PURE CYCLE CORP

(unaudited)

May 31, 2026

NOTE 1 – PRESENTATION OF INTERIM INFORMATION

The accompanying unaudited consolidated financial statements have been prepared by Pure Cycle Corporation (the “Company” or “Pure Cycle”) and include all adjustments that are of a normal recurring nature and are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company as of and for the three and nine months ended May 31, 2026 and 2025. The August 31, 2025 balance sheet was derived from the Company’s audited consolidated financial statements.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is suggested the accompanying consolidated financial statements and notes be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2025 (“2025 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”) on November 12, 2025. The results of operations for interim periods presented are not necessarily indicative of the operating results expected for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for certain items such as revenue recognition, the dollar amount of reimbursable costs and collectability of reimbursable costs, costs of revenue for lot sales, share-based compensation, certain accrued liabilities, and the useful lives and recoverability of long-lived assets. Actual results could differ from those estimatesand assumptions due to risks and uncertainties, including uncertainty in the current economic environment.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). Upon adoption of this ASU, the Company has disclosed significant segment expenses, the title and position of the Chief Operating Decision Maker (“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 11.

In December 2023, FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires expanded disclosure of the Company’s income rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company for annual periods beginning September 1, 2025. The Company expects the adoption of ASU 2023-09 to result in enhanced income tax disclosures, including expanded rate reconciliation detail and disaggregated information regarding income taxes paid, in its annual consolidated financial statements. The adoption is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” ("ASU 2024-03"), which 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 September 1, 2027. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

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. The changes (i) provide additional details about the Company’s operations by reporting segment, which 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 for the three and nine months ended May 31, 2025 were made to conform to the current period presentation. The changes had no impact on gross margins or net income.

Changes to the Consolidated Statement of Cash Flows for the nine months ended May 31, 2025 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 2 – REIMBURSABLE PUBLIC IMPROVEMENTS AND NOTE RECEIVABLE FROM THE SKY RANCH COMMUNITY AUTHORITY BOARD

The Sky Ranch Community Authority Board (“Sky Ranch CAB”) and the Company’s agreements with the Sky Ranch CAB are described in greater detail in Notes 5 and 14 to the financial statements included in the 2025 Annual Report.

The related party notes receivable is comprised oftwo separate notes, one from the Rangeview Metropolitan District andone from the Sky Ranch CAB. The following table summarizes the balances associated with the note receivable related party:

The note from the Sky Ranch CAB reflects the balances owed to the Company for public improvements paid for by Pure Cycle that are reimbursable from the Sky Ranch CAB and include project management fees related to the Company’s management of the construction of the public improvements and interest accrued on the unpaid balances related to the ongoing development of the Sky Ranch master planned community (“Sky Ranch”). Pure Cycle has advanced funds to the Sky Ranch CAB for the cost of constructing certain public improvements at Sky Ranch, which are the ultimate responsibility of the Sky Ranch CAB. During the three and nine months ended May 31, 2026, Pure Cycle spent $2.2 million and $12.1 million, respectively, on public improvements, which were certified by a third-party engineer and are 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 three and nine months ended May 31, 2026, project management fees of $0.1 million and $0.6 million and interest income on the outstanding note receivable of $0.8 million and $2.3 million, respectively, were also added to the note receivable. During the three and nine months ended May 31, 2026, the Sky Ranch CAB paid Pure Cycle $0.4 million and $0.7 million, respectively, pursuant to the note. Pursuant to the agreements with the Sky Ranch CAB, any payments received are initially applied to interest.

During the three and nine months ended May 31, 2025, Pure Cycle spent $2.9 million and $9.4 million, respectively, on public improvements, which were certified by a third-party engineer and are 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 three and nine months ended May 31, 2025, project management fees of $0.1 million and $0.5 million and interest income on the outstanding note receivable of $0.4 million and $1.2 million, respectively, were also added to the note receivable. During the three and nine months ended May 31, 2025, the Sky Ranch CAB paid Pure Cycle $0.8 million and $11.4 million, respectively, pursuant to the note. Pursuant to the agreements with the Sky Ranch CAB, any payments received are initially applied to interest.

