What changed in this filing

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Item 1. Financial Statements

2026-05-08 compared with 2025-11-07 · 429 added, 346 removed, 566 unchanged (58% of the section changed)

3 unchanged sentences

(In thousands)

ASSETS September 30, 2025 December 31, 2024

ASSETS March 31, 2026 December 31, 2025

Utility plant, at original cost (less accumulated depreciation - 2026- $ 205,600 ;

52 unchanged sentences

(In thousands, except per share amounts)

For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

For the Three Months Ended

Operating revenues

11 unchanged sentences

Operating income 6,276 5,546

Other income, net

Allowance for funds used during construction (AFUDC) 498 566

Miscellaneous (expense) income ( 48 ) ( 58 ) 1,411 1,450

Miscellaneous income 1,388 1,489

Income before interest charges 8,162 7,601

1 unchanged sentence

Net income applicable to common stock $ 5,934 $ 5,435

Income per common share:

Net income per common share:

Basic $ 0.58 $ 0.53

8 unchanged sentences

(In thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

31 unchanged sentences

Borrowings under lines of credit agreements 5,214 357

Increase in overdraft payable 4 3,909

Deferred debt issuance costs ( 20 ) -

(Decrease) increase in overdraft payable ( 31 ) 269

Proceeds from contributions in aid of construction and advances 8,363 5,840

8 unchanged sentences

(In thousands)

For the Nine Months Ended

September 30,

NET (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS $ ( 442 ) $ 8,198

For the Three Months Ended

NET INCREASE IN CASH AND CASH EQUIVALENTS $ 4,203 $ 2,560

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 52 1,147

1 unchanged sentence

Supplemental Disclosures of Cash Flow Information:

For the Nine Months Ended

September 30,

For the Three Months Ended

Non-cash Investing and Financing Activity:

Utility plant received as construction advances and contributions $ 9,232 $ 7,475

Utility plant received as construction advances and contributions in aid of construction $ 4,388 $ 4,774

Contractual amounts of contributions in aid of construction due from developers included in accounts receivable and due from class action settlement funds included in other deferred assets (See Note 15 – Legal Proceedings) $ 1,835 $ 216

Change in amounts included in accounts payable, accrued payables and other related to capital expenditures $ ( 2,792 ) $ ( 1,810 )

7 unchanged sentences

(In thousands)

Common Shares Outstanding Class A Non-Voting (1) (3) (4) Common Shares Outstanding Class B Voting (2) $ 1 Par Value Class A Non-Voting $ 1 Par Value Class B Voting Additional Paid-in Capital Retained Earnings Total

Common Shares Outstanding Common Shares Outstanding $ 1 Par Value $1 Par Value

Class A Non-Voting (1) (3) (4) Class B Voting (2) Class A Non-Voting Class B Voting Additional Paid-in Capital Retained Earnings Total

Balance as of December 31, 2024 9,419 881 $ 9,419 $ 881 $ 143,920 $ 84,969 $ 239,189

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Balance as of March 31, 2025 9,422 881 $ 9,422 $ 881 $ 144,047 $ 87,300 $ 241,650

Net income - - - - - 5,325 5,325

Cash dividends declared -

Common stock - - - - - ( 3,042 ) ( 3,042 )

Issuance of common stock

Dividend reinvestment plan 3 - 3 - 87 - 90

Employee stock options and awards(4) 5 - 5 - 52 - 57

Employee Retirement Plan(3) - - - - - - -

Balance as of June 30, 2024 9,415 881 9,415 881 143,663 80,457 234,416

Net income - - - - - 6,813 6,813

Cash dividends declared

Common stock - - - - - ( 3,043 ) ( 3,043 )

Issuance of common stock

Dividend reinvestment plan 2 - 2 - 78 - 80

Employee stock options and awards(4) - - - - 48 - 48

Employee Retirement Plan(3) - - - - - - -

Balance as of September 30, 2024 9,417 881 $ 9,417 $ 881 $ 143,789 $ 84,227 $ 238,314

Common Shares Outstanding Class A Non-Voting (1) (3) (4) Common Shares Outstanding Class B Voting (2) $1 Par Value Class A Non-Voting $1 Par Value Class B Voting Additional Paid-in Capital Retained Earnings Total

Common Shares Outstanding Common Shares Outstanding $1 Par Value $1 Par Value

Class A Non-Voting (1) (3) (4) Class B Voting (2) Class A Non-Voting Class B Voting Additional Paid-in Capital Retained Earnings Total

Balance as of December 31, 2025 9,435 881 $ 9,435 $ 881 $ 144,492 $ 95,114 $ 249,922

5 unchanged sentences

Employee stock options and awards(4) - - - - 92 - 92

- - - 45 - 45

Employee Retirement Plan(3) - - - - - - -

Balance as of March 31, 2026 9,437 881 $ 9,437 $ 881 $ 144,668 $ 97,812 $ 252,798

Net income - - - - - 6,290 6,290

Cash dividends declared - -

Common stock - - - - - ( 3,169 ) ( 3,169 )

Issuance of common stock

Dividend reinvestment plan 3 - 3 - 84 - 87

Employee stock options and awards(4) 5 - 5 - 42 - 47

Employee Retirement Plan(3) - - - - - - -

Balance as of June 30, 2025 9,430 881 9,430 881 144,173 90,421 244,905

Net income - - - - - 6,962 6,962

Cash dividends declared

Common stock - - - - - ( 3,169 ) ( 3,169 )

Issuance of common stock

Dividend reinvestment plan 2 - 2 - 83 - 85

Employee stock options and awards(4) -

Employee Retirement Plan(3) - - - - - - -

Balance as of September 30, 2025 9,432 881 $ 9,432 $ 881 $ 144,316 $ 94,214 $ 248,843

At September 30, 2025 and September 30, 2024, Class A Stock had 15,000,000 shares authorized.

For the same periods, shares issued, inclusive of treasury shares, were 9,460,651 and 9,445,316 , respectively.

At September 30, 2025 and September 30, 2024, Class B Stock had 1,040,000 shares authorized and 881,452 shares issued.

Artesian Resources Corporation registered 200,000 shares of Class A Stock, subsequently adjusted for stock splits, available for purchase through the Company’s 401(k) retirement plan.

Under the Equity Compensation Plan, effective December 9, 2015, or the 2015 Plan, Artesian Resources Corporation authorized up to 331,500 shares of Class A Stock for issuance of grants in the form of stock options, stock units, dividend equivalents and other stock-based awards, subject to adjustment in certain circumstances as discussed in the 2015 Plan.

Includes stock compensation expense for September 30, 2025 and September 30, 2024.

At March 31, 2026 and March 31, 2025, Class A Non-Voting Stock had 15,000,000 shares authorized.

For the same periods, shares issued, inclusive of 28,970

treasury shares, were 9,465,922 and 9,450,519 ,

respectively.

At March 31, 2026 and March 31, 2025, Class B Voting Stock had 1,040,000 shares authorized and 881,452 shares issued.

Artesian Resources Corporation registered 200,000 shares of Class A Non-Voting Stock, subsequently adjusted for stock splits, available for purchase through the Company’s 401(k) retirement plan.

Under the Equity Compensation Plan, effective December 9, 2015, or the 2015 Plan, and

the 2025 Equity Compensation Plan, effective October 31, 2025, or the 2025

Plan, Artesian Resources Corporation authorized up to 331,500 shares and 263,932 , respectively, of Class A Non-Voting Stock for

issuance of grants in the form of stock options, stock units, dividend

equivalents and other stock-based awards, subject to adjustment in certain

circumstances as discussed in the Plan.

