based on a flat monthly fee and actual usage charges. The monthly wastewater treatment fees are shown net of amounts retained by the Rangeview District. Costs of delivering water and providing wastewater service to customers are recognized as incurred. Water and wastewater tap fees and construction fees/special facility funding – Pure Cycle has various water and wastewater service agreements, components of which may require the payment of tap fees. A tap constitutes a right to connect to the wholesale water and wastewater systems through a service line to a residential or commercial building or property, and once granted, the customer may make a physical tap into the wholesale line(s) to connect its property to Pure Cycle’s water and/or wastewater systems. The right stays with the property upon sale or transfer. Pure Cycle has no obligation to physically connect the property to the lines. Once connected to the water and/or wastewater systems, the customer has live service and the ability to receive metered water deliveries from Pure Cycle’s system and send wastewater into Pure Cycle’s system. Thus, once the connection right is granted, the customer has full control of the connection right as it can obtain all the benefits from this right. Therefore, management has determined that tap fees are separate and distinct performance obligations that are recognized at a point in time. Pure Cycle recognizes water and wastewater tap fee revenue when Pure Cycle grants the right for the customer to connect to the water or wastewater service line to obtain service and the customer pays the tap fee. During the years ended August 31, 2025 and 2024, Pure Cycle recognized $ 5.9 million and $ 2.9 million of water tap fee revenue. The water tap fees recognized are based on the amounts billed by the Rangeview District to customers, after deduction of royalties due to the Land Board for water taps, if applicable. During the years ended August 31, 2025 and 2024, the Company recognized $ 1.4 million and $ 0.5 million of wastewater tap fee revenue. Pure Cycle recognizes construction fees, including fees received to construct “special facilities,” over time as the construction is completed because the customer is generally able to use the property improvement to enhance the value of other assets during the construction period. Special facilities are facilities that enable water to be delivered to a single customer and are not otherwise classified as a typical wholesale facility or retail facility. 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. Management has determined that special facilities are separate and distinct performance obligations because these projects are contracted to construct a specific water and wastewater system or transmission pipeline and typically do not include multiple performance obligations in a contract with a customer. For the years ended August 31, 2025 and 2024, Pure Cycle recognized less than $ 0.1 million and $ 0.1 million of special facilities revenue. Consulting fees – Pure Cycle can receive, typically monthly, fees from customers including municipalities and area water providers, for contract operations services. Consulting fees are recognized monthly based on a flat monthly fee plus charges for additional work performed. For each of the years ended August 31, 2025 and 2024, Pure Cycle recognized less than $ 0.1 million of consulting fees. These fees are classified in Water and wastewater activities. F-12 Table of Contents Land Development Segment Revenue Pure Cycle generates revenue through its land development business predominantly from the sources described below. Because these items are separately delivered and distinct, Pure Cycle accounts for each of the items separately. Sale of finished lots – Pure Cycle acquired approximately 930 acres of land zoned as a Master Planned Community known as Sky Ranch. Pure Cycle has entered into multiple purchase and sale agreements with home builders pursuant to which Pure Cycle agreed to sell, and each builder agreed to purchase, finished residential lots at Sky Ranch. Per its agreements, Pure Cycle is obligated to deliver finished lots, which the Company develops through agreements with the Sky Ranch CAB. Pure Cycle began Phase 1 in March 2018 and broke ground on Phase 2 in February 2021. As of August 31, 2025, Phase 1 is complete and includes 509 lots, of which 505 were sold to three homebuilders and the remainder were retained by Pure Cycle for use in its single-family rental business. Phase 2 is planned to have 1,020 lots ( 929 allocated for sale to homebuilders and 91 retained for use in the single-family rental business) and is being developed in five subphases (referred to as Phase 2A, 2B, 2C, 2D and 2E). Phase 2A broke ground in February 2021 and includes a total of 229 lots, of which 219 lots were sold to home builders and 10 were retained for use in the single-family rental business. Phase 2B broke ground in March 2023 and includes a total of 211 lots, of which 194 lots were sold to home builders and 17 lots were retained for use in the single-family rental business. Phase 2C broke ground in March 2024 and includes a total of 228 lots, of which 180 lots were sold to home builders, eight lots are in the process of being sold, and 40 lots were retained for use in the single-family rental business. The timing of cash flows from Phase 2, consistent with Phase 1, includes certain milestone deliveries, including, but not limited to, completion of governmental approvals for final plats, installation of wet utility public improvements, and final completion of lot deliveries. Pure Cycle sells lots at Sky Ranch pursuant to distinct agreements with each builder. These agreements require the same level of construction for all lots and builders, the primary difference in the agreements being the timing of payments and timing of the transfer of ownership of the lots. Pure Cycle’s lot sales agreements require payments under one of the two following structures: (1) Upon the substantial completion of the finished lot, whereby the builder pays for a ready-to-build finished lot and the sales price is paid in a lump sum upon substantial completion of the finished lot (typically subject to completion of related public improvements by Pure Cycle, through its development agreement with the Sky Ranch CAB) that is permit ready. Depending on timing of delivery of the finished lot to the builder, Pure Cycle may still have unfulfilled contract performance obligations related to the timing of completion of public improvements and other amenities. If these unfulfilled obligations, after the finished lots are delivered, are deemed other than insignificant, the Company follows format 2 and recognizes revenue over time based on the estimated progress using overall costs incurred to date compared to total estimated costs from the period of time the lot is delivered until the remaining performance obligations are substantially completed. (2) As certain construction milestones are achieved, which include payments due as follows pursuant to a lot development agreement with the builder: (i) first payment upon the execution of an agreement and transfer of platted lots (which requires Pure Cycle to deliver deeded title to individual lots), (ii) a second payment upon the completion of certain infrastructure milestones, and (iii) final payment upon the delivery of the finished lot. Typically these lots are also subject to completion of related public improvements by the Company, through its development agreement with the Sky Ranch CAB, after all three payments have been received. Under the first payment structure, the builder (i.e., the customer) takes control/ownership of the lot at the time payment is received and the lot is substantially complete, at which point the Company recognizes revenue. Under the second payment structure, the builder takes control/ownership at the first closing, or delivery of the platted lots. Under both payment scenarios Pure Cycle has subsequent improvements to make to the lot to either improve the builder’s lot and/or complete its performance obligations of managing the construction of public improvements required to complete the neighborhood, which includes items such as fencing, final utility installation, and landscaping. Because Pure Cycle has obligations remaining under the contracts, Pure Cycle accounts for lot sales revenue over time as construction progresses, with progress measured based upon costs incurred to date compared to total expected costs for a particular construction phase (i.e., for Phases 2A, 2B and 2C). Any revenue in excess of amounts entitled to be billed is reflected on the balance sheet as a contract asset, and amounts received in excess of revenue recognized are recorded as deferred revenue. Pure Cycle does not have any material significant payment terms as all payments are expected to be received within a few months after invoicing. Pure Cycle adopted the practical expedient for financing components and does not need to account for a financing component of these lot sales as the delivery of lot sales is expected to occur within one year . F-13 Table of Contents For the years ended August 31, 2025 and 2024, Pure Cycle recognized $ 13.7 million and $ 16.0 million, respectively, of lot sale revenue related to Phases 2A, 2B, 2C and 2D at Sky Ranch for recognition of the performance obligations using the percentage-of-completion methods for each builder contract in each phase. Since development of Sky Ranch began through August 31, 2025, Pure Cycle has received payments totaling $ 18.4 million for Phase 2A, $ 17.3 million for Phase 2B, $ 16.5 million for Phase 2C and $ 1.4 million for Phase 2D. Of the amounts received for Phase 2A, as of August 31, 2025, $ 18.4 million has been recognized as revenue as Phase 2A is complete. Of the amounts received for Phase 2B, as of August 31, 2025, $ 16.8 million has been recognized as revenue as Phase 2B is approximately 97 % complete. Of the amounts received for Phase 2C, as of August 31, 2025, $ 13.6 million has been recognized as revenue as Phase 2C is approximately 82 % complete. Of the amounts received for Phase 2D, as of August 31, 2025, $ 1.8 million has been recognized as revenue as Phase 2D is approximately 43 % complete. As of August 31, 2025, no revenue has been deferred related to Phase 2A contracts, $ 0.5 million of revenue has been deferred related to Phase 2B contracts, and $ 2.9 million of revenue has been deferred related to Phase 2C contracts. As of August 31, 2025 there is a receivable of $ 0.4 million which is included in Accounts receivable, net. Deferred revenue will be recognized over time as the Company completes its performance obligations of managing the completion of the public improvements in Phases 2A, 2B, 2C, and 2D which includes items such