PURE CYCLE CORP (PCYO)

CIK: 0000276720. SIC: 4941 Water Supply. Latest 10-K as of: 2025-11-12.

SIC breadcrumb: Transportation, Communications, Electric, Gas, And Sanitary Services > Electric, Gas, And Sanitary Services > SIC 4941 Water Supply

SEC company page: https://www.sec.gov/edgar/browse/?CIK=276720. Latest filing source: 0001104659-25-110312.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-11-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000276720.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000276720.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001104659-26-040879.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-04-08. Report date: 2026-02-28.

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

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

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

Recent Developments and Economic Conditions

​

The housing market stabilized in 2024 as the Federal Reserve shifted from aggressively increasing interest rates in 2023 to a balanced approach that maintained relatively consistent interest rates through the first half of 2025. In the second half of 2025, the Federal Reserve pivoted from primarily combating inflation to supporting labor market stability and economic activity, implementing a series of interest rate reductions that continued through December 2025. Since December, the Federal Reserve has paused its easing cycle and held rates steady at both its January and March 2026 meetings, as policymakers navigate persistent inflation above the Federal Reserve’s target, a softening labor market, heightened geopolitical uncertainty following conflicts in the Middle East, and weak consumer confidence. Although mortgage interest rates declined from their 2024 peaks and the 30-year fixed rate averaged approximately 6.11% as of mid-March 2026, the housing market continues to face significant headwinds. Consumer demand remains constrained by cumulative affordability challenges and heightened economic uncertainty. Furthermore, volatility in the broader macroeconomic environment, driven in part by federal trade policies affecting the cost of imported construction materials and fluctuating consumer confidence, continues to impact builder sentiment and the pace of new home sales. Builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index, stood at 38 in March 2026, remaining below the breakeven level of 50 for the 23rd consecutive month, with nearly two-thirds of builders continuing to offer sales incentives to attract buyers.

As higher mortgage interest rates, volatile macroeconomic conditions and geopolitical instability have adversely affected the residential real estate market, homebuilders' strategic use of interest rate buydowns and other sales incentives have played a crucial role in driving sales. Despite current interest rates, rising energy costs, increases in the cost of construction materials and economic uncertainty stemming from actual and anticipated U.S. governmental policy changes, we maintain a positive long-term outlook on land development and the housing market based on fundamental factors remaining positive. These include favorable demographics, the lot and housing supply-demand imbalance resulting from a decade-plus of underproduction of new homes in relation to population growth, and low resale home inventory. While we remain confident in the long-term growth prospects for the industry given these factors, the current demand for new homes is subject to continued uncertainty due to many factors. The combination of higher mortgage interest rates since early 2022, several years of rising housing prices, elevated inflation, and various other macroeconomic and geopolitical concerns have been moderating housing demand. The Denver metro housing market has reflected these national trends, with median home prices beginning to decline in 2026 and home sales at their lowest levels since the 2008 financial crisis. Although the Federal Reserve has signaled the possibility of additional rate reduction in 2026, we expect moderate to lower demand to continue throughout 2026 given the compounding headwinds of increased energy prices, persistent inflation, and ongoing trade policy and geopolitical uncertainty. Given current conditions, we continue to monitor market dynamics and surrounding community performance and will adjust the timing of additional construction expenditures at Sky Ranch as warranted. We believe our segment pricing (entry level) lots and the low inventory of entry level housing in the Denver market will help Sky Ranch navigate a cyclical market better than other surrounding and significantly higher priced communities.

​

Our future performance and the strategies we implement (and adjust or refine as necessary or appropriate) will depend significantly on the prevailing economic environment, the homebuilding industry, capital, credit and financial market conditions and political and regulatory factors (particularly regarding housing and mortgage loan financing policies and trade policies impacting the cost of

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construction and building materials). The Federal Reserve’s decision to pause its rate cutting cycle in early 2026, combined with the upwardly revised inflation projections for 2026 and elevated uncertainty regarding the duration and economic impact of the conflict in the Middle East, are expected to be ongoing headwinds for the housing market. Prolonged supply chain disruptions, labor shortages, increased costs as a result of tariffs or other factors and other production-related challenges could extend or delay our construction cycle times and intensify construction-related cost pressures beyond those we experienced in 2025. Consumer confidence has weakened up  to and including March 2026 as households react to military conflict and higher gasoline prices. Higher energy cost disproportionately impacts lower income households, which represents a significant portion of the entry-level buyer demographic we serve.  In addition, consumer demand for our homes and our ability to grow and scale revenue and returns in fiscal 2026 could be materially and negatively affected by the above-described monetary policy impacts, the economic consequences of the Middle East conflicts, rising energy costs, or other factors that curtail mortgage loan availability, employment or income growth or consumer confidence in the U.S. and in the Colorado markets.

