PURE CYCLE CORP Commitments Disclosure
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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 12, 2025 | Showing above |
| 2024 | Nov 13, 2024 | |
| 2023 | Nov 15, 2023 | |
| 2022 | Nov 14, 2022 | |
| 2021 | Nov 10, 2021 | |
| 2020 | Nov 10, 2020 | |
| 2019 | Nov 12, 2019 | |
| 2018 | Nov 13, 2018 | |
| 2017 | Nov 15, 2017 | |
| 2016 | Oct 28, 2016 | |
| 2015 | Nov 9, 2015 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.