What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-10 · 160 added, 100 removed, 220 unchanged (54% of the section changed)

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Certain factors as discussed under Item 1A - Risk Factors, in our Annual Report

on Form 10-K for the year ended December 31, 2022, and this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, such as changes in weather, changes in our contractual obligations, changes in government policies, the timing and results

of our rate requests, failure to receive regulatory approval, changes in economic and market conditions generally, and other matters could cause results to differ materially from those in the forward-looking statements.

on Form 10-K for the year ended December 31, 2022, and this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, such as changes in weather, changes in our contractual obligations, changes in government policies, the timing and results of

our rate requests, failure to receive regulatory approval, changes in economic and market conditions generally, and other matters could cause results to differ materially from those in the forward-looking statements.

While the Company may elect to

update forward-looking statements, we specifically disclaim any obligation to do so and you should not rely on any forward-looking statement as a representation of the Company's views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2023

RESULTS OF OPERATIONS FOR THE PERIOD ENDED JUNE 30, 2023

Our profitability is primarily attributable to the sale of water and wastewater services in our regulated utility business.

Our regulated utility segment

comprised 92.4% of total operating revenues for the three months ended March 31, 2023 and 93.0% for the three months ended March 31, 2022.

Water sales are subject to seasonal fluctuations, particularly during summer when water demand may vary with

rainfall and temperature.

comprised 93.2% of total operating revenues for the six months ended June 30, 2023 and 91.8% for the six months ended June 30, 2022.

Water sales are subject to seasonal fluctuations, particularly during summer when water demand may vary with rainfall

and temperature.

In the event temperatures during the typically warmer months are cooler than expected, or rainfall is greater than expected, the demand for water may decrease and our revenues may be adversely affected.

We believe these

effects of weather are short term and do not materially affect the execution of our strategic initiatives.

We believe these effects of

weather are short term and do not materially affect the execution of our strategic initiatives.

Our wastewater services provide a revenue stream that is not affected by these changes in weather patterns.

We continue to seek growth

opportunities to provide wastewater services in Delaware and the surrounding areas.

We continue to seek growth opportunities to

provide wastewater services in Delaware and the surrounding areas.

Our profitability is also attributed to other non-utility business, such as various contract operations, water, sewer and internal SLP Plans and other

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certain materials and equipment in 2021 and 2022.

We have been successful in minimizing these delays with thorough planning and pre-ordering.

However, there is no assurance that our future financial results or business operations will not be

negatively affected.

We successfully minimized these delays with thorough planning and pre-ordering.

However, there is no assurance that our future financial results or business operations will not be negatively affected.

Regulated Water Subsidiaries

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Increases in the number of customers contribute to increases, or help to offset any intermittent decreases, in our operating revenue.

As of March 31, 2023, the number of metered water customers in Delaware increased

approximately 3.2% compared to March 31, 2022.

The number of metered water customers in Maryland increased approximately 1.0% compared to March 31, 2022.

The number of metered water customers in Pennsylvania remained consistent compared to March 31,

For the three months ended March 31, 2023, approximately 1.9 billion gallons of water were distributed in our Delaware systems and approximately 22.3 million gallons of water were distributed in our Maryland systems.

As of June 30, 2023, the number of metered water customers in Delaware increased

approximately 1.5% compared to June 30, 2022.

The number of metered water customers in Maryland increased approximately 0.7% compared to June 30, 2022.

The number of metered water customers in Pennsylvania remained consistent compared to June 30,

For the six months ended June 30, 2023, approximately 4.2 billion gallons of water were distributed in our Delaware systems and approximately 51.7 million gallons of water were distributed in our Maryland systems.

On April 28, 2023, Artesian Water filed a request with the DEPSC to implement new rates to meet a requested increase in revenue of 23.84%, or approximately

$17.5 million, on an annualized basis.

The actual effective increase is less than 23.84% since Artesian Water has been permitted to recover specific investments made in infrastructure through the assessment of a 7.50% DSIC.