​

Our Business Strategy

​

For more than 30 years, we have accumulated and continue to accumulate a portfolio of valuable water rights, land interests and single-family rental homes along the Front Range of Colorado. We have added an extensive network of wholesale water production, storage, treatment and distribution systems and wastewater collection and treatment systems that we operate and maintain to serve domestic, commercial, and industrial customers in the eastern Denver metropolitan region. Our primary land asset, known as Sky Ranch, is in one of the most active Master Planned Communities in the Denver metropolitan region along the rapidly developing I-70 corridor, where we are developing lots for residential, commercial, retail, and light industrial uses. Sky Ranch is zoned to include up to 3,200 single-family and multifamily homes, parks, open spaces, trails, recreational centers, schools, and over two million square feet of retail, commercial and light industrial space, all of which will be serviced by our water and wastewater services segment. Additionally, we have retained lots in our Sky Ranch development for our single-family rental business where we contract with national home builders to build the single-family homes we rent, typically under annual lease agreements. With 19 homes currently owned, we continue to evaluate this new line of business, which will include up to 62 rental homes at Sky Ranch by the end of 2026.

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

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Water and Wastewater

​

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

​

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

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Revenues for our water operations are dependent on us growing the number of customers we serve. If we are unable to add customers to our systems and sell taps to builders, our revenues could be negatively impacted. We are currently the developer of the Sky Ranch Master Planned Community, which is the main driver of our tap sales. Prolonged periods of hot and dry weather generally cause increased water usage for watering lawns, washing cars, and irrigating parks. Conversely, prol

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2025-11-12. Report date: 2025-08-31.

Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as described in “Risk Factors” and elsewhere in this Annual Report on Form 10-K, that could cause our actual growth, results of operations, performance, financial position and business prospects and opportunities for this fiscal year and the periods that follow to differ materially from those expressed in, or implied by, those forward-looking statements. Readers are cautioned that forward-looking statements contained in this Annual Report on Form 10-K should be read in conjunction with our disclosure under the heading “FORWARD-LOOKING STATEMENTS” on page 1.

The following Management’s Discussion and Analysis (MD&A) is intended to help the reader understand the results of operations and our financial condition and should be read in conjunction with the accompanying consolidated financial statements and the notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K.

Executive Summary

We saw a decrease in our land development segment revenue during fiscal 2025 due to the timing of lot deliveries with our national homebuilders. We also saw a decrease in our water sales, primarily from a decrease in selling water to oil and gas operators. Our water and wastewater tap fees revenue increased in fiscal 2025 due to the timing of our national homebuilder’s production schedules in Phase 2B and 2C.  Our single-family rental business experienced a modest increase in revenue due to increasing monthly rent for the majority of our rental homes in fiscal 2025. Although the housing market is slowing, we continue to see demand for affordable housing in our local market and have focused our land development activity in fiscal 2025 on ensuring that we are delivering the type of products that our national homebuilder partners desire in our Sky Ranch Master Planned Community. Phases 1 and 2A are complete, Phase 2B is approximately 97% complete, Phase 2C is approximately 82% complete and Phase 2D is approximately 43% complete. We continue to work on projects to expand our water assets to be competitive to sell water to oil and gas operators and have the infrastructure in place for future land development opportunities.  In fiscal 2025 we began construction of four new alluvial wells on the Lowry Ranch. Our notable financial highlights from fiscal 2025 include the following:

​

●

Total revenue was $26.1 million, down from $28.7 million in 2024 (a 9% decrease), primarily driven by a decrease in lot deliveries at Sky Ranch with a portion of lots in Phase 2D pushing into fiscal 2026, a decrease in water sales to oil and gas operators for use in their drilling operations and an increase in tap sales;

​

◾

Revenue from commercial water sales, which includes selling water to oil and gas operators, was $1.6 million in 2025 compared to $6.1 million in 2024;

​

◾

Revenue from water and wastewater tap sales was $7.3 million in 2025 compared to $3.4 million in 2024 (a 115% increase);

​

◾

Recorded lot sales for 2025 were $13.7 million compared to $16.0 million in 2024, which is due to the development work in Phases 2B, 2C and 2D;

​

●

Pre-tax income was $17.4 million in 2025, which is up from $15.6 million in 2024 (a 12% increase);

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●

Earnings per share increased 13% to $0.54 per share compared to $0.48 per share in 2024;

​

●

In 2025 we posted $0.54 of earnings per fully diluted common share, which is up from $0.48 in 2024 (a 13% increase), which was driven by our oil and gas royalty income;

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●

Total assets continue to increase to $162.2 million at August 31, 2025 from $147.4 million at August 31, 2024; and

​

●

Total equity increased to $142.7 million at August 31, 2025 from $129.7 million at August 31, 2024.