The following table summarizes the activity and balances associated with the note receivable from the Sky Ranch CAB:

The note receivable from the Sky Ranch CAB accrues interest at 6% per annum. Public improvements that do not qualify for reimbursement at the time of being incurred are considered contract fulfillment costs related to the delivery of lots to the Company’s homebuilder customers and are recorded as land development construction costs as incurred. If public improvement costs are deemed qualified for reimbursement, 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, at each reporting period. 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 3 – REVENUES, FEES AND OTHER INCOME ITEMS

The Company’s revenue is primarily generated from three unique segments: (1) sales of water and wastewater taps, metered water and wastewater usage; (2) the sale of lots to homebuilders; and (3) rent collected from its single-family homes. Detailed descriptions of the policies related to revenue recognition are included in Note 2 to the financial statements included in the 2025 Annual Report.

The following describes significant components of revenue for the three and nine months ended May 31, 2026 and 2025.

Water and wastewater tap fees– During the three months ended May 31, 2026 and 2025, the Company sold a total of 66 and 40 water taps, respectively, generating $1.9 million and $1.4 million in tap fee revenues, respectively. During the three months ended May 31, 2026 and 2025, the Company sold a total of 48 and 40 wastewater taps, respectively, generating $0.4 million and $0.3 million in tap fee revenues, respectively. During the nine months ended May 31, 2026 and 2025, the Company sold a total of 161 and 130 water taps, respectively, generating $4.6 million and $4.3 million in tap fee revenues, respectively. During the nine months ended May 31, 2026 and 2025, the Company sold a total of 117 and 127 wastewater taps, respectively, generating $1.0 million and $1.0 million in tap fee revenues, respectively. The water taps were all sold at Sky Ranch and Wild Pointe, and the wastewater taps were all sold at Sky Ranch.

Water and wastewater activities – During the three months ended May 31, 2026 and 2025, the Company sold a total of 631 and 76 acre-feet of water, respectively, generating $2.4 million and $0.4 million in metered water and wastewater treatment fees revenue, respectively. During the nine months ended May 31, 2026 and 2025, the Company sold a total of 1,050 and 443 acre-feet of water, respectively, generating $4.5 million and $2.2 million in metered water and wastewater treatment fees revenue, respectively. The Company provides water and wastewater services to customers and charges 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 offour persons living in a single-family house on a standard-sized lot. Water usage pricing is based on a tiered pricing structure, and certain usage revenues are subject to royalties as described in the 2025 Annual Report. Historically, the Company’s largest customers for water are industrial users, mainly oil and gas companies using water in drilling and hydraulic fracking processes.

Lot sales– For the three months ended May 31, 2026 and 2025, the Company recognized $3.0 million and $2.5 million of lot sales revenue, respectively, which was recognized using the percent-of-completion method for the Company’s land development activities at the Sky Ranch Master Planned Community. For the nine months ended May 31, 2026 and 2025, the Company recognized $10.7 million and $6.0 million of lot sales revenue, respectively, which was recognized using the percent-of-completion method for the Company’s land development activities at the Sky Ranch Master Planned Community. As of May 31, 2026, the first development phase (509 lots) is complete and the second development phase (1,031 lots) is being developed infive subphases, referred to as Phase 2A (229 lots), Phase 2B (211 lots), Phase 2C (228 lots), Phase 2D (204 lots) and Phase 2E (159 lots). These numbers include lots reserved for the Company’s single-family home rental business. As of May 31, 2026, Phase 2A is 100% complete, Phase 2B is approximately 99% complete, Phase 2C is approximately 95% complete, Phase 2D is approximately 84% complete, and Phase 2E development has begun. The Company will begin recognizing revenue for Phase 2E under the percent-of-completion method once its first customer contract is executed. Phases 2B and 2C are substantially complete with some landscaping and warranty items remaining. Phase 2D is expected to be completed in fiscal 2026, and Phase 2E is expected to be completed in fiscal 2027.