Since the DSIC rate is set

to zero when temporary rates are placed into effect, customers would experience an incremental increase of 16.34%, the net of the overall 23.84% increase less the DSIC rate of 7.50% currently in effect, if the requested increase is granted in full by

This is discussed further in Note 11 – Regulatory Proceedings.

Regulated Wastewater Subsidiaries

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It is not currently providing these services in Maryland.

Our residential and commercial wastewater customers are billed a flat monthly

fee, which contributes to providing a revenue stream unaffected by weather.

As of March 31, 2023, the number of Delaware wastewater customers increased approximately 8.3% compared to March 31, 2022.

The majority of our residential and commercial wastewater customers are

billed a flat monthly fee, and our large industrial wastewater customer is billed monthly based on wastewater flow, which contributes to providing a revenue stream unaffected by weather.

As of June 30, 2023, the number of Delaware wastewater customers

increased approximately 8.1% compared to June 30, 2022.

Non-Utility Subsidiaries

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consistent customer growth over the years.

As of March 31, 2023, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 1.6%, 0.5% and 5.1%, respectively, compared to March 31, 2022.

As of June 30, 2023, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 4.8%, 3.3% and 8.2%, respectively, compared to June 30, 2022.

The non-utility customers

enrolled in one of our three protections plans decreased 1.7%.

enrolled in one of our three protection plans decreased 2.9%.

Strategic Direction and Recent Developments

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owns two nine-acre parcels of land, located in Sussex County, Delaware, which will allow for construction of a water treatment facility and wastewater treatment facility.

Artesian Storm Water was formed to expand contract work related to the design,

installation, maintenance and repair services associated with existing or proposed storm water management systems in Delaware and the surrounding areas.

Results of Operations – Analysis of the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022.

Results of Operations – Analysis of the Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022.

Operating Revenues

Revenues totaled $22.5 million for the three months ended March 31, 2023, $0.3 million, or 1.4%, more than revenues for the three months ended March 31, 2022 .

Other utility operating revenue increased approximately $0.3 million, or 11.6%, for the three months ended March 31, 2023 compared to the three months ended March 31,

Revenues totaled $25.3 million for the three months ended June 30, 2023, $0.2 million, or 1.0%, more than revenues for the three months ended June 30, 2022 .

Water sales revenue increased $0.9 million, or 4.6%, for the three months ended June 30, 2023 from the corresponding period in 2022, primarily related to an increase in

overall water consumption due to the brief warm, dry weather conditions experienced during the quarter and an increase in fixed fee charges related to customer growth.

We realized 81.7% and 78.9% of our total operating revenue for the three months

ended June 30, 2023 and June 30, 2022, respectively, from the sale of water.

Other utility operating revenue increased approximately $0.1 million, or 4.0%, for the three months ended June 30, 2023 compared to the three months ended

June 30, 2022.

This increase is primarily due to an increase in wastewater revenue associated with customer growth.

Non-utility operating revenue increased approximately $0.1 million, or 9.4%, for the three months ended March 31, 2023 compared to the three months ended

March 31, 2022.

This increase is primarily due to an increase in Service Line Protection Plan revenue.

Water sales revenue decreased $0.1 million, or 0.7%, for the three months ended March 31, 2023 from the corresponding period in 2022, primarily related to a

one-time customer refund to be issued to Town of Frankford customers for a rate change retroactive to February 2022, as approved by the DEPSC in the first quarter of 2023, in accordance with the agreement for the purchase of Frankford’s water assets.

We realized 80.1% and 81.8% of our total operating revenue for the three months ended March 31, 2023 and March 31, 2022, respectively, from the sale of water.

Non-utility operating revenue decreased approximately $0.8 million, or 33.3%, for the three months ended June 30,

2023 compared to the three months ended June 30, 2022.

This decrease is primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure, slightly offset by an increase in

Service Line Protection Plan revenue.

Operating Expenses

Operating expenses, excluding depreciation and income taxes, increased $0.8

million, or 7.4%, fo r the three months ended March 31, 2023, compared to the same period in 2022.

million, or 6.3%, fo r the three months ended June 30, 2023, compared to the same period in 2022.

Utility operating

expenses increased $1.6 million, or 15.5%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022.