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​

Recent Developments

​

The housing market stabilized in 2024 as the Federal Reserve shifted from an aggressive monetary policy in 2023 to a more balanced approach that continued into the first half of 2025 with relatively consistent interest rates. In the second half of 2025, interest rates began to decrease as the Federal Reserve signaled a shift in its monetary policy from primarily fighting inflation to supporting the labor market and economic activity, which it began implementing through interest rate cuts.  However, the housing market continues to face headwinds as consumer demand was influenced by ongoing affordability challenges and uncertainty resulting from federal trade policies and employment and economic uncertainties. Additionally, the housing market has faced volatility due to other macroeconomic and geopolitical conditions, including weakened consumer confidence.

​

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

​

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

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Results of Operations

​

The results of our operations for the fiscal years ended August 31, 2025 and 2024 were as follows:

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

​

​

(In thousands, except for water deliveries and taps sold)

August 31, 2025

August 31, 2024

$ Change

% Change

​

Water and Wastewater

​

​

​

​

​

​

​

​

​

​

​

​

Water and wastewater activities

​

$

2,997

​

$

7,283

​

$

(4,286)

​

(59)

%

Water and wastewater tap fees

​

​

7,337

​

​

3,384

​

​

3,953

​

117

%

Total water and wastewater

​

​

10,334

​

​

10,667

​

​

(333)

​

(3)

%

Land development revenue

​

​

​

​

​

​

​

​

​

​

​

​

Lot sales

​

​

13,691

​

​

15,998

​

​

(2,307)

​

(14)

%

Project management fees

​

​

781

​

​

707

​

​

74

​

10

%

Special facility projects and other

​

​

785

​

​

894

​

​

​

​

​

​

Single-family rental

​

​

496

​

​

481

​

​

15

​

3

%

Total revenue

​

​

26,087

​

​

28,747

​

​

(2,660)

​

(9)

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Water and wastewater resource cost of revenue

​

​

4,781

​

​

4,426

​

​

355

​

8

%

Land development cost of revenue

​

​

5,100

​

​

4,374

​

​

726

​

17

%

Single-family rental cost of revenue

​

​

176

​

​

188

​

​

(12)

​

(6)

%

Total cost of revenue

​

​

10,057

​

​

8,988

​

​

1,069

​

12

%

​

​

​

​

​

​

​

​

​

​

​

​

​

General and administrative expense and depreciation

​

​

8,360

​

​

7,517

​

​

843

​

11

%

Operating income

​

​

7,670

​

​

12,242

​

​

(4,572)

​

(37)

%

Other income, net

​

​

9,800

​

​

3,390

​

​

6,410

​

189

%

Income tax expense

​

​

(4,360)

​

​

(4,019)

​

​

341

​

8

%

Net income

​

$

13,110

​

$

11,613

​

$

1,497

​

13

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic EPS

​

$

0.54

​

$

0.48

​

$

0.06

​

13

%

Diluted EPS

​

$

0.54

​

$

0.48

​

$

0.06

​

13

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Water delivered (acre-feet)

​

​

639

​

​

1,818

​

​

(1,179)

​

(65)

%

Water taps sold

​

​

182

​

​

73

​

​

109

​

149

%

Wastewater taps sold

​

​

179

​

​

69

​

​

110

​

159

%

​

Fiscal 2025 vs. Fiscal 2024

Revenue – Total revenue decreased in 2025 as compared to 2024, primarily due to a decline in land development activity. When we transfer title to lots to homebuilders under contracts where we remain obligated to deliver finished lots, the sales of such lots are recognized using the percentage of completion method. The decrease in water sales was driven by a decline in oil and gas drilling activities within our service area in 2025. This was offset by an increase in water and wastewater tap fee revenue. Tap fee revenue timing depends on the timing of builders filing for building permits, which has increased with the development of Phase 2B and 2C in 2025. Project management revenue at Sky Ranch increased to $0.8 million in 2025 from $0.7 million in 2024. As Sky Ranch continues to grow, we expect lot sales to generate significant revenue in the future, and increasing water and wastewater usage and taps purchased as we continue to add customers to our water resource development segment.