Project management fees – During the three months ended May 31, 2026 and 2025, the Company recognized $0.1 million and $0.1 million of project management revenue. During the nine months ended May 31, 2026 and 2025, the Company recognized $0.6 million and $0.5 million, respectively, of project management revenue. Project management fees are recognized from the Sky Ranch CAB, a related party, for managing the Sky Ranch development project.

Single-family rental revenue

As of May 31, 2026, the Company has 38 single-family homes, paired homes or townhomes rented andone additional home available for sale. Pure Cycle generally rents its single-family properties undernon-cancelable one-year lease agreements. For the three months ended May 31, 2026 and 2025, the Company recognized $0.2 million and $0.1 million of rental property revenues, respectively. For the nine months ended May 31, 2026 and 2025, the Company recognized $0.5 million and $0.4 million of rental property revenues, respectively.

Pure Cycle completed 20 additional single-family detached homes and 25 additional single-family detached homes or townhomes in the three and nine months ended May 31, 2026, respectively. As of May 31, 2026, the Company has contracts for the construction of 23 of the 33 additional rental homes planned in Phases 2C and 2D, the majority of which the Company believes will be available for rent in calendar 2026. When combined with the 38 units already built and rented, these 33 additional homes will bring the total number of single-family rental homes to 71. Following completion of the remaining rental homes planned in Phase 2C and 2D, the Company intends to evaluate the economics of the segment to determine the pace of future expansion of its rental portfolio.

Special facility projects and other revenue

The Company performs certain construction activities at Sky Ranch. The activities performed include construction and maintenance services. The revenue for both types of services are invoiced and recognized as special facility projects revenue. For the three months ended May 31, 2026 and 2025, the Company recognized $0.2 million and $0.2 million, respectively, of special facility projects revenue. For the nine months ended May 31, 2026 and 2025, the Company recognized $0.6 million and $0.5 million, respectively, of revenue in this category. The Company recognizes special facility projects and other revenue from work performed for the Sky Ranch CAB, a related party.

Deferred revenue

Changes and balances of the Company’s deferred revenue accounts by segment are as follows:

The Company recognizes lot sales over time as construction activities progress and not necessarily when payment is received. For example, the Company may 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 construction activities progress, measured based on costs incurred compared to total estimated costs of the project, which management believes is a faithful representation of the transfer of goods and services to the customer.

Revenue allocated to remaining performance obligations such as described above represents contracted revenue that has not yet been recognized, which includes unearned revenue and amounts that will be recognized as revenue in future periods.

NOTE 4 – FAIR VALUE MEASUREMENTS

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

The carrying value for certain of the Company’s financial instruments (i.e., cash, restricted cash, short term investments, accounts receivable, accounts payable, accrued liabilities, the SFR Notes and the Lost Creek Note (each as defined in Note 6 below) approximate their fair value because of their short-term nature and generally negligible credit losses.

As of May 31, 2026 and August 31, 2025, the Company hadno assets or liabilities measured at fair value on a recurring basis. As of May 31, 2026 and August 31, 2025, the Company hadone Level 3 asset (notes receivable – related party), evaluated at fair value on a nonrecurring basis, for which the Company didnot record any impairment charges.

There were no transfers between Level 1, 2 or 3 categories during the three and nine months ended May 31, 2026 and 2025.

NOTE 5 – WATER, LAND AND OTHER FIXED ASSETS

The Company’s water rights and current water and wastewater service agreements, including capitalized terms not defined herein, are more fully described in Note 4 to the financial statements in the 2025 Annual Report.