The net increase is primarily

related to the following;

Payroll and employee benefit costs increased $0.6 million, primarily related to an increase in overall compensation, an increase in the number of

employees and an increase in medical benefit costs.

Repair and maintenance costs increased $0.5 million, primarily associated with water treatment and

distribution operations, including tank painting costs and filter replacement costs, and wastewater treatment and disposal operations.

Water treatment costs

increased $0.2 million , primarily due to an increase in the cost and volume of chemicals used.

Administrative costs increased $0.2 million, primarily due to an increase in company subscription costs,

customer billing and assistance program costs and legal fees.

Purchased power costs increased $0.1 million due to an increase in usage in wastewater and water

Purchased water costs decreased $0.1 million, primarily related to a decrease of water purchased under

contract, in which the minimum amount of water required to be purchased was reduced in July 2022.

Non-utility operating expenses decreased $0.8 million primarily due to a decrease in costs associated with a wastewater infrastructure design and construction contract.

The ratio of operating expense, excluding depreciation and income taxes, to

total revenue was 56.4% for the three months ended June 30, 2023, compared to 53.5% fo r the three months ended June 30, 2022.

Depreciation and amortization expense increased $0.2 million, or 5.2%, primarily due to continued investment in utility plant providing supply, treatment,

storage and distribution of water to customers and service to our wastewater customers.

Federal and state income tax expense decreased $0.1 million, or 7.7%, primarily due to lower pre-tax income in 2023 compared to 2022, partially offset by a

decrease in 2022 income tax expense related to stock options exercised in the second quarter of 2022, with no similar activity in 2023.

Property and other taxes increased $0.1 million, or 5.2%, primarily due to an increase in utility plant subject to

Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, hydrants and wells.

In addition, payroll taxes increased, related to increased payroll related expenses.

Other income increased $0.3 million, primarily due an increase in

allowance for funds used during construction, or AFUDC, as a result of higher long-term construction activity subject to AFUDC for the three months ended June 30, 2023 compared to the same period in 2022.

Interest Charges

Short-term debt interest increased $0.1 million, primarily related to higher

interest rates.

The average short-term interest rate for the three months ended June 30, 2023 was 5.87% compared to 1.68% for the same period in 2022.

Long-term debt interest increased $0.1 million, primarily related to an increase in

long-term debt interest associated with the Series W First Mortgage Bond issued on April 29, 2022 .

Our net income applicable to common stock decreased $0.6 million, or 12.0%.

Total operating revenues increased $0.2 million and other income increased $0.3

million, offset by a $0.9 million increase in total operating expenses and $0.2 million increase in interest charges.

Results of Operations – Analysis of the Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022.

Operating Revenues

Revenues totaled $47.7 million for the six months ended June 30, 2023, $0.5 million, or 1.2%, more than revenues for the six months ended June 30, 2022 .

Water sales revenue increased $0.8 million, or 2.1%, for the six months ended June 30, 2023 from the corresponding period in 2022, primarily related to an increase in

overall water consumption due to the brief warm, dry weather conditions experienced during the second quarter of 2023 and an increase in fixed fee charges related to customer growth.

This increase is partially offset by a decrease in water sales

related to a one-time customer refund issued to Town of Frankford customers for a rate change retroactive to February 2022, as approved by the DEPSC in the first quarter of 2023, in accordance with the agreement for the purchase of Frankford’s water

We realized 81.0% and 80.2% of our total operating revenue for the six months ended June 30, 2023 and June 30, 2022, respectively, from the sale of water.

Other utility operating revenue increased approximately $0.4 million, or 7.5%, for the six months ended June 30,

2023 compared to the six months ended June 30, 2022.

This increase is primarily due to an increase in wastewater revenue associated with customer growth.

Non-utility operating revenue decreased approximately $0.6 million, or 16.6%, for the six months ended June 30, 2023

compared to the six months ended June 30, 2022.

This decrease is primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure, partially offset by an increase in Service

Line Protection Plan revenue.

Operating Expenses

Operating expenses, excluding depreciation and income taxes, increased $1.8

million, or 6.9%, fo r the six months ended June 30, 2023, compared to the same period in 2022.

