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Item 1. Business

2026-03-16 compared with 2025-03-26 · 475 added, 268 removed, 103 unchanged (88% of the section changed)

General Information

Artesian Resources Corporation, or Artesian Resources, is a Delaware corporation incorporated in 1927, that is the holding company of seven wholly-owned

subsidiaries offering water, wastewater and other services in Delaware, Maryland and Pennsylvania.

Artesian Resources Corporation, or Artesian Resources, is a Delaware corporation incorporated in 1927, that is the holding company of seven wholly-owned subsidiaries offering water, wastewater and other services in Delaware, Maryland and Pennsylvania.

The Company’s principal executive offices are located at 664 Churchmans Road, Newark, Delaware 19702.

Our principal subsidiary, Artesian Water Company,

Inc., is the oldest and largest investor-owned public water utility on the Delmarva Peninsula and has been providing superior water service since 1905.

We distribute and sell water, including water for public and private fire protection, to

residential, commercial, industrial, municipal and utility customers in the states of Delaware, Maryland and Pennsylvania.

Our principal subsidiary, Artesian Water Company, Inc., is the oldest and largest investor-owned public water utility on the Delmarva Peninsula and has been providing superior water service since 1905.

We distribute and sell water, including water for public and private fire protection, to residential, commercial, industrial, municipal and utility customers in the states of Delaware, Maryland and Pennsylvania.

We provide wastewater services to customers in Delaware.

In addition, we provide contract water and wastewater operations, and

water, sewer and internal Service Line Protection Plans.

Our Class A Non-Voting Common Stock is listed on the Nasdaq Global Select Market and trades under the symbol “ARTNA.” Our Class B Common Stock trades on the Nasdaq’s OTC Bulletin Board under

the symbol “ARTNB.”

In addition, we provide contract water and wastewater operations, and water, sewer and internal Service Line Protection Plans.

Our Class A Non-Voting Common Stock is listed on the Nasdaq Global Select Market and trades under the symbol “ARTNA.” Our Class B Common Stock trades on the Nasdaq’s OTC Bulletin Board under the symbol “ARTNB.”

Artesian Resources is the holding company of five regulated public utilities:

Artesian Water Company, Inc., or Artesian Water, Artesian Water Pennsylvania,

Inc., or Artesian Water Pennsylvania, Artesian Water Maryland, Inc., or Artesian Water Maryland, Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland, and Artesian Wastewater Management, Inc., or Artesian Wastewater, along with its

wholly-owned subsidiary Tidewater Environmental Services, Inc.

Artesian Water Company, Inc., or Artesian Water, Artesian Water Pennsylvania, Inc., or Artesian Water Pennsylvania, Artesian Water Maryland, Inc., or Artesian Water Maryland, Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland, and Artesian Wastewater Management, Inc., or Artesian Wastewater, along with its wholly-owned subsidiary Tidewater Environmental Services, Inc.

dba Artesian Wastewater, or TESI;

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Our largest service area is in the State of Delaware.

Substantial portions of Delaware, particularly

outsid e of northern New Castle County, are not served by a public water or wastewater system and represent potential opportunities for Artesian Water and Artesian

Wastewater to obtain new exclusive franchised service areas.

Substantial portions of Delaware, particularly outside of northern New Castle County, are not served by a public water or wastewater system and represent potential opportunities for Artesian Water and Artesian Wastewater to obtain new exclusive franchised service areas.

We continue to focus resources on developing and serving existing service territories and obtaining new territories throughout Delaware.

We hold Certificates of Public Convenience and Necessity, or CPCNs, for approximately 310 square miles of exclusive water service territory, most of which is

in Delaware with some territory being in Maryland and Pennsylvania.

Our largest connected regional water system, consisting of approximately 145 square miles and 80,100 metered customers, is located in northern New Castle County and portions of

southern New Castle County, Delaware.

We hold Certificates of Public Convenience and Necessity, or CPCNs, for approximately 312 square miles of exclusive water service territory, most of which is in Delaware with some territory being in Maryland and Pennsylvania.

Our largest connected regional water system, consisting of approximately 145 square miles and 81,000 metered customers, is located in northern New Castle County and portions of southern New Castle County, Delaware.

We hold CPCNs for approximately 61 square miles of wastewater service territory located in Sussex County, Delaware.

A significant portion of our exclusive service territory is in Sussex County, Delaware and

remains undeveloped, and if and when development occurs and there is population growth in these areas, we anticipate we will increase our customer base by providing water and/or wastewater service to the newly developed areas and new customers.

A significant portion of our exclusive service territory is in Sussex County, Delaware and remains undeveloped, and if and when development occurs and there is population growth in these areas, we anticipate we will increase our customer base by providing water and/or wastewater service to the newly developed areas and new customers.

Artesian Water

Artesian Water, our principal subsidiary, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers

throughout the State of Delaware.

Artesian Water, our principal subsidiary, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware.

In addition, Artesian Water provides services to other water utilities, including operations, and has contract operation agreements with private, municipal and state water providers.

Artesian Water also provides

water for public and private fire protection to customers in our service territories.

Artesian Water also provides water for public and private fire protection to customers in our service territories.

Artesian Water produced approximately 80.5% of our 2025 consolidated operating revenues.

In May 2022, Artesian Water completed its purchase of substantially all of the water operating assets from the Town of Clayton, or Clayton, a Delaware municipality located in Kent County, Delaware.

This purchase agreement is discussed

further in the “Strategic Direction and Recent Developments” section.

We derive about 92% of our self-supplied groundwater from wells that pump groundwater from aquifers and other formations located in the Atlantic

Coastal Plain.

We derive about 93% of our self-supplied groundwater from wells that pump groundwater from aquifers and other formations located in the Atlantic Coastal Plain.

The remaining 7% of our groundwater supply comes from wells in the Piedmont Province.

We use a variety of treatment methods, including aeration, pH adjustment, chlorination, fluoridation, ultra violet oxidation, arsenic removal,

nitrate removal, radium removal, iron removal, and carbon adsorption to meet federal, state and local water quality standards.

We use a variety of treatment methods, including aeration, pH adjustment, chlorination, fluoridation, ultra violet oxidation, arsenic removal, nitrate removal, radium removal, iron removal, and carbon adsorption to meet federal, state and local water quality standards.

Additionally, a corrosion inhibitor is added to our self-supplied groundwater and to supply from interconnections.

have 62 different water treatment facilities in our Delaware systems.

We have 64 different water treatment facilities in our Delaware systems.

All water supplies that we purchase from neighboring utilities are potable.

To supplement our groundwater supply, we purchase treated surface water through

interconnections only in the northern service area of our New Castle County, Delaware system.

To supplement our groundwater supply, we purchase treated surface water through interconnections only in the northern service area of our New Castle County, Delaware system.

The treated surface water is blended with our groundwater supply for distribution to our customers.

Nearly 95% of the overall 9.4 billion gallons of water

we distributed in all of our Delaware systems during 2024 came

from our groundwater wells, while the remaining 5% came from interconnections with other utilities and municipalities.

In Delaware in 2024, we pumped an average of 24.9 million gallons per day, or mgd, from our groundwater wells and obtained an

average of approximately 0.9 mgd from interconnections.

Nearly 97% of the overall 9.2 billion gallons of water we distributed in all of our Delaware systems during 2025 came from our groundwater wells, while the remaining 3% came from interconnections with other utilities and municipalities.

In Delaware in 2025, we pumped an average of 24.3 million gallons per day, or mgd, from our groundwater wells and obtained an average of approximately 0.9 mgd from interconnections.

Our peak water supply capacity currently is approximately 57.7 mgd.

We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and

new customers in all of our service territories.

We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.

Most of our New Castle County, Delaware water system is interconnected.

In the remainder of the State of Delaware, we have several satellite systems

that have not yet been connected by transmission and distribution facilities.

We intend to join these systems into larger integrated regional systems through the construction of a transmission and distribution network as development continues and

our expansion efforts provide us with contiguous exclusive service territories.

In Delaware, we have 24 interconnections with three neighboring water utilities

and seven municipalities that provide us with the ability to purchase or sell water.

An interconnection agreement with Chester Water Authority, which 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 currently requires us to purchase a minimum of 0.5 million gallons of water per day.

Artesian’s capital investments in self-sufficiency of water supply

facilitated a reduction in the minimum amount of water required to be purchased under the current contract compared to previous contracted requirements.

In the remainder of the State of Delaware, we have several satellite systems that have not yet been connected by transmission and distribution facilities.

We intend to join these systems into larger integrated regional systems through the construction of a transmission and distribution network as development continues and our expansion efforts provide us with contiguous exclusive service territories.

In Delaware, we have 25 interconnections with three neighboring water utilities and seven municipalities that provide us with the ability to purchase or sell water.

An interconnection agreement with Chester Water Authority, which 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 currently requires us to purchase a minimum of 0.5 million gallons of water per day.

Artesian’s capital investments in self-sufficiency of water supply facilitated a reduction in the minimum amount of water required to be purchased under the current contract compared to previous contracted requirements.

As of December 31, 2025, we were serving customers through approximately 1,515 miles of transmission and distribution mains.

Mains range in diameter

from two inches to twenty-four inches, and most of the mains are made of ductile iron or cast iron.

Mains range in diameter from two inches to twenty-four inches, and most of the mains are made of ductile iron or cast iron.

We have 36 storage tanks in Delaware, most of which are elevated, providing total system storage of approximately 45.0 million gallons.

developed and are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware.

Our ASR system provides approximately 130.0 million gallons of storage capacity, which can be withdrawn at an average rate of approximately 1.0

We have developed and are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware.

Our ASR system provides approximately 130.0 million gallons of storage capacity, which can be withdrawn at an average rate of approximately 1.0 mgd.