2025 Plan replaces the 2015 Plan, and outstanding grants under the 2015 Plan

shall continue in effect according to their terms, consistent with the 2015 Plan.

Includes stock compensation expense for March 31, 2026 and March 31, 2025.

See Note 8 – Stock Compensation Plans .

See notes to the condensed consolidated financial statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – GENERAL

Artesian Resources Corporation, or Artesian Resources, includes income from the earnings of all of our wholly-owned subsidiaries.

Artesian Resources Corporation, or Artesian Resources, includes income from the earnings of all our wholly-owned subsidiaries.

The terms "we", "our", "Artesian" and the "Company" as used herein refer to Artesian Resources and its subsidiaries.

DELAWARE REGULATED UTILITY SUBSIDIARIES

Artesian Water Company, Inc., or Artesian Water, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware.

Artesian Water Company, Inc., or 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.

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and governmental institutions.

Utility may also evaluate land parcels and provide 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.

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

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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 million gallons per day.

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 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.

Artesian Utility also

offers the following protection plans to customers, the Water Service Line

Protection Plan, or WSLP Plan, and the Sewer Service Line Protection Plan, or

SSLP 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.

SSLP Plan covers all parts, material and labor required to repair or replace

participating customers' leaking or clogged sewer lines up to an annual

The Company also maintains the

Internal Service Line Protection Plan, or ISLP Plan, in which the Company

discontinued enrolling new customers 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 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.

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Certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information provided not misleading.

Accordingly, these condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes thereto in the Company's annual report on Form 10-K for fiscal year 2024 as filed with the SEC on March 26, 2025.

The condensed consolidated financial statements include the accounts of Artesian Resources Corporation and its wholly-owned subsidiaries, including its principal operating company, Artesian Water.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments (unless otherwise noted) necessary to present fairly the Company's balance sheet position as of September 30, 2025, the results of its operations for the three and nine-month periods ended September 30, 2025 and September 30, 2024, its cash flows for the nine-month periods ended September 30, 2025 and September 30, 2024 and the changes in stockholders’ equity for the three and nine-month periods ended September 30, 2025 and September 30, 2024.

Accordingly, these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes thereto in the Company's annual report on Form 10-K for fiscal year 2025 as filed with the SEC on March 16, 2026.

The unaudited condensed consolidated financial statements include the accounts of Artesian Resources Corporation and its wholly-owned subsidiaries, including its principal operating company, Artesian Water.

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments (unless otherwise noted) necessary to present fairly the Company's balance sheet position as of March 31, 2026, the results of its operations for the three-month periods ended March 31, 2026 and March 31, 2025, its cash flows for the three-month periods ended March 31, 2026 and March 31, 2025 and the changes in stockholders’ equity for the three month-periods ended March 31, 2026 and March 31, 2025.

The December 31, 2025 Condensed Consolidated Balance Sheet was derived from the Company’s December 31, 2025 audited consolidated financial statements but does not include all disclosures and notes normally provided in annual financial statements.

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Regulated Utility Accounting

The accounting records of Artesian Water, Artesian Wastewater, and TESI are maintained in accordance with the uniform system of accounts as prescribed by the Delaware Public Service Commission, or the DEPSC.

The accounting records of Artesian Water Pennsylvania are maintained in accordance with the uniform system of accounts as prescribed by the Pennsylvania Public Utility Commission, or the PAPUC.

The accounting records of Artesian Water Maryland, and Artesian Wastewater Maryland, are maintained in accordance with the uniform system of accounts as prescribed by the Maryland Public Service Commission, or the MDPSC.

All these subsidiaries follow the provisions of Accounting Standards Codification, or ASC, 980, Regulated Operations, which provides guidance for companies in regulated industries.

These regulated subsidiaries account for the majority of our operating revenue.

See Note 16 – Business Segment Information to our Condensed Consolidated Financial Statements for a full description of our segment information.

Use of Estimates

The condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the U.S., which require management to make certain estimates and assumptions that could impact the Company’s financial condition, results of operations and cash flows.

The accounting records of

Artesian Water, Artesian Wastewater, and TESI are maintained in accordance with

the uniform system of accounts as prescribed by the Delaware Public Service

Commission, or the DEPSC.

The accounting

records of Artesian Water Maryland and Artesian Wastewater Maryland are

maintained in accordance with the uniform system of accounts as prescribed by

the Maryland Public Service Commission, or the MDPSC.

The accounting records of Artesian Water

Pennsylvania are maintained in accordance with the uniform system of accounts

as prescribed by the Pennsylvania Public Utility Commission, or the PAPUC.

All these subsidiaries follow the provisions

of Accounting Standards Codification, or ASC, 980, Regulated Operations, which

provides guidance for companies in regulated industries.

These regulated

subsidiaries account for the majority of our operating revenue.

See Note 16 – Business Segment Information to our Unaudited Condensed Consolidated Financial Statements for a full description of our segment information.

of Estimates in the Preparation of Unaudited Condensed Consolidated Financial Statements

The unaudited condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the U.S., which require management to make certain estimates and assumptions that could impact the Company’s financial condition, results of operations and cash flows.

Actual results could differ from management's estimates.

Management makes certain estimates and assumptions regarding unbilled revenues, accounting for income taxes, credit losses and reserves for bad debt, lease agreements, goodwill and contingent assets and liabilities at the date of the condensed consolidated financial statements.

Management makes certain estimates and assumptions regarding unbilled revenues, reserve for revenues associated

with temporary rates expected to be refunded, accounting for income taxes, credit losses and reserves for bad debt, lease agreements, goodwill and contingent assets and liabilities.

Utility Plant

All additions to utility plant are recorded at cost.

Business combinations pursuant to ASC 805, Business Combinations, may result in a purchase price allocation and the acquired assets are required to be evaluated by the applicable regulatory agency.

All additions to utility

plant are recorded at cost.

combinations pursuant to ASC 805, Business Combinations, may result in a

purchase price allocation and the acquired assets are required to be evaluated

by the applicable regulatory agency.

Cost includes direct labor, materials, AFUDC

(see description below) and indirect charges for such capitalized items as

transportation, supervision, pension, medical, and other fringe benefits

related to employees engaged in construction activities.

When depreciable

units of utility plant are retired, the historical costs of plant retired is

charged to accumulated depreciation.

cost associated with retirement, less any salvage value or proceeds received,

is charged to the regulated retirement liability.

repairs, and replacement of minor items of utility plant are charged to expense

Allowance for Funds Used

during Construction, or AFUDC, is a non-cash credit to income with a

corresponding charge to utility plant that represents the cost of borrowed funds

or a return on equity funds devoted to plant under construction.

Depreciation and Amortization

For financial reporting purposes, depreciation is recorded using the straight-line method at rates based on estimated economic useful lives, which range from 5 to 85 years.

Composite depreciation rates for water utility plant were 1.92 %, and 1.93 % for September 30, 2025 and December 31, 2024, respectively.

In a rate order issued by the DEPSC, the Company was directed, effective June 12, 2024, to begin using revised depreciation rates for utility plant in Artesian Water, which are based on the estimated useful life years.

Composite depreciation rates for water utility plant were 1.91 % and 1.91 % for March 31, 2026 and December 31, 2025, respectively.

Artesian Water offsets depreciation recorded on utility plant by depreciation on utility property funded by Contributions in Aid of Construction, or CIAC, and Advances for Construction, or Advances.

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the previous year’s volume in the same period, the previous billing period’s volume, or averaging.

While actual volume for individual customers may differ from the estimate based on management judgments described above, we believe the overall total estimate of volume and revenue for the fiscal period will not differ materially from actual billed consumption.