Cost of revenue – Total costs of revenue increased in 2025 as compared to 2024, primarily due to an increase in our water and wastewater system overhead as we continue to expand our system capacity, an increase in the estimated cost for Phase 2B and increased property tax due to our accelerated development schedule.  

General and administrative expense – General and administrative expense increased in 2025 as compared to 2024, primarily due to increases in payroll and related expenses as our service area continues to grow with the activity at Sky Ranch.

Other income, net – Other income, net increased in 2025 as compared to 2024, primarily due to royalty revenues from our oil and gas mineral interest at Sky Ranch. Additionally, in fiscal 2025 we recognized $3.3 million of interest income, compared to $2.8 million in

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fiscal 2024, primarily due to the note receivable from the Sky Ranch CAB, which is described in greater detail in Notes 5 and 14 to the accompanying consolidated financial statements.

Income tax expense – Income tax expense increased in 2025 as compared to 2024, due to higher pre-tax income primarily from the increase in our oil and gas royalty income, in fiscal 2025. Our effective tax rate remained relatively consistent year over year.

Water delivered – Water deliveries decreased in 2025 as compared to 2024, primarily due to decreased sales to oil and gas operators. Oil and gas operations are highly variable and dependent on oil prices, demand for gas, and timing of other leases in our service areas. As Sky Ranch continues to develop, we anticipate continued growth in our residential water and wastewater service revenue.

Water and wastewater tap sales – Water and wastewater tap sales increased in 2025 as compared to 2024 primarily due to the timing of residential taps sold and a price increase for water and wastewater taps in 2025. Tap sales are driven by the issuance of building permits and the timing of these sales are not contractually established with the home builders. During fiscal 2025, we sold 125 taps in Phase 2B and 54 taps in Phase 2C, with an additional six taps allocated to our single-family rental segment. We expect to substantially complete the next 134 lots in Phase 2C in fiscal 2025 and expect to realize additional tap sales in fiscal 2026 relating to the delivery of the Phase 2D lots.

Lots delivered – The number of lots delivered (which occurs when title to a lot passes to the homebuilder) decreased in 2025 compared to 2024 due to delays in closing in Phase 2D. We recognized certain milestones from our Lot Delivery Agreements from home builders in 2025 which accounted for $0.1 million in lot sales revenue for Phase 2A, $0.9 million in lot sales revenue for Phase 2B, $10.9 million in lot sales revenue for Phase 2C and $1.8 million in lot sales revenue for Phase 2D. We expect to be substantially complete with the delivery of all 180 lots in Phase 2D during fiscal 2026. Despite lots being transferred to the homebuilders, we still have minor construction activities to complete Phases 2B and 2C and to turn over the completed infrastructure to the applicable governmental agency for maintenance.

Water and Wastewater Services Results of Operations

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

​

(In thousands, except for water deliveries)

August 31, 2025

August 31, 2024

$ Change

% Change

​

Metered water usage from:

​

​

​

​

​

​

​

​

​

​

​

Municipal water usage

​

$

808

​

$

788

​

$

20

​

3

%

Commercial water usage

​

​

1,638

​

​

6,095

​

​

(4,457)

​

(73)

%

Wastewater treatment fees

​

​

391

​

​

343

​

​

48

​

14

%

Water and wastewater tap fees

​

​

7,337

​

​

3,384

​

​

3,953

​

117

%

Other revenue

​

​

160

​

​

57

​

​

103

​

181

%

Total segment revenue

​

​

10,334

​

​

10,667

​

​

(333)

​

(3)

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Water service cost

​

​

2,113

​

​

2,204

​

​

(91)

​

(4)

%

Wastewater service cost

​

​

878

​

​

691

​

​

187

​

27

%

Depreciation

​

​

1,707

​

​

1,504

​

​

203

​

13

%

Other

​

​

83

​

​

27

​

​

56

​

207

%

Total expenses

​

​

4,781

​

​

4,426

​

​

355

​

8

%

Segment operating income

​

$

5,553

​

$

6,241

​

$

(688)

​

(11)

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Water deliveries (acre-feet)

​

​

​

​

​

​

​

​

​

​

​

​

On Site

​

​

2

​

​

3

​

​

(1)