Investment in Water and Water Systems

The Company’s Investments in water and water systems consist of the following costs and accumulated depreciation and depletion:

During the nine months ended May 31, 2026, the Company’s Rangeview water supply increased $1.3 million of which $0.9 million related to the settlement of the Company’s and Rangeview District’s 2020 Water Court application. The settlement included the adjudication of 1,635 acre feet of water from the Box Elder Creek Alluvial aquifer along with other water right improvements. Increases in construction in progress and Rangeview water system primarily related to additions the Company made to the water and wastewater system within the Sky Ranch community to support future land development.

Single-Family Rental Homes

As of May 31, 2026, the Company has 38 single-family homes, paired homes or townhomes rented andone additional home available for sale. Pure Cycle completed 20 additional single-family detached homes and 25 additional single-family detached homes or townhomes in the three and nine months ended May 31, 2026, respectively. As of May 31, 2026, the Company has contracts for the construction of 23 of the 33 additional rental homes planned in Phases 2C and 2D, the majority of which the Company believes will be available for rent in calendar 2026. When combined with the 38 units already built, these 33 additional homes will bring the total number of single-family rental homes to 71. Following completion of the remaining rental homes planned in Phase 2C and 2D, the Company intends to evaluate the economics of the segment to determine the pace of future expansion of its rental portfolio.

NOTE 6 – DEBT AND OTHER LONG-TERM OBLIGATIONS

As of May 31, 2026, the outstanding principal and deferred financing costs of the Company’s loans are as follows:

As of May 31, 2026, the scheduled maturities (i.e., principal payments) of the Company’s loans are as follows:

SFR Note 1

On November 29, 2021, PCY Holdings, LLC, a wholly owned subsidiary of the Company, issued a Promissory Note (“SFR Note 1”) to its primary bank to reimburse amounts expended for the construction of the first three single-family rental units. The SFR Note 1 has the following terms:

SFR Note 2

On August 30, 2023, PCY Holdings, LLC, a wholly owned subsidiary of the Company, issued a Promissory Note (“SFR Note 2” and, together with SFR Note 1, the “SFR Notes”) to 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:

Lost Creek Note

On June 28, 2022, the Company entered into a loan agreement 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 Designated Groundwater Basin area of Colorado (the “Lost Creek Note”). The Lost Creek Note has an original principal balance of $3.0 million, aten-year maturity, monthly interest only payments averaging $12,000 per month for 36 months (which began on July 28, 2022),24 monthly principal and interest payments of $42,000 beginning on July 28, 2025,59 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 30 year amortization period and a fixed per annum interest rate equal to 4.90%. The Lost Creek Note is secured by the Lost Creek Water rights acquired with the note and any fees derived from the use of the Lost Creek Water rights. The Lost Creek Note does not contain any financial covenants.

SFR Facility Agreement

On September 29, 2025, Pure Cycle, as guarantor, and PCY Holdings, LLC and PCYO Home Rentals, LLC, each a wholly owned subsidiary of the Company, as borrowers, entered into a debt Facility Agreement (as amended in February 2026, “Facility Agreement” or “SFR 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, which are secured by the single-family homes financed under the Facility Agreement. The Facility Agreement allows the Company and its subsidiaries the flexibility to close on multiple single-family rental homes over a short period of time 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 term loans, which would bear interest at a rate per annum equal to the then current five-year US Constant Maturity Treasury rate plus a margin of 2.75% at the time of conversion. The term loan will be amortized over 25 years with afive year balloon payment. The Facility Agreement contains financial covenants requiring the Company to maintain a minimum Tangible Net Worth of $75 million, minimum liquidity of $5 million, and a minimum Debt Service Coverage Ratio (as each term is defined in the Facility Agreement) of 1.00 to 1.00 for PCYO Home Rentals, LLC, and 1.30 to 1.00 for the Company. As of May 31, 2026, the Company was in compliance with all covenants and requirements. As of May 31, 2026, the Company has drawn $7.7 million in term loans with a fixed per annum interest rate ranging from 6.34% to 7.02%. The term loans have fixed monthly principal and interest payments of approximately $53,500 and a balloon payment of $7.1 million due between October 2030 and May 2031.