We believe the overall total estimate of volume and revenue for the fiscal period will not differ materially from actual billed consumption.

The majority of these wastewater customers are billed for the volume of wastewater transferred on a quarterly basis.

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Since DSIC revenue is a surcharge applied to tariff rates, we recognize DSIC revenue based on the same guidelines as noted above depending on whether the surcharge was applied to consumption revenue or fixed-fee revenue.

Artesian generates revenue from interim temporary rates.

In Delaware, utilities are permitted by law to place rates into effect, under bond, on a temporary basis, pending resolution of an application for a base rate increase by the DEPSC.

Temporary rate revenue is calculated as a percentage increase on tariff rates.

We recognize this revenue based on the same guidelines as noted above depending on whether the additional rate was applied to consumption revenue or fixed-fee revenue.

Until final rates are determined by the DEPSC, if it is probable that a refund of revenue associated with temporary rates will occur, a reserve would be recorded reducing revenue from temporary rates.

As of September 30, 2025 and September 30, 2024, no such reserve or reduction to revenue was recorded.

Temporary rates that were previously

effective as of November 28, 2023 were replaced with final rates effective June

12, 2024, with no reserve or reduction to previously recorded revenue, as

approved by the DEPSC.

approved and Artesian Water implemented a temporary rate increase effective

June 3, 2025.

Artesian generates revenue

from interim temporary rates.

Delaware, utilities are permitted by law to place rates into effect, under

bond, on a temporary basis, pending resolution of an application for a base

rate increase by the DEPSC.

rate revenue is calculated as a percentage increase on tariff rates.

We recognize this revenue based on the same

guidelines as noted above depending on whether the additional rate was applied

to consumption revenue or fixed-fee revenue.

Until final rates are determined by the DEPSC, if it is probable that a

refund of revenue associated with temporary rates will occur, a reserve would

be recorded reducing revenue from temporary rates.

The DEPSC approved and Artesian Water

implemented temporary rate increases effective June 3, 2025 and November 6,

As of March 31, 2026, approximately $ 1.0 million of

the revenue from the November 6, 2025 temporary rate increase was recorded as a

reserve for refund and is included in other current

liabilities in the Condensed Consolidated Balance Sheets.

Temporary rates that

were previously effective as of November 28, 2023 were replaced with final

rates approved by the DEPSC effective June 12, 2024, with no reserve or

reduction to previously recorded revenue.

Accounts receivable related to tariff contract revenues are typically due within 25 days of invoicing.

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These services are invoiced at the end of every month based on incurred costs to date.

As of September 30, 2025, there is no associated contract asset or liability.

As of December 31, 2025, there is no associated contract asset or liability.

There is no provision for expected credit loss or bad debt expense associated with this revenue.

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all revenues are generated within a similar geographical location:

For the Three Months For the Nine Months

Ended September 30, Ended September 30,

For the Three Months

Ended March 31,

(in thousands) 2026 2025

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Service charges 154 180

DSIC - 67 534 67

Metered wastewater services 142 187

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Our contract assets and liabilities consist of the following:

(in thousands) September 30, 2025 December 31, 2024

(in thousands) March 31, 2026 December 31, 2025

Contract Assets – Tariff $ 3,044 $ 3,265

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Total Deferred Revenue $ 2,168 $ 2,171

For the nine months ended September 30, 2025, the Company recognized revenue of $ 1.4 million from amounts that were included in Deferred Revenue – Tariff at the beginning of the year and revenue of $ 0.5 million from amounts that were included in Deferred Revenue – Non-Tariff at the beginning of the year.

For the three months ended March 31, 2026, the Company recognized revenue of $ 1.6 million from amounts that were included in Deferred Revenue – Tariff at the beginning of the year and revenue of $ 0.4 million from amounts that were included in Deferred Revenue – Non-Tariff at the beginning of the year.

The changes in Contract Assets and Deferred Revenue are primarily due to normal timing differences between our performance and customer payments.

Remaining Performance Obligations

As of September 30, 2025 and December 31, 2024, Deferred Revenue – Tariff is recorded net of contract assets within Unbilled operating revenues and represents our remaining performance obligations for our fixed fee water and wastewater services, all of which are expected to be satisfied and associated revenue recognized in the next three months .

As of September 30, 2025 and December 31, 2024, Deferred Revenue – Non-Tariff is recorded within Other current liabilities and represents our remaining performance obligations for our SLP Plan services, contract water operation services and wastewater inspections, which are expected to be satisfied and associated revenue recognized within the next three months , approximately four years and one year , respectively.

As of March 31, 2026 and December 31, 2025, Deferred Revenue – Tariff is recorded

partially within Unbilled operating revenues net against contract assets

representing our remaining performance obligations for our fixed fee water

services and partially within Other current liabilities representing our

remaining performance obligations for our fixed fee wastewater services, all of

which are expected to be satisfied and associated revenue recognized in the

next three months .

As of March 31, 2026 and December 31, 2025, Deferred Revenue – Non-Tariff is recorded within Other current liabilities and represents our remaining performance obligations for our SLP Plan services, contract water operation services and wastewater inspections, which are expected to be satisfied and associated revenue recognized within the next three months , approximately four years and one year , respectively.

NOTE 4 – ACCOUNTS RECEIVABLE

Accounts receivable are recorded at the invoiced amounts.

As set forth in a settlement agreement, Artesian Water received reimbursements from the Delaware Sand and Gravel Remedial Trust, or Trust, for Artesian Water’s past capital and operating costs, totaling approximately $ 10.0 million, related to the treatment costs associated with the release of contaminants from the Delaware Sand & Gravel Landfill Superfund Site, or Site, in groundwater that Artesian Water uses for public potable water supply.

The full amount of $ 10.0

million has been paid to us, in four installments of approximately $ 2.5 million each,

Accounts receivable are

recorded at the invoiced amounts.

forth in a settlement agreement, Artesian Water received reimbursements from

the Delaware Sand and Gravel Remedial Trust, or Trust, for Artesian Water’s past capital and operating costs, totaling

approximately $ 10.0 million, related to the treatment costs associated with the

release of contaminants from the Delaware Sand & Gravel Landfill Superfund

Site, or Site, in groundwater that Artesian Water uses for public potable water

The full amount of $ 10.0 million

has been paid to us, in four installments of approximately $ 2.5 million each,

in August 2022, July 2023, July 2024 and July 2025.

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concern and of emerging concern.

settlement receivable as of March 31, 2026 includes the short-term portion of multi-district litigation, MDL, reimbursements as further discussed in Note 15 - Legal Proceedings .

A provision for expected credit loss is calculated as a percentage of total associated revenues based upon historical trends and adjusted for current and reasonable projections based upon expected economic conditions.

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The following table summarizes the changes in the Company’s accounts receivable balance.

(in thousands) September 30, 2025 December 31, 2024 December 31, 2023

The reduction in the water

customer accounts receivable balance as of December 31, 2025 is the result of a

one-time bill credit that was applied to Artesian Water’s customer bills in

December 2025 related to MDL settlement funds received as further discussed in

Note 15 – Legal Proceedings.

(in thousands) March 31, 2026 December 31, 2025 December 31, 2024

Customer accounts receivable – water $ 7,010 $ 4,366 $ 6,824

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Customer accounts receivable – SLP Plan 517 371 470

Settlement agreement receivable – short term - 2,523 2,747

Settlement receivable – short term 3,831 2,023 2,523

Developer receivable 562 2,249 837

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The Company leases land and office equipment under operating leases from non-related parties.