​

(33)

%

Commercial sales - export water and other

​

​

4

​

​

4

​

​

—

​

—

%

Sky Ranch

​

​

347

​

​

306

​

​

41

​

13

%

Wild Pointe

​

​

92

​

​

97

​

​

(5)

​

(5)

%

O&G operations

​

​

194

​

​

1,408

​

​

(1,214)

​

(86)

%

Total water deliveries

​

​

639

​

​

1,818

​

​

(1,179)

​

(65)

%

​

Municipal water usage – Municipal water usage increased in 2025 compared to 2024, primarily due to new Sky Ranch customers in our water and wastewater resource development segment. We anticipate that these revenues will continue to increase as more customers are added to our system as Sky Ranch continues to develop.

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Table of Contents

Commercial water usage – The main component of commercial water usage is from sales to oil and gas operators for use in their drilling process. Commercial water sales decreased during fiscal 2025, primarily due to decreased demand by our oil and gas customers. Because oil and gas is cyclical in nature as demand and oil prices fluctuate, it is not possible to predict whether the volume of water supplied to oil and gas operators will increase or decrease in the future.

Wastewater treatment fees – Wastewater treatment fees increased in 2025 compared to 2024, primarily due to new Sky Ranch customers in our water and wastewater resource development segment. We anticipate that revenues will continue to increase as more customers are added to our system as Sky Ranch continues to develop.

Water and wastewater tap fees –Water and wastewater tap sales increased in 2025 compared to 2024, primarily due to the timing of residential taps sold and a price increase of water and wastewater taps in 2025. Water and wastewater taps are sold to home builders at the time a building permit is issued. The timing of tap sales is dependent on when the home builder constructs homes, and sales are not contractually driven; therefore, timing of tap sales fluctuates with demand for new construction. During 2025, the average price of a Sky Ranch water and wastewater tap was approximately $40,000 compared to approximately $38,000 per tap in 2024.

Other revenue – Other revenue increased in 2025 as compared to 2024, primarily due to increased revenue from inspections of infrastructure at Sky Ranch.

Water service cost – Water service costs decreased in 2025 as compared to 2024, primarily due to the decrease in oil and gas sales.

Wastewater service cost – Wastewater service costs increased in 2025 as compared to 2024, primarily due to the addition of staff to meet the needs of our growing customer base.

Other costs of revenue – Other costs of revenue increased in 2025 as compared to 2024, primarily due to costs associated with the infrastructure inspections at Sky Ranch.

Water delivered – Water deliveries decreased in 2025 as compared to 2024, primarily due to decreased oil and gas operations, offset by additional demand generated by new Sky Ranch customers.

Land Development Results of Operations

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

(In thousands)

August 31, 2025

August 31, 2024

$ Change

% Change

​

Lot sales

​

$

13,691

​

$

15,998

​

$

(2,307)

​

(14)

%

Project management fees

​

​

781

​

​

707

​

​

74

​

10

​

Special facility projects and other

​

​

785

​

​

894

​

​

(109)

​

(12)

​

Total revenue

​

​

15,257

​

​

17,599

​

​

(2,342)

​

(13)

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Land development construction and project management cost

​

​

5,100

​

​

4,374

​

​

726

​

17

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment operating income

​

$

10,157

​

$

13,225

​

$

(3,068)

​

(23)

%

​

Lot sales – Lot sales decreased in 2025 as compared to 2024, primarily due to a decrease in lot deliveries at Sky Ranch and delays in our development activities in Phase 2D at our Sky Ranch Master Planned Community. Phase 2A is complete while Phase 2B is substantially complete at 97%.  We delivered finished lots in Phase 2C, and Phase 2C is approximately 82% complete. Phase 2D is approximately 43% complete.

Project management revenue – Project management revenue increased in 2025 as compared to 2024, which was primarily due to increased development activities in Phase 2C and Phase 2D. We earn a 5% project management fee on construction costs for managing the completion of public improvements at Sky Ranch.

Special facility projects and other – Special facility projects decreased in 2025 as compared to 2024, which was primarily due to a decrease in self-perform development activities at Sky Ranch.

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Table of Contents

Land development construction and project management cost – Land development construction costs increased in 2025 as compared to 2024, primarily due to accelerated development activities in Phases 2C and 2D. As Phase 2C winds down, more of our costs are anticipated to be public improvements costs, whereas the beginning of Phase 2D is anticipated to result in us incurring more lot costs.  This is due to the timing of the development of the costs incurred in the beginning of the development phase compared to those costs incurred towards the end.