Working Capital Line of Credit

On February 18, 2026, the SFR Facility Agreement was amended to add the Company as a direct borrower instead of as a guarantor and to include an additional $10 million in lending capacity in the form of an operating line of credit (the “Working Capital LOC”). The Working Capital LOC has athree-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 Wall Street Journal Prime Rate (6.75% as of May 31, 2026), with a floor of 4.50%. In the event of default, the interest rate on the Working Capital LOC would be increased by an additional 5.0%. The Working Capital LOC has the same financial covenants as the SFR Facility Agreement. As of May 31, 2026, the Company hasnot drawn on the Working Capital LOC.

Letters of Credit

At May 31, 2026, the Company had 15 Irrevocable Letters of Credit (“LOCs”) outstanding. The LOCs 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 2C. The Company has the intent and ability to perform on the contracts, after which the LOCs will expire at various dates from June 2026 through May 2027. As of May 31, 2026, the LOCs totaled $6.8 million, which are secured by cash balances maintained in restricted cash accounts at the Company’s bank or secured by available capacity under the Working Capital LOC. LOCs issued under the Company’s Working Capital LOC have a 1.25% annual fee.

NOTE 7 – EMPLOYEE STOCK PLANS

The Company reserved 2.0 million shares of common stock for issuance to employees and directors pursuant to the Company’s 2024 Equity Incentive Plan (the “2024 Equity Plan”). As of May 31, 2026, there were 1,956,631 shares available for grant under the 2024 Equity Plan. Prior to the effective date of the 2024 Equity Plan, the Company granted options and stock awards to eligible participants under its 2014 Equity Plan (the “2014 Equity Plan”), which expired on April 12, 2024.

The following table summarizes the combined stock option activity for the 2014 Equity Plan and 2024 Equity Plan for the periods noted:

During the three months ended May 31, 2026, the Company issued 962 shares pursuant to the exercise of stock options. These options were net settled, meaning that, the optionee did not pay cash for the options exercised but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise, with 1,038 options being cancelled as a result of the net settlements. During the nine months ended May 31, 2026, the Company issued 10,000 shares pursuant to the exercise of stock options for cash and net settlement exercises resulted in 6,794 shares being issued and 45,206 options being cancelled in settlement of the shares issued. During the nine months ended May 31, 2025, the Company issued 13,815 shares pursuant to the net settlement of stock options, with 21,185 options being cancelled as a result of the net settlements.

The following table summarizes the activity and value of non-vested options under the 2014 Equity Plan and 2024 Equity Plan for the periods presented:

All non-vested options are expected to vest.

On January 14, 2026, the Company’sseven non-employee Board members were each granted 2,653 shares of common stock not subject to vesting requirements. 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 grant at $11.31. There is no vesting requirement for the unrestricted common stock grants.

On September 17, 2025, the Company issued four employees a total of 5,000 shares of restricted stock. These shares vested 20% at the September 17, 2025 grant date, and 20% will vest on each anniversary of the grant date forfour years subject to continued employment. On September 17, 2025, the Company also issuedan employee 10,000 unrestricted shares of common stock. The shares are eligible to vote and participate in any dividend or stock splits approved by the Company. On November 20, 2025, the Company issuedan employee stock options to purchase 30,000 shares of common stock with a grant-date fair value of $4.59 per share, athree-year vesting term and aten year expiration date.

On September 18, 2024, the Company issued five employees a total of 8,000 shares of restricted stock. These shares vested 20% at the September 18, 2024 grant date, and 20% will vest on each anniversary of the grant date forfour years subject to continued employment. On September 18, 2024, the Company also issued an employee 1,200 shares of restricted stock. One third of these shares vested at the September 18, 2024 grant date, and the remaining shares will vest inone-third increments on each anniversary of the grant date fortwo years subject to continued employment. The shares are eligible to vote and participate in any dividend or stock splits approved by the Company.

For the three and nine months ended May 31, 2026, the Company recognized less than $0.1 million and $0.4 million, respectively, of stock-based compensation expense. For the three and nine months ended May 31, 2025, the Company recognized less than $0.1 million and $0.3 million, respectively, of stock-based compensation expense.

At May 31, 2026, the Company had unrecognized compensation expenses totaling $0.2 million relating to non-vested options and restricted stock that are expected to vest. The weighted-average period over which these options and shares of restricted stock are expected to vest is approximatelytwo years.

NOTE 8 – RELATED PARTY TRANSACTIONS

The Rangeview Metropolitan District

The Rangeview District and the Company’s agreements with the Rangeview District are described in greater detail in Note 14 to the financial statements in the 2025 Annual Report.

The Rangeview District and the Company have entered intotwo 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% (8.75% at May 31, 2026). The maturity date of the loan is December 31, 2026, at which time it automatically renews through December 31, 2027. 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 May 31, 2026, the balance of the related party notes receivable totaled $0.9 million, which included borrowings of $0.9 million and accrued interest of less than $0.1 million. As of August 31, 2025, the principal and interest on both loan agreements totaled $1.2 million, which included $1.2 million of borrowings and less than $0.1 million of accrued interest. During the three months ended May 31, 2026 and 2025, the Company didnot receive interest and principal payments from the Rangeview District. During the nine months ended May 31, 2026 and 2025, the Company received interest and principal payments totaling $0.4 million and $0.1 million, respectively, from the Rangeview District.

Additionally, the Company provides funding to the Rangeview District for the Rangeview District’s participation in the “WISE Partnership.” The WISE Partnership and capitalized terms related to WISE not defined herein are defined in Note 7 to the financial statements included in the 2025 Annual Report. During the three and nine months ended May 31, 2026, the Company, through the Rangeview District, received 345 and 595 acre-feet of water, paying $0.8 million and $1.4 million, respectively, for this water. During the three and nine months ended May 31, 2025, the Company, through the Rangeview District, received 28 and 58 acre-feet of water, paying $0.1 million and $0.2 million for this water, respectively. The cost of WISE 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, 2026, WISE water was approximately $6.97 per thousand gallons, and such rate will remain in effect through calendar year 2026.

Sky Ranch Community Authority Board

The Sky Ranch CAB and the Company’s agreements with the Sky Ranch CAB are described in greater detail in Note 14 to the financial statements included in the 2025 Annual Report.

The Sky Ranch Districts and the Sky Ranch CAB are quasi-municipal corporations and political subdivisions of Colorado formed for the purpose of providing services to Sky Ranch. The Sky Ranch CAB was formed 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. 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. To fund these improvements, the Company and the Sky Ranch CAB entered into various funding agreements obligating the Company to advance funds to the Sky Ranch CAB for the construction of specified public improvements starting in 2018. All amounts owed under the agreements 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 the first phase and December 31, 2060 for the second phase shall be deemed forever discharged and satisfied in full. The Company has received cumulative, project-to-date payments of $52.2 million from the Sky Ranch CAB for payments on the note receivable including both principal and interest payments.

As of May 31, 2026, the balance of the Company’s advances to the Sky Ranch CAB for improvements, including interest and net of reimbursements from the Sky Ranch CAB, total $58.2 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 that have been certified by an independent third party. The Company anticipates providing additional funding of approximately $2.7 million for construction of public improvements to the Sky Ranch CAB during the remainder of fiscal 2026 related to Phase 2C, Phase 2D and Phase 2E of the Sky Ranch development. Payments from Sky Ranch CAB are made based on available cash flow from operations or from proceeds from the issuance of bonds.