as fencing, final utility installation, and landscaping. We anticipate the completion of Phase 2B and substantial completion of Phases 2C and 2D by the end of fiscal 2026. Reimbursable Costs for Public Improvements – The Sky Ranch CAB is responsible for the construction of certain public improvements at Sky Ranch. Public improvements are items that are not associated with an individual lot or home, but can be used by the public, whether living in Sky Ranch or not. Public improvements include items such as roads, curbs, sidewalks, landscaping, and parks but also includes items such as water distribution systems, sewer collection systems, storm water systems, and drainage improvements. These public improvements are constructed pursuant to design standards specified by local governmental jurisdictions including the Sky Ranch Metropolitan District Nos. 1, 3, 4, 5, 6, 7 and 8 (collectively, the Sky Ranch Districts), the Sky Ranch CAB, Arapahoe County, and the local stormwater authority and, after inspection and acceptance, are turned over to the applicable governmental entity to own, operate and maintain. Pursuant to agreements between the Company and the Sky Ranch CAB (see Note 14), the Company is obligated to provide advance funding to the Sky Ranch CAB related to the construction of these public improvements pursuant to a note. Because public improvements are utilized by more than just a single home, the costs are typically reimbursed through property tax assessments, fees, and other funding mechanisms like municipal bonds. Although the Company is developing Sky Ranch in phases, the Sky Ranch CAB collects taxes and fees for the entire community and those funds are available to repay the Company regardless of the location of the public improvement (except for certain regional public improvements). Additional information about the amounts spent on public improvements as well as amounts repaid are further detailed in Note 5. The Company evaluates the notes receivable - related parties, reimbursable public improvements for indicators of impairment each reporting period by estimating the fair value of the Notes receivable – related party using the discounted cash flow method. The note receivable from the Sky Ranch CAB bears an interest rate of six percent ( 6 %) per annum until paid. To date no impairment has been recorded for the reimbursable amounts on the note receivable. Project management services – Pursuant to two Service Agreements for Project Management Services (Project Management Agreements) with the Sky Ranch CAB, Pure Cycle acts as the project manager and provides the services required to deliver the Sky Ranch CAB-eligible public improvements (see discussion of reimbursable public improvements above and in Note 5), including but not limited to Sky Ranch CAB compliance; planning design and approvals; project administration; contractor agreements; and construction management and administration. Pure Cycle is responsible for all expenses it incurs in the performance of the Project Management Agreements and is not entitled to any reimbursement or compensation except as set forth in the Project Management Agreements, unless otherwise approved in advance by the Sky Ranch CAB in writing. Pure Cycle receives a project management fee of five percent ( 5 %) of actual qualifying construction costs of Sky Ranch CAB-eligible public improvements. The project management fee is based only on the actual costs of the improvements; thus, items such as fees, permits, review fees, and land acquisition or any other costs that are not directly related to the cost of construction of Sky Ranch CAB-eligible public improvements are not included in the calculation of the project management fee. Other costs incurred by Pure Cycle that are not directly related to the construction of Sky Ranch CAB-eligible public improvements are included in the land under development account and accounted for in the same manner as construction support activities as described below. Per the Project Management Agreements, no payment is required by the Sky Ranch CAB with respect to F-14 Table of Contents project management fees unless and until the Sky Ranch CAB and/or the Sky Ranch Districts have sufficient funds from tax assessment, fees or the issuance of municipal bonds in an amount sufficient to reimburse Pure Cycle for all or a portion of advances provided or expenses incurred for construction of public improvements that qualify as reimbursable expenses. Additional information on the Project Management fees and treatment of the related receivables is included in Note 5. Construction support activities – Pure Cycle performs certain construction activities at Sky Ranch. The activities performed include construction and maintenance of the grading erosion and sediment control, best management practices and other construction-related services. The Phase 2 activities are invoiced based on an agreement between Pure Cycle and the Sky Ranch CAB. The amounts are invoiced and recognized as special facility projects revenue and are a component of trade accounts receivable, net. For the years ended August 31, 2025 and 2024, the Company recognized $ 0.8 million and $ 0.9 million, respectively, related to construction support activities at Sky Ranch. Deferred Revenue As noted above, the Company recognizes certain lot sales over time as construction activities progress for lots sold pursuant to lot development agreements and not when payment is received. Based on this, the Company will frequently receive milestone payments before revenue can be recognized (i.e. prior to the Company completing cumulative progress which faithfully represents the transfer of goods and services to the customer) which results in the Company recording deferred revenue. The Company recognizes this revenue into income as control of lots are transferred to the homebuilder, generally from the period title to a lot is transferred until all construction activities (including public improvements) for that phase or subphase are completed and turned over to the governmental agency that will maintain the asset. The progress of construction activities is measured based on the amount of costs incurred compared to total expected costs of the project (i.e. Phase 2A), which management believes is a faithful representation of the transfer of goods and services to the customer. As of August 31, 2025 and 2024, the Company’s deferred revenue along with the changes in the deferred revenue are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended August 31, 2025 (In thousands) ​ Water and Wastewater Resource Development ​ Land Development ​ Total Balance at August 31, 2024 ​ $ — ​ $ 2,173 ​ $ 2,173 Revenue recognized ​ ​ ( 23 ) ​ ​ ( 13,492 ) ​ ​ ( 13,515 ) Revenue deferred ​ ​ 23 ​ ​ 14,674 ​ ​ 14,697 Balance at August 31, 2025 ​ $ — ​ $ 3,355 ​ $ 3,355 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended August 31, 2024 (In thousands) ​ Water and Wastewater Resource Development ​ Land Development ​ Total Balance at August 31, 2023 ​ $ 69 ​ $ 1,661 ​ $ 1,730 Revenue recognized ​ ​ ( 177 ) ​ ​ ( 16,302 ) ​ ​ ( 16,479 ) Revenue deferred ​ ​ 108 ​ ​ 16,814 ​ ​ 16,922 Balance at August 31, 2024 ​ $ — ​ $ 2,173 ​ $ 2,173 ​ When recognized, the amounts reflected as unearned revenue will be recorded in lot sales, metered water usage from oil and gas operations, or Other income oil and gas lease income, net in the consolidated statements of income. ​ Royalty and Other Obligations Revenue from the sale of Export Water is shown net of royalties payable to the Land Board. Revenue from the sale of water on the Lowry Ranch is invoiced directly by the Rangeview District, and a percentage of such collections is then paid to the Company by the Rangeview District net of royalties paid to the Land Board and amounts retained by the Rangeview District. F-15 Table of Contents Oil and Gas Lease Payments As further described in Note 4 below, on March 10, 2011, the Company entered a Paid-Up Oil and Gas Lease (Sky Ranch O&G Lease) and a Surface Use and Damage Agreement that have been assigned to various other oil and gas companies as a result of acquisitions. Nine wells have been drilled within the Company’s mineral interest and placed into service and are producing oil and gas and accruing royalties to the Company. During the years ended August 31, 2025, and 2024, the Company received $ 6.7 million and $ 0.8 million, respectively, in royalties attributable to these wells. The Company classifies income from lease and royalty payments as Other income in the consolidated statements of income as the Company does not consider these arrangements to be an operating business activity. Oil and gas operations, although material in certain years, are deemed a passive activity as the Chief Operating Decision Maker (CODM) does not actively allocate resources to these projects; therefore, this is not classified as a reportable segment. Share-based Compensation The Company maintains a stock option plan for the benefit of its employees and non-employee directors. The Company recognizes share-based compensation costs as expenses over the applicable vesting period of the stock award using the straight-line method. The compensation costs to be expensed are measured at the grant date based on the fair value of the award. The Company has adopted the alternative transition method for calculating the tax effects of share-based compensation, which allows for a simplified method of calculating the tax effects of employee share-based compensation. The impact on the income tax provision for the granting and exercise of stock options during each of the years ended August 31, 2025 and 2024, was immaterial. During the years ended August 31, 2025 and 2024, the Company recognized $ 0.3 million and $ 0.4 million, respectively, of share-based compensation expense. Income Taxes The Company uses a “more-likely-than-not” threshold for the recognition and de-recognition of tax positions, including any potential interest and penalties relating to tax positions taken by the Company. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax positions as a component of income tax expense. At August 31, 2025, the Company did no t have any accrued interest or penalties associated with any unrecognized tax benefits, no r was any interest expense recognized during the year ended August 31, 2025. The Company does no t have any significant unrecognized tax benefits as of August 31, 2025. The Company records deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating losses and tax credit carryforwards. The Company measures deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company files income tax returns with the Internal Revenue Service and the State of Colorado. The tax years that remain subject to examination are fiscal 2020 through fiscal 2025. The Company does no t believe there will be any material changes in its unrecognized tax positions over the next 12 months. Earnings per Common Share Basic earnings per common share is computed by dividing net income by the weighted-average number of shares outstanding during each period. Diluted earnings per share is computed similarly but reflects the potential dilution that would occur if dilutive options were exercised and all unvested share-based payment awards were vested. Certain outstanding options are excluded from the diluted earnings per share calculation because they are anti-dilutive (i.e., their assumed conversion into common stock would increase rather than decrease earnings per share). ​ New Accounting Pronouncements The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its consolidated financial statements and to ensure that there are proper controls in place to ascertain that F-16 Table of Contents the Company’s consolidated financial statements properly reflect the change. New pronouncements assessed by the Company recently are discussed below: In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This ASU requires disaggregated disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. ASU 2024-03 is effective for the Company for annual periods beginning after December 31, 2026. The Company is are currently evaluating the impact ASU 2024-03 will have on our financial statement disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . Upon adoption of this ASU, the company will disclose specific new categories in its income tax rate reconciliation and provide additional information for reconciling items above a quantitative threshold. The Company will also disclose the amount of income taxes paid disaggregated by federal and state. The Company expects these amendments will first be applied in the company’s annual report on form 10-K for the fiscal year ending August 31, 2026, on a prospective basis. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . Upon adoption of this ASU, the Company has disclosed significant segment expenses, the title and position of the CODM, and an explanation of how the reported measure of segment profit or loss is used by the CODM to assess segment performance and make resource allocation decisions. Effective August 31, 2025, the Company adopted the provisions of this ASU on a retrospective basis. See Note 13. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements and related disclosures. ​ Changes Affecting Comparability For the year ended August 31, 2025, the Company made changes to certain categories within its financial statements. These changes were made as part of the Company’s adoption of ASU 2023-07, Segment Reporting (Topic 280). The changes (i) provide additional details about the Company’s operations by reporting segment and enable the readers of its financial statements to more easily trace the performance of its segments from the financial statements through to the notes and (ii) align its presentation with industry peers. ​ The Company made changes in the presentation of “Revenues” and “Cost of revenues” categories within the Consolidated Statements of Income. As a result, changes within the Consolidated Statements of Income in the prior periods were made to conform to the current period presentation. The changes had no impact on gross margins or net income. ​ The Company allocated “Construction in progress” into its corresponding fixed asset class within the Consolidated Balance Sheet. The Company consolidated “Land held for investment purposes,” “Land held for sale” and “Operating lease – right to use assets” into “Other assets” within the Consolidated Balance Sheets. The changes had no impact on total assets, total liabilities, or total equity. ​ Changes to the Consolidated Statement of Cash Flows were made to align with new categories on the Consolidated Balance Sheet. All prior period amounts have been reclassified to conform to the current presentation . NOTE 3 – FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The Company uses a fair value hierarchy that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of significant inputs to determine the level in the fair value hierarchy which is applicable to the fair value measure. Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as The NASDAQ Stock Market. As of August 31, 2025 and August 31, 2024, the Company had no recurring Level 1 assets or liabilities. Level 2 — Valuations for assets and liabilities obtained from readily available pricing sources via independent providers for market transactions involving similar assets or liabilities. As of August 31, 2025 and 2024, the Company had three non-recurring Level 2 F-17 Table of Contents liabilities, both of the SFR Notes and the Lost Creek Note (all defined in Note 7), for which the Company has determined the valuation of the liabilities can be obtained from readily available pricing sources via independent providers for market transactions involving similar liabilities. ​ Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain significant unobservable assumptions and projections in determining the fair value assigned to such assets or liabilities. As of August 31, 2025 and 2024, the Company had one Level 3 asset, the notes receivable. The Company did not record any impairment charges related to the notes receivable, as their fair value, based on a discounted cash flow analysis, exceeded the carrying value. The Company maintains policies and procedures to value instruments using what management believes to be the best and most relevant data available. There were no transfers between Level 1, 2 or 3 categories during the years ended August 31, 2025 or 2024. NOTE 4 – WATER AND LAND ASSETS Investment in Water and Water Systems The Company’s water and water systems consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, 2025 ​ August 31, 2024 ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ Depreciation ​ ​ ​ ​ Depreciation (In thousands) Costs and Depletion Costs and Depletion Rangeview water system ​ $ 31,421 ​ $ ( 5,903 ) ​ $ 23,381 ​ $ ( 3,579 ) ​ Rangeview water supply ​ ​ 16,273 ​ ​ ( 21 ) ​ ​ 15,889 ​ ​ ( 20 ) ​ Water supply – Other ​ 1,300 ​ ( 1,147 ) ​ 7,588 ​ ( 2,307 ) a Sky Ranch water rights and other costs ​ 7,690 ​ ( 1,689 ) ​ 7,764 ​ ( 1,641 ) ​ Sky Ranch pipeline ​ 5,740 ​ ( 1,558 ) ​ 5,740 ​ ( 1,366 ) ​ Lost Creek water supply ​ 10,836 ​ — ​ 7,357 ​ — b Fairgrounds water and water system ​ 2,900 ​ ( 1,679 ) ​ 2,900 ​ ( 1,591 ) ​ Wild Pointe service rights ​ 1,632 ​ ( 1,475 ) ​ 1,632 ​ ( 1,261 ) ​ Construction in progress - water and water systems ​ ​ 3,203 ​ ​ — ​ ​ 1,804 ​ ​ — ​ Totals ​ 80,995 ​ ( 13,472 ) ​ 74,055 ​ ( 11,765 ) ​ Net investments in water and water systems ​ $ 67,523 ​ ​ ​ ​ $ 62,290 ​ ​ ​ ​ ​ a) Change in Water supply – Other for the year ended August 31, 2025 compared to 2024 is primarily due to reclassification of WISE infrastructure into Rangeview water system. ​ b) During the year ended August 31, 2025, the Company’s Lost Creek water supply increased $ 3.5 million, primarily from the acquisition of 378 acre-feet of ditch water in the Henrylyn Irrigation District and 220 acre-feet of groundwater rights in the Lost Creek Designated Basin ​ Single-Family Rental Homes During the year ended August 31, 2024, the Company capitalized two homes in Phase 2A. The costs of the homes are capitalized and when applicable are depreciated over periods not exceeding thirty-years , depending on the asset type. As of August 31, 2025, all 14 completed homes have been rented, with contracts signed to construct 17 single-family rentals in Phase 2B. Construction began on five of those homes, which will be ready for lease by the end of calendar year 2025. ​ The Company has reserved a total of 91 lots in Phase 2 ( 10 of which are in Phase 2A and completed as of August 31, 2025) of Sky Ranch to build additional rental homes. ​ F-18 Table of Contents Depletion and Depreciation ​ During the years ended August 31, 2025 and 2024, the Company recorded an immaterial amount of depletion charges, which related entirely to the Rangeview Water Supply (as defined below). ​ During the years ended August 31, 2025 and 2024, the Company recorded $ 2.3 million and $ 2.1 million, respectively, of depreciation expense, which include $ 0.6 million and $ 0.6 million, respectively, of depreciation expense for other equipment not included in the table above. ​ The following table presents the estimated useful lives by asset class used for calculating depreciation and depletion charges: ​ ​ ​ ​ Asset Classes Estimated Useful Lives Wild Pointe Units of production depletion Rangeview water supply Units of production depletion Lost Creek water supply Units of production depletion Rangeview, Sky Ranch and WISE water systems 30 years ECCV wells 10 years Furniture and fixtures 5 years Trucks and heavy equipment 5 years Water system general (pumps, valves, etc.) 5 years Computers 3 years Water equipment 3 years Software 1 year ​ Rangeview Water Supply and Water System The “Rangeview Water Supply” consists of approximately 27,000 acre-feet and is a combination of tributary surface water and groundwater rights along with certain storage rights associated with the Lowry Ranch, a 26,000 -acre property owned by the Land Board located 16 miles southeast of Denver, Colorado. As of August 31, 2025, the Company has invested $ 31.4 million in facilities to extend water service to customers located on and off the Lowry Ranch. The recorded costs of the Rangeview Water Supply include payments to the sellers of the Rangeview Water Supply, design and construction costs and certain direct costs related to improvements to the asset, including legal and engineering fees. The Company acquired the Rangeview Water Supply in 1996 pursuant to the following agreements: ● 1996 Amended and Restated Lease Agreement between the Land Board and the Rangeview District, which was superseded by the 2014 Amended and Restated Lease Agreement, dated July 10, 2014 (Lease), between the Company, the Land Board, and the Rangeview District; ● The 1996 Service Agreement between the Company and the Rangeview District, which was superseded by the Amended and Restated Service Agreement, dated July 11, 2014, between the Company and the Rangeview District (Lowry Service Agreement), which allows the Company to provide water service to the Rangeview District’s customers located on the Lowry Ranch; ● The Agreement for Sale of non-tributary and not non-tributary groundwater between the Company and the Rangeview District (Export Agreement), pursuant to which the Company purchased a portion of the Rangeview Water Supply referred to as the “Export Water” because the Export Agreement allows the Company to export this water from the Lowry Ranch to nearby communities; and ● The 