Global Water Resources Inc

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Risk Factors included in Part I, Item 1A of the 2024 Form 10-K. There have been no material changes to such risk factors, other than as set forth below:

Legal, Regulatory, and Legislative Factors

We are subject to the jurisdiction and regulations of the ACC, the primary utility regulator in Arizona, and our financial condition depends upon our ability to recover costs in a timely manner from customers through regulated rates.

We are subject to comprehensive regulation by several federal, state and local regulatory agencies that significantly influence our business, liquidity and results of operations. In particular, the ACC is the regulatory authority with jurisdiction over privately-held water and wastewater utilities and our ability to fully recover costs from utility customers in a timely manner. The ACC has exclusive constitutional authority related to ratemaking and extensive constitutional authority to mandate accounting treatments, authorize long-term financing programs, evaluate significant capital expenditures and plant additions, examine and regulate transactions between a regulated subsidiary and its affiliated entities and approve or disapprove some reorganizations, mergers and acquisitions prior to their completion. Additionally, the ACC has statutory authority to oversee service quality and consumer complaints and approve or disapprove expansion of service areas. The ACC is comprised of five elected members, each serving four-year terms. Our profitability to expand into new service areas and to eis affected by the rates we may charge and the timeliness of recovering costs incurred through our rates. Accordingly, our financial condition and results of operations are dependent upon the satisfactory resolution of any rate proceedings and ancillary matters which may come before the ACC. In addition, the ACC may reopen prior decisions and modify otherwise final orders under certain circumstances. Decisions made by the ACC could have a material adverse impact on our financial condition, results of operations and cash flows.

For example, in connection with the current rate case for our GW-Santa Cruz and GW-Palo Verde utilities, which serve approximately 87.2% of our total active service connections as of September 30, 2025, the initial written testimonies of the ACC Staff and RUCO included recommendations that materially differed from the rate case applications filed by the GW-Utilities, including relating to net annual revenue, adjusted rate base, and certain write-offs and disallowances. See Managements Discussion and Analysis of Financial Condition and Results of OperationsRate Regulation Updates, included in Part I, Item 2 of this report for additional information. There can be no assurance that we will be successful in reconciling the differences between the GW-Utilities rate case applications and the ACC Staff's and RUCOs initial testimonies. If ultimately adopted by the ACC, these recommendations would have a material adverse impact on our results of operations, cash flows and ability to raise capital needed to invest in future growth. Additionally, these impacts could, among other things, limit our ability to fund system replacements and improvements internally, as well as constrain our ability to respond to unforeseen needs or regulatory requirements, which may lead to increased service interruptions and higher costs over time.

Our ability to expand cinto new service areas and to expand current water and wastewater service depends on approval from regulatory agencies. Failure to obtain required regulatory approvals will adversely affect future growth.

In Arizona, the ACC is the regulatory authority that oversees the formation, expansion and ongoing operations of water and wastewater utilities. The ACC has authority, among other things, to determine service areas for utility providers. In order for our owned utilities to provide water or wastewater service, they must obtain a CCN for a service area before they can service that area. In addition, our owned utilities and/or the developments that we serve must demonstrate to the ADWR that there exists a 100-year water supply and obtain either a CAWS, which is a certificate issued by the ADWR evidencing sufficient groundwater, surface water, or effluent of adequate quality will be continuously available to satisfy the water needs of the proposed use for at least one hundred years and which applies to a specific subdivision, or a DAWS, which applies to the utilitys entire service area. The designation area is generally coterminous with the CCN and can grow into adjacent areas as needed. Further, our wastewater facilities require ADEQ and/or EPA permits that regulate, among other things, the level of discharges from our facilities, the size of our facilities and the location of our facilities. Any inability to obtain the necessary regulatory approvals, assured water supplies or environmental permits would limit our ability to expand our water or wastewater service areas.

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In particular, water resource constraints exist in certain areas within Pinal County near and around the City of Maricopa. We have obtained two DAWS in the Maricopa/Casa Grande service area (GW-Santa Cruz) for approximately 22,900 acre-feet of water use in total. We have significant unused capacity provided by the large DAWS in the north, including the incorporated City of Maricopa. In Pinal County, southwest of the City of Maricopa, growth covered by the smaller DAWS is more constrained by state law and groundwater regulations, which may impact developers ability to obtain final plat approval if the DAWS is not expanded. While we believe we have sufficient capacity for many years to support connection growth in this area, it is the increase in land entitlement that may exceed the allocation of the smaller DAWS, which in turn may limit future plat approvals. We are working with our development partners and others to develop long-term solutions for this area. See Managements Discussion and Analysis of Financial Condition and Results of OperationsFactors Affecting our Results of OperationsAccess to and Quality of Water Supply, included in Part I, Item 2 of this report.

In addition, if we choose to expand to states other than Arizona, we may have difficulty acquiring the necessary approvals and permits or complying with environmental, health and safety or quality standards of such states. See Risk FactorsBusiness and Operational Factors Doing business in jurisdictions other than Arizona may present unforeseen regulatory, legal and operational challenges that could impede or delay our operations or adversely affect our profitability, included in Part I, Item 1A of the 2024 Form 10-K.