At some locations, we rely on hydro-pneumatic tanks to maintain adequate system pressures.

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Artesian Water Maryland began operations in August 2007.

Artesian Water

Maryland distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland.

Artesian Water Maryland distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland.

Artesian Water Maryland owns and operates 9 public water systems.

The majority of the 0.1 billion gallons of water we distributed in all of our

Maryland systems during 2024 came from our groundwater wells,

while a portion came from treated surface water.

The majority of the 0.5 billion gallons of water we distributed in all of our Maryland systems during 2025 came from our groundwater wells, while a portion came from treated surface water.

We have ten separate water treatment facilities in our Maryland systems.

We have one surface water treatment facility located in Cecil County, Maryland, with the current ability to treat up to 1.0

mgd from an intake in the Susquehanna River that is permitted a withdrawal of a maximum of 5.0 mgd and a daily average of 3.5 mgd.

We have one surface water treatment facility located in Cecil County, Maryland, with the current ability to treat up to 1.0 mgd from an intake in the Susquehanna River that is permitted a withdrawal of a maximum of 5.0 mgd and a daily average of 3.5 mgd.

Our total peak water supply capacity in Cecil County, Maryland currently is approximately 2.0 mgd.

We have 9 storage

tanks capable of storing approximately 2.5 million gallons.

We have 9 storage tanks capable of storing approximately 2.5 million gallons.

We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.

In Maryland, we have one interconnection with the Artesian Water system in

Delaware, one interconnection with a neighboring utility, and four interconnections with municipalities.

In Maryland, we have one interconnection with the Artesian Water system in Delaware, one interconnection with a neighboring utility, and four interconnections with municipalities.

These interconnections are capable of providing over 3.0 mgd of water to our Maryland systems.

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Artesian Water Pennsylvania began operations in 2002.

It provides water

service to a residential community in Chester County, Pennsylvania.

It provides water service to a residential community in Chester County, Pennsylvania.

Artesian Wastewater

Artesian Wastewater began providing wastewater services in Sussex County, Delaware in July 2005.

Artesian Wastewater is a regulated entity that owns

wastewater collection and treatment infrastructure and provides wastewater services to customers in Delaware as a regulated public wastewater service company.

Artesian Wastewater owns and operates four wastewater treatment facilities, which, combined, are permitted to treat

and/or dispose of approximately 2.3 mgd.

Artesian Wastewater and Sussex County, a political subdivision of Delaware, provide reciprocal services to address the need of each for additional wastewater treatment and disposal capacity in certain service

areas within Sussex County.

Artesian Wastewater is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Delaware as a regulated public wastewater service company.

Artesian Wastewater owns and operates four wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 2.3 mgd.

Artesian Wastewater also owns and operates a disposal facility that includes a 90-million-gallon storage lagoon and spray irrigation to agricultural land.

This facility provides treated process wastewater disposal services

for an industrial customer at a rate up to 1.5 mgd.

This facility provides treated process wastewater disposal services for an industrial customer at a rate up to 1.5 mgd.

In early 2026, a new treatment facility was

completed that provides 625,000 gallon per day treated process wastewater

disposal services for residential and small

commercial customers.

Artesian Wastewater operates as the parent holding company of TESI.

TESI was incorporated in 2004 and is a regulated entity that owns wastewater

collection and treatment infrastructure and provides wastewater services to customers in Sussex County, Delaware, including all residents within the Town of Milton, as a regulated public wastewater service company.

TESI owns and operates five wastewater treatment facilities, which, combined, are permitted to treat and/or dispose

of approximately 35.2 mgd.

TESI was incorporated in 2004 and is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Sussex County, Delaware, including all residents within the Town of Milton, as a regulated public wastewater service company.

TESI owns and operates four wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 525 ,000 gallons per day.

Artesian Wastewater Maryland

Artesian Wastewater Maryland was incorporated on June 3, 2008 and is

authorized and able to provide regulated wastewater services to customers in the State of Maryland.

Artesian Wastewater Maryland was incorporated on June 3, 2008 and is authorized and able to provide regulated wastewater services to customers in the State of Maryland.

It is currently not providing these services.

Artesian Utility

Artesian Utility was formed in 1996 and designs and builds water and wastewater infrastructure and provides contract water and wastewater operation services

on the Delmarva Peninsula to private, municipal and governmental institutions.

Artesian Utility also evaluates land parcels, provides recommendations to developers on the size of water or wastewater facilities and the type of technology that should be

used for treatment at such facilities and operates water and wastewater facilities in Delaware for municipal and governmental agencies.

Artesian Utility also contracts with developers and government agencies for design and construction of wastewater

infrastructure throughout the Delmarva Peninsula.

Artesian Utility currently operates wastewater treatment facilities for the Town of Middletown, in southern New Castle County, Delaware, or Middletown, under

a 20-year contract that expires in July 2039.

Artesian Utility was formed in 1996 and designs and builds water and wastewater infrastructure and provides contract water and wastewater operation services on the Delmarva Peninsula to private, municipal and governmental institutions.

Artesian Utility also evaluates land parcels, provides recommendations to developers on the size of water or wastewater facilities and the type of technology that should be used for treatment at such facilities and operates water and wastewater facilities in Delaware for municipal and governmental agencies.

Artesian Utility also contracts with developers and government agencies for design and construction of wastewater infrastructure throughout the Delmarva Peninsula.

Artesian Utility currently operates wastewater treatment facilities for the Town of Middletown, in southern New Castle County, Delaware, or Middletown, under a 20-year contract that expires in July 2039.

Artesian Utility currently operates three wastewater treatment systems with a combined capacity of up to approximately 3.8 mgd.

The wastewater treatment facilities in Middletown provide reclaimed

wastewater for use in spray irrigation on public and agricultural lands in the area.

Artesian Utility also offers three protection plans to customers, the Water Service Line Protection Plan, or WSLP Plan, the Sewer Service Line Protection

Plan, or SSLP Plan, and the Internal Service Line Protection Plan, or ISLP Plan (collectively, SLP Plan or SLP Plans).

The WSLP Plan covers all parts, material and labor required to repair or replace participating customers' leaking water service

lines up to an annual limit.

The wastewater treatment facilities in Middletown provide reclaimed wastewater for use in spray irrigation on public and agricultural lands in the area.

Artesian Utility also offers protection plans to customers, the Water Service Line Protection Plan, or WSLP Plan, the Sewer Service Line Protection Plan, or SSLP Plan, and the Internal Service Line Protection Plan, or ISLP Plan (collectively, SLP Plan or SLP Plans).

The WSLP Plan covers all parts, material and labor required to repair or replace participating customers' leaking water service lines up to an annual limit.

The SSLP Plan covers all parts, material and labor required to repair or replace participating customers' leaking or clogged sewer lines up to an annual limit.

The ISLP Plan enhances available coverage to include water

and wastewater lines within customers' residences up to an annual limit.

The Company discontinued enrolling new customers

in the ISLP Plan effective January 2026.

For customers that were previously enrolled, the ISLP Plan enhances available coverage to include water and wastewater lines within customers' residences up to an annual limit.

Artesian Development

Artesian Development is a real estate holding company that owns properties, including land approved for office buildings, a water treatment plant and

wastewater facility, as well as property for current operations, including an office facility in Sussex County, Delaware.

The office facility consists of approximately 10,000 square feet of office space along with nearly 7,000 square feet of warehouse

Artesian Development is a real estate holding company that owns properties, including land approved for office buildings, a water treatment plant and wastewater facility, as well as property for current operations, including an office facility in Sussex County, Delaware.

Government Regulations

The Company is subject to federal, state and local laws and regulations in all of the jurisdictions in which it operates.

These regulations include state commission orders, environmental protection, securities and exchange activities, including financial reporting and internal

controls processes, data protection and privacy, tax compliance, health and safety, labor and employment practices, and other general business activities.

These regulations include state commission orders, environmental protection, securities and exchange activities, including financial reporting and internal controls processes, data protection and privacy, tax compliance, health and safety, labor and employment practices, and other general business activities.

State Regulatory Commission Matters

Our water and wastewater utility operations are subject to regulation by their respective state regulatory commissions, which have broad administrative power

and authority to regulate rates charged for service, determine franchise areas and conditions of service, approve acquisitions, authorize the issuance of securities and the incurrence of indebtedness, and other matters.

The profitability of our

utility operations is influenced, to a great extent, by the timeliness and adequacy of regulatory relief we are granted by the respective regulatory commissions or authorities in the states in which we operate.

See Notes to Consolidated Financial

Statements – Note 13 – Regulatory Proceedings for a full description of recent regulatory proceedings.

Our water and wastewater utility operations are subject to regulation by their respective state regulatory commissions, which have broad administrative power and authority to regulate rates charged for service, determine franchise areas and conditions of service, approve acquisitions, authorize the issuance of securities and the incurrence of indebtedness, and other matters.

The profitability of our utility operations is influenced, to a great extent, by the timeliness and adequacy of regulatory relief we are granted by the respective regulatory commissions or authorities in the states in which we operate.

See Notes to Consolidated Financial Statements – Note 13 – Regulatory Proceedings for a full description of recent regulatory proceedings.

Service Territory Expansion

In Delaware, a CPCN grants a water or wastewater company the exclusive right to serve all existing and new customers within a designated area.

Public Service Commission, or DEPSC, has the authority to issue and revoke these CPCNs.

The Delaware Public Service Commission, or DEPSC, has the authority to issue and revoke these CPCNs.

In this Form 10-K, we may refer to CPCNs as "franchises" or "service territories."

For a water company, the DEPSC may grant a CPCN under circumstances where there has been a determination that the water in the proposed service area does not

meet the regulations governing drinking water standards of the Delaware Division of Public Health, or DPH, for human consumption or where the supply is insufficient to meet the projected demand.