1997 Wastewater Service Agreement between the Company and Rangeview District (Lowry Wastewater Agreement), which allows the Company to provide wastewater service to the Rangeview District’s customers on the Lowry Ranch. F-19 Table of Contents ● The ECCV Option Agreement, dated January 30, 2024, among the Company, Rangeview District, and the Land Board (ECCV Option), which allows the Company to add the East Cherry Creek Valley (ECCV) system and 4,000 acre-feet or Arapahoe aquifer groundwater, to the Lease, subject to the payment of additional rent, effective as of July 8, 2032 (the expiration of the ECCV lease). The Lease, the Lowry Service Agreement, the Export Agreement, and the Lowry Wastewater Agreement, and the ECCV Option are collectively referred to as the Rangeview Water Agreements. Pursuant to the Rangeview Water Agreements, the Company owns 11,650 acre-feet of water consisting of 10,000 acre-feet of groundwater and 1,650 acre-feet of average yield surface water which can be exported off the Lowry Ranch to serve area users (referred to as Export Water). The 1,650 acre-feet of surface rights are subject to completion of documentation by the Land Board related to the Company’s exercise of its right to substitute an aggregate gross volume of 165,000 acre-feet of its groundwater for 1,650 acre-feet per year of adjudicated surface water and to use this surface water as Export Water. Additionally, assuming completion of the substitution of groundwater for surface water, the Company has the exclusive right to provide water and wastewater service, through 2081, to all water users on the Lowry Ranch and the right to develop an additional 13,685 acre-feet of groundwater and 1,650 acre-feet of adjudicated surface water to serve customers either on or off the Lowry Ranch. The Rangeview Water Agreements also provide for the Company to use surface reservoir storage capacity in providing 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 the Company’s 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 the Company’s 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. Services on the Lowry Ranch – Pursuant to the Rangeview Water Agreements, the Company designs, finances, constructs, operates and maintains the Rangeview District’s water and wastewater systems to provide service to the Rangeview District’s customers on the Lowry Ranch. The Company will operate both the water and the wastewater systems during the contract period, and the Rangeview District owns both systems. After 2081, ownership of the water system will revert to the Land Board, with the Rangeview District retaining ownership of the wastewater system. Rates and charges for all water and wastewater services on the Lowry Ranch, including tap fees and usage or monthly fees, are governed by the terms of the Rangeview Water Agreements. Rates and charges cannot exceed the average of similar rates and charges of three surrounding municipal water and wastewater service providers, which are reassessed annually. Pursuant to the Rangeview Water Agreements, the Land Board receives a royalty of 10 % or 12 % of gross revenue from the sale or disposition of the water, depending on the nature and location of the purchaser of the water, except that the royalty on tap fees shall be 2 % (other than taps sold for Sky Ranch which are exempt from royalties). The Company also is required to pay the Land Board a minimum annual water production fee of approximately $ 46,000 per year, which offsets earned royalties, and annual rent of $ 8,400 which amount is increased every five years based on the Consumer Price Index for Urban Customers. The Rangeview District retains 2 % of the remaining revenue, and the Company receives 98 % of the remaining revenue after the Land Board royalty. The Land Board does not receive a royalty on wastewater fees. The Company receives 100 % of the Rangeview District’s wastewater tap fees and 90 % of the Rangeview District’s wastewater treatment fees (the Rangeview District retains the other 10 %). Export Water – Pursuant to the Rangeview Water Agreements, the Company owns the Export Water and intends to use it to provide wholesale water and wastewater services to customers off the Lowry Ranch, including customers of the Rangeview District and other governmental entities and industrial and commercial customers. The Company will own all wholesale facilities required to extend water and wastewater services using its Export Water. The Company anticipates contracting with third parties for the construction of these facilities. If the Company sells Export Water, the Company is required to pay royalties to the Land Board ranging from 10 % to 12 % of gross revenue, except that the royalty on tap fees shall be 2 % (other than taps sold for Sky Ranch which are exempt). F-20 Table of Contents WISE The WISE Partnership Agreement provides for the purchase of certain infrastructure (i.e., pipelines, water storage facilities, water treatment facilities, and other appurtenant facilities) to deliver water to and among the ten members of the SMWA, Denver Water and Aurora Water. Certain infrastructure has been constructed and other infrastructure will be constructed over the next several years. During each of the years ended August 31, 2025 and 2024, the Company made $ 0.5 million and less than $ 0.1 million, respectively, in capital investments in WISE. Capitalized terms used under this caption are defined in Note 7 below. The Arapahoe County Fairgrounds Water and Water System The Company owns 321 acre-feet of groundwater purchased pursuant to its agreement with Arapahoe County. The Company plans to use this water in conjunction with its Rangeview Water Supply in providing water to areas outside the Lowry Ranch. The $ 2.9 million of capitalized costs noted in the table “Investment in Water and Water Systems” above includes the costs to construct various wholesale and special facilities, including a new deep water well, a 500,000 -gallon water tank and pipelines to transport water to the Arapahoe County fairgrounds. The Lost Creek Water Supply In August 2019, the Company purchased 150 acre-feet of ditch water rights, 300 acre-feet of designated groundwater rights, 70 acre-feet of deep groundwater rights and 260 acres of land in the Lost Creek Basin in Weld County, Colorado. Total consideration for the land, water and related costs was $ 3.5 million. The Company allocated the acquisition cost to the land and water rights based on estimates of each asset’s respective fair value at the acquisition date. This transaction was accounted for as an asset acquisition. On June 27, 2022, Pure Cycle acquired an additional 370 acre-feet of designated groundwater rights located in the Lost Creek basin in Weld County Colorado. The acquisition included three water wells and related well permits and structures. The total purchase price was $ 3.7 million, which was allocated entirely to the water rights as the other assets were deemed to not have determinable values. This transaction was accounted for as an asset acquisition. ​ In October 2024, the Company purchased an additional 378 acre-feet of ditch water rights, 300 acre-feet of designated groundwater rights, 432 acres of land, a house, barn, outbuildings and irrigation pivots in the Lost Creek Basin. Total consideration for the land, water and other purchased items was $ 5.4 million. The Company allocated the acquisition cost to the land, water rights, and various other assets based on estimates of each asset’s respective fair value at the acquisition date. This transaction was accounted for as an asset acquisition. All the Lost Creek Water will be changed for use as municipal/industrial/agricultural water as needed. Additionally, the Company has filed an application with the Colorado Water Court, as described under Item 3 – Legal Proceedings, to use the Lost Creek Water to augment its municipal/industrial water supplies at the Lowry Ranch. The Company plans are to consolidate its Lost Creek Water with its Rangeview Water Supply to provide service to the Rangeview District’s customers both on and off the Lowry Ranch. Service to Customers Not on the Lowry Ranch Sky Ranch – In 2010, the Company purchased approximately 930 acres of undeveloped land known as Sky Ranch. The property includes the rights to approximately 830 acre-feet of water, which the Company is using in conjunction with its Rangeview Water Supply to provide water service to the Rangeview District’s customers at Sky Ranch. The $ 13.5 million of capitalized costs includes the costs to acquire the water rights and to construct various facilities. Total consideration for the land, water, and acquisition-related costs and fees was $ 7.6 million. The Company allocated the total acquisition cost to the land and water rights based on estimates of each asset’s respective fair value at the acquisition date. The purchase of the Sky Ranch land and water was accounted for as an asset acquisition. In June 2017, the Company completed and placed into service its Sky Ranch pipeline, which cost $ 5.7 million to construct, connecting its Sky Ranch water system to the Rangeview District’s water system. F-21 Table of Contents Wild Pointe – On December 15, 2016, the Rangeview District, acting by and through its water activity enterprise, and Elbert & Highway 86 Commercial Metropolitan District, a quasi-municipal corporation and political subdivision of the State of Colorado, acting by and through its water enterprise (Elbert 86 District), entered into a Water Service Agreement (Wild Pointe Service Agreement). Subject to the conditions set forth in the Wild Pointe Service Agreement and the terms of the Company’s engagement by the Rangeview District as the Rangeview District’s exclusive service provider, the Company acquired, among other things, the exclusive right to provide water services to residential and commercial customers in the Wild Pointe development, located in unincorporated Elbert County, Colorado, for $ 1.6 million in cash. Pursuant to the terms of the Wild Pointe Service Agreement, the Company, in its capacity as the Rangeview District’s service provider, is responsible for providing water services to all users of water services within the boundaries and service area of the Elbert 86 District and for operating and maintaining the Elbert 86 District’s water system. In exchange, the Company receives 100 % of the tap fees from new customers and 98 % of all other fees and charges, including monthly water service revenue, remitted to the Rangeview District by the Elbert 86 District pursuant to the Wild Pointe Service Agreement. The Elbert 86 District’s water system currently provides water service to approximately 249 SFE water connections in Wild Pointe. O&G Leases In 2011, the Company entered into the Sky Ranch O&G Lease. Pursuant to the Sky Ranch