Our leases have remaining lease terms of 2.5 years to 71 years, some of which include options to automatically extend the leases for up to 66 years and are included as part of the lease liability and right-of-use assets as we expect to exercise the options.

One of the leases for land was terminated in its entirety effective October 10, 2024.

The remaining lease liability and right-of-use asset for the terminated lease was removed in the fourth quarter of 2024.

The difference between the carrying amounts of the right-of-use asset and the lease liability was recorded in the income statement.

Payments made under operating leases are recognized in the consolidated statement of operations on a straight-line basis over the period of the lease.

The annual lease payment for the remaining land operating lease increases each year by the most recent increase in the Consumer Price Index and includes a provision to periodically adjust the annual lease payment based on the fair market value of the parcel of land.

Our leases have remaining lease terms of 2 years to 71 years, one of which includes options to automatically extend the leases for up to 66 years and is included as part of the lease liability and right-of-use assets as we expect to exercise the options.

Payments made under operating leases are recognized in the condensed consolidated statement of operations on a straight-line basis over the period of the lease.

The annual lease payment for the land operating lease increases each year by the most recent increase in the Consumer Price Index and includes a provision to periodically adjust the annual lease payment based on the fair market value of the parcel of land.

None of the operating leases contain contingent rent provisions.

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Rent expense for all operating leases, except those with terms of 12 months or less, comprises:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in thousands)

Three Months Ended Three Months Ended

March 31, 2026 March 31, 2025

Minimum rentals $ 2 $ 2

Contingent rentals - -

Rent expenses $ 2 $ 4 $ 6 $ 13

Supplemental cash flow information related to leases is as follows:

(in thousands)

Nine months ended Nine months ended

September 30, 2025 September 30, 2024

Three months ended Three months ended

March 31, 2026 March 31, 2025

Cash paid for amounts included in the measurement of lease liabilities:

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(in thousands, except lease term and discount rate)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Operating Leases:

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Operating leases 5.0 % 5.0 %

Maturities of operating lease liabilities that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2025 are as follows:

Maturities of operating lease liabilities that have initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2026 are as follows:

(in thousands)

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Total lease liabilities recognized $ 414

As of September 30, 2025, we have not entered into operating or finance leases that will commence at a future date.

As of March 31, 2026, we have not entered into operating or finance leases that will commence at a future date.

NOTE 6 – FAIR VALUE OF FINANCIAL INSTRUMENTS

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For those current assets and liabilities that are considered financial instruments, the carrying amounts approximate fair value because of the short maturity of those instruments.

Under the fair value hierarchy, the fair value of such financial instruments is classified as a Level 1.

Under the fair value hierarchy, the fair value of such financial instruments is classified as Level 1.

Other Deferred Assets

deferred assets associated with the MDL class action settlement reimbursements,

as further discussed in Note 15 – Legal Proceedings, has a carrying amount of

$ 2.6 million as of both March 31, 2026

and December 31, 2025, which approximates fair value, and was

recorded at amortized cost using an estimated market discount rate.

The fair value of this non-current receivable

is classified as Level 3.

Long-term Financial Liabilities

As of September 30, 2025 and December 31, 2024, all of the Company’s outstanding long-term debt interest rates were a fixed rate.

As of March 31, 2026 and December 31, 2025, all of the Company’s outstanding long-term debt interest rates were a fixed rate.

The fair value of the Company’s long-term debt is determined by discounting their future cash flows using current market interest rates on similar instruments with comparable maturities consistent with ASC 825, Financial Instruments.

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(in thousands)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Carrying amount $ 185,933 $ 176,408

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NOTE 7 – INCOME TAXES

Deferred income taxes are provided in accordance with ASC 740, Income Taxes, on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the condensed consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse.

Deferred income taxes are

provided in accordance with ASC 740, Income Taxes, on all differences between the

tax basis of assets and liabilities and the amounts at which they are carried

in the unaudited condensed consolidated financial statements based on the enacted tax rates expected

to be in effect when such temporary differences are expected to reverse .

The Company’s rate regulated subsidiaries recognize regulatory liabilities, to the extent considered in ratemaking, for deferred taxes provided in excess of the current statutory tax rate and regulatory assets for deferred taxes provided at rates less than the current statutory rate.

Such tax-related regulatory assets and liabilities are reported at the revenue requirement level and amortized to income as the related temporary differences reverse, generally over the lives of the related properties.

Under ASC 740, Income Taxes, an uncertain tax position represents our expected treatment of a tax position taken, or planned to be taken in the future, that has not been reflected in measuring income tax expense for financial reporting purposes.

The Company establishes reserves for uncertain tax positions based upon management's judgment as to the sustainability of these positions.

These accounting estimates related to the uncertain tax position reserve require judgments to be made as to the sustainability of each uncertain tax position based on its technical merits.

The Company believes its tax positions comply with applicable law and that it has adequately recorded reserves as required.

However, to the extent the final tax outcome of these matters is different than the estimates recorded, the Company would then adjust its tax reserves or unrecognized tax benefits in the period that this information becomes known.

The Company has elected to recognize accrued interest (net of related tax benefits) and penalties related to uncertain tax positions as a component of its income tax expense.

For the full year 2024, the Company accrued approximately $ 17 thousand in penalties and interest related to positions taken on the 2022 corporate income tax return.

For the nine months ended September 30, 2025, the Company has accrued approximately $ 16 thousand in penalties and interest related to positions taken on the 2022 and 2024 corporate income tax return.

Under ASC 740, Income Taxes, an uncertain tax position represents our expected treatment of a tax position

taken, or planned to be taken in the future, that has not been reflected in

measuring income tax expense for financial reporting purposes.

The Company establishes reserves for

uncertain tax positions based upon management's judgment as to the

sustainability of these positions.

These accounting estimates related to the

uncertain tax position reserve require judgments to be made as to the

sustainability of each uncertain tax position based on its technical merits.

The Company believes its tax positions comply with applicable law and that it

has adequately recorded reserves as required.

However, to the extent the final

tax outcome of these matters is different than the estimates recorded, the

Company would then adjust its tax reserves or unrecognized tax benefits in the

period that this information becomes known.

The Company has elected to recognize accrued interest (net of related

tax benefits) and penalties related to uncertain tax positions as a component

of its income tax expense.

For the full year 2025, the Company accrued approximately $ 22 thousand in penalties and interest related to positions taken on the 2022 and 2024 corporate income tax return.

For the three months ended March 31, 2026, the Company has accrued approximately $ 6 thousand in penalties and interest related to positions taken on the 2022 and 2024 corporate income tax return.

The Company remains subject to examination by federal and state authorities for the tax years 2022 through 2025 .

Investment tax credits were deferred through 1986 and are recognized as a reduction of deferred income tax expense over the estimated economic useful lives of the related assets.

2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law, which

includes several changes to U.S.

tax and related laws, including the temporary

and permanent extension of expiring provisions of the Tax Cuts and Jobs Act of

The Company has begun evaluating the impact that the OBBBA may have on its consolidated financial condition and

results of operations and determined that the majority of the provisions in the OBBBA does not apply to the Company and management anticipates minimal impact.

On July 4, 2025, the One

Big Beautiful Bill Act, or OBBBA, was signed into law, which includes several

changes to U.S.

tax and related laws, including the temporary and permanent

extension of expiring provisions of the Tax Cuts and Jobs Act of 2017, or TCJA.

The Company has evaluated the impact that the

OBBBA may have on its consolidated financial condition and results of

operations and determined there is no material impact on our business,

financial position or results of operations .

NOTE 8 – STOCK COMPENSATION PLANS

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Plan, that replaced the 2015 Equity Compensation Plan, or the 2015 Plan.