For a wastewater company, the DEPSC has jurisdiction

over non-governmental wastewater utilities having fifty or more customers in the aggregate.

For a water company, the DEPSC may grant a CPCN under circumstances where there has been a determination that the water in the proposed service area does not meet the regulations governing drinking water standards of the Delaware Division of Public Health, or DPH, for human consumption or where the supply is insufficient to meet the projected demand.

For a wastewater company, the DEPSC has jurisdiction over non-governmental wastewater utilities having fifty or more customers in the aggregate.

A CPCN for water and wastewater utilities shall be granted by the DEPSC to applicants in possession of one of the following:

a signed service agreement with the developer of a proposed subdivision or development, which subdivision or development has been duly approved by

the respective county government;

a signed service agreement with the developer of a proposed subdivision or development, which subdivision or development has been duly approved by the respective county government;

a petition requesting such service signed by a majority of the landowners of the proposed territory to be served;

a duly certified copy of a resolution from the governing body of a county or municipality requesting the applicant to provide service to the

proposed territory to be served.

a duly certified copy of a resolution from the governing body of a county or municipality requesting the applicant to provide service to the proposed territory to be served.

A water or wastewater utility that has a CPCN must obtain the approval of the DEPSC to abandon a service territory.

Once a CPCN is granted to a water or

wastewater utility, it may not be suspended or terminated unless the DEPSC determines in accordance with its rules and regulations that good cause exists for any such suspension or termination.

Although we have been granted an exclusive franchise for

each of our existing water and wastewater systems in Delaware, our ability to expand service areas can be affected by the DEPSC awarding franchises to other regulated water or wastewater utilities with whom we compete for such franchises.

In Maryland, the Company must obtain approval from the appropriate local government authority for the ability to serve a particular area and also ensure that

the acquired area is in the county’s master water and sewer plan.

Once a CPCN is granted to a water or wastewater utility, it may not be suspended or terminated unless the DEPSC determines in accordance with its rules and regulations that good cause exists for any such suspension or termination.

Although we have been granted an exclusive franchise for each of our existing water and wastewater systems in Delaware, our ability to expand service areas can be affected by the DEPSC awarding franchises to other regulated water or wastewater utilities with whom we compete for such franchises.

In Maryland, the Company must obtain approval from the appropriate local government authority for the ability to serve a particular area and also ensure that the acquired area is in the county’s master water and sewer plan.

The authority to exercise a franchise must then be obtained from the Maryland Public Service Commission, or MDPSC.

Utilities that seek to develop a franchise by constructing new

facilities must obtain appropriate approvals from the Maryland Department of the Environment, or MDE, the local government and the MDPSC.

The utility must also obtain approval for soil and erosion plans and easement agreements from appropriate

Utilities that seek to develop a franchise by constructing new facilities must obtain appropriate approvals from the Maryland Department of the Environment, or MDE, the local government and the MDPSC.

The utility must also obtain approval for soil and erosion plans and easement agreements from appropriate parties.

Environmental Regulation

The United States Environmental Protection Agency, or the EPA, the Delaware Department of Natural Resources and Environmental Control, or DNREC, and DPH,

regulate the water quality of our treatment and distribution systems in Delaware, as do the EPA and the MDE, with respect to our operations in Maryland.

The Chester Water Authority, which supplies water to Artesian Water through an interconnection in

northern New Castle County, and Artesian Water Pennsylvania, which also supplies water to Artesian Water, are regulated by the Pennsylvania Department of Environmental Protection, or PADEP, as well as the EPA.

We believe that we are in material

compliance with all current federal, state and local water quality standards, including regulations under the federal Safe Drinking Water Act.

However, if new water quality regulations are too costly, or if we fail to comply with such regulations, it

could have a material adverse effect on our financial condition, results of operations and planned capital investments.

The water industry is capital intensive, with one of the highest levels of capital investment in plant and equipment per dollar of revenue among all

Increasingly stringent drinking water regulations adopted to meet the requirements of the Safe Drinking Water Act have required the water industry to invest in more advanced treatment systems and processes, which require a heightened level

of expertise.

We have made significant enhancements to existing facilities to effectively treat and remove compounds as required by government agencies, such as ultra violet oxidation treatment, ceramic membrane filtration and carbon filtration.

are currently in full compliance with the requirements of the Safe Drinking Water Act.

The United States Environmental Protection Agency, or the EPA, the Delaware Department of Natural Resources and Environmental Control, or DNREC, and DPH, regulate the water quality of our treatment and distribution systems in Delaware, as do the EPA and the MDE, with respect to our operations in Maryland.

The Chester Water Authority, which supplies water to Artesian Water through an interconnection in northern New Castle County, and Artesian Water Pennsylvania, which also supplies water to Artesian Water, are regulated by the Pennsylvania Department of Environmental Protection, or PADEP, as well as the EPA.

We believe that we are in material compliance with all current federal, state and local water quality standards, including regulations under the federal Safe Drinking Water Act.

However, if new water quality regulations are too costly, or if we fail to comply with such regulations, it could have a material adverse effect on our financial condition, results of operations and planned capital investments.

The water industry is capital intensive, with one of the highest levels of capital investment in plant and equipment per dollar of revenue among all utilities.

We have made significant enhancements to existing facilities to effectively treat and remove compounds as required by government agencies, such as ultraviolet oxidation treatment, ceramic membrane filtration and carbon filtration.

We are currently in full compliance with the requirements of the Safe Drinking Water Act.

Even though our water utility was founded in 1905, the majority of our investment in infrastructure occurred in the last 40 years.

As required by the Safe Drinking Water Act, the EPA establishes maximum contaminant levels, or MCLs, for various substances found in drinking water to ensure

that the water is safe for human consumption.

As required by the Safe Drinking Water Act, the EPA establishes maximum contaminant levels, or MCLs, for various substances found in drinking water to ensure that the water is safe for human consumption.

On April 10, 2024, the EPA established MCLs for certain per- and polyfluoroalkyl substances, or PFAS, in drinking water.

Under these regulations, water utilities will be required to complete initial

monitoring for PFAS by 2027 and to conduct ongoing compliance monitoring.

Water utilities also will be required to meet the new MCLs by April 2029 and to notify the public of any violations of the MCLs as of and after that date.

Under these regulations, water utilities will be required to complete initial monitoring for PFAS by 2027 and to conduct ongoing compliance monitoring.

At the national level, water utilities also will

be required to meet the new MCLs by April 2029 and to notify the public of any

violations of the MCLs as of and after that date.

Delaware water utilities are required to

notify the public of any violations of the MCLs beginning January 15, 2026.To allow drinking water systems more time to develop

plans for addressing PFAS where they are found and implement solutions, the EPA

plans to develop a rulemaking to provide additional time for compliance,

including a proposal to extend the compliance date to 2031.

The EPA plans to finalize this rule in the

Spring of 2026.

The Company has

installed treatment for PFAS at several wellfields to date and has included installation of treatment at additional locations in 2025 in its capital budget, with any remaining necessary treatment planned to be installed before 2029.

investment and operating costs for treatment of PFAS are anticipated to be recoverable in water rates charged to customers as approved by the applicable public service commission.

The Company is participating in the multi-district litigation class

action settlements with certain manufacturers of PFAS seeking reimbursement of costs incurred and that will continue to be incurred.

installed treatment for PFAS at several wellfields to date and plans to

continue to install treatment at additional locations as necessary in future

The capital investment and operating costs for treatment of PFAS are anticipated to be recoverable in water rates charged to customers as approved by the applicable public service commission.

The Company is participating in the multi-district litigation class action settlements with certain manufacturers of PFAS seeking reimbursement of costs incurred and that will continue to be incurred.

See Note 15 – Legal Proceedings.

The Lead and Copper Rule, or LCR, is a federal regulation that limits the concentration of lead and copper allowed in public drinking water at the consumer's

tap, in addition to limiting the permissible amount of pipe corrosion occurring due to the water itself.

The LCR limits the levels of lead and copper in water by improving water treatment, testing for lead and copper at customer taps, and eliminating

the water supply as a significant source of lead and copper.

The Lead and Copper Rule, or LCR, is a federal regulation that limits the concentration of lead and copper allowed in public drinking water at the consumer's tap, in addition to limiting the permissible amount of pipe corrosion occurring due to the water itself.

The LCR limits the levels of lead and copper in water by improving water treatment, testing for lead and copper at customer taps, and eliminating the water supply as a significant source of lead and copper.

The EPA published a revised LCR in 2021, or LCR Revisions, to provide greater and more effective protection of public health by reducing exposure to lead and copper in drinking water.

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In addition, implementation of the revised rule is anticipated to accelerate lead service line replacements by closing existing regulatory loopholes, propelling early action, and strengthening replacement requirements.

We filed all required Lead

Service Line Inventories by the October 16, 2024 deadline and are fully compliant with the LCR Revisions.

We filed all required Lead Service Line Inventories by the October 16, 2024 deadline and are fully compliant with the LCR Revisions.

On October 8, 2024, the EPA announced the new final regulations requiring the removal of lead water lines.

The EPA’s rule, known as the Lead and Copper Rule

Improvements, or LCRI, requires all public water systems to remove lead service lines within 10 years, among other changes to regulations in the EPA’s LCR.

The EPA’s rule, known as the Lead and Copper Rule Improvements, or LCRI, requires all public water systems to remove lead service lines within 10 years, among other changes to regulations in the EPA’s LCR.

The service lines connect a home’s plumbing system to a public water system’s main water line.

The LCRI specifies that the water provider will cover the cost for replacements of the customer’s service line up to the first fitting inside the structure being served.

