| Item | | Page |
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| | Part I | |
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| 1 | Business | 4 |
| 1A. | Risk Factors | 23 |
| 1B. | Unresolved Staff Comments | 37 |
| 1C. | Cybersecurity | 37 |
| 2 | Properties | 38 |
| 3 | Legal Proceedings | 38 |
| 4 | Mine Safety Disclosures | 38 |
| | Part II | |
| 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 38 |
| 6 | Selected Financial Data | 39 |
| 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 40 |
| 7A. | Quantitative and Qualitative Disclosures About Market Risk | 48 |
| 8 | Financial Statements and Supplementary Data | F-1 |
| 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 49 |
| 9A. | Controls and Procedures | 49 |
| 9B. | Other Information | 50 |
| | Part III | |
| 10 | Directors, Executive Officers and Corporate Governance | 50 |
| 11 | Executive Compensation | 50 |
| 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 50 |
| 13 | Certain Relationships and Related Transactions and Director Independence | 50 |
| 14 | Principal Accounting Fees and Services | 50 |
| | Part IV | |
| 15 | Exhibits and Financial Statement Schedules | 51 |
| | Signatures | 54 |
FORWARD-LOOKING STATEMENTS
Statements that are not historical facts contained in this Annual Report on Form 10-K, or incorporated by reference into this Annual Report on Form 10-K, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “anticipate,” “seek,” “project,” “future,” “likely,” “believe,” “may,” “should,” “could,” “will,” “estimate,” “expect,” “plan,” “intend” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Forward-looking statements include statements relating to, among other things:
| ● | future water supply needs in Colorado and how such needs will be met; |
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| ● | anticipated revenue from water sales; |
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| ● | anticipated increases in residential and commercial demand for water services and competition for these services; |
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| ● | estimated population increases in the Denver metropolitan area and the South Platte River basin; |
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| ● | demand for single-family rental homes; |
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| ● | plans for, and the efficiency of, development of our Sky Ranch property; |
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| ● | our competitive advantage; |
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| ● | the number of units planned for development at Sky Ranch; |
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| ● | the timing of the completion of construction and sale of finished lots at Sky Ranch; |
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| ● | the number of lots expected to be delivered in a fiscal period; |
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| ● | anticipated financial results, including anticipated increases in customers and revenue, from development of our Sky Ranch property; |
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| ● | estimated tap fees to be generated from the development of the various phases of Sky Ranch; |
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| ● | anticipated expansion and rental dates for our single-family rental homes; |
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| ● | anticipated revenue and cash flows from our single-family rental homes; |
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| ● | timing of and interpretation of royalty obligations to the State Board of Land Commissioners; |
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| ● | participation in regional water projects, including “WISE” (as defined herein) and the timing and availability of water from, and projected costs related to, WISE; |
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| ● | future water or wastewater tap fees; |
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| ● | our ability to collect fees and charges from customers and other users; |
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| ● | the estimated amount of reimbursable costs for Sky Ranch and the collectability of reimbursables; |
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| ● | anticipated timing and amount of, and sources of funding for, (i) capital expenditures to construct infrastructure and increase production capacities, (ii) compliance with water, environmental and other regulations, and (iii) operations, including delivery and treatment of water and wastewater; |
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| ● | capital required and costs to develop Sky Ranch; |
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| ● | anticipated development of other phases concurrently with the second phase of Sky Ranch; |
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| ● | our ability to secure a permit and finance the construction of a new interchange at I-70 for continued development of Sky Ranch; |
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| ● | plans to provide water for drilling and hydraulic fracturing of oil and gas wells; |
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| ● | changes in oil and gas drilling activity on our property, on the Lowry Ranch, or in the surrounding areas; |
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| ● | estimated costs of earthwork, erosion control, streets, drainage and landscaping at Sky Ranch; |
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| ● | the anticipated revenue from customers in the Rangeview District, Sky Ranch Districts, and Elbert & Highway 86 District; |
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| ● | plans for the use and development of our water assets and potential delays; |
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| ● | estimated number of connections we can serve with our existing water rights; |
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| ● | factors affecting demand for water; |
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| ● | our ability to meet customer demands in a sustainable and environmentally friendly way; |
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| ● | our ability to reduce the amount of up-front construction costs for water and wastewater systems; |
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| ● | costs and plans for treatment of water and wastewater; |
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| ● | expenditures for expenses and capital needs of the Rangeview District; |
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| ● | regional cooperation among area water providers in the development of new water supplies and water storage, transmission and distribution systems as the most cost-effective way to expand and enhance service capacities; |
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| ● | sufficiency of tap fees to fund infrastructure costs of the Rangeview District; |
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| ● | plans to use raw water, effluent water or reclaimed water for agricultural and irrigation uses; |
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| ● | factors that may impact labor and material costs; |