Outstanding grants under the 2015 Plan shall

continue in effect according to their terms, consistent with the 2015

No further grants will be made

under the 2015 Plan after the approval date of the 2025 Plan.

The 2025 Plan

provides that grants may be in any of the following forms:

incentive stock

options, nonqualified stock options, stock units, stock awards, dividend

equivalents and other stock-based awards.

The 2025 Plan is administered and

interpreted by the Compensation Committee of the Board of Directors, or the

The Committee has the

authority to determine the individuals to whom grants will be made under the 2025

Plan, determine the type, size and terms of the grants, determine the time when

grants will be made and the duration of any applicable exercise or restriction

period (subject to the limitations of the 2025 Plan) and deal with any other

matters arising under the 2025 Plan.

of the employees of the Company and its subsidiaries are eligible for grants

under the 2025 Plan.

Non-employee directors of the Company are also

eligible to receive grants under the 2025 Plan.

The 2025 Plan provides for the issuance of

263,932 shares of Class A Non-Voting Stock.

Outstanding grants under the 2015 Plan shall continue in effect

according to their terms, consistent with the 2015 Plan.

No further grants will be made under the 2015

Plan after the approval date of the 2025 Plan.

The 2025 Plan provides that grants may be in any of the following forms:

incentive stock options, nonqualified stock options, stock units, stock awards,

dividend equivalents and other stock-based awards.

The 2025 Plan is

administered and interpreted by the Compensation Committee of the Board of

Directors, or the Committee.

Committee has the authority to determine the individuals to whom grants will be

made under the 2025 Plan, determine the type, size and terms of the grants,

determine the time when grants will be made and the duration of any applicable

exercise or restriction period (subject to the limitations of the 2025 Plan)

and deal with any other matters arising under the 2025 Plan.

All of the employees of the Company and its

subsidiaries are eligible for grants under the 2025 Plan.

directors of the Company are also eligible to receive grants under the 2025

On September 16, 2025,

5,000 shares of Class A Stock were granted as restricted stock awards.

5,000 shares of Class A Non-Voting Stock were granted as restricted stock awards.

The fair value per share was $ 32.08 , the

closing price of the Class A Stock as recorded on the Nasdaq Global Select

closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select

Market on September 16, 2025.

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date, are subject to forfeiture in the event of the recipient’s termination of

On July 1, 2025, 1,000 shares of Class A Stock were granted as a restricted stock award.

The fair value per share was $ 33.96 , the closing price of the Class A Stock as recorded on the Nasdaq Global Select Market on July 1, 2025.

On July 1, 2025, 1,000 shares of Class A Non-Voting Stock were granted as a restricted stock award.

The fair value per share was $ 33.96 , the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on July 1, 2025.

This restricted stock award will be fully vested and released May 6, 2026 and, prior to its vesting date, is subject to forfeiture in the event of the recipient’s termination of service.

On May 5, 2025, 4,000 shares

of Class A Stock were granted as

of Class A Non-Voting Stock were granted as

restricted stock awards.

The fair value

per share was $ 34.27 , the closing price of the Class A Stock as recorded on the

per share was $ 34.27 , the closing price of the Class A Non-Voting Stock as recorded on the

Nasdaq Global Select Market on May 5, 2025.

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date, are subject to forfeiture in the event of the recipient’s termination of

On April 11, 2025, 1,000 shares of Class A Stock were granted as a restricted stock award.

The fair value per share was $ 33.51 , the closing price of the Class A Stock as recorded on the Nasdaq Global Select Market on April 11, 2025.

On April 11, 2025, 1,000 shares of Class A Non-Voting Stock were granted as a restricted stock award.

The fair value per share was $ 33.51 , the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on April 11, 2025.

This restricted stock award will be fully vested and released one year after the grant date and, prior to its vesting date, is subject to forfeiture in the event of the recipient’s termination of service.

On May 6, 2024, 5,000 shares

of Class A Stock were granted as

restricted stock awards.

The fair value

per share was $ 37.07 , the closing price of the Class A Stock as recorded on the

Nasdaq Global Select Market on May 6, 2024.

These restricted stock awards were fully

vested and released one year after the grant.

Compensation expense of approximately $ 60 thousand and $ 152 thousand was recorded for the three and nine months ended September 30, 2025, respectively, for restricted stock awards

issued in May 2024, April 2025, May 2025, July 2025 and September 2025.

Compensation expense of approximately $ 47 thousand and $ 172 thousand was recorded for the three and nine months ended September 30, 2024, respectively, for restricted stock awards issued in May 2023.

Costs were determined based on the fair value on the dates of the awards and those costs were charged to income over the service periods associated with the awards.

Compensation expense of approximately

$ 92 thousand, related to the April, May, July and September 2025 issue of

restricted stock awards, was recorded for the three months ended March 31, 2026.

Compensation expense of approximately $ 46

thousand, related to the May 2024 issue of restricted stock awards, was

recorded for the three months ended March 31, 2025.

Costs were determined based on the fair value

on the dates of the awards and those costs were charged to income over the

service periods associated with the awards.

There was no stock compensation cost capitalized as part of an asset.

The following summary reflects changes in the shares of Class A Stock underlying options and restricted stock awards for the nine months ended September 30, 2025:

Options Restricted Awards

Option Shares Weighted Average Exercise Price Weighted Average Remaining Life (Yrs.) Aggregate Intrinsic Value (in thousands) Outstanding Restricted Stock Awards Weighted Average Grant Date Fair Value

Plan options/restricted stock awards

Outstanding at January 1, 2025 - $ - - $ - 5,000 $ 37.07

Granted - - - - 11,000 33.18

Exercised/vested and released - - - - ( 5,000 ) 37.07

Expired/cancelled - - - - - -

Outstanding at September 30, 2025 - $ - - $ - 11,000 $ 33.18

Exercisable/vested at September 30, 2025 - $ - - $ - - $ -

There were no options exercised during the nine months ended September 30, 2025.

There were no unvested option shares outstanding under the 2015 Plan during the nine months ended September 30, 2025.

As of September 30, 2025, there were no unrecognized expenses related to non-vested option shares granted under the 2015 Plan.

As of September 30, 2025, there was approximately $ 276 thousand total unrecognized expenses related to non-vested awards of restricted shares awarded under the 2015 Plan.

There were no options exercised during the three months ended March 31, 2026.

There were no unvested option shares outstanding under the 2025 Plan during the three months ended March 31, 2026.

As of March 31, 2026, there were no unrecognized expenses related to non-vested option shares granted under the 2025 Plan.

As of March 31, 2026, there was approximately $ 91 thousand total unrecognized expenses related to non-vested awards of restricted shares awarded under the 2025 Plan.

The cost will be recognized over 0.26 years, the remaining vesting period for the restricted stock awards.

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Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide regulated water utility service to customers within their established service territory in all three counties of Delaware and in portions of Maryland and Pennsylvania, pursuant to rates filed with and approved by the DEPSC, the MDPSC and the PAPUC.

As of September 30, 2025, Artesian Water was serving approximately 98,800 customers, Artesian Water Maryland was serving approximately 2,700 customers and Artesian Water Pennsylvania was serving approximately 40 customers.

As of March 31, 2026, Artesian Water was serving approximately 99,500 customers, Artesian Water Maryland was serving approximately 2,700 customers and Artesian Water Pennsylvania was serving approximately 40 customers.

Artesian Wastewater and TESI provide regulated wastewater utility service to customers within their established service territory in Sussex County, Delaware pursuant to rates filed with and approved by the DEPSC.