Capital investment and operating costs incurred by water utilities for

customer-side pipe replacements are typically recoverable in water rates charged to customers as approved by the applicable public service commission.

Capital investment and operating costs incurred by water utilities for customer-side pipe replacements are typically recoverable in water rates charged to customers as approved by the applicable public service commission.

The DPH has set maximum contaminant levels for certain substances that are more restrictive than the maximum contaminant levels set by the EPA.

the EPA's agent for enforcing the Safe Drinking Water Act in Delaware and, in that capacity, monitors the activities of Artesian Water and reviews the results of water quality tests performed by Artesian Water for adherence to applicable regulations.

The DPH is the EPA's agent for enforcing the Safe Drinking Water Act in Delaware and, in that capacity, monitors the activities of Artesian Water and reviews the results of water quality tests performed by Artesian Water for adherence to applicable regulations.

Artesian Water is also subject to other laws regulating substances and contaminants in water, including rules for volatile organic compounds and the Total Coliform Rule.

A normal by-product of our iron removal treatment facilities is a solid consisting of the iron removed from untreated groundwater plus residue from chemicals

used in the treatment process.

A normal by-product of our iron removal treatment facilities is a solid consisting of the iron removed from untreated groundwater plus residue from chemicals used in the treatment process.

The solids produced at our facilities are either disposed directly into approved wastewater facilities or removed from our facilities by a licensed third-party vendor.

A normal by-product of our carbon adsorption

filtration process is exhausted carbon media, which is disposed of by the contractor providing the media replacement.

Management believes that the costs of compliance with existing federal, state and local laws and regulations regulating the discharge

of materials into the environment, or otherwise relating to the protection of the environment, has had no material adverse effect upon the business and affairs of the Company, but there is no assurance that such compliance costs will continue to not

have a material effect in the future.

U nder Delaware state laws and regulations, we are required to file applications

with DNREC for water allocation permits for each of our operating wells pumping greater than 50,000 gallons per day.

For any wells in the Delaware River Basin, we must also file allocation permits with the Delaware River Basin Commission, or

A normal by-product of our carbon adsorption filtration process is exhausted carbon media, which is disposed of by the contractor providing the media replacement.

Management believes that the costs of compliance with existing federal, state and local laws and regulations regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has had no material adverse effect upon the business and affairs of the Company, but there is no assurance that such compliance costs will continue to not have a material effect in the future.

Under Delaware state laws and regulations, we are required to file applications with DNREC for water allocation permits for each of our operating wells pumping greater than 50,000 gallons per day.

For any wells in the Delaware River Basin, we must also file allocation permits with the Delaware River Basin Commission, or DRBC.

We have 154 operating and 63 observation and monitoring wells in our Delaware systems.

At December 31, 2024, we had allocation permits for 116 wells and had 25 wells

that did not require a permit.

At December 31, 2025, we had allocation permits for 124 wells, permits pending for 14 wells and 16 wells that did not require a permit.

Our access to aquifers within our service territory is not exclusive.

allocation permits control the amount of water that can be drawn from water resources and are granted with specific restrictions on water level draw down limits, annual, monthly and daily pumpage limits, and well field allocation pumpage limits.

are also subject to water allocation reg ulations that control the amount of water that we can draw from water sources.

As a result, if new or more restrictive water allocation regulations are imposed, they could have an adverse effect on our

ability to supply the demands of our customers, and in turn, our water supply revenues and results of operations.

Our ability to supply the demands of our customers historically has not been affected by private usage of the aquifers by landowners or

the limits imposed by the State of Delaware.

Because of the extensive regulatory requirements relating to the withdrawal of any significant amounts of water from the aquifers, we believe that third-party usage of the aquifers within our service

territory will not interfere with our ability to meet the present and future demands of our customers.

The MDE ensures that water quality and quantity at all public water systems in Maryland meet the needs of the public and are in compliance with federal and

state regulations.

The MDE also ensures that public drinking water systems provide safe and adequate water to all current and future users in Maryland and that appropriate usage, planning, and conservation policies are implemented for Maryland’s water

Water allocation permits control the amount of water that can be drawn from water resources and are granted with specific restrictions on water level draw down limits, annual, monthly and daily pumpage limits, and well field allocation pumpage limits.

We are also subject to water allocation regulations that control the amount of water that we can draw from water sources.

As a result, if new or more restrictive water allocation regulations are imposed, they could have an adverse effect on our ability to supply the demands of our customers, and in turn, our water supply revenues and results of operations.

Our ability to supply the demands of our customers historically has not been affected by private usage of the aquifers by landowners or the limits imposed by the State of Delaware.

Because of the extensive regulatory requirements relating to the withdrawal of any significant amounts of water from the aquifers, we believe that third-party usage of the aquifers within our service territory will not interfere with our ability to meet the present and future demands of our customers.

The MDE ensures that water quality and quantity at all public water systems in Maryland meet the needs of the public and are in compliance with federal and state regulations.

The MDE oversees the development of Source Water Assessments for water supplies and issues water appropriation permits for public drinking water systems.

In order to appropriate water for municipal, commercial, industrial or other

non-domestic uses, a Water Appropriation Permit must be obtained.

Issuance of the permit involves evaluating the needs of the user and the potential impact of the withdrawal on neighboring users and the water source in order to maximize beneficial use

of the water.

In order to appropriate water for municipal, commercial, industrial or other non-domestic uses, a Water Appropriation Permit must be obtained.

Issuance of the permit involves evaluating the needs of the user and the potential impact of the withdrawal on neighboring users and the water source in order to maximize beneficial use of the water.

Permits for large appropriations often involve conducting pump tests to measure adequacy of an aquifer and safe yield of a well, or reviewing stream flow records to determine the adequacy of a surface water source.

Regulations require

all new community water systems to have sufficient technical, managerial and financial capacity to provide safe drinking water to their consumers prior to being issued a construction permit.

Regulations require all new community water systems to have sufficient technical, managerial and financial capacity to provide safe drinking water to their consumers prior to being issued a construction permit.

Also, capacity management guidance contains capacity limiting factors that can include source capacity, treatment capacity and appropriation permit quantity.

The quantity of water withdrawn from the Port Deposit surface water

intake is allocated by the Susquehanna River Basin Commission, or SRBC, and the MDE.

The quantity of water withdrawn from the Port Deposit surface water intake is allocated by the Susquehanna River Basin Commission, or SRBC, and the MDE.

We have 15 operating wells and one surface water in-take in our Maryland systems.

The PADEP administers and oversees departmental programs involving surface and groundwater quantity and quality

planning and water conservation in Pennsylvania.

The PADEP administers and oversees departmental programs involving surface and groundwater quantity and quality planning and water conservation in Pennsylvania.

The office also coordinates policies, procedures, and regulations which influence public water supply withdrawals and quality.

The DRBC administers and oversees programs involving water quality

protection, water supply allocation, water conservation initiatives and watershed planning, regulatory review and permitting, and drought management in Pennsylvania.

The DRBC administers and oversees programs involving water quality protection, water supply allocation, water conservation initiatives and watershed planning, regulatory review and permitting, and drought management in Pennsylvania.

We have one operating well in Pennsylvania within the DRBC’s jurisdiction.

is treated by a water treatment plant located in Delaware.

This well is treated by a water treatment plant located in Delaware.

The Clean Water Act has established the foundation for wastewater discharge control in the United States.

The Clean Water Act established a control program

for ensuring that communities have clean water by regulating the release of contaminants into waterways.

Permits that limit the amounts of pollutants discharged are required for all wastewater dischargers under the National Pollutant Discharge

Elimination System, or the NPDES, permit program.

The Clean Water Act established a control program for ensuring that communities have clean water by regulating the release of contaminants into waterways.

Permits that limit the amounts of pollutants discharged are required for all wastewater dischargers under the National Pollutant Discharge Elimination System, or the NPDES, permit program.

In accordance with the NPDES permit program, the implementing states set maximum discharge limits for wastewater effluents and overflows from wastewater collection systems.

Discharges that exceed the

limits specified under the NPDES permit program can lead to the imposition of penalties.

Discharges that exceed the limits specified under the NPDES permit program can lead to the imposition of penalties.

The Clean Water Act also requires that wastewater treatment plant discharges meet a minimum of secondary treatment.

The secondary treatment process can remove

90% to 99% of the organic matter in wastewater.

The secondary treatment process can remove 90% to 99% of the organic matter in wastewater.

Our removal efficiency is generally 96% to 98%.

Under Delaware state laws and regulations, we are required to hold a permit from DNREC for the construction, operation, maintenance or repair of any on-site

wastewater treatment and disposal systems with daily design flow rates of 2,500 gallons or greater.

Under Delaware state laws and regulations, we are required to hold a permit from DNREC for the construction, operation, maintenance or repair of any on-site wastewater treatment and disposal systems with daily design flow rates of 2,500 gallons or greater.

A classification on the facility is performed in accordance with Regulations Licensing Operators of Wastewater Facilities.

The class of operator

required for the facility is determined by the Board of Certification for Licensed Wastewater Operations in accordance with Regulations Licensing Operators of Wastewater Facilities.

We work to ensure that we operate environmentally friendly wastewater

systems that meet federal, state and local laws.

In March 2024, the SEC passed rule changes that will require registrants to provide certain climate-related information in their registration statements and

annual reports.

The new rules enhance and standardize climate-related disclosures in an effort to provide investors with more consistent, comparable and reliable information about the impact of climate-related risks on registrants.

The rules require

disclosure of greenhouse gas (GHG) emissions in annual reports and registration statements.

Additionally, all registrants would be required to provide numerous climate-related disclosures within their financial statements and elsewhere in their

The new rules apply to companies on a phased-in basis, with the first compliance deadline for large accelerated filers required for fiscal year 2025 annual reports filed in 2026.