O&G Lease, the Company received an up-front payment for the purpose of exploring for, developing, producing, and marketing oil and gas on 634 acres of mineral estate owned by the Company at its Sky Ranch property. The Sky Ranch O&G Lease is now held by production, entitling the Company to royalties based on production. Land and Mineral Rights As part of the Sky Ranch acquisition, the Company acquired approximately 930 acres of land, of which approximately 397 acres have been sold to home builders for the purpose of building residential homes or dedicated for schools and public rights of way. As of August 31, the costs allocated to the Company’s land held for development is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, 2025 August 31, 2024 Sky Ranch land ​ $ 1,875 ​ $ 1,982 Sky Ranch development costs ​ 461 ​ 1,483 Lost Creek land ​ 1,729 ​ 218 Construction in progress ​ ​ 103 ​ ​ 1,012 Net land and mineral interests held for development ​ $ 4,168 ​ $ 4,695 ​ 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 the Company’s books due to an impairment charge of $ 1.4 million recorded in fiscal 2020. The Company currently has no plans to sell its mineral interests. ​ NOTE 5 – REIMBURSABLE PUBLIC IMPROVEMENTS AND NOTE RECEIVABLE FROM THE SKY RANCH CAB The note receivable from the Sky Ranch CAB reports the balances owed by the Sky Ranch CAB to the Company for public improvements paid for by the Company which are reimbursable from the Sky Ranch CAB, project management fees, and interest accrued on the unpaid balances related to the ongoing development of the Sky Ranch master planned community. The Company has advanced funds to the Sky Ranch CAB for the cost of public improvements which the Sky Ranch CAB is responsible for constructing and the Company is obligated to fund through various funding agreements between the Sky Ranch CAB and the Company. During the year ended August 31, 2025, the Company spent $ 15.0 million on public improvements which were certified by a third-party engineer and reimbursable by the Sky Ranch CAB to the Company and were therefore added to the note receivable from the Sky Ranch CAB. Additionally, for the year ended August 31, 2025, project management fees owed to the Company of $ 0.8 million, and interest income on the outstanding note receivable of $ 2.3 million, were also added to the note receivable. During the year ended August 31, 2025, the Sky Ranch CAB made seven payments to the Company on the note totaling $ 15.2 million, which was applied first to interest and then to public improvements on the note. F-22 Table of Contents The following table summarizes the activity and balances associated with the note receivable from the Sky Ranch CAB: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (In thousands) ​ August 31, 2025 August 31, 2024 Beginning balance ​ $ 40,964 ​ $ 24,999 Additions ​ ​ 18,043 ​ ​ 16,715 Payments received ​ ​ ( 15,172 ) ​ ​ ( 750 ) Ending balance ​ $ 43,835 ​ $ 40,964 ​ The note receivable from the Sky Ranch CAB accrues interest at 6 % per annum. Public improvements which are not probable of reimbursement at the time of being incurred are considered contract fulfillment costs and are recorded as land development construction costs as incurred. If public improvement costs are deemed probable of collection, the costs are recognized as notes receivable - related party. The Company assesses the collectability of the note receivable from the Sky Ranch CAB, which includes reimbursable public improvements, project management fees and the related interest income, when events or circumstances indicate the amounts may not be recoverable. The Sky Ranch CAB has an obligation to repay the Company, but the ability of the Sky Ranch CAB to do so before the contractual termination dates is dependent upon the establishment of a tax base or other fee generating activities sufficient to fund reimbursable costs incurred. NOTE 6 – ACCRUED LIABILITIES At August 31, 2025 and 2024, the Company’s current accrued liabilities are: ​ ​ ​ ​ ​ ​ ​ (In thousands) August 31, 2025 August 31, 2024 Accrued compensation ​ $ 683 ​ $ 1,045 Other operating payables ​ 607 ​ 147 Property taxes ​ ​ 742 ​ ​ 206 Operating lease obligation, current ​ ​ 12 ​ ​ 73 Professional fees ​ ​ 500 ​ ​ 5 Rental deposits ​ ​ 38 ​ ​ 38 Taxes Payable ​ ​ 1,310 ​ ​ 1,442 Land development costs due to the Sky Ranch CAB ​ ​ 415 ​ ​ 1,556 Due to Rangeview Metropolitan District ​ ​ 28 ​ ​ 652 Total accrued and other liabilities ​ $ 4,335 ​ $ 5,164 ​ The amounts due to the Sky Ranch CAB are either included in notes receivable or land under development. The amounts recorded in land under development will be subsequently expensed through Land development construction costs. In addition, the amounts payable to the Rangeview District relate to construction costs of water infrastructure, which are included in Investments in water and water systems. The remaining items that make up accrued liabilities are generally self-explanatory. ​ NOTE 7 – DEBT AND OTHER LONG-TERM OBLIGATIONS As of August 31, 2025, the outstanding principal and deferred financing costs of the Company’s loans are as follows: ​ ​ ​ ​ (In thousands) ​ August 31, 2025 Single-Family Rental Home Note Payable ​ $ 3,898 Lost Creek Note Payable ​ ​ 2,940 Total outstanding principal ​ ​ 6,838 Deferred financing costs ​ ​ ( 47 ) Less current maturities, net of current deferred financing costs ​ ​ ( 411 ) Debt, less current portion ​ $ 6,380 F-23 Table of Contents ​ As of August 31, 2025, the scheduled maturities (i.e., principal payments) of the Company’s loans are as follows: ​ ​ ​ ​ (In thousands) ​ Scheduled principal payments Within 1 year ​ $ 425 Year 2 ​ ​ 1,336 Year 3 ​ ​ 3,153 Year 4 ​ ​ 290 Year 5 ​ ​ 306 Thereafter ​ ​ 1,328 Total principal payments ​ ​ 6,838 Deferred financing costs ​ ​ ( 47 ) Total principal payments, net ​ $ 6,791 ​ SFR Note 1 ​ On November 29, 2021, PCY Holdings, LLC, a wholly owned subsidiary of the Company, entered a Promissory Note (SFR Note) with its primary bank to reimburse amounts expended for the construction of the first three single-family rental homes. The SFR Note has the following terms: ​ ● Initial principal amount of $ 1.0 million ● Floating per annum interest rate equal to the Western Edition of the “Wall Street Journal” Prime Rate plus 0.5 % ( 4.25 % as of August 31, 2025), which has a floor of 3.75 % and a ceiling of 4.25 % . In the event of default, the interest rate on the SFR Note would be increased by adding an additional 2.0 % ● Maturity date of December 1, 2026 ● Fifty-three principal and interest payments each month which began July 1, 2022, in the amount of $ 4,600 each and increased to $ 5,000 each on November 1, 2024 ● Estimated final principal and interest balloon payment of $ 0.9 million payable on December 1, 2026 ● Secured by the three single-family rental homes ● Required minimum debt service coverage ratio of 1.10 , measured annually based on audited financial statements, calculated as net operating income less distributions divided by required principal and interest payments, with net operating income defined as net income plus interest, depreciation, and amortization. ​ Lost Creek Note On June 28, 2022, the Company entered a loan with its primary bank to fund the acquisition of 370 acre-feet of water rights the Company acquired on June 27, 2022, in the Lost Creek region of Colorado (Lost Creek Note). The Lost Creek Note has an initial principal balance of $ 3.0 million, a ten-year maturity, monthly interest only payments averaging $ 12,000 per month for thirty-six months beginning July 28, 2022, twenty-four monthly principal and interest payments of $ 42,000 beginning July 28, 2025, fifty-nine monthly principal and interest payments of $ 32,000 beginning on July 28, 2027, and a balloon payment of less than $ 0.8 million plus unpaid and accrued interest due on June 28, 2032. The Lost Creek Note has a thirty-year amortization period and a fixed per annum interest rate equal to 4.90 %. Lost Creek Note is secured by the Lost Creek Water rights acquired with the proceeds of the note issuance and any fees derived from the use of the Lost Creek Water rights. The Lost Creek Note does not contain any financial covenants. ​ SFR Note 2 ​ On August 30, 2023, PCY Holdings, LLC, a wholly owned subsidiary of the Company, entered a Promissory Note (SFR Note 2) with its primary bank to reimburse amounts expended for the construction of the next 11 single-family rental homes. The SFR Note 2 has the following terms: ​ ● Initial principal amount of $ 3.0 million F-24 Table of Contents ● An interest rate of 7.51 % . In the event of default, the interest rate on the SFR Note 2 would be increased by adding an additional 5.0 % ● Maturity date of August 30, 2028 ● Fifty-nine principal and interest payments each month beginning September 30, 2023 in the amount of $ 21,200 each ● Estimated final principal and interest balloon payment of $ 2.9 million payable on August 30, 2028 ● Secured by 11 single-family rental homes ● Required minimum EBITDA of $ 3.0 million, measured annually at each fiscal year end. ​ Working Capital Line of Credit On January 31, 2022, the Company entered into a Business Loan Agreement (Working Capital LOC) with its primary bank to provide a $ 5.0 million operating line of credit. The Working Capital LOC has a two-year maturity, monthly interest only payments if the line is drawn upon with unpaid principal and interest due at maturity, and a floating per annum interest rate equal to the rate published in the Western Edition of the Wall Street Journal as the Prime Rate plus 0.5 % and a floor of 3.75 %. In the event of default, the interest rate on the Working Capital LOC would be increased by adding an additional 2.0 %. During the year ended August 31, 2025, the Company extended the Working Capital LOC, which now has an expiration date of January 31, 2026, a floating per annum interest rate equal to the rate published in the Western Edition of the Wall Street Journal as the Prime Rate ( 7.5 % as of August 31, 2025) and an amended floor rate of 5.00 %. As of August 31, 2025, the Company has no t drawn on the Working Capital LOC. ​ Letters of Credit At August 31, 2025, the Company had 12 Irrevocable Letters of Credit (“LOCs”) outstanding. The LOCs are to guarantee the Company’s performance related to certain construction projects at Sky Ranch relating to the delivery of finished lots and as collateral for payment obligations outlined in the construction contract for certain single-family rental homes in Phase 2B. The Company has the intent and ability to perform on the contracts, after which, the LOC’s will expire at various dates from November 2025 through July 2026. However, the Company is required to renew the majority of the LOCs. As of August 31, 2025, the LOCs totaled $ 6.4 