Utility operating expenses increased $2.3 million,

or 7.4%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

or 11.3%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

The net increase is primarily related to the following.

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employees and an increase in medical benefit costs.

Repair and maintenance costs increased $0.2 million, primarily associated with wastewater treatment and

disposal facilities and water treatment and distribution operations along with a one-time acquisition adjustment related to TESI in 2022.

In addition, hardware and software maintenance costs and fuel costs increased.

These increases are

partially offset by a decrease in water treatment filter replacements, due to the timing of scheduled replacements.

Repair and maintenance costs increased $0.8 million, primarily associated with water treatment and

distribution operations, including tank painting costs and technology costs, and wastewater treatment and disposal operations, including a one-time acquisition adjustment related to TESI in 2022.

These increases are partially offset by a decrease in water treatment filter replacements, due to the timing of scheduled replacements.

Water treatment costs

increased $0.2 million , primarily due to an increase in the cost of chemicals as well as an increase in water treatment testing costs.

increased $0.4 million , primarily due to an increase in the cost and volume of chemicals used.

Administrative costs increased $0.3 million, primarily due to an increase in company subscription costs, a

one-time adjustment related to the TESI acquisition in 2022, customer billing and assistance program costs and legal fees.

Purchased power costs increased $0.2 million due to an increase in usage in wastewater and water

Administrative costs increased $0.1 million, primarily due to a one-time acquisition adjustment related to

TESI’s allowance for doubtful accounts in 2022.

Purchased water costs decreased $0.5 million, related to a decrease of water purchased under contract, in

which the minimum amount of water required to be purchased was reduced in July 2022.

Non-utility operating expenses increased $0.1 million primarily due to an increase in plumbing services related to Service Line Protection Plan repairs.

Purchased water costs decreased $0.6 million, primarily related to a decrease of water purchased under

contract, in which the minimum amount of water required to be purchased was reduced in July 2022.

Non-utility operating expenses decreased $0.6 million primarily due to a decrease in costs associated with a wastewater infrastructure design and

construction contract.

The ratio of operating expense, excluding depreciation and income taxes, to

total revenue was 61.8% for the three months ended March 31, 2023, compared to 58.3% fo r the three months ended March 31, 2022.

total revenue was 58.9% for the six months ended June 30, 2023, compared to 55.8% fo r the six months ended June 30, 2022.

Depreciation and amortization expense increased $0.3 million, or 4.9%, primarily due to continued investment in utility plant providing supply, treatment,

storage and distribution of water to customers and service to our wastewater customers.

Federal and state income tax expense

decreased $0.1 million, or 7.5%, primarily due to lower pre-tax income in 2023 compared to 2022, partially offset by a decrease in 2022 income tax expense related to stock options exercised in the first quarter of 2022.

Federal and state income tax expense decreased $0.2 million, or 7.6%, primarily due to lower pre-tax income in 2023 compared to 2022, partially offset by a

decrease in 2022 income tax expense related to stock options exercised in the first six months of 2022, with no similar activity in 2023.

Other income increased $0.7 million, primarily due to a $0.5 million

increase in allowance for funds used during construction, or AFUDC, as a result of higher long-term construction activity subject to AFUDC for the three months ended March 31, 2023 compared to the same period in 2022.

increase in allowance for funds used during construction, or AFUDC, as a result of higher long-term construction activity subject to AFUDC for the six months ended June 30, 2023 compared to the same period in 2022.

Miscellaneous income increased $0.2

$0.1 million related to an increase in the annual patronage refund from CoBank, ACB.

million primarily related to an increase in the annual patronage refund from CoBank, ACB.

The primary refund calculation for both 2023 and 2022 was based on the average loan balance outstanding.

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related to higher interest rates.

The average short-term interest rate for the three months ended March 31, 2023 was 5.71% compared to 1.48% for the same period in 2022.

The average short-term interest rate for the six months ended June 30, 2023 was 5.94% compared to 1.84% for the same period in 2022.

Our net income applicable to common stock decreased $1.4 million, or 14.5%.