The next compliance deadline for accelerated filers is

required for fiscal year 2026 annual reports filed in 2027.

Also in March 2024, the U.S.

Fifth Circuit Court of Appeals granted a temporary stay of the rules pending judicial review, in response to a petition arguing, among other things, that the

rules would cause irreparable harm and exceed the SEC's authority.

The Company is currently evaluating the impact of the rule changes.

The class of operator required for the facility is determined by the Board of Certification for Licensed Wastewater Operations in accordance with Regulations Licensing Operators of Wastewater Facilities.

We work to ensure that we operate environmentally friendly wastewater systems that meet federal, state and local laws.

In March 2024, the SEC

passed rule changes that would have required registrants to include extensive

climate-related information in their registration statements and periodic

Later in March 2024, the U.S.

Fifth Circuit Court of Appeals granted a temporary stay of the rules pending

judicial review, in response to a petition arguing, among other things, that

the rules would cause irreparable harm and exceed the SEC's authority.

In March 2025, the SEC announced that it had

voted to end its defense of the final rules on the enhancement and

standardization of climate-related disclosures.

While climate-related risk and emissions

disclosure requirements continue to evolve at the state level, the future of

the SEC’s climate-related disclosure rules remains uncertain, and it is

unlikely that public companies will need to make disclosures under the SEC’s

climate rules.

Additional General Information

Substantially all of our water customers are metered, which allows us to measure and bill for our customers’ water consumption.

Demand for water during the

warmer months is generally greater than during cooler months primarily due to additional customer requirements for water in connection with cooling systems, swimming pools, irrigation systems and other outside water use.

Throughout the year, and

particularly during typically warmer months, demand for water will vary with temperature and rainfall.

In the event that temperatures during the typically warmer months are cooler than expected, or there is more rainfall than expected, the demand for

water may decrease and our revenues may be adversely affected.

Demand for water during the warmer months is generally greater than during cooler months primarily due to additional customer requirements for water in connection with cooling systems, swimming pools, irrigation systems and other outside water use.

Throughout the year, and particularly during typically warmer months, demand for water will vary with temperature and rainfall.

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

Our business in our franchised service areas is substantially free from direct competition with other public utilities, municipalities and other entities.

However, our ability to provide additional water and wastewater services is subject to competition from other public utilities, municipalities and other entities.

Even though our regulated subsidiaries have been granted an exclusive franchise for each

of our existing community water and wastewater systems, our ability to expand service areas can be affected by the DEPSC, the MDPSC or the Pennsylvania Public Utility Commission, or PAPUC, awarding franchises to other regulated water or wastewater

utilities with whom we compete for such franchises.

Even though our regulated subsidiaries have been granted an exclusive franchise for each of our existing community water and wastewater systems, our ability to expand service areas can be affected by the DEPSC, the MDPSC or the Pennsylvania Public Utility Commission, or PAPUC, awarding franchises to other regulated water or wastewater utilities with whom we compete for such franchises.

As the sole regional regulated wastewater utility

in Sussex County, Delaware, our operational initiatives are not impacted by competing

franchise applications, which ensures uninterrupted service and protection

against service area encroachment.

Suppliers and Independent Contractors

We are dependent upon the ability of our suppliers and independent contractors to meet performance specifications, quality standards and delivery schedules

at our anticipated costs.

affect construction and maintenance schedules.

We are dependent upon the ability of our suppliers and independent contractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs.

While we maintain an extensive qualification and performance review system to control risk associated with such reliance on third parties, failure of suppliers or independent contractors to meet commitments could adversely affect construction and maintenance schedules.

We are also dependent on the availability of electricity and purchased water at affordable prices.

3 unchanged sentences

Of these employees, 58 were officers and managers;

122 were employed as

operations personnel, including engineers, technicians, draftsman, maintenance and repair persons, meter readers and utility personnel;

and 36 were employed in accounting, budgeting, information systems, human resources, customer relations and public

142 were employed as operations personnel, including engineers, technicians, draftsman, maintenance and repair persons, meter readers and utility personnel;

and 38 were employed in accounting, budgeting, information systems, human resources, customer relations and public relations.

The remaining 36 employees were administrative personnel.

The Company has no collective bargaining agreements with any of its employees,

and its work force is not union organized or union represented.

The Company has no collective bargaining agreements with any of its employees, and its work force is not union organized or union represented.

We believe that our relations with our employees are good.

Through ongoing employee development, competitive compensation and benefits, and a focus on health, safety and

employee wellbeing, we strive to help our employees in all aspects of their lives.

Through ongoing employee development, competitive compensation and benefits, and a focus on health, safety and employee wellbeing, we strive to help our employees in all aspects of their lives.

We believe the Company’s success depends on its ability to attract, develop and retain key personnel.

We provide our employees with resources that

contribute to their professional development, including technical training and performance reviews.

A core principle of our company is to promote from within and offer advancement opportunities at all levels of employment, which helps us retain

talented employees.

We provide our employees with resources that contribute to their professional development, including technical training and performance reviews.

A core principle of our company is to promote from within and offer advancement opportunities at all levels of employment, which helps us retain talented employees.

We believe our management team has the experience, talent and dedication necessary to effectively execute our business goals and growth strategy.

We recognize that the skills, experience, diversity, industry knowledge and

dedication of our employees significantly benefit our operations and performance.

We recognize that the skills, experience, diversity, industry knowledge and dedication of our employees significantly benefit our operations and performance.

We set pay ranges based on market data.

When considering compensation, we

consider factors such as an employee’s role, experience, and his or her performance.

We regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our compensation is fair and

When considering compensation, we consider factors such as an employee’s role, experience, and his or her performance.

We regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our compensation is fair and equitable.

Health and safety in the workplace for our employees is one of the Company’s core values.

Hazards in the workplace are proactively identified and actions

are taken to maintain workplace safety.

Hazards in the workplace are proactively identified and actions are taken to maintain workplace safety.

We sponsor a wellness program designed to enhance physical, financial, and mental wellbeing for all our employees.

Throughout the year, we encourage healthy behaviors through regular communications, educational

sessions and other incentives.

Throughout the year, we encourage healthy behaviors through regular communications, educational sessions and other incentives.

We use outside consultants and independent contractors on an as needed basis for various services.

We rely on our independent contractors to manage their

respective employee relations so that the services they are contractually obligated to perform for us satisfy our requirements.

Management believes that through our own employees, coupled with the services provided by our independent contractors and

outside consultants, we have sufficient human capital to continue to operate our business successfully.

We rely on our independent contractors to manage their respective employee relations so that the services they are contractually obligated to perform for us satisfy our requirements.

Management believes that through our own employees, coupled with the services provided by our independent contractors and outside consultants, we have sufficient human capital to continue to operate our business successfully.

Available Information

We are a Delaware corporation with our principal executive offices located at 664 Churchmans Road, Newark, Delaware, 19702.

Our telephone number is (302)

453-6900 and our website address is www.artesianwater.com .

We make available free of charge through our website our Code of Ethics, Annual Reports on Form

10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, our Corporate Governance Guidelines, and our Board Committee Charters as soon as reasonably practicable after such material is electronically filed

with or furnished to the Securities and Exchange Commission, or the SEC.

Our telephone number is (302) 453-6900 and our website address is www.artesianwater.com.

We m ake available free of charge through our website our Code of Ethics, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, our Corporate Governance Guidelines, and our Board Committee Charters as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission, or the SEC.

We include our website address in this Annual Report on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our website.

contained on our website shall not be deemed incorporated into, or to be a part of, this report.

Information contained on our website shall not be deemed incorporated into, or to be a part of, this report.

We are exposed to a variety of risks and uncertainties.

Most are general risks and uncertainties applicable to all water and wastewater utility companies.

We describe below some of the specific known risk factors that could negatively affect our business, financial condition or results of operations.

If one or more of these risks or uncertainties occur, actual results may vary materially from our projections.

Risks Related to Our Operations

We are dependent upon the ability of our suppliers and independent contractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs.

We have been affected and could continue to be further affected, by supplier delays and increased costs, due to the impacts of inflation, tariffs, recession, wars and international conflicts, and/or other macroeconomic factors, which are outside of our control and could affect our results of operations.

We are also dependent on the availability of electricity and purchased water at affordable prices.

While our electricity costs and purchased water costs are at fixed prices under contracts, after the expiration of these contracts, we may be required to pay higher electricity costs and purchased water costs.

We are subject to risks associated with the collection, treatment and disposal of wastewater.

Wastewater collection, treatment and disposal involve various unique risks.

If collection or treatment systems fail, overflow, or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages, which may not be recoverable in fees.

This risk is most acute during periods of substantial rainfall or flooding, which are common causes of sewer overflow and system failure.

Liabilities resulting from such damages and injuries could materially and adversely affect our business, results of operations and financial condition.

We also require pre-treatment by various industrial customers prior to receiving their wastewater for further treatment and disposal.

If those pre-treatment systems operated by others fail, or do not operate properly, they can impact our downstream facilities’ ability to meet their permit limitations.

If we fail to meet our permit limitations, we could be fined or otherwise sanctioned by regulators and our operations could be curtailed or shut down.

Aging infrastructure may lead to service disruptions, property damage and increased capital expenditures and operation and management costs, all of which could negatively impact our financial results.

We have risks associated with aging infrastructure, including water and sewer mains, pumping stations and water and wastewater treatment facilities.

Additionally, the nature of information available on buried and newly acquired assets may be limited, which may challenge our ability to conduct efficient asset management and maintenance practices.

Assets that have aged beyond their expected useful lives may experience a higher rate of failure.

Failure of aging infrastructure could result in increased capital expenditures and operation and management costs.

In addition, failure of aging infrastructure may result in property damage, and in safety, environmental and public health impacts.