As of September 30, 2025, Artesian Wastewater and TESI were serving approximately 9,000 customers combined, including one large industrial customer.

As of March 31, 2026, Artesian Wastewater and TESI were serving approximately 9,300 customers combined, including one large industrial customer.

NOTE 10 – OTHER DEFERRED ASSETS

The investment in CoBank, ACB, or CoBank, which is a cooperative bank, is related to certain outstanding First Mortgage Bonds and is a required investment in the bank based on the underlying long-term debt agreements .

(in thousands) September 30, 2025 December 31, 2024

The investment in CoBank,

ACB, or CoBank, which is a cooperative bank, is related to certain outstanding

First Mortgage Bonds and is a required investment in the bank based on the

underlying long-term debt agreements.

settlement agreement receivable is related to the long-term portion of MDL class action settlement reimbursements, as

further discussed in Note 15 - Legal Proceedings, and is recorded at amortized

cost, with the difference between the carrying amount and the amortized cost

recognized as CIAC.

(in thousands) March 31, 2026 December 31, 2025

Investment in CoBank $ 7,351 $ 6,889

Settlement receivable-long term 2,596 2,596

Other deferred assets 77 86

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NOTE 11 - REGULATORY ASSETS

The ASC 980, Regulated Operations, stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency.

Certain expenses are recoverable through rates charged to our customers, without a return on investment, and are deferred and amortized during future periods using various methods as permitted by the DEPSC, MDPSC, and PAPUC.

ASC 980, Regulated Operations, stipulates generally accepted accounting principles for companies whose rates

are established or subject to approvals by a third-party regulatory

Certain expenses are recoverable

through rates charged to our customers, without a return on investment, and are

deferred and amortized during future periods using various methods as permitted

by the DEPSC, MDPSC, and PAPUC.

The deferred income taxes will be amortized over future years as the tax effects of temporary differences that previously flowed through to our customers are reversed.

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Amortization of these deferred costs began in the fourth quarter of 2023.

Deferred acquisition adjustments represent the excess payment for purchases of utility plant from Delaware municipalities over the determined original cost net of depreciation.

Deferred acquisition costs represent the closing cost associated with the acquisitions.

Costs of $ 3.7 million were reclassified from net utility plant and $ 0.1 million were reclassified from contributions in aid of construction, which are being amortized over the periods noted in the table below and recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023.

Unrecovered reserve for depreciation of $ 4.3 million was the result of the implementation of a change in depreciation methods for certain general plant assets that are being amortized over five years and recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023.

Amortization of these deferred costs began in the third quarter of 2024.

Regulatory expenses amortized on a straight-line basis are noted below:

Deferred acquisition

adjustments represent the excess payment for purchases of utility plant from

Delaware municipalities over the determined original cost net of

depreciation.

Deferred acquisition costs

represent the closing cost associated with the acquisitions.

Costs are being amortized over the periods

noted in the table below and recovered in customer rates as approved by the

Amortization of these deferred

costs began in the third quarter of 2024.

Unrecovered reserve for

depreciation is the result of the implementation of a change in depreciation

methods for certain general plant assets that are being amortized over five

years and recovered in customer rates as approved by the DEPSC.

Amortization of these deferred costs began in

the third quarter of 2024.

expenses amortized on a straight-line basis are noted below:

Years Amortized

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(in thousands)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Deferred contract costs and other $ 86 $ 109

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The annual amortization currently authorized by the DEPSC could be adjusted in future rate applications.

settlement refunds consist of reimbursements from the Trust for Artesian

Water’s past capital and operating costs, totaling approximately $ 10.0 million,

related to the treatment costs associated with the release of contaminants from

the Site in groundwater that Artesian Water uses for public potable water

supply, pursuant to the Settlement Agreement.

The full amount of $ 10.0 million has been paid to us, in four

installments of approximately $ 2.5 million each, in August 2022, July 2023,

July 2024 and July 2025.

Artesian Water

received approval from the DEPSC in October 2022 to refund to its customers

these reimbursements for past capital and operating costs.

The refund for the reimbursements was applied

to customer bills in annual installments.

The refunds occurred in October 2022, August 2023, August 2024 and

The amount of the credit was

calculated by dividing the amount of the reimbursement by the number of

eligible customers.

Beginning in 2022, Artesian

Water began recording recovery of capital expenditures related to treatment of

contaminants from the Site as Contributions in Aid of Construction and began recording expense recovery as an

offset to operations and maintenance expense, with the intention that those

recoveries will be available for inclusion and consideration in any future rate

applications.

Pursuant to the enactment of the Tax Cuts and Jobs Act, or TCJA, on December 22, 2017, the Company adjusted its existing deferred income tax balances to reflect the decrease in the corporate income tax rate from 34 % to 21 % (see Note 7 – Income Taxes) resulting in a decrease in the net deferred income tax liability of $ 24.3 million, of which $ 22.8 million was reclassified to a regulatory liability related to Artesian Water and Artesian Water Maryland.

The regulatory liability amount is subject to certain Internal Revenue Service, or IRS, normalization rules that require the benefits to customers be spread over the remaining useful life of the underlying assets giving rise to the associated deferred income taxes.

On January 31, 2019, the DEPSC approved Artesian Water to amortize the regulatory liability amount of $ 22.2 million over a period of 49.5 years beginning February 1, 2018, subject to audit at a later date.

In May 2022, Artesian Water received a rate order from the DEPSC instructing Artesian Water to continue amortizing the liability over a period of 49.5 years, subject to review in Artesian Water’s next base rate filing.

On June 12, 2024, the DEPSC approved a settlement agreement for the Artesian Water rate application, filed on April 28, 2023, that required two changes to the deferred income tax regulatory liability effective June 12, 2024.

A $ 7.6 million gross-up adjustment was recorded to reflect the benefit customers would receive from the implementation of new base rates and $ 4.0 million of the regulatory liability, which represents costs not subject to IRS normalization rules, is now required to be amortized over a six-year period rather than 49.5 years.

The MDPSC has not issued a final order on the regulatory liability amount of $ 0.6 million regarding the effects of the TCJA on Maryland customers.

Deferred income taxes

primarily represent tax benefits that will be returned to regulated utility customers

through an approved rate making process, as described below.

These tax benefits resulted from the TCJA.

The TCJA required the Company to remeasure its

deferred income tax balances to reflect the reduction in the corporate income

tax rate from 34 % to 21 %.

This remeasurement adjustment made to deferred income

taxes was substantially offset by the recognition of a regulatory liability for

excess accumulated deferred income taxes, or EADIT, and reflects the benefits

customers will receive in future approved rates.

Pursuant to a DEPSC rate order, Artesian

Water is amortizing $ 24.7 million of the EADIT balance.

The DEPSC has not issued a final order on the

TCJA regulatory liability amount of $ 0.6 million for wastewater customers, and

the MDPSC has not issued a final order on the TCJA regulatory liability amount

of $ 0.6 million for Maryland customers.

Regulatory liabilities comprise:

(in thousands)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Utility plant retirement cost obligation $ 97 $ 107

Deferred settlement refunds - 2,496

Deferred income taxes (related to TCJA) 25,869 26,194

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We can provide no assurances that rate increase requests will be approved by applicable regulatory agencies and, if approved, we cannot guarantee that these rate increases will be granted in a timely or sufficient manner to cover the investments and expenses for which we initially sought the rate increase.

Artesian Water filed an initial request with the DEPSC on April 28, 2023, further supplemented with a request filed on November 30, 2023, to implement new rates to meet a requested increase in revenue of approximately $ 16.7 million, on an annualized basis, or 22.7 %.