million, an amount secured by cash balances maintained in restricted cash accounts at the Company’s bank. The LOCs renew annually at various dates and have a 1 % annual fee. WISE Partnership During 2014, the Company, through the Rangeview District, consented to the waiver of all contingencies set forth in the Amended and Restated WISE Partnership – Water Delivery Agreement, dated December 31, 2013 (WISE Partnership Agreement), among the City and County of Denver acting through its Board of Water Commissioners (Denver Water), the City of Aurora acting by and through its utility enterprise (Aurora Water), and the South Metro WISE Authority (SMWA). SMWA was formed by the Rangeview District and nine other governmental or quasi-governmental water providers pursuant to the South Metro WISE Authority Formation and Organizational Intergovernmental Agreement, dated December 31, 2013 (SM-IGA), to enable the members of SMWA to participate in the regional water supply project known as the Water Infrastructure Supply Efficiency partnership (WISE) created by the WISE Partnership Agreement. The SM-IGA specifies each member’s pro rata share of WISE and the members’ rights and obligations with respect to WISE. The WISE Partnership Agreement provides for the purchase of certain infrastructure (i.e., pipelines, water storage facilities, water treatment facilities, and other appurtenant facilities) to deliver water to and among the members of SMWA, Denver Water and Aurora Water. Certain infrastructure has been constructed and other infrastructure will be constructed over the next several years. Pursuant to the terms of the Rangeview/Pure Cycle WISE Project Financing and Service Agreement (WISE Financing Agreement) between the Company and the Rangeview District, the Company has an agreement to fund the Rangeview District’s participation in WISE effective as of December 22, 2014. During each of the years ended August 31, 2025 and 2024, the Company, through the Rangeview District, purchased 156 acre-feet and 134 acre-feet of WISE water for $ 0.4 million and $ 0.4 million. See further discussion in Note 14 . F-25 Table of Contents Lease Commitments Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheet. For lease agreements with an initial term of more than twelve months, the Company combines the lease and non-lease components in determining the lease liabilities and right-of-use (ROU) assets. Operating lease expense is generally recognized evenly over the term of the lease. During the year ended August 31, 2025, the Company amended its office lease twice terminating the rental of the previous office and warehouse spaces within the same complex. The result is the rental of approximately 6,460 square feet of office space and 8,400 square feet of warehouse space for a monthly payment of roughly $ 11,000 which includes a certain pro-rata share of the lessor’s operating costs, which are variable in nature. The Company performed its own leasehold improvements which are credits against our monthly payments. The monthly payment will increase roughly 2.5 % every October 1st. The Company’s lease agreement does not contain any residual value guarantees or material restrictive covenants. As a result, the Company’s associated right of use asset and liability decreased, as noted in the table below. For each of the years ended August 31, 2025 and 2024, payments on lease liabilities totaled less than $ 0.1 million. The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the consolidated balance sheet as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) August 31, 2025 ​ August 31, 2024 Operating leases - ROU assets $ 13 ​ $ 158 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease liabilities, current ​ $ 12 ​ ​ $ 73 ​ Operating lease liabilities, long term ​ 1 ​ ​ 87 ​ Total lease liability ​ $ 13 ​ ​ $ 160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average remaining lease term (in years) ​ 1.0 ​ ​ 2.0 ​ Weighted average discount rate ​ 7.5 % ​ 7.5 % ​ ​ ​ NOTE 8 – SHAREHOLDERS’ EQUITY Preferred Stock The Company’s non-voting Series B Preferred Stock has a preference in liquidation of $ 1.00 per share less any dividends previously paid. Additionally, the Series B Preferred Stock is redeemable at the discretion of the Company for $ 1.00 per share less any dividends previously paid. In the event the proceeds from the sale or disposition of Export Water rights exceed $ 36.0 million the Series B Preferred Shareholders will receive the next $ 0.4 million of proceeds in the form of a dividend. The terms of the Series B Preferred Stock prohibit payment of dividends on common stock unless all dividends accrued on the Series B Preferred Stock have been paid. To date, no dividends have been accrued as this contingency has not been met. Equity Compensation Plan The Company maintains the 2024 Equity Incentive Plan (2024 Equity Plan), which was approved by shareholders in January 2024 and became effective January 17, 2024. Executives, eligible employees, consultants, and non-employee directors are eligible to receive options and stock grants pursuant to the 2024 Equity Plan. Options to purchase shares of stock and restricted stock awards can be granted with exercise prices, vesting conditions and other performance criteria determined by the Compensation Committee of the Company’s board of directors. The Company has reserved 2.0 million shares of common stock for issuance under the 2024 Equity Plan. As of August 31, 2025, 26,204 shares had been issued and there were 1,973,796 shares available for grant under the 2024 Equity Plan. Prior to the effective date of the 2024 Equity Plan, the Company granted stock awards to eligible participants under its 2014 Equity Incentive Plan (2014 Equity Plan), which expired April 12, 2024. As of August 31, 2025, restricted stock awards and awards to purchase 577,000 shares of the Company’s common stock have been made under the 2014 Equity Plan, of which 489,500 remain outstanding. No additional awards may be granted pursuant to the 2014 Equity Plan. F-26 Table of Contents The Company estimates the fair value of share-based payment awards on the date of grant using the Black-Scholes option-pricing model (Black-Scholes model). Using the Black-Scholes model, the value of the portion of the award that is ultimately expected to vest is recognized as a period expense over the requisite service period in the consolidated statements of income. Option forfeitures are to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company does not expect any forfeiture of its options; therefore, the compensation expense has not been reduced for estimated forfeitures. No options expired in either of the years ended August 31, 2025 and 2024. The Company attributes the value of share-based compensation to expense using the straight-line single option method for all options granted. The Company’s determination of the estimated fair value of share-based payment awards on the date of grant is affected by the following variables and assumptions: ● The grant date exercise price – is the closing market price of the Company’s common stock on the date of grant; ● Estimated dividend rates – based on historical and anticipated dividends over the life of the option; ● Life of the option – based on historical experience, including actual and projected employee stock option exercise, option grants have lives of between five and ten years ; ● Risk-free interest rates – with maturities that approximate the expected life of the options granted; ● Calculated stock price volatility – calculated over the expected life of the options granted, which is calculated based on the weekly closing price of the Company’s common stock over a period equal to the expected life of the option. For the year ended August 31, 2025, the Company granted no stock options. In addition, six non-employee Board members were each granted 2,566 unrestricted shares of common stock. The fair market value of the unrestricted shares for share-based compensation expense is equal to the closing price of the Company’s common stock on the date of grants of $ 11.69 . Stock-based compensation expense includes $ 0.2 million of expense related to these unrestricted stock grants. The unrestricted stock grants were fully expensed at the date of the grant because no vesting requirements existed for the unrestricted stock grants. For the year ended August 31, 2024, the Company granted no stock options. In addition, six non-employee Board members were each granted 3,006 unrestricted shares of common stock and one non-employee Board member was granted 1,608 unrestricted shares of common stock. The fair market value of the unrestricted shares for share-based compensation expense is equal to the closing price of the Company’s common stock on the date of grants of $ 9.98 and $ 9.33 , respectively. Stock-based compensation expense includes $ 0.2 million of expense related to these unrestricted stock grants. The unrestricted stock grants were fully expensed at the date of the grant because no vesting requirements existed for the unrestricted stock grants. During the years ended August 31, 2025 and 2024, 35,000 and 38,500 options were exercised. The options exercised in 2025 were net settled, meaning the optionee did not pay cash for the options but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise. The net settlement exercises during the year ended August 31, 2025, resulted in 13,815 shares being issued and 21,185 options being cancelled in settlement of shares issued. The options exercised in 2024 were also net settled resulting in 17,456 shares being issued and 21,044 options being cancelled in settlement of shares issued. F-27 Table of Contents The following table summarizes the combined stock option activity for the 2014 Equity Plan and 2024 Equity Plan for the years ended August 31, 2025 and August 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Approximate Aggregate Intrinsic Value (in thousands) Outstanding at August 31, 2024 ​ 524,500 ​ $ 9.42 ​ 4.7 ​ $ 877 Granted — ​ ​ — ​ ​ ​ ​ ​ Net settlement exercised ( 35,000 ) ​ ​ 7.89 ​ ​ ​ ​ ​ Forfeited / Expired ​ — ​ ​ — ​ ​ ​ ​ ​ Outstanding at August 31, 2025 489,500 ​ ​ 9.52 ​ 3.8 ​ ​ 616 Options exercisable at August 31, 2025 472,500 ​ $ 9.54 ​ 3.7 ​ $ 598 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at August 31, 2023 563,000 ​ $ 9.15 ​ 5.5 ​ $ 1,221 Granted — ​ ​ — ​ ​ ​ ​ ​ Net settlement exercised ( 38,500 ) ​ ​ 5.57 ​ ​ ​ ​ ​ Forfeited / Expired ​ — ​ ​ — ​ ​ ​ ​ ​ Outstanding at August 31, 2024 524,500 ​ $ 9.42 ​ 4.7 ​ $ 877 ​ The following table summarizes the activity and value of non-vested options as of and for the years ended August 31, 2025 and August 31, 2024: ​ ​ ​ ​ ​ ​ ​ Number of Options Weighted Average Grant Date Fair Value Non-vested options outstanding at August 31, 2024 ​ 59,000 ​ $ 