To the extent that any increased costs or expenditures are not fully recovered in rates, our results of operations, liquidity and cash flows could be negatively impacted.

Potential terrorist attacks, sabotage, or accidental damage by outside parties may disrupt our operations and adversely affect our business, operating results and financial condition.

We are subject to disruption of our water and wastewater systems, including as a result of vandalism, terrorism, sabotage and/or accidental damage by outside parties, any of which could cause an interruption in or contamination of water supply, and a reduction in water quality.

We have security measures in place at our facilities to reduce the possibility of occurrences of sabotage, vandalism, or terrorism and to secure our water and wastewater systems.

These security measures address water collection, pre-treatment, treatment, distribution, storage, wastewater disposal, electronic or automated systems, and the use, handling, delivery, and storage of all chemicals.

We also have programs in place to ensure employee awareness of potential threats.

We have and will continue to bear any increase in costs, most of which have been recoverable under state regulatory policies, for security precautions to protect our facilities, operations and supplies.

While the costs of increases in security, including capital expenditures, may be significant, we expect these costs to continue to be recoverable in water and wastewater rates.

Despite our security measures, we may not be in a position to control the outcome of terrorist events, sabotage or other attacks on our water systems, should they occur.

Our water and wastewater systems are also subject to accidental damage from work being completed by outside parties not under the supervision or control of the Company.

Construction activities in the vicinities of our pipelines and other infrastructure can lead to damage which results in inadvertent discharge onto nearby properties, or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages.

We could also incur repair and remediation costs, which may not be reimbursed or recoverable in water and wastewater rates.

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

Weaknesses in capital and credit markets or increased interest rates may limit our access to capital.

Our ability to continue our expansion efforts and fund our utility construction and maintenance program depends on the availability of adequate capital.

There is no guarantee that we will be able to obtain sufficient capital in the future on favorable terms and conditions for expansion, construction and maintenance, as general macroeconomic conditions impacting the capital markets, including interest rates, are beyond our control.

In the event our lines of credit are not extended or we are unable to refinance our first mortgage bonds when due and the borrowings are called for payment, we will have to seek alternative financing sources, although there can be no assurance that these alternative financing sources will be available on terms acceptable to us.

In the event we are unable to obtain sufficient capital, our expansion efforts could be curtailed, which may affect our growth and may affect our future results of operations.

We may be adversely affected by the implementation of new regulations, the reinterpretation or recission of existing regulations, or regulatory uncertainty.

Changes in local, state or federal policy or administrative priorities could adversely affect our business.

As a regulated utility, we are subject to regulation at the federal, state and local level.

We have made significant capital expenditures to adhere to regulations imposed by such authorities and expect to continue to make capital expenditures in the future to adhere to such regulations.

Changes in local, state or federal administrative policy or priorities could affect the possible interpretation of existing regulations or such authorities may impose new rules and regulatory requirements.

New administrations could also eliminate proposed rules and reverse final policies of prior administrations, which could lead to conflict between federal and state regulations and regulatory uncertainty, which could cause us to reevaluate our strategic priorities and capital expenditures or otherwise impact our business operations.

The impact of any regulatory requirement changes is unpredictable, and could materially and adversely affect our business, financial position and results of operations.

We may be adversely affected by climate variability or by regulatory, legal or market responses to such change.

Climate variability may cause negative impacts to our business if an unexpectedly severe weather event or natural disaster damages our facilities and/or operations or those of our suppliers or independent contractors in our service areas, or from the unintended consequences of regulatory changes that directly or indirectly impose substantial restrictions on our activities or adaptation requirements.

Potential climate variability challenges include the following:

increased frequency and duration of droughts, increased precipitation and flooding, increased frequency and severity of storms and other weather events, potential degradation of water quality, unexpected changes in temperature, possible increases in ocean levels, disruptions in water or wastewater services to our customers, decreases in available water supply, extreme changes in water usage patterns and related revenue, increases in expenditures to repair any damages, increases in costs to reduce risks associated with significant weather events or natural disasters, and increases in costs to improve the reliability of our water and wastewater systems and facilities.

Due to the uncertainty of weather volatility related to climate variability, we cannot predict its potential impact on our financial condition, results of operations, cash flows and liquidity.

Although some or all potential expenditures and costs with respect to our regulated businesses could be recovered through rates we charge to our customers, there can be no assurance that the applicable regulatory authority would authorize recovery of such costs, in whole or in part, for any of these impacts.

Furthermore, federal, state and local authorities and legislative bodies have issued, implemented or proposed regulations, penalties, standards and/or guidance intended to restrict, moderate or promote activities consistent with resource conservation, Greenhouse Gas, or GHG, emission reduction, environmental protection or other climate-related objectives.

Compliance with those directed at or otherwise affecting our business or our suppliers’ (or their suppliers’) operations, or services, could lead to increased environmental compliance expenditures, increased energy and raw materials costs and new and/or additional investment in designs and technologies.

We continually assess our compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations.

It is reasonably possible that costs incurred related to the various physical and regulatory risks from climate change may affect our future results of operations, financial condition, cash flows or liquidity.

While we have health and safety protocols in place, we can provide no assurance that we or our suppliers or independent contractors can successfully operate in areas experiencing a significant weather event or natural disaster, and we or they may be more significantly impacted and take longer, and incur higher costs, to resume operations in an affected location, depending on the nature of the event or other circumstances.

Though we have not as of the date of this report identified or experienced any particular material impact, whether singular or in combination, to our consolidated financial statements from climate change or the associated regulatory, physical, and other risks discussed above, we cannot provide any assurance that we have or can successfully prepare for, or are or will be able to reduce or manage any of them to the extent they may arise.

In addition, the SEC has previously issued extensive climate-related disclosure rules.

Although these rules are currently stayed, if adopted in the future, such rules would likely result in increased compliance costs and capital expenditures.

Risks Related to Governmental Laws and Regulations

We rely on governmental approvals in the States of Delaware and Maryland and the Commonwealth of Pennsylvania, such as approvals from the Delaware River Basin Commission and Susquehanna River Basin Commission for applicable water allocation, water appropriation and water capacity permits.

In addition, we rely on governmental approvals in the State of Delaware for applicable wastewater collection, treatment and disposal permits for the operation of our wastewater facilities.

Our water and wastewater services are governed by various federal and state governmental agencies.

Pursuant to these regulations, we are required to obtain various permits for any additional systems and current systems to assist in our operations.

If any of those permit approvals are not received timely or at all, we may risk the loss of economic opportunity and our ability to create additional systems for the effective operation of our water business in Delaware, Maryland and Pennsylvania or our wastewater business in Delaware.

We can provide no assurances that we will receive all necessary permits to add systems or continue to operate facilities of our water or wastewater business.

Our operating revenue is primarily from water sales.

The rates that we charge our customers are subject to the regulations of the public service commissions in the states in which we operate.

If a public service commission disapproves or is unable to timely approve our requests for rate increases or approves rate increases that are inadequate to cover our investments, deferred regulatory assets or increased costs, our profitability may suffer.

We file rate increase requests, from time to time, to recover our investments in utility plant, deferred regulatory assets and expenses, see Notes to Consolidated Financial Statements - Note 13 – Regulatory Proceedings.

Once a rate increase petition is filed with a public service commission, the ensuing administrative and hearing process may be lengthy and costly.

We can provide no assurances that any future rate increase request will be approved by the DEPSC, MDPSC or PAPUC, and if approved, we cannot guarantee that these rate increases will be granted in a timely manner and/or will be sufficient in amount to cover the investments, deferred regulatory assets and expenses for which we initially sought the rate increase.

To the extent we are able to pass through such costs to customers and a state public service commission subsequently determines that such costs should not have been paid by customers, we may be required to refund such costs, with interest, to customers.

Any such costs not recovered through rates, or any such refund, could adversely affect our results of operations, financial position or cash flows.

Our water and wastewater operations are subject to extensive federal and state laws and regulations.

In addition, our operating costs and capital expenditures could be significantly increased if new or stricter regulatory standards are imposed by federal or state environmental agencies.

We are subject to various federal, state, and local laws and regulations relating to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes.

Our water and wastewater services are governed by various federal and state environmental protection and health and safety laws and regulations, including, among others, the federal Safe Drinking Water Act, the Clean Water Act, the Lead and Copper Rule and other federal and state laws.

These federal and state regulations are issued by the EPA and state environmental regulatory agencies.

Pursuant to these laws and regulations, we are required to obtain various water allocation permits and environmental permits for our operations.

The water allocation permits control the amount of water that can be drawn from water resources.

New or stricter water allocation regulations can adversely affect our ability to meet the demands of our customers.

While we have budgeted for future capital and operating expenditures to maintain compliance with these laws and our permits, it is possible that new or stricter standards would be imposed that will raise our operating costs and capital expenditures.

Thus, we can provide no assurances that our costs of complying with, or discharging liability under, current and future environmental and health and safety laws will not adversely affect our business, results of operations or financial condition.

Risks Related to Our Financial Statements and Operating Results

Our business is subject to seasonal fluctuations, which could affect demand for our water service and our revenues.

Demand for water during warmer months is generally greater than during cooler months primarily due to additional customer requirements in irrigation systems, swimming pools, cooling systems and other outside water use.

In the event that temperatures during typically warmer months are cooler than normal, or rainfall is more than normal, the demand for our water may decrease and adversely affect our revenues.

Drought conditions and government-imposed water use restrictions may impact our ability to serve our current and future customers, and may impact our customers’ use of our water, which may adversely affect our financial condition and results of operations.

We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.

However, severe drought conditions could interfere with our sources of water supply and could adversely affect our ability to supply water in sufficient quantities to our existing and future customers.

This may adversely affect our revenues and earnings.