The DEPSC approved and Artesian Water implemented a temporary rate increase effective November 28, 2023 of approximately $ 10.8 million, on an annualized basis, or 14.6 %, subject to refund, and reduced the DSIC previously in effect from approximately 7.5 % to zero.

On May 22, 2024, Artesian Water, the Staff of the DEPSC, and the Division of the Public Advocate, or DPA, (collectively, the Parties) entered into an agreement, or Settlement Agreement, to settle Artesian Water’s April 2023 application to implement new rates.

On June 12, 2024, a DEPSC order was issued approving the settlement agreement entered into on May 22, 2024 between the Parties.

The Settlement Agreement authorized a total increase in the revenue requirement of $ 11.2 million, on an annualized basis, or approximately 15.2 %, with a rate effective date of June 12, 2024, which encompassed a 9.5 % return on common equity and an overall rate of return on rate base of 6.75 %.

Temporary rates that were in effect since November 28, 2023 were replaced with the final approved rates from the Settlement Agreement.

Revised depreciation rates for utility plant and revised amortization rates for certain regulatory assets and liabilities were also approved effective June 12, 2024.

On April 4, 2025, Artesian Water filed a request with the DEPSC to implement new rates to meet a requested increase in revenue of 12.41 %, or approximately $ 10.8 million, on an annualized basis.

The actual effective increase is less than 12.41 % since Artesian Water has been permitted to recover specific investments made in infrastructure through the assessment of a 1.66 % DSIC.

Since the DSIC rate is set to zero when temporary rates are placed into effect, customers would experience an incremental increase of 10.75 %, the net of the overall 12.41 % increase less the DSIC rate of 1.66 % currently in effect, if the requested increase is granted in full by the DEPSC.

The new proposed rates are designed to support Artesian Water’s ongoing capital improvement program and to cover increased costs of operations, including chemicals and electricity for water treatment, water quality regulation compliance, taxes, labor and benefits.

In accordance with

applicable Delaware law, the DEPSC approved and Artesian Water implemented the

first temporary rate increase effective June 3, 2025 of approximately $ 2.5

million in additional annual revenue, or 2.88 %, subject to refund, and reduced

the DSIC previously in effect from approximately 1.66 % to zero, for a temporary

rate increase of net 1.22 %.

On April 4, 2025, Artesian

Water filed a request with the DEPSC to implement new rates to meet a requested

increase in revenue of 12.41 %, or approximately $ 10.8 million, on an annualized

Supplemental and rebuttal

filings were subsequently filed, reducing the

requested increase to 10.2 %, or approximately $ 9.0 million, on an annualized

The actual effective increase would be less than 10.2 % if the requested

increase is granted in full by the DEPSC since Artesian Water has been

permitted to recover specific investments made in infrastructure through the

assessment of a 1.66 % DSIC rate, which rate is set to zero once temporary rates

are placed into effect.

Temporary rates

were placed into effect as noted below.

The new proposed rates are designed to

support Artesian Water’s ongoing capital improvement program and to cover

increased costs of operations, including chemicals and electricity for water

treatment, water quality regulation compliance, taxes, labor and benefits.

In accordance with applicable Delaware law,

the DEPSC approved and Artesian Water implemented the first temporary rate

increase effective June 3, 2025 of approximately $ 2.5 million in additional

annual revenue, or 2.88 %, subject to refund, and reduced the DSIC previously in

effect from approximately 1.66 % to zero , for a temporary rate increase of net

Also, as permitted by law, on

November 6, 2025 Artesian Water placed into effect a second step of temporary rates

designed to generate an increase in annual operating revenue of approximately

6.82 %, or $ 5.8 million, on an annualized basis, until permanent rates are

determined by the DEPSC.

As of March 31, 2026, a pproximately

$ 1.0 million of the revenue from the second step of temporary rates was recorded

as a reserve for refund and is included in Other current

liabilities in the Condensed Consolidated Balance Sheets.

Other Proceedings

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The DSIC rate applied between base rate filings is capped at 7.50 % of the amount billed to customers under otherwise applicable rates and charges, and the DSIC rate increase applied cannot exceed 5.0 % within any 12-month period.

The following table summarizes (1) Artesian Water’s last two applications with the DEPSC to collect DSIC rates and (2) the rate upon which eligible plant improvements was based:

The following table summarizes (1) Artesian Water’s applications with the DEPSC to collect DSIC rates and (2) rate upon which each eligible plant improvement was based:

Application Date 11/22/2024

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Eligible Plant Improvements – Installed Ending Date 10/31/2024

On December 18, 2024, the DEPSC approved Artesian

Water’s application to implement a DSIC rate of 1.66 %, effective January 1,

Effective July 1, 2024, Artesian

Water was permitted to recover specific investments made in infrastructure

through the assessment of a 0.34 % DSIC.

The January 1, 2025 DSIC rate is subject to periodic

audit by the DEPSC.

Effective January 1, 2025,

Artesian Water was permitted to recover specific investments made in

infrastructure through the assessment of a 1.66 % DSIC.

The January 1, 2025 DSIC rate is still subject

to audit by the DEPSC.

The January 1,

DSIC rate was reset to zero when the temporary base rate increase was placed

into effect on June 3, 2025.

For the three

months ended September 30, 2025, we did no t report any earnings in DSIC

For the nine months ended September

30, 2025, we earned approximately $ 0.5 million, in DSIC revenue.

In each of the three and nine months ended September

2025 DSIC rate was reset to zero when the temporary base rate increase was

placed into effect on June 3, 2025.

For the three months ended March 31, 2026, we

did no t report any earnings in DSIC revenue.

For the three months ended March

31, 2025, we earned approximately $ 0.3 million in DSIC revenue.

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The following table summarizes the shares used in computing basic and diluted net income per share:

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

(in thousands) (in thousands)

For the Three Months Ended

(in thousands)

Weighted average common shares outstanding during the period for basic computation 10,318 10,302

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Weighted average common shares outstanding during the period for diluted computation 10,324 10,306

For the three months and nine months ended September 30, 2025 and 2024, no shares of restricted stock awards were excluded from the calculations of diluted net income per share.

For the three and nine months ended September 30, 2025 and 2024, no stock options were excluded from the calculations of diluted net income per share.

The Company has 15,000,000 authorized shares of Class A Stock and 1,040,000 authorized shares of Class B Stock.

As of September 30, 2025, 9,431,674 shares of Class A Stock and 881,452 shares of Class B Stock were issued and outstanding.

As of September 30, 2024, 9,416,339 shares of Class A Stock and 881,452 shares of Class B Stock were issued and outstanding.

the three months ended March 31, 2026, no shares of restricted stock awards

were excluded from the calculations of diluted net income per share.

For the three months

ended March 31, 2025, no stock options were excluded from the calculations of

diluted net income per share.

The Company has 15,000,000 authorized shares of Class A Non-Voting Stock and 1,040,000 authorized shares of Class B Voting Stock.

As of March 31, 2026, 9,436,952 shares of Class A Non-Voting Stock and 881,452 shares of

Class B Voting Stock were issued and outstanding.

As of March 31, 2025, 9,421,542 shares

of Class A Non-Voting Stock and 881,452 shares of Class B Voting Stock were

issued and outstanding.

The par value for both classes is $ 1.00 per share.

Equity per common share was $ 24.14 and $ 23.24 at September 30, 2025 and December 31, 2024, respectively.

These amounts were computed by dividing common stockholders' equity by the number of weighted average shares of common stock outstanding on September 30, 2025 and December 31, 2024, respectively.

Equity per common share was $ 24.50 and $ 24.24 at March 31, 2026 and December 31, 2025, respectively.