Lots delivered – The number of lots delivered decreased in 2025 compared to 2024 due delays in the development of Phase 2D. Despite the lots being transferred to the homebuilders, we still have minor construction activities to complete Phase 2B to turn over the completed infrastructure to the applicable governmental agency that will maintain the infrastructure. We did receive certain milestone payments for Phase 2C and 2D lots. Because we record lot sales as construction progresses, the timing of revenue and lot deliveries are not necessarily correlated.

Single-Family Rental Results of Operations

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

(In thousands)

August 31, 2025

August 31, 2024

$ Change

% Change

​

Single-family rentals revenue

​

$

496

​

$

481

​

$

15

​

3

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Single-family rentals cost

​

​

176

​

​

188

​

​

(12)

​

(6)

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment operating income

​

$

320

​

$

293

​

$

27

​

9

%

​

Single-family rentals revenue – Fiscal 2025 and 2024 revenue represented rental income for our first 14 completed homes. Each home is rented under a one-year non-cancelable lease agreement which typically includes annual rental rate increases. We expect to rent 5 townhomes in the first quarter of fiscal 2026 and we are currently under contract with several national home builders to construct the next 40 single-family detached homes in Phases 2B and 2C at Sky Ranch for delivery in fiscal 2026.

Single-family rentals cost – The costs reflected as cost of sales for the rental units include a pro-rata share of the annual property taxes and insurance related specifically to the rental units as well as immaterial fees related to the operations and maintenance assessments from the Sky Ranch CAB that are assessed to every home in Sky Ranch. Our tenants are responsible for all other utilities including water and wastewater services that are paid to us through the Rangeview District. 

General and Administrative Expenses

The table below details significant items and changes included in our General and Administrative Expenses (G&A Expenses) as well as the impact that share-based compensation has on our G&A Expenses for the fiscal years ended August 31, 2025 and 2024.

Summary of G&A Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

(in thousands)

August 31, 2025

August 31, 2024

$ Change

% Change

​

Significant G&A Expense items:

​

​

​

​

​

​

​

​

Salary and salary-related expenses

​

$

3,923

​

$

3,563

​

$

360

​

10

%

Share-based compensation

​

​

323

​

​

436

​

​

(113)

​

(26)

%

Professional fees

​

​

1,388

​

​

1,090

​

​

298

​

27

%

Public entity-related expenses, including director fees

​

​

406

​

​

450

​

​

(44)

​

(10)

%

Corporate insurance

​

​

371

​

​

329

​

​

42

​

13

%

All other combined

​

​

1,359

​

​

1,053

​

​

306

​

29

%

G&A Expenses as reported

​

$

7,770

​

$

6,921

​

$

849

​

12

%

​

Salary and Salary-Related Expenses – Salary and salary-related expenses net increased in fiscal 2025 compared to fiscal 2024 due to the addition of six employees to the overall headcount and the related salaries, benefits, and taxes associated with the increased workforce employed by the Company.  Although the increase in base salaries was offset by the reduction in bonuses, other related costs like benefits and payroll taxes accounted for the increase. Share-based compensation decreased in fiscal 2025 compared to fiscal 2024 primarily due to the vesting of outstanding options and no options being issued in the current year.

45

Table of Contents

Professional Fees – Professional fees consist mainly of IT, telecom, legal, consulting and accounting fees.  Legal fees increased year over year due to the water court case discussed further in Note 4 to the financial statements.

Public Entity-Related Expenses, including director fees – Costs associated with being a corporation and costs associated with being a publicly traded entity consist primarily of XBRL and EDGAR conversion fees, stock exchange fees, and press releases. These costs fluctuate from year to year and were higher in 2024 compared to 2025, primarily due to the cost of filing the Company’s S-8 in 2024. Compensation including stock grants paid to our board was consistent in fiscal 2025 compared to fiscal 2024.

Corporate insurance – Corporate insurance costs increased as our operations continue to expand, which is due to adding additional construction and rental home policies, covering added infrastructure in the Sky Ranch master planned community, and overall insurance rate increases.

All other – All other expenses include typical operating expenses related to the maintenance of our office and equipment, business development, travel, and property taxes. Other expenses increased during 2025 compared to 2024. The changes were primarily the result of increased equipment maintenance, various software subscription expenses and a donation to the Sky Ranch Academy.