Moreover, governmental restrictions on water usage during drought conditions may result in a decreased demand for water, which may adversely affect our revenue and earnings.

General economic conditions may materially and adversely affect our financial condition and results of operations.

The effects of adverse U.S.

economic conditions may lead to a number of impacts on our business that may materially and adversely affect our financial condition and results of operations.

Such impacts may include a reduction in discretionary and recreational water use by our residential water customers, particularly during the summer months;

a decline in usage by industrial and commercial customers as a result of decreased business activity and commerce in our customers’ businesses;

an increased incidence of customers’ inability to pay their bills, bankruptcy or delay in paying their bills which may lead to higher bad debt expense and reduced cash flow;

and a lower natural customer growth rate may result as compared to what had been experienced before due to a decline in new housing starts or a decline in the number of active customers due to housing vacancies or abandonments.

We could be adversely impacted by macroeconomic factors outside of our control, including but not limited to inflation, interest rates, tariffs, trade wars, wars and international conflicts, and/or recession.

We have been affected and could continue to be affected by increased costs for items such as, among others, materials for capital expenditures, fuel, and treatment chemicals, due to the impacts of inflation.

If inflation increases significantly, as a result of increased interest rates, tariffs, trade wars, wars and international conflicts, or otherwise, we may seek to increase our rates charged to customers.

We can provide no assurances that any future rate increase request will be approved by the applicable regulatory authority, and if approved, we cannot guarantee that any rate increase will be granted in a timely manner and/or will be sufficient in amount to cover costs for which we initially sought the rate increase.

The impact of such inflationary pressure could adversely affect our results of operations, financial position or cash flows.

We may be required to record impairments of goodwill, or otherwise change the fair value of certain assets, in the future that could have a material adverse effect on our financial condition and results of operations.

The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired as of the date of an acquisition.

The Company’s goodwill is associated with the January 2022 acquisition of Tidewater Environmental Services, Inc.

Goodwill is not amortized, but is evaluated for impairment at least annually, or more frequently, if impairment indicators are present that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

We may be required to recognize in the future an impairment of goodwill due to market conditions, or other factors related to our performance or the performance of an acquired business, or other circumstances that may impact the fair value of assets acquired.

Recognition of impairments of goodwill and changes in fair value of certain of our assets would result in a charge to income in the period in which the impairment or change occurred, which may negatively affect our financial condition, results of operations and total capitalization.

Risks Related to Our Business Strategy

We face competition from other water and wastewater utilities for the acquisition of new exclusive service territories.

We face competition from other water and wastewater utilities as we pursue the right to exclusively serve new territories in Delaware and Maryland.

We address this competition by entering into agreements with landowners, developers or municipalities and, under current law, then applying to the DEPSC or the MDPSC for a CPCN.

If we are unable to enter into agreements with landowners, developers or municipalities and secure CPCNs for the right to exclusively serve new territories in Delaware or Maryland, our ability to expand may be significantly impeded.

Any future acquisitions we undertake or other actions to further grow our water and wastewater business may involve risks.

An element of our growth strategy is the acquisition and integration of water and wastewater systems in order to broaden our current service areas and move into new ones.

It is our intent, when practical, to integrate any organizations we acquire with our existing operations.

The negotiation of potential acquisitions as well as the integration of acquired organizations could require us to incur significant costs and cause diversion of our management’s time and resources.

We may not be successful in the future in identifying organizations that meet our acquisition criteria.

The failure to identify such organizations may limit the rate of our growth.

In addition, future acquisitions or expansion of our service areas by us could result in:

Dilutive issuance of our equity securities;

Incurrence of debt and contingent liabilities;

Difficulties in integrating the operations and personnel of the acquired organization;

Diversion of our management’s attention from ongoing business concerns;

Failure to have effective internal control over financial reporting;

Overload of human capital resources;

Other acquisition-related expense.

Some or all of these items could have a material adverse effect on our business and our ability to finance our business and comply with regulatory requirements.

The organizations we acquire in the future may not achieve sales and profitability that would justify our investment.

We also may experience risks relating to the challenges and costs of closing a transaction and the risk that an announced transaction may not close.

Completion of certain acquisition transactions are conditioned upon, among other things, the receipt of approvals, including from certain state public utilities commissions.

The timeliness and outcome of those state public utilities commissions' decisions could hinder future acquisitions and any failure to complete a pending transaction would prevent us from realizing the anticipated benefits.

We would also remain liable for significant transaction costs, including legal and accounting fees, whether or not the transaction is completed.

Risks Related to Legal Uncertainty

Contamination of our water supply or wastewater operational malfunctions may result in disruption in our services and could lead to litigation that may adversely affect our business, operating results and financial condition.

Our water supplies are subject to contamination from naturally-occurring compounds as well as pollution resulting from man-made sources.

Even though we monitor the quality of our water on an ongoing basis, any possible contamination could interrupt the use of our water supply until we are able to substitute it from an uncontaminated water source.

Additionally, treating the contaminated water source could involve significant costs and could adversely affect our business.

We could also be held liable for consequences arising out of human or environmental exposure to hazardous substances, if found, in our water supply.

If wastewater collection or treatment systems fail, overflow, or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages for which we could be held liable.

Any such occurrence could adversely affect our business, results of operations and financial condition.

We are subject to various laws and regulations that could expose us to governmental investigations or actions by other third parties.

We are subject to various federal and state laws and regulations, including environmental laws and regulations, violations of which can involve civil or criminal sanctions.

Our Company from time to time could be party to or our operations targets of, lawsuits, claims, investigations and proceedings, including system failure, injury, contract, environmental, health and safety and employment matters, which are handled and defended in the ordinary course of business.

The results of any future litigation or settlement of such lawsuits and claims are inherently unpredictable, but such outcomes could also materially and adversely affect our business, financial position and results of operations.

Risk Related to Cybersecurity and Technology

We are dependent on the continuous and reliable operation of our information technology systems that require potentially costly maintenance, and could become subject to cyberattacks disrupting our operations.

We rely on our information technology systems to manage operation of our business.

Specifically, our business relies on various technology systems, including but not limited to those associated with customer information, financial reporting, asset and inventory management, facility operations and monitoring, human resources and accounts receivable.

Such systems require periodic modifications, upgrades or replacement that subject us to inherent costs and risks, including substantial capital expenditures, additional administration and operating expenses, and other risks and costs of delays in transitioning to new systems or of integrating new systems into our current systems.

Our computer and communications systems and operations could be damaged or interrupted by natural disasters, power loss, telecommunications failures, human error, acts of war, terrorism, international conflict, sabotage, theft or similar events or disruptions.

A loss of these systems or major problems with the operation of these systems could affect our operations and have a material adverse effect on our business and results of operations.

Cyberattacks on utility companies have been increasing in recent years.

To date, there have been no risks identified from cybersecurity threats or previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the company.

Despite our efforts, a cyberattack, if it occurred, could cause water or wastewater system operational complications, disrupt service to our customers, compromise important data or systems or result in an unintended release of customer or other confidential information.

Possible impacts associated with a cyberattack could also include remediation costs related to lost, stolen, or compromised data, repairs to information technology and data processing systems, increased cyber security protection costs, adverse effects on our compliance with regulatory and environmental laws and regulations, including standards for water and wastewater utility providers, and litigation.

We feel we have adequate cybersecurity insurance coverage to mitigate the cost of any such cyberattack;

however, a possible cyberattack could affect our operations and have a material adverse effect on our business and results of operations.

We have implemented, and will continue to internally monitor and manage, business processes to support our cybersecurity program.

For additional information concerning the Company’s cybersecurity program, see Item 1C - Cybersecurity.

Risk Associated with Managing our Business, Including Employees and Our Reputation

Turnover in our management team could have an adverse impact on our business or the financial market’s perception of our ability to continue to grow.

Our success depends significantly on the continued contribution of our management team both individually and collectively.

The loss of the services of any member of our management team or the inability to hire and retain experienced management personnel could harm our operating results.

In addition, turnover in our management team could adversely affect the financial market’s perception of our ability to continue to grow.

We depend on our ability to attract and retain qualified, skilled employees and independent contractors.

We depend on our ability to attract and retain qualified talent, including full-time and part-time employees, managers, management team, and independent contractors.

If we are unable to attract and retain such individuals, we may be unable to maintain our ability to meet performance targets, customer demands and expectations or successfully expand and grow our business.

Changes in the job market may increase labor costs and could adversely affect our business, results of operations, cash flows and financial condition.

Employee and independent contractor misconduct could harm us by subjecting us to legal liability and reputational harm.

There is a risk that our employees or independent contractors engage in misconduct that adversely affects our business.

Misconduct could subject us to regulatory investigations, legal liabilities or penalties and we could suffer harm to our reputation, financial position, and the trading price of our common stock.

We also face the risk that our employees engage in workplace misconduct, despite our implementation of policies and training to prevent and detect misconduct.

Such misconduct could negatively harm our reputation or impair our ability to attract and retain qualified, skilled employees.

If our employees engage in misconduct, our business could be materially adversely affected.

Risks Related to Our Common Stock

There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.

Dividends on our common stock will only be paid if and when declared by our Board of Directors.

Our earnings, financial condition, capital requirements, applicable regulations and other factors, including the timeliness and adequacy of rate increases, will determine both our ability to pay dividends on common stock and the amount of the dividends declared by our Board of Directors.

There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.

Holders of Class A Non-Voting Common Stock have no voting rights.

As a result, holders of Class A Non-Voting Common Stock will not have any ability to influence stockholder decisions and the principal holders of Class B Common Stock have significant control over the outcome of most fundamental corporate matters.

We have two classes of common stock, Class A Non-Voting Common Stock and Class B Common Stock.