These amounts were computed by dividing common stockholders' equity by the number of weighted average shares of common stock outstanding on March 31, 2026 and December 31, 2025, respectively.

NOTE 15 - LEGAL PROCEEDINGS

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Several of the water

systems of Artesian Resources’ subsidiaries are claimants in four

multi-district litigation, or MDL, class action settlements designed to resolve

systems of Artesian Resources’ subsidiaries are claimants in four MDL class action settlements designed to resolve

claims for per- and polyfluoroalkyl substances, or PFAS, contamination in

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(3) Tyco Fire Products LP and Chemguard, Inc.

( collectively, “the Tyco Defendants”);

( collectively, “the

Tyco Defendants”);

and (4) BASF Corporation (“BASF”).

Claims Forms have been submitted on behalf of

Artesian Resources’ eligible

systems in each of the Settlements.

2025, the Company received its first payment from 3M in the amount of $ 2.3

million with an anticipated total net settlement of approximately $ 12.6 million

to be paid over 8 years.

DuPont settlement payments

to claimants began on or about October 15, 2025.

Although the Company has not yet received its

first payment, it expects to soon receive approximately $ 1.3 million, equal to approximately 95 % of its total

DuPont settlement award.

The Company anticipates receiving the balance

of the 3M settlement award, the Dupont settlement award and additional

settlement payments from the other MDL lawsuit defendants.

The current projected payment timeline for

the Tyco Defendants and BASF settlements is December 2025;

however, that

timeline is heavily dependent on timely resolution of claim deficiencies by

claimants and the outcome of the quality control review process.

The settlement proceeds are intended to

reimburse the Company for past and future capital investments or operations and

maintenance expenses related to PFAS water contamination to its water systems .

The DEPSC will review

and approve the regulatory treatment for the settlement funds received to date as

well as future settlement funds.

expected that the funds will be returned to customers through regulatory mechanisms as determined by the DEPSC.

Artesian Resources’ eligible systems in each of the Settlements.

In October 2025, the Company received its

first payment from 3M in the amount of $ 2.3 million, and its second payment of

$ 5.2 million in November 2025, with an anticipated additional net settlement of

approximately $ 5.1 million to be paid over eight years .

In December 2025, the

Company received the full DuPont settlement award payment of approximately $ 1.3

In April 2026, the Company received

approximately $ 1.3 million in settlement payments from the Tyco defendants and approximately

$ 0.5 million in settlement payments from BASF.

The settlement

proceeds are intended to reimburse the Company for past and future capital

investments or operations and maintenance expenses related to PFAS water

contamination to its water systems.

DEPSC approved the return of $ 7.2 million received from 3M to Artesian Water’s

customers through a one-time bill credit, which was applied to customers’ bills

in December 2025.

The DEPSC also

approved the regulatory treatment of the settlement amounts for DuPont, the

Tyco Defendants and BASF and the remaining settlement amounts for 3M to be

recorded as CIAC .

On September 15, 2025, Artesian Water was served as a

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from a contractual dispute related to a water main renewal project and asserts a claim against us in the total amount of

$ 3.4 million comprised mainly of $ 2.7 million in unabsorbed office overhead as

well as $ 0.1 million in end-of-job direct costs and $ 0.6 million in change

$ 3.4 million consisting mainly of $ 2.7 million in unabsorbed office overhead, $ 0.1 million in end-of-job direct costs and $ 0.6 million in change

While we plan to defend the

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This profit measure excludes the financing component and allows management to focus on controllable expenses, to allocate resources during the annual budgeting process and to monitor budget versus actual results on a monthly basis.

The accounting policies of the operating segments are the same as those described in Note 2 – Basis of Presentation.

The accounting policies of the operating segments are the same as those described in Note 3 – Revenue Recognition.

The measurement of depreciation, interest, and capital expenditures are predominately related to our Regulated Utility segment.

These amounts in our non-utility business are negligible and account for approximately less than 1% of condensed consolidated amounts as of September 30, 2025 and September 30, 2024.

Three Months Ended September 30,

Regulated Utility Total Regulated Utility Total

Regulated Utility Revenues $ 28,617 $ 28,617 $ 27,450 $ 27,450

Reconciliation of revenue

Other revenues 1,938 (a) 1,751 (a)

Inter-segment elimination ( 64 ) ( 59 )

Consolidated revenues $ 30,491 $ 29,142

Payroll and Benefits (c) 6,873 6,160

Supply and Delivery (d) 4,066 3,640

Administrative (e) 2,557 2,384

Depreciation and Amortization 3,484 3,274

Income Taxes 2,229 2,147

Property and other taxes 1,188 1,556

Regulated Utility Operating Income $ 8,220 $ 8,220 $ 8,289 $ 8,289

Reconciliation of operating income

Other profit 399 (a) 301 (a)

Consolidated operating income $ 8,619 $ 8,590

Nine Months Ended September 30,

These amounts in our non-utility business are negligible and account for approximately less than 1% of consolidated amounts as of March 31, 2026 and March 31, 2025.

Three Months Ended March 31,

Regulated Utility Total Regulated Utility Total

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NOTE 17 - IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

In December 2023, the Financial Accounting Standards Board, or FASB, issued amended guidance on Income Taxes:

Improvements to Income Tax.

The amendments require the Company to provide further disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, as well as additional information about federal, state/local and foreign income taxes.

The standard also requires the Company to annually disclose its income taxes paid (net of refunds received), disaggregated by jurisdiction.

The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The standard is to be applied on a prospective basis, although optional retrospective application is permitted.

While the standard will require additional disclosures related to the Company’s income taxes, management does not expect the adoption of this guidance to have an impact on the Company’s results of operations or cash flows.

In November 2024, FASB issued amended guidance which requires disaggregated disclosure of income statement expenses for public business entities.

The guidance does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

The standard is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

In November 2024, FASB

issued amended guidance which requires disaggregated disclosure of income

statement expenses for public business entities.

The guidance does not change

the expense captions an entity presents on the face of the income statement;

it requires disaggregation of certain expense captions into specified

categories in disclosures within the footnotes to the financial

The standard is effective

for fiscal years beginning after December 15, 2026, and interim periods within fiscal

years beginning after December 15, 2027.

Early adoption is permitted.

In September 2025, the FASB

issued guidance that amends the existing standard to remove all references to

prescriptive and sequential software development project stages.

Under this guidance, eligible software development

costs will begin capitalization when management has authorized and committed to

funding the software project, and it is probable that the project will be

completed and the software will be used to perform the function intended.

In evaluating whether it is probable the

project will be completed, management is required to consider whether there is

significant uncertainty associated with the development activities of the

This guidance is effective for

all annual periods beginning after December 15, 2027, and for interim periods

within those annual reporting periods, with early adoption permitted.

The guidance may be applied on a prospective

basis, a modified basis for in-process projects, or a retrospective basis.

We are currently evaluating the impact of

this guidance to determine the impact on the consolidated financial statements

and related disclosures.

In December 2025, the FASB

issued guidance to enhance, clarify, and streamline interim disclosure

requirements, emphasizing events and material changes that have occurred since

the most recent annual reporting period.

The amendments are effective for the Company for interim reporting

periods within annual reporting periods beginning after December 15, 2027, with

early adoption permitted.

The Company is

required to apply the amendments in its interim reporting starting with the

first quarter of fiscal year 2028.

guidance may be adopted prospectively or retrospectively.

The Company is currently evaluating the

impact of this new guidance, which may alter the structure of our interim

financial statement disclosures.

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

What changed 10-Q

Item 1. Financial Statements