4.45 Granted — ​ ​ — Vested ( 42,000 ) ​ ​ 4.66 Forfeited / Expired — ​ ​ — Non-vested options outstanding at August 31, 2025 17,000 ​ $ 3.93 ​ ​ ​ ​ ​ ​ Non-vested options outstanding at August 31, 2023 111,000 ​ $ 4.43 Granted — ​ ​ — Vested ( 52,000 ) ​ ​ 4.41 Forfeited ​ — ​ ​ — Non-vested options outstanding at August 31, 2024 59,000 ​ $ 4.45 ​ All non-vested options are expected to vest. For each of the years ended August 31, 2025 and 2024, the total fair value of options that vested during the year was $ 0.2 million. For the year ended August 31, 2025, there were no options granted. For the years ended August 31, 2025 and 2024, share-based compensation expense was $ 0.3 million and $ 0.4 million, respectively. As of August 31, 2025, the Company had unrecognized share-based compensation expenses totaling $ 0.1 million relating to non-vested options and restricted stock units that are expected to vest. The weighted average period over which these options are expected to vest is just over one year . The Company has not recorded any excess tax benefits to additional paid-in capital. ​ NOTE 9 – SIGNIFICANT CUSTOMERS The Company has significant customers in its operations. The table below presents the percentage of total revenue for the reported customers for the years ended August 31, 2025 and 2024. For water and wastewater customers, the Company primarily provides services on behalf of the Rangeview District for which the significant end users include all Sky Ranch homes in the aggregate combined with the Sky Ranch CAB and two oil & gas operators. The home builders at Sky Ranch account for lot purchase revenue but also for water and wastewater tap fees revenue. ​ F-28 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended % of Total Revenue Generated From: ​ August 31, 2025 ​ August 31, 2024 Melody (DR Horton) ​ 30 % ​ 19 % Lennar ​ 20 % ​ 24 % KB Home ​ 15 % ​ 10 % Sky Ranch CAB ​ 8 % ​ 9 % Taylor Morrison ​ 8 % ​ - % Challenger ​ 5 % ​ 9 % Two oil & gas operators ​ 4 % ​ 19 % ​ ​ ​ NOTE 10 – INCOME TAXES For the year ended August 31, 2025, Pure Cycle recorded income tax expense of $ 4.4 million, which consisted of current income tax expense of $ 4.2 million and deferred income tax expense of $ 0.1 million. The deferred tax expense consists mainly of the timing difference between book and tax depreciation of fixed assets. For the year ended August 31, 2024, Pure Cycle recorded income tax expense of $ 4.0 million, which consisted of current income tax expense of almost $ 4.0 million and deferred income tax expense of less than $ 0.1 million. The deferred tax expense consists mainly of the timing difference between book and tax depreciation of fixed assets. During the year ended August 31, 2025, Pure Cycle paid Federal and State income tax installments of $ 3.6 million and $ 0.8 million, respectively. During the year ended August 31, 2024, Pure Cycle paid Federal and State income tax installments of $ 1.6 million and $ 0.5 million, respectively. Deferred income taxes reflect the tax effects of net operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of August 31 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) August 31, 2025 August 31, 2024 Deferred tax assets (liabilities): ​ ​ Depreciation and depletion ​ $ ( 2,361 ) ​ $ ( 2,237 ) Non-qualified stock options ​ 522 ​ 527 Accrued compensation ​ ​ 127 ​ ​ 230 Deferred revenue ​ ​ 113 ​ ​ 31 Other ​ 58 ​ 54 Net deferred tax liability ​ $ ( 1,541 ) ​ $ ( 1,395 ) ​ As of August 31, 2025 and 2024, the Company had no liability for unrecognized tax benefits. ​ Income taxes computed using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to the following for the fiscal years ended August 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (In thousands) August 31, 2025 August 31, 2024 Expected expense (benefit) from federal taxes at statutory rate of 21 % ​ $ 3,669 ​ $ 3,283 State taxes, net of federal benefit ​ ​ 600 ​ ​ 559 Permanent and other differences ​ ​ 45 ​ ​ 148 Stock Compensation ​ ​ ( 12 ) ​ ​ ( 14 ) Other ​ ​ 58 ​ ​ 43 Total income tax expense ​ $ 4,360 ​ $ 4,019 ​ As of August 31, 2025 and 2024, the Company had no net operating loss carryforwards available for income tax purposes. F-29 Table of Contents NOTE 11 – 401(k) PLAN The Company maintains the Pure Cycle Corporation 401(k) Profit Sharing Plan (401(k) Plan), a defined contribution retirement plan for the benefit of its employees. The Company matches employee contributions at the rate of 50 % of the first 3 % up to a maximum of $ 2,500 per annum. The contributions vest based on years of service - first anniversary 25 %, second anniversary 50 %, third anniversary 75 % and the fourth anniversary 100 %. The Company pays the annual administrative fees of the 401(k) Plan, and the 401(k) Plan participants pay the investment fees. The 401(k) Plan is open to all employees, age 18 or older, who have been employees of the Company for at least three months . For the years ended August 31, 2025 and 2024, the Company recorded less than $ 0.1 million of expenses related to the 401(k) Plan. ​ NOTE 12 – COMMITMENTS AND CONTINGENCIES The Company has historically been involved in various claims, litigation and other legal proceedings that arise in the ordinary course of its business. The Company records an accrual for a loss contingency when its occurrence is probable and damages can be reasonably estimated based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. The Company makes such estimates based on information known about the claims and experience in contesting, litigating, and settling similar claims. Disclosures are also provided for reasonably possible losses that could have a material effect on the Company’s financial position, results of operations or cash flows. As of August 31, 2025, the Company has accrued an estimated $ 0.5 million in legal expenses associated with potential legal liability relating to the water court’s ruling in February 2025. The Company's current settlement negotiations have the potential to obtain a new water right asset as well as a favorable outcome on the remaining three claims, which would result in a reversal of the legal accrual. The water court proceedings are described under Item 3 – Legal Proceedings. ​ NOTE 13 – SEGMENT REPORTING An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the CODM, or decision-making group, to evaluate performance and make operating decisions. The Company has identified its CODM as its Chief Executive Officer. ​ Based on the methods used by the CODM to allocate resources, the Company has identified three operating segments which meet GAAP segment disclosure requirements, namely the water and wastewater resource development segment, the land development segment and single-family rental business segment. ​ The water and wastewater resource development segment provides water and wastewater services to customers for fees. The water is provided by the Company using water rights owned or controlled by the Company, and developing infrastructure to divert, treat and distribute that water and collect, treat, and reuse wastewater. The land resource development segment includes all the activities necessary to develop and sell finished lots, which as of August 31, 2025 and 2024, was done exclusively at the Sky Ranch Master Planned Community. The single-family rental business segment includes single-family homes that the Company has contracted with homebuilders to build on finished lots retained by the Company during its land development activities. The revenue for this segment includes rental income from those homes, which as of August 31, 2025 and 2024 were located exclusively at the Company’s Sky Ranch Master Planned Community. ​ The Company’s operating segments, as defined in ASC 280, Segment Reporting, reflect how its CODM reviews financial information, makes operating decisions and assesses business performance. In identifying operating segments, the Company also considers its annual budgeting and forecasting process, management reporting structure, and information presented to the Board of Directors. The Company only operates in one geographic region and is not able to be aggregated by geographic operating segments. ​ The CODM evaluates the performance of the reportable segments based on operating income. Sales, gross margins, and operating expenses are also monitored closely. This information is used to monitor operating margins, measure segment profitability, allocate resources, and make budgeting and forecasting decisions about the reportable segments. The CODM also uses these measures to monitor trends in year over year performance comparisons, sequential quarter performance comparisons, and to compare actual results to forecasts. More disaggregated information about operating expense is generally only reviewed by the CODM on a consolidated basis. ​ F-30 Table of Contents As a result of the Company’s philosophy of maximizing operating efficiencies through the centralization of certain functions, operating income for the reportable segments excludes unallocated corporate overhead costs, depreciation on corporate fixed assets, other costs and other income, as they are not attributable to the individual reportable segments and are included in the corporate line item. The tables below present the measure of profit and assets as well as the interest income and expense that the CODM uses to assess the performance of the segment for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended August 31, 2025 (In thousands) Water and wastewater resource development Land development ​ Single-family rental Corporate Total Total revenue $ 10,334 $ 15,257 ​ $ 496 $ — $ 26,087 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 3,074 ​ 5,100 ​ 176 ​ — ​ 8,350 Depreciation and depletion ​ 1,707 ​ — ​ — ​ — ​ 1,707 Total cost of revenue ​ 4,781 ​ 5,100 ​ 176 ​ — ​ 10,057 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit ​ $ 5,553 ​ $ 10,157 ​ $ 320 ​ $ — ​ $ 16,030 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ $ — ​ $ — ​ $ — ​ $ 3,272 ​ $ 3,272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ $ 151 ​ $ — ​ $ 273 ​ $ 2 ​ $ 426 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended August 31, 2024 (In thousands) Water and wastewater resource development Land development ​ Single-family rental Corporate Total Total revenue ​ $ 10,667 ​ $ 17,599 ​ $ 481 ​ $ — ​ $ 28,747 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 2,922 ​ 4,374 ​ 188 ​ — ​ 7,484 Depreciation and depletion ​ 1,504 ​ — ​ — ​ — ​ 1,504 Total cost of revenue ​ 4,426 ​ 4,374 ​ 188 ​ — ​ 8,988 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment profit ​ $ 6,241 ​ $ 13,225 ​ $ 293 ​ $ — ​ $ 19,759 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ $ — ​ $ — ​ $ — ​ $ 2,837 ​ $ 2,837 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ $ 151 ​ $ — ​ $ 276 ​ $ 12 ​ $ 439 ​ The following table summarizes the Company’s total assets by segment. The assets consist of water rights and water and wastewater systems in the Company’s water and wastewater resource development segment; land, land development costs and deposits in the Company’s land development segment; and the cost of the homes in the single-family rental line. The Company’s other assets (“Corporate”) primarily consist of cash, cash equivalents, restricted cash, equipment, and related party notes receivables. ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) August 31, 2025 August 31, 2024 Water and wastewater resource development ​ $ 69,366 ​ $ 64,616 Land development ​ ​ 11,121 ​ ​ 8,521 Single-family rental ​ ​ 5,280 ​ ​ 5,371 Corporate ​ ​ 76,512 ​ ​ 68,846 Total assets ​ $ 162,279 ​ $ 147,354 ​ ​ NOTE 14 – RELATED PARTY TRANSACTIONS The Rangeview District On December 16, 2009, the Company entered into a Participation Agreement with the Rangeview District, whereby the Company agreed to provide funding to the Rangeview District in connection with the Rangeview District joining the South Metro Water Supply Authority F-31 Table of Contents (SMWSA). During the years ended August 31, 2025 and 2024, the Company provided funding of less than $ 0.1 million to the Rangeview District related to this Participation Agreement. Through the WISE Financing Agreement, to date the Company has made payments totaling $ 6.9 million to purchase certain rights to use existing water transmission and related infrastructure acquired by the WISE project and to construct the connection to the WISE system. At August 31, 2025, the amounts are included in Investments in water and water systems on the Company’s balance sheet. During the year ended August 31, 2025, the Company, through the Rangeview District, purchased 156 acre-feet of WISE water for $ 0.4 million. 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. As of January 1, 2025, WISE water was $ 7.23 per thousand gallons and such rate remained in effect through calendar 2025. Effective January 1, 2024, WISE water increased to $ 6.55 per thousand gallons , a price that was in effect through the end of calendar 2024. In addition, the Company pays certain system operational and construction costs. 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. During the years ended August 31, 2025 and 2024, the Company provided $ 0.9 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 allocated share of the operational and overhead costs of SMWA and construction activities related to delivery of WISE water. The Rangeview District is a quasi-municipal corporation and political subdivision of Colorado formed in 1986 for the purpose of providing water and wastewater service to the Lowry Ranch and other approved areas. The Rangeview District is governed by an elected board of directors. Eligible voters and persons eligible to serve as directors of the Rangeview District must own an interest in property within the boundaries of the Rangeview District. The Company owns certain rights and real property interests which encompass the current boundaries of the Rangeview District. The Rangeview District and the Company have entered into two loan agreements. In 1995, the Company extended a loan to the Rangeview District for borrowings of up to $ 0.3 million, which is unsecured, and bears interest based on the prevailing prime rate plus 2 % ( 9.50 % at August 31, 2025). The maturity date of the loan is December 31, 2025, at which time it automatically renews through December 31, 2026. Beginning in January 2014, the Rangeview District and the Company entered into a funding agreement that allows the Company to continue to provide funding to the Rangeview District for day-to-day operations and accrue the funding into a note that bears interest at a rate of 8 % per annum and remains in full force and effect for so long as the 2014 Amended and Restated Lease Agreement among the Rangeview District, the Company, and the State Board of Land Commissioners remains in effect. At August 31, 2025, balance in notes receivable - related parties, other totaled $ 1.2 million, which included borrowings of $ 1.2 million and accrued interest of less than $ 0.1 million. During the year ended August 31, 2025, the Rangeview District made payments totaling $ 0.2 million on the notes payable to the Company. The August 31, 2024 balance in notes receivable totaled $ 1.2 million, which included borrowings of $ 1.2 million and accrued interest of less than $ 0.1 million. Sky Ranch CAB Pursuant to a certain Community Authority Board Establishment Agreement, as the same may be amended from time to time, Sky Ranch Metropolitan District No. 1 and Sky Ranch Metropolitan District No. 5 formed the Sky Ranch CAB to, among other things, design, construct, finance, operate and maintain certain public improvements for the benefit of the property within the boundaries and/or service area of the Sky Ranch Districts. In order for the public improvements to be constructed and/or acquired, it is necessary for each Sky Ranch District, directly or through the Sky Ranch CAB, to be able to fund the improvements and pay its ongoing operations and maintenance expenses related to the provision of services that benefit the property. In November 2017, but effective as of January 1, 2018, the Company entered into a Project Funding and Reimbursement Agreement (PF Agreement) with the CAB for the Sky Ranch property. The PF Agreement required the Company to fund an agreed upon list of public improvements for Sky Ranch with respect to earthwork, erosion control, streets, drainage, and landscaping at an estimated cost of $ 13.2 million for calendar years 2018 and 2019. Each advance or reimbursable expense is certified by a third-party engineer and accrues interest at a rate of six percent ( 6 %) per annum. The Company 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 the Company to advance funding to the Sky Ranch CAB for specified public improvements. The Company and the Sky Ranch CAB entered into a Phase 2 Facilities Funding and Acquisition Agreement F-32 Table of Contents (FFAA2) for Phase 2 effective December 2020, obligating the Company 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. As of August 31, 2025, the balance of the Company’s advances for improvements, including interest, net of reimbursements already received from the Sky Ranch CAB, totaled $ 43.8 million. The advances have been used by the Sky Ranch CAB to pay for construction of public improvements. The Company submits specific costs for reimbursement to the Sky Ranch CAB which have been certified by an independent third-party. ​ Sky Ranch Metropolitan District Nos. 1, 3, 4, 5, 6, 7 and 8 (Sky Ranch Districts) and the Sky Ranch CAB are quasi-municipal corporations and political subdivisions of Colorado formed for the purpose of providing service to the Company’s Sky Ranch property. The current members of the board of directors of the Rangeview District, two of the Sky Ranch Districts, and the Sky Ranch CAB consist of four employees of the Company (including the Company’s CEO and CFO) and one independent board member. Sky Ranch Metropolitan District No. 1 has a board comprised of three employees of the Company (including the Company’s CEO and CFO) and two independent board members. The following table summarizes the balances associated with the note receivable related party: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (In thousands) ​ August 31, 2025 August 31, 2024 Sky Ranch CAB reimbursable public improvements and project management fees ​ $ 43,835 ​ $ 40,964 Rangeview Metro District note receivable ​ ​ 1,167 ​ ​ 1,221 Related party notes receivable, including accrued interest ​ $ 45,002 ​ $ 42,185 ​ Nelson Pipeline Constructors LLC Through a competitive bidding process, the Sky Ranch CAB awarded Nelson Pipeline Constructors, LLC (Nelson) a contract to construct the wet utility pipelines in Phase 2A of Sky Ranch. As the project progressed, change orders were approved by the Sky Ranch CAB board upon review by an independent engineer hired by the Sky Ranch CAB to certify costs are reasonable and appropriate for the scope of work contemplated. During the years ended August 31, 2025 and August 31, 2024, the Sky Ranch CAB paid Nelson $ 0 and $ 0.1 million, respectively, related to this contract. Nelson is majority owned by the chair of the Company’s board of directors. ​ NOTE 15 – EARNINGS PER SHARE Certain outstanding options are excluded from the diluted earnings per share calculation because they are anti-dilutive (i.e., their assumed conversion into common stock would increase rather than decrease earnings per share). No options were excluded for the fiscal years ended August 31, 2025 and 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended (In thousands, except share and per share amounts) August 31, 2025 August 31, 2024 Net income ​ $ 13,110 ​ $ 11,613 ​ ​ ​ ​ ​ ​ ​ Basic weighted average common shares ​ ​ 24,076,317 ​ ​ 24,083,001 Effect of dilutive securities ​ ​ 91,212 ​ ​ 57,945 Weighted average shares applicable to diluted earnings per share ​ ​ 24,167,529 ​ ​ 24,140,946 ​ ​ ​ ​ ​ ​ ​ Earnings per share - basic ​ $ 0.54 ​ $ 0.48 Earnings per share - diluted ​ $ 0.54 ​ $ 0.48 ​ ​ F-33 Table of Contents ​ NOTE 16 – SUBSEQUENT EVENTS On September 29, 2025, PCY Holdings, LLC and PCYO Home Rentals, LLC, both a wholly owned subsidiary of the Company, entered into a debt Facility Agreement (Facility Agreement) with a new banking partner. The Facility Agreement provides up to $ 10 million to finance new single-family rental homes. Under the Facility Agreement the Company guarantees payment and performance by its subsidiaries of obligations due under the Facility Agreement and related lending documents. The Facility Agreement allows for flexibility to close on multiple single-family rental homes over a short duration with a variable per annum interest rate equal to the Western Edition of the Wall Street Journal as Prime Rate, with a floor of 4.55 %. Under the Facility Agreement the Company and its subsidiaries have the option to consolidate multiple single-family rental homes into a term loan which would bear interest at a rate per annum equal to 5-year US CMT plus a margin of 2.75 %. The term loan will be amortized over 25 years with a 5-year ballon. The Facilities Agreement also contains financial covenants and collateral requirements. On October 20, 2025 , the Company used proceeds from the Facility Agreement to fund the completed construction cost of five additional single-family rental homes. As of the filing of this Form 10-K, the Company’s outstanding balance under the Facilities Agreement is $ 1.3 million. ​ ​ ​ F-34 Table of Contents ​ Item 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ​ ​