Under our Restated Certificate of Incorporation, the right to vote for the election of directors and other stockholder matters is exercised exclusively by the holders of Class B Common Stock.

The holders of our Class A Non-Voting Common Stock do not have voting rights on any matters that are submitted to a vote of stockholders, including with respect to the election of directors and other matters voted upon by stockholders, except as required by the Delaware General Corporation Law.

As a result, the principal stockholders of Class B Common Stock have significant control over the outcome of most fundamental corporate matters.

There are no agreements among the holders of Class B Common Stock or with the Company that restrict the transfer of shares of Class B Common Stock which could result in significant ownership of shares of Class B Common Stock being held by others who are not currently principal holders.

The price of our common stock may be volatile and may be affected by market conditions beyond our control.

The trading price of our common stock may fluctuate in the future based on a variety of factors, many of which are beyond our control and unrelated to our financial results.

Factors that could cause fluctuations in the trading price of our common stock include but are not limited to volatility of the general stock market or the utility stock index, regulatory developments, general economic conditions and trends, actual or anticipated changes or fluctuations in our results of operations, actual or anticipated changes in the expectations of investors or securities analysts, actual or anticipated developments in our competitors’ businesses or the competitive landscape generally, litigation involving us or our industry, major catastrophic events or sales of large blocks of our stock.

Furthermore, we believe that stockholders invest in public utility stocks in part because they seek reliable dividend payments.

If there is an oversupply of stock of public utilities in the market relative to demand by such investors, the trading price of our common stock may decrease.

Additionally, if interest rates rise above the dividend yield offered by our common stock, demand for our stock and its trading price may also decrease.

Risk Related to Pandemics

Our business, results of operations, financial condition, cash flows and stock price may be adversely affected by pandemics, epidemics or other public health emergencies.

We are considered an essential utility service company, as defined by the U.S.

Department of Homeland Security.

We believe we will continue to operate our business consistent with any federal guidelines or state and local orders, however, the outbreak of pandemics, epidemics or other public health emergencies and any preventive or protective actions taken by governmental authorities may have an adverse effect on our operations.

UNRESOLVED STAFF COMMENTS

CYBERSECURITY

There have been an increasing number of cyberattacks on companies around the world, which have caused operational failures, compromised sensitive corporate or customer data, and/or resulted in significant financial damages.

These attacks have occurred over the internet, through malware, viruses or attachments to e-mails, or through inside actors with access to systems within the organization.

In addition, there have been reports of other water utility companies being subjected to such attacks, resulting in widespread operational outages.

Risk Management and Strategy

We have implemented security measures and will continue to devote resources to address security vulnerabilities in an effort to prevent cyberattacks.

All employees receive cybersecurity training and other education regarding their use of computers, information technology, and sensitive data.

We utilize third parties to support our information technology, or IT, resources, including disaster recovery intended to safeguard our ability to access and use our IT resources during a disaster or cyber incident.

Our business continuity plans are evaluated against evolving security and service level standards, which includes evaluating those cybersecurity threats associated with our use of key third party service providers.

Our cybersecurity management process consists of utilizing a combination of employee education, preventative controls, detective controls, and periodic third-party cybersecurity testing.

We have installed and utilize enterprise scale technology to support an appropriate cybersecurity posture including:

endpoint detection and response, firewalls, security information and event management, email security, multifactor authentication, and vulnerability management.

We receive cybersecurity related alerts from our membership in a number of industry groups.

These alerts are evaluated and in the event an alert requires action within our environment, such actions are taken promptly.

Our process and cybersecurity posture are refined based on the results of periodic third-party cybersecurity assessments.

We engage with the Cybersecurity and Infrastructure Security Agency through their cyber hygiene service offerings.

Cybersecurity is addressed in IT’s reports to the Corporate Automation Steering Committee, which consists of all Officers and the Director of Customer Service, as well as in IT’s reports to the Board of Directors.

Should a cyber event occur, depending on the severity of an event, our cyber incident reporting process includes informing, as early as practicable, our senior corporate management.

The Audit Committee of the Board of Directors, as overseen by the full Board of Directors, is responsible for oversight of cybersecurity risk.

Our IT executives report on our cybersecurity practices and risks at each meeting of the Audit Committee of our Board of Directors.

In addition, our IT executives provide periodic updates on cybersecurity risks to our management at regularly held executive committee meetings.

Should any cybersecurity threat or incident be detected, our IT executives would timely report such threat or incident to the management executive committee and provide regular communications and updates to the executive committee throughout the incident and any subsequent investigation, in order that the impact, materiality, and reporting requirements of such incident are appropriately identified and assessed for further necessary or appropriate action to be taken.

Any incident identified by the management executive committee as having a material impact would be promptly escalated to all members of the Board of Directors.

Should there be an incident which does not rise to the level of being material, such incident would, at minimum, be included in the subsequent IT reports to both the management executive committee and the Board of Directors.

We believe we are appropriately staffed to support a healthy cybersecurity posture.

All IT personnel have a combination of professional experience, education, and/or certifications for their area of responsibility.

For IT leadership, our Chief Information Officer earned a Masters of Business Administration and also a Master of Science degree in Information Systems & Technology Management.

Our Vice President of Information Technology earned a Bachelor of Science in Computer Science and Business and a Bachelor of Science in Business and Economics.

The Vice President of Information Technology is also a Certified Public Accountant, a Certified Information Systems Auditor, and a Chartered Global Management Accountant.

Our Director of Cybersecurity earned an Associates Degree in Computer Network Engineering and is a Certified Information Systems Security Professional.

To date, there have been no risks identified from cybersecurity threats or previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the company.

However, despite all the aforementioned efforts, a cyberattack, if it occurred, could cause water or wastewater system operational problems, disrupt service to our customers, compromise important data or systems or result in an unintended release of customer or other confidential information.

See “Item 1A.

Risk Factors—Risks Related to Cybersecurity and Technology” for additional discussion of cybersecurity risks impacting our Company.

Our corporate headquarters are located at 664 Churchmans Road, Newark, Delaware and are owned by Artesian Water.

The Company owns approximately six acres of land in New Castle County, Delaware zoned for office development and two nine-acre parcels of land in Sussex County, Delaware for water and wastewater treatment facilities and an elevated water storage.

The Company also owns an office facility located in Sussex County, Delaware.

The facility consists of approximately 10,000 square feet of office space along with approximately 10,000 square feet of warehouse space.

The Company owns land, rights-of-way, easements, transmission and distribution mains, collection mains, pump facilities, treatment plants, lift stations, treatment/disposal facilities, storage tanks, meters, vehicles and related equipment and facilities.

The following table indicates our utility plant as of December 31, 2025.

Utility plant comprises :

Estimated Useful Life

(In Years) Effective

June 12, 2024

December 31,2025

Utility plant at original cost

Utility plant in service-Water

Intangible plant

Source of supply plant

Pumping and water treatment plant

Transmission and distribution plant

Storage tanks

General plant

Utility plant in service-Wastewater

Intangible plant

Treatment and disposal plant

Collection mains and lift stations

General plant

Property held for future use

Construction work in progress

Less – accumulated depreciation

Substantially all of Artesian Water's utility plant, except the utility plant in the town of Townsend, Delaware, is pledged as security for our First Mortgage Bonds.

As of December 31, 2025, no other water utility plant has been pledged as security for loans.

Two parcels of land held by Artesian Wastewater are pledged as security for a loan.

We believe that our properties are generally maintained in good condition and in accordance with current standards of good water and wastewater industry practice.

We believe that all our existing facilities adequately meet current necessary production capacities and current levels of utilization.

LEGAL PROCEEDINGS

For a discussion of our legal proceedings, refer to Notes to Consolidated Financial Statements – Note 15 – Legal Proceedings.

MINE SAFETY DISCLOSURES

Not applicable.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information for the Company’s Common Equity

Artesian Resources' Class A Non-Voting Common Stock, or Class A Non-Voting Stock, is listed on the Nasdaq Global Select Market and trades under the symbol "ARTNA." On March 10, 2026, the last closing sale price as reported by the Nasdaq Global Select Market was $32.56 per share.

As of March 10, 2026 there were 452 holders of record of the Class A Non-Voting Stock.

The stockholders of Class A Non-Voting Stock are entitled to receive dividends when they are declared by the Board of Directors.

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

See the Consolidated Financial Statements for additional information regarding the Company’s dividend history.

The intraday high and low Nasdaq Global Select Market prices on the Class A Non-Voting Stock for each quarter during the past two years were:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Our Class B Common Stock, or Class B Stock, is quoted on the OTC Bulletin Board under the symbol "ARTNB." There has been a limited and sporadic public trading market for the Class B Stock.

As of March 10, 2026, the last reported trade of the Class B Stock on the OTC Bulletin Board was at a price of $33.51 per share on January 16, 2026.

As of March 10, 2026, there were 133 holders of record of the Class B Stock.

Shares of Class B Stock are paid the same dividend as the shares of the Class A Non-Voting Stock.

Recent Sales of Unregistered Securities

During the year ended December 31, 2025, we did not issue any unregistered shares of our Class A Non-Voting Stock or Class B Stock.

The following graph compares the yearly change in the cumulative shareholder return on the Company’s Class A Non-Voting Stock with the Standard & Poor’s 500 Stock Index and a Peer Group of water utility companies.

The graph covers the period from December 2020 (assuming a $100 investment on December 31, 2020, and the reinvestment of any dividends) through December 2025:

INDEXED RETURNS

Years Ending December 31

Company Name / Index

Artesian Resources Corporation

S&P 500 Index

The Peer Group includes American States Water Company, American Water Works Company, Inc., Essential Utilities, Inc., H2O Water, California Water Service Group, Middlesex Water Company, SJW Group and York Water Company.

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-K

Item 1. Business