Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Aug. 31, 2025
INCOME TAXES  
INCOME TAXES

NOTE 10 – INCOME TAXES

For the year ended August 31, 2025, Pure Cycle recorded income tax expense of $4.4 million, which consisted of current income tax expense of $4.2 million and deferred income tax expense of $0.1 million. The deferred tax expense consists mainly of the timing difference between book and tax depreciation of fixed assets.

For the year ended August 31, 2024, Pure Cycle recorded income tax expense of $4.0 million, which consisted of current income tax expense of almost $4.0 million and deferred income tax expense of less than $0.1 million. The deferred tax expense consists mainly of the timing difference between book and tax depreciation of fixed assets.

During the year ended August 31, 2025, Pure Cycle paid Federal and State income tax installments of $3.6 million and $0.8 million, respectively. During the year ended August 31, 2024, Pure Cycle paid Federal and State income tax installments of $1.6 million and $0.5 million, respectively.

Deferred income taxes reflect the tax effects of net operating loss carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of August 31 are as follows:

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(In thousands)

    

August 31, 2025

    

August 31, 2024

Deferred tax assets (liabilities):

    

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Depreciation and depletion

​

$

(2,361)

​

$

(2,237)

Non-qualified stock options

​

 

522

​

 

527

Accrued compensation

​

​

127

​

​

230

Deferred revenue

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​

113

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​

31

Other

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58

​

 

54

Net deferred tax liability

​

$

(1,541)

​

$

(1,395)

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As of August 31, 2025 and 2024, the Company had no liability for unrecognized tax benefits.

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Income taxes computed using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to the following for the fiscal years ended August 31:

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Year Ended 

(In thousands)

    

August 31, 2025

    

August 31, 2024

Expected expense (benefit) from federal taxes at statutory rate of 21%

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$

3,669

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$

3,283

State taxes, net of federal benefit

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​

600

​

​

559

Permanent and other differences

​

​

45

​

​

148

Stock Compensation

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(12)

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(14)

Other

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​

58

​

​

43

Total income tax expense

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$

4,360

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$

4,019

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As of August 31, 2025 and 2024, the Company had no net operating loss carryforwards available for income tax purposes.