Liquidity, Capital Resources and Financial Position

We believe we are well-positioned to navigate the ever-evolving market conditions given our strong financial position. At August 31, 2025, our working capital, defined as current assets less current liabilities, was $20.0 million, which includes $22.0 million in cash and cash equivalents. We believe that as of August 31, 2025, and as of the date of the filing of this Annual Report on Form 10-K, we have sufficient working capital to fund our operations for the next 12 months. We have completed Phase 1 and Phase 2A at Sky Ranch. Phase 2B is approximately 97% complete, Phase 2C is approximately 82% complete, and Phase 2D is approximately 43% complete.  We anticipate starting work on Phase 2E during fiscal 2026. We have sold 194 lots in Phase 2B at Sky Ranch (retaining an additional 17 lots for ourselves) and have approximately 3% of construction-related activities remaining for Phase 2B to be finished. We expect to spend $0.5 million in the next twelve months on remaining Phase 2B construction activities (of which we estimate $0.3 million will be reimbursable by the Sky Ranch CAB). We have sold 180 of the 188 for sale lots in Phase 2C at Sky Ranch (retaining an additional 40 lots for ourselves) and have approximately 18% of construction-related activities remaining for Phase 2C to be finished. We expect to sell the remaining eight lots in the first quarter of fiscal 2026. We expect to be complete with Phase 2C during fiscal 2026 and expect to spend $3.0 million in the next twelve months on remaining Phase 2C construction activities (of which we estimate $2.4 million will be reimbursable by the Sky Ranch CAB). We expect to be substantially complete with Phase 2D during fiscal 2026 and expect to spend $7.8 million in the next twelve months on Phase 2D construction-related activities (of which we estimate $7.0 million will be reimbursable by the Sky Ranch CAB). We anticipate starting work on Phase 2E during fiscal 2026 and expect to spend $3.2 million in the next twelve months on Phase 2E construction-related activities (of which we estimate $2.4 million will be reimbursable by the Sky Ranch CAB). We anticipate receiving approximately $19.8 million in milestone and finished lot payments and approximately $7 million of water and wastewater tap fees from the homebuilders over the same period. We also anticipate receiving reimbursement from Sky Ranch CAB of approximately $4 million from excess funds from higher fees and property taxes collected by the Sky Ranch CAB. We believe we can fund such capital expenditures from cash and cash equivalents on hand, phased payments from our lot sales agreements, and payments from the Sky Ranch CAB for reimbursement of public improvements. We expect to complete approximately 45 additional single-family rental homes in the next twelve months. The Company expects to fund the construction of our new rental homes with a debt facility agreement.

​

Notes payable – Notes payable includes limited recourse secured notes with third parties that totaled $6.8 million at August 31, 2025. These notes have maturities ranging up to seven years, are secured by the applicable asset to which they relate, and generally have no recourse to other assets. The stated interest rates on these notes range up to 7.51%.

​

46

Table of Contents

Summary Cash Flows

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

​

​

(In thousands)

August 31, 2025

August 31, 2024

$ Change

% Change

Cash (used) provided by:

​

​

​

​

Operating activities

​

$

13,164

​

$

2,312

​

$

10,852

​

469

%

Investing activities

​

​

(9,652)

​

​

(4,829)

​

​

(4,823)

​

(100)

%

Financing activities

​

​

(491)

​

​

(612)

​

​

121

​

20

%

​

​

​

​

​

​

​

​

​

​

​

​

​

Net Change in cash

​

$

3,021

​

$

(3,129)

​

$

6,150

​

197

%

​

Changes in Operating Activities – Operating activities include amounts we receive from the sale of wholesale water and wastewater services, costs incurred in the delivery of those services, the sale of lots, the costs incurred in completing and delivering finished lots, rental income from single-family homes and the cost incurred in constructing and maintaining our single-family rental homes, oil and gas royalty income and G&A Expenses. Cash provided by operations in fiscal 2025 increased due to the timing of cash receipts of trade receivables, payments of payables and accrued liabilities, and collection of oil and gas royalty income, which was offset by net increases to the note receivable from the Sky Ranch CAB for continued construction costs related to public improvements.  The Sky Ranch CAB made payments to us totaling $15.2 million in fiscal 2025 from the refinancing of the bonds issued in 2019 and excess funds from higher fees and property taxes collected by the Sky Ranch CAB. The Sky Ranch CAB made payments to us totaling $0.7 million in fiscal 2024 from excess funds from higher fees and property taxes collected by the Sky Ranch CAB.