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LIQUIDITY AND CAPITAL RESOURCES

Our primary sourc es of liquidity for the three months ended March 31,

2023 were $10.5 million of cash provided by operating activities, $5.3 million in net contributions and advances from developers, which includes $1.8 million of grant funds from the State of Delaware, $1.1 million from the issuance of long-term debt

and $0.1 million in net proceeds from the issuance of common stock.

Cash flow from operating activities is primarily provided by our utility operations, and is impacted by the timeliness and adequacy of rate increases and changes in water consumption

as a result of year-to-year variations in weather conditions, particularly during the summer.

A significant part of our ability to maintain and meet our financial objectives is to ensure that our investments in utility plant and equipment are

recovered in the rates charged to customers.

As such, from time to time, we file rate increase requests to recover increases in operating expenses and investments in utility plant and equipment.

See Note 19 – Subsequent Events.

We will continue to

borrow on available lines of credit in order to satisfy current liquidity needs.

In addition, the Company has a long history of paying regular quarterly dividends as

approved by our Board of Directors using net cash from operating activities.

Our primary sourc es of liquidity for the six months ended June 30, 2023

were $15.2 million of cash provided by operating activities, $10.1 million in net contributions and advances from developers, which includes $2.7 million of grant funds from the State of Delaware, $1.2 million from the issuance of long-term debt and

$36.4 million in net proceeds from the issuance of Class A Stock.

On May 23, 2023 and June 16, 2023, the Company completed the sale of 695,650 shares and 67,689 shares of its Class A Stock, respectively.

Cash flow from operating activities is

primarily provided by our utility operations, and is impacted by the timeliness and adequacy of rate increases and changes in water consumption as a result of customer growth levels and year-to-year variations in weather conditions, particularly during

A significant part of our ability to maintain and meet our financial objectives is to ensure that our investments in utility plant and equipment are recovered in the rates charged to customers.

As such, from time to time, we file rate

increase requests to recover increases in operating expenses and investments in utility plant and equipment.

See Note 11 – Regulatory Proceedings.

We will continue to borrow on available lines of credit in order to satisfy current liquidity needs.

In addition, the Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities.

Investment in Plant and Systems

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Capital expenditures during

the first three months of 2023 were $16.8 million compared to $9.8 million during the same period in 2022.

During the first three months of 2023, we continued to focus our

the first six months of 2023 were $32.3 million compared to $23.3 million during the same period in 2022.

During the first six months of 2023, we continued to focus our

investment through our rehabilitation program for transmission and distribution facilities by replacing aging or

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Developers contributed $3.7

million of these total investments during the first three months of 2023.

million of these total investments during the first six months of 2023.

We depend on the availability of capital for expansion, construction and maintenance.

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Lines of Credit and Long-Term Debt

At March 31, 2023, Artesian Resources had a $40 million line of credit with

At June 30, 2023, Artesian Resources had a $40 million line of credit with

Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources.

As of March 31, 2023, there was $27.5 million of available funds under this line of credit.

As of June 30, 2023, there was $40.0 million of available funds under this line of credit.

The previous interest rate for borrowings under this line was the

London Interbank Offered Rate, or LIBOR, plus 1.00%.

It is expected that the LIBOR rate for USD currency will be discontinued after June 30, 2023.

As a result, effective

May 20, 2022, this line of credit agreement was amended to replace LIBOR with the Daily Secured Overnight Financing Rate, or SOFR.

The interest rate is a one-month SOFR plus 10 basis points, or Term SOFR, plus an applicable margin of 0.85%.

SOFR cannot be less than 0.00%.

The LIBOR rate for USD currency was discontinued as of June 30, 2023.

As a result, effective May 20, 2022, this

line of credit agreement was amended to replace LIBOR with the Daily Secured Overnight Financing Rate, or SOFR.

The interest rate is a one-month SOFR plus 10 basis points, or Term SOFR, plus an applicable margin of 0.85%, which was increased to

1.10% effective August 3, 2023.

Term SOFR cannot be less than 0.00%.

This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time.

The term of this line of credit expires on the earlier of August 18, 2023 or any

date on which Citizens demands payment.