In fiscal 2022, through a competitive bidding process, the Sky Ranch CAB awarded the Company a contract to construct fencing around Phase 2A of the Sky Ranch Master Planned Community. The contracted bid price is $0.4 million, which is being recognized as revenue as the construction of the fence progresses. Through the same process, in fiscal 2024 the Sky Ranch CAB awarded the Company a contract to construct fencing around Phase 2B of the Sky Ranch Master Planned Community. The contracted bid price is $0.2 million, which is being recognized as revenue as the construction of the fence progresses. During the three months ended May 31, 2026 and 2025, the Company recognized $0 million of revenue related to these contracts. During the nine months ended May 31, 2026 and 2025, the Company recognized $0 and $0.1 million of revenue, respectively, related to these contracts.

NOTE 9 – SIGNIFICANT CUSTOMERS

The Company has significant customers. The tables below present the percentage of total revenue for the reported customers for the nine months ended May 31, 2026 and 2025. For water and wastewater customers, the Company provides services on behalf of the Rangeview District, whose significant end users include Sky Ranch CAB andtwo oil and gas operators. The homebuilders at Sky Ranch account for lot purchase revenue and also for water and wastewater tap fee revenues.

NOTE 10 – ACCRUED LIABILITIES

NOTE 11 – SEGMENT INFORMATION

The Company reports three operating segments which meet segment disclosure requirements, the water and wastewater resource development segment, the land development segment, and the single-family rental segment.

The water and wastewater resource development segment includes providing water and wastewater services to customers. The Company delivers these services by using water rights owned or controlled by the Company and developing, operating, and maintaining infrastructure to divert, treat and distribute that water and collect, treat and reuse reclaimed wastewater. The land development segment includes all activities necessary to develop and sell finished lots, which for the three and nine months ended May 31, 2026 and 2025 was done exclusively at the Company’s Sky Ranch Master Planned Community. The single-family rental business includes the monthly rental fees received from the renters under non-cancelable annual leases.

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 segments for the periods presented:

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 segment. The Company’s other assets (Corporate) primarily consist of cash, short term investments, restricted cash, equipment, and related party notes receivable.

NOTE 12 – EARNINGS PER SHARE

Earnings per share (“EPS”) is calculated by dividing net income attributable to common shareholders by the weighted-average shares of common stock outstanding during the period. Certain outstanding options are excluded from the diluted EPS calculation because they are anti-dilutive (i.e., their assumed conversion into common stock would increase rather than decrease EPS). For the three months ended May 31, 2026 and 2025, the Company excluded 398,451 options and 421,988 options, respectively, because their impact was anti-dilutive. For the nine months ended May 31, 2026 and 2025, the Company excluded 393,614 and 399,762 options, respectively, because their impact was anti-dilutive.

NOTE 13 – INCOME TAXES

The income tax provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items. As of May 31, 2026, the Company is estimating an annual effective tax rate of approximately 24%. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility in the effective tax rate due to various factors.

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year considering any items requiring discrete recognition.

The effective income tax rate for the three and nine months ended May 31, 2026 was impacted by adjustments related to reconciling items between the Company’s books and tax returns.

NOTE 14 – SUBSEQUENT EVENTS

On June 15, 2026, the Company and certain of its subsidiaries entered into a Second Amendment to the SFR Facility Agreement that increased the lending capacity available to finance new single-family rental homes from $10 million to $20 million and extended the period during which that capacity may be drawn to May 29, 2028. Advances may continue to be converted into term loans that amortize over 25 years with afive-year balloon payment. The amendment removed the minimum Debt Service Coverage Ratio covenant applicable to PCYO Home Rentals, LLC; the Company's remaining financial covenants and the $10 million Working Capital LOC were unchanged, bringing total lending capacity under the SFR Facility Agreement to $30 million.