Changes in Investing Activities – Investing activities in fiscal 2025 consisted primarily of the investment in our water system of $8.6 million and investments in future development phases of Sky Ranch for $0.9 million. Investing activities in fiscal 2024 consisted primarily of the investment in our land and water system of $1.9 million and investments in future development phases of Sky Ranch of $2.2 million. We capitalize costs associated with obtaining, defending, enhancing, and developing our water rights. We capitalize costs incurred to construct infrastructure required to deliver water and wastewater services to our customers, and we capitalize costs to develop our land assets that are not sold to home builders.

Changes in Financing Activities – Financing activities in 2025 and 2024 consisted of payments on existing debt facilities as well as cash used to repurchase the Company’s common stock.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. Our discussion and analysis of our financial condition and results of operations are based on these consolidated financial statements. The preparation of our consolidated financial statements requires the application of these accounting principles in addition to certain estimates and judgments based on current available information, engineering estimates, historical results, and other assumptions believed to be reasonable. These estimates, assumptions and judgments are affected by our application of accounting policies, which are discussed in Note 2 in the accompanying consolidated financial statements. Estimates are used for, but not limited to, determining the recoverability of notes receivable, measure of progress related to our land development activities, and accrued liabilities. Actual results could differ from these estimates.

Accounting estimates are considered critical if both of the following conditions are met: (1) the nature of the estimates or assumptions is material because of the levels of subjectivity and judgment needed to account for matters that are highly uncertain and susceptible to change and (2) the effect of the estimates and assumptions is material to the financial statements. The following provides a summary of the two critical estimates we identified.

​

Collectability of the Notes Receivable from the Sky Ranch CAB – The notes receivable from the Sky Ranch CAB are comprised of amounts we incurred and provided to the Sky Ranch CAB for costs related to the construction of public improvements which are reimbursable to us, along with related project management fees and accrued interest associated with those costs. Collectability of the notes is based on the Sky Ranch CAB generating sufficient cash flows to repay us prior to certain contractual dates, which is deemed probable based on a mill levy increase resulting from the remainder of Sky Ranch being in a different taxing district than Phase 1, higher than projected assessed values of completed homes, and additional houses from the start of the next development phase at Sky Ranch. The notes are evaluated for a credit loss at each reporting period based on the factors indicated, and an impairment would be recognized whenever it was determined that a credit loss had occurred.  Management applies judgment to assess whether a credit loss has occurred,

47

Table of Contents

and factors that are considered include, but are not limited to: significant decreases in the market price of houses which generate tax payments to the Sky Ranch CAB; significant adverse changes in the business climate or legal factors including significant decreases in housing sales or assessments; significant increase in costs and accumulation of costs significantly in excess of the amount originally expected for the construction of the associated public improvements; and current period cash flow or operating losses combined with a history of losses or a forecast of losses.  Recoverability of these notes is measured by comparing the carrying value to the future cash flows expected to be generated by the Sky Ranch CAB which can be used to repay us.  If the carrying value of the notes exceeds the fair value of the estimated cash flows, an impairment loss would be recorded by writing down the carrying value of the related asset to its estimated fair value, which is determined using discounted future cash flows.

​

Revenue recognition on lot sales under the percentage-of-completion method – We recognize lot revenue over time as construction progresses for most of our lot development contracts. This involves an estimation of the total project costs which are incurred over several months or even years. This requires management to estimate labor and material costs which could change materially over the life of that construction project and have a material impact on the timing of revenue recognition. Under the percentage of completion method, revenue and related costs from lots sold pursuant to lot development contracts requiring milestone payments as construction occurs are recognized over the course of the construction period based on the completion progress of that project phase (i.e. Phase 2C). In relation to each phase or subphase, revenue is determined by calculating the ratio of incurred construction costs, including construction costs related to public improvements subject to reimbursement, to total estimated costs and applying that ratio to the contracted sales amounts. Current period amounts are calculated based on the difference between the life-to-date project totals and the previously recognized amounts. Cost of sales is the cost incurred related to construction of lots. Any changes in significant judgments and/or estimates used in determining construction and development revenue could significantly change the timing or amount of construction and development revenue recognized. Changes in estimated costs or losses, if any, are recognized in the period in which they are determined.

​

Off-Balance Sheet Arrangements

None

Recently Adopted and Issued Accounting Pronouncements

See Note 2 to the accompanying consolidated financial statements for recently adopted and issued accounting pronouncements.

​