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

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

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	12 Months Ended
Aug. 31, 2025
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	NOTE 12 – COMMITMENTS AND CONTINGENCIES The Company has historically been involved in various claims, litigation and other legal proceedings that arise in the ordinary course of its business. The Company records an accrual for a loss contingency when its occurrence is probable and damages can be reasonably estimated based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. The Company makes such estimates based on information known about the claims and experience in contesting, litigating, and settling similar claims. Disclosures are also provided for reasonably possible losses that could have a material effect on the Company’s financial position, results of operations or cash flows. As of August 31, 2025, the Company has accrued an estimated $0.5 million in legal expenses associated with potential legal liability relating to the water court’s ruling in February 2025. The Company's current settlement negotiations have the potential to obtain a new water right asset as well as a favorable outcome on the remaining three claims, which would result in a reversal of the legal accrual. The water court proceedings are described under Item 3 – Legal Proceedings.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Aug. 31, 2025

NOTE 12 – COMMITMENTS AND CONTINGENCIES

The Company has historically been involved in various claims, litigation and other legal proceedings that arise in the ordinary course of its business. The Company records an accrual for a loss contingency when its occurrence is probable and damages can be reasonably estimated based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes. The Company makes such estimates based on information known about the claims and experience in contesting, litigating, and settling similar claims. Disclosures are also provided for reasonably possible losses that could have a material effect on the Company’s financial position, results of operations or cash flows. As of August 31, 2025, the Company has accrued an estimated $0.5 million in legal expenses associated with potential legal liability relating to the water court’s ruling in February 2025. The Company's current settlement negotiations have the potential to obtain a new water right asset as well as a favorable outcome on the remaining three claims, which would result in a reversal of the legal accrual. The water court proceedings are described under Item 3 – Legal Proceedings.