The term of this line of credit expires on the

earlier of May 20, 2024 or any date on which Citizens demands payment.

The Company expects to renew this line of credit.

At March 31, 2023, Artesian Water had a $20 million line of credit with CoBank,

At June 30, 2023, Artesian Water had a $20 million line of credit with CoBank,

ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland.

As of March 31, 2023, there was $10.9 million of available funds under this

As of June 30, 2023, there was $20.0 million of available funds under this

line of credit.

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transfer certain assets or change our business.

As of March 31, 2023, we were in compliance with these covenants.

As of June 30, 2023, we were in compliance with these covenants.

Long-term debt obligations reflect the maturities of certain series of our first mortgage bonds, which we intend to refinance when due if not refinanced

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Each annual installment is payable with interest at an annual rate of 2.0%.

In order to control purchased power cost, in February 2021, Artesian Water entered into an electric supply contract with MidAmerican

that is effective from May 2021 to May 2025.

In order to control purchased power cost, in February 2021, Artesian Water entered into an electric supply contract with MidAmerican that is effective from

May 2021 to May 2025.

The fixed rate was lowered 5.6% starting in May 2021.

In February 2022, Artesian Water Maryland entered into an electric supply agreement with Constellation NewEnergy, Inc., effective from May 2022 through

November 2025.

In January 2022, following the acquisition of Tidewater Environmental Services, Inc., TESI dba Artesian Wastewater assumed an electricity supply contract with WGL Energy that is effective through December 2024.

These fixed rate electric

supply contracts are for normal purchases and are not derivative instruments.

Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under an interconnection agreement with the Chester Water Authority.

The agreement is effective from January 1, 2022

through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step-down schedule through July 5, 2022, and now requires us to purchase a

minimum of 0.5 million gallons per day.

In addition, payments for unconditional purchase obligations reflect minimum water purchase obligations based on a contract rate under our interconnection agreement with the Town of North East, which expires June

In February 2022, Artesian Water Maryland entered into an electric supply agreement with Constellation NewEnergy, Inc., effective from May 2022 through November 2025.

January 2022, following the acquisition of Tidewater Environmental Services, Inc., TESI dba Artesian Wastewater assumed an electricity supply contract with WGL Energy that is effective through December 2024.

These fixed rate electric supply contracts

are for normal purchases and are not derivative instruments.

Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under an interconnection

agreement with the Chester Water Authority.

The agreement is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to

purchase water on a step-down schedule through July 5, 2022, and requires us to purchase a minimum of 0.5 million gallons per day.

In addition, payments for unconditional purchase obligations reflect minimum water purchase obligations based on a

contract rate under our interconnection agreement with the Town of North East, which expires June 26, 2024.

In April 2021, Artesian Water entered into a 3-year agreement with Worldwide Industries Corporation effective July 1, 2021 to paint elevated water storage

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Pursuant to the amended agreement, the total expenditure for the four years is $2.2 million.

Critical Accounting Assumptions, Estimates and Policies;

Critical Accounting Estimates;

Recent Accounting Pronouncements

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Actual amounts or results could differ from those based on such assumptions and estimates.

Our critical accounting assumptions, estimates and policies are described in Management's Discussion and Analysis of Financial Condition and Results of

Operations included in our annual report on Form 10-K for the year ended December 31, 2022.

There have been no changes in our critical accounting assumptions, estimates and policies.

Our significant accounting policies are described in our notes to

the 2022 consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2022.

Our critical accounting estimates are described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our

annual report on Form 10-K for the year ended December 31, 2022.

There have been no changes in our critical accounting estimates.

Our significant accounting policies are described in our notes to the 2022 consolidated financial statements included

in our annual report on Form 10-K for the year ended December 31, 2022.

Information concerning our implementation and the impact of recent accounting

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financial statements contained in this Quarterly Report on Form 10-Q .

We did not adopt any accounting policy in the first three months of 2023 that had a material impact on our financial condition, liquidity or results of operations.

We did not adopt any accounting policy in the first six months of 2023 that had a material impact on our financial condition, liquidity or results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis