What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-16 compared with 2025-03-17 · 200 added, 287 removed, 836 unchanged (37% of the section changed)

3 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2025 and 2024

8 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Consolidated Water Co.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 17, 2025 , expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of a material weakness.

We have audited the accompanying consolidated balance sheet of Consolidated Water Co.

(the “Company”) as of December 31, 2025, and the related consolidated statements of income, stockholders’ equity and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2025, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 16, 2026 , expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

20 unchanged sentences

● Assessing the accuracy and the occurrence of the actual cost amount used in the percentage of completion by testing a sample of project costs incurred to date.

● Evaluating the reasonableness of project status by performing site visits and performing inquiries of project managers to assess the nature and costs of activities required to complete the project.

● Evaluating the reasonableness of project status by performing inquiries of project managers to assess the nature and costs of activities required to complete the project.

● Assessing the reasonableness of changes in estimated costs to complete by comparing project profitability estimates in the current period to historical estimates and actual performance including during the period under audit and subsequent to the period end and investigating reasons for changes in expected costs and project margins.

/s/ Marcum LLP

We have served as the Company’s auditor since 2005.

West Palm Beach, Florida

/s/ CBIZ CPAs P.C.

We have served as the Company’s auditor since 2005 (such date takes into account the acquisition of the attest business of Marcum llp by CBIZ CPAs P.C.

effective November 1, 2024).

Fort Lauderdale, FL

March 16, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Consolidated Water Co.

Adverse Opinion on Internal Control over Financial Reporting

We have audited Consolidated Water Co.

Ltd.’s (the "Company") internal control over financial reporting as of December 31, 2024 , based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weakness described in the subsequent paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in “Management’s Annual Report on Internal Control Over Financial Reporting”:

Business process controls (automated and manual) that are dependent on information technology general controls (ITGCs) from January 1, 2024 through October 31, 2024 could have been adversely affected due to the ineffective ITGCs during this time period.

Due to the lack of a sufficient time period over which to demonstrate operating effectiveness, certain annual and quarterly business process controls are considered to be ineffective as of December 31, 2024.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal December 31, 2024 financial statements and this report does not affect our report dated March 17, 2025 on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the balance sheets as of December 31, 2024 and 2023 and the related statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024 and our report dated March 17, 2025 expressed an unqualified opinion on those financial statements.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Consolidated Water Co.

(the “Company”) as of December 31, 2024, the related consolidated statements of income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “ Management’s Annual Report on Internal Control Over Financial Reporting” .

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP

We have served as the Company’s auditor since 2005.

West Palm Beach, Florida

We served as the Company’s auditor from 2005 through April 2025.

West Palm Beach, FL

March 17, 2025

14 unchanged sentences

Operating lease right-of-use assets

Long-term assets of discontinued operations

LIABILITIES AND EQUITY

20 unchanged sentences

issued and outstanding 39,507 and 44,004 shares, respectively

Class A common stock, $ 0.60 par value.

Common stock, $ 0.60 par value.

Authorized 24,800,000 shares;

issued and outstanding 15,945,233 and 15,846,345 shares, respectively

Class B common stock, $ 0.60 par value.

Authorized 145,000 shares;

Additional paid-in capital

10 unchanged sentences

General and administrative expenses

Gain (loss) on asset dispositions and impairments, net

Gain on asset dispositions, net

Income from operations

3 unchanged sentences

Equity in the earnings of affiliates

Loss on put/call options

Other income, net

6 unchanged sentences

( 1,086,744 )

( 2,371,049 )

Net income attributable to Consolidated Water Co.

23 unchanged sentences

Buyback of preferred stock

Purchase of remaining non-controlling interest in PERC

( 3,667,305 )

( 2,440,027 )

Exercise of options

2 unchanged sentences

( 5,684,270 )

( 6,314,126 )

Stock-based compensation

3 unchanged sentences

Buyback of preferred stock

Purchase of remaining non-controlling interest in PERC

( 3,667,305 )

( 2,440,027 )

Exercise of options

7 unchanged sentences

Buyback of preferred stock

Stock issued for services rendered

Exercise of options

14 unchanged sentences

( 12,134,766 )

Impairment loss for Mexico assets - discontinued operations

Foreign currency transaction adjustment - discontinued operations

1 unchanged sentence

Depreciation and amortization

Deferred income tax benefit

Deferred income tax provision (benefit)

Provision for credit losses

Loss on net put/call option

Amortization of operating lease right-of-use assets

Stock issued for services rendered

Compensation expense relating to stock and stock option grants

(Gain) loss on asset dispositions and impairments, net

(Gain) loss on asset dispositions, net

Equity in earnings of affiliates

6 unchanged sentences

( 3,747,675 )

( 3,387,011 )

Prepaid expenses and other assets

( 3,365,747 )

Accounts payable, accrued expenses and other current liabilities

( 2,547,190 )

Accrued compensation

Contract liabilities

6 unchanged sentences

( 1,142,969 )

( 1,819,943 )

Net cash provided by operating activities

Cash flows from investing activities

Purchase of certificate of deposit

( 2,518,493 )

Maturity of certificate of deposit

Additions to property, plant and equipment and construction in progress

4 unchanged sentences

Investment in affiliate

Proceeds from Mexican settlement agreement

Proceeds from Mexico settlement agreement

Acquisition of REC, net of cash acquired

12 unchanged sentences

Dividends paid to non-controlling interests

( 1,102,475 )

Buyback of redeemable preferred stock

53 unchanged sentences

The exchange rates for conversion of Mexican pesos and euros into US$ vary based upon market conditions.

Net foreign currency gains arising from transactions and re-measurements were $ 74,993 , $ 84,678 and $ 41,750 for the years ended December 31, 2024, 2023, and 2022, respectively, and are included in “Other income - Other” in the accompanying consolidated statements of income.

Net foreign currency gains arising from transactions and re-measurements were $ 39,259 , $ 74,993 and $ 84,678 for the years ended December 31, 2025, 2024, and 2023, respectively, and are included in “Other income (expense) - Other” in the accompanying consolidated statements of income.

Cash and cash equivalents:

Cash and cash equivalents consist of demand deposits at banks and certificates of deposit at banks with an original maturity of three months or less.

Cash and cash equivalents as of December 31, 2024 and 2023 include $ 5.2 million and $ 5.1 million, respectively, of certificates of deposit with an original maturity of three months or less.

Cash and cash equivalents consist of demand deposits at banks, certificates of deposit at banks with an original maturity of three months or less and a money market fund with a brokerage firm.

Cash and cash equivalents as of December 31, 2025 and 2024 include $ 17.0 million and $ 5.2 million, respectively, of certificates of deposit with an original maturity of three months or less, and $ 18.1 million and $ 10.6 million, respectively, in the money market fund.

As of December 31, 2025, the Company had deposits in U.S.

banks and brokerages in excess of federally mandated and insured limits of approximately $ 54.7 million.

banks in excess of federally insured limits of approximately $ 44.0 million.

As of December 31, 2025, the Company held cash in foreign bank accounts of approximately $ 58.7 million.

Certain transfers from the Company’s Bahamas bank accounts to Company bank accounts in other countries require the approval of the Central Bank of The Bahamas.

The equivalent United States dollar cash balances for deposits held in The Bahamas as of December 31, 2024 and 2023 were approximately $ 7.7 million and $ 3.0 million, respectively.

The equivalent United States dollar cash balances held in The Bahamas as of December 31, 2025 and 2024 were approximately $ 12.0 million and $ 7.7 million, respectively.

Accounts receivable:

62 unchanged sentences

Based upon this qualitative assessment, the Company determined that it is more likely than not that the fair values of its reporting units exceeded their carrying values as of December 31, 2025 and 2024.

For the year ended December 31, 2022, the Company elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing conducted in prior years for all reporting units other than the manufacturing reporting unit.

The Company assessed relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units are less than their carrying values.

The events and circumstances assessed for each reporting unit included macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant events.

Based upon this qualitative assessment the Company determined that it was more likely than not that the fair values of its Cayman Water and bulk segment reporting units exceeded their carrying values as of December 31, 2022