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| ● | our ability to comply with permit requirements and environmental regulations and the cost of such compliance; |
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| ● | the impact of water quality, solid waste disposal and environmental regulations on our financial condition and results of operations; |
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| ● | our belief that several long-term land development and housing factors remain positive; |
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| ● | anticipated mortgage interest rates; |
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| ● | our belief that Sky Ranch is better positioned to navigate the changing market than competitors; |
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| ● | the impact of the homebuilding market and interest rates on our business and financial condition; |
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| ● | the recoverability of water and wastewater service costs from rates; |
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| ● | forfeitures of option grants, vesting of non-vested options and the fair value of option awards; |
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| ● | the sufficiency of our working capital and financing sources to fund our operations; |
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| ● | estimated costs of public improvements to be funded by Pure Cycle and constructed on behalf of the Sky Ranch Community Authority Board; |
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| ● | service life of constructed facilities; |
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| ● | accounting estimates and the impact of new accounting pronouncements; |
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| ● | our beliefs regarding the impact of the One Big Beautiful Bill Act; and |
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| ● | the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting. |
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Forward-looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. There are no assurances that any of our expectations will be realized, and actual results could differ materially from those in such statements. Factors that could cause actual results to differ from those contemplated by such forward-looking statements include, without limitation:
| ● | political and economic instability, whether resulting from natural disasters, wars, terrorism, pandemics, tariffs, trade policies or other sources; |
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| ● | our ability to successfully expand our single-family home rental business and rent our single-family homes at rates sufficient to cover our costs; |
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| ● | the timing of new home construction and other development in the areas where we may sell our water, which in turn may be impacted by credit availability, inflation and interest rates; |
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| ● | changes in employment levels, job and personal income growth and household debt-to-income levels; |
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| ● | changes in consumer confidence generally and confidence of potential home buyers in particular; |
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| ● | declines in property values which impact tax revenue to the Sky Ranch Community Authority Board which would impact their ability to repay us; |
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| ● | changes in the supply of available new or existing homes and other housing alternatives, such as apartments and other residential rental property; |
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| ● | timing of oil and gas development in the areas where we sell our water; |
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| ● | the market price of homes, rental rates, and water, oil and gas prices; |
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| ● | changes in customer consumption patterns; |
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| ● | changes in applicable statutory and regulatory requirements; |
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| ● | changes in governmental policies and procedures, including with respect to land use, environmental, and tax matters; |
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| ● | changes in interest rates; |
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| ● | changes in tenant relief laws, including laws regulating evictions, rent control laws, and other regulations that limit our ability to increase rental rates; |
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| ● | changes in private and federal mortgage financing programs and lending practices; |
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| ● | uncertainties in the estimation of water available under decrees; |
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| ● | uncertainties in the estimation of the number of connections we can service with our existing water supplies; |
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| ● | uncertainties in the estimation of costs of delivery of water and treatment of wastewater; |
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| ● | uncertainties in the estimation of the service life of our systems; |
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| ● | uncertainties in the estimation of costs of construction projects; |
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| ● | uncertainties in the amount of reimbursable costs we may ultimately collect; |
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| ● | the strength and financial resources of our competitors; |
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| ● | our ability to find and retain skilled personnel; |
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| ● | climatic and weather conditions, including floods, droughts and freezing conditions; |
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| ● | turnover of elected and appointed officials and delays caused by political concerns and government procedures; |
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| ● | availability and cost of labor, material and equipment, including the impact of trade policies and tariffs; |
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| ● | engineering and geological problems; |
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| ● | environmental risks and regulations; |
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| ● | our ability to raise capital; |
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| ● | changes in corporate tax rates; |
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| ● | our ability to negotiate contracts with customers; |
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| ● | uncertainties in water court rulings; |
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| ● | security and cyberattacks, including unauthorized access to confidential information on our information technology systems; and |
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We undertake no obligation, and disclaim any obligation, to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. All forward-looking statements are expressly qualified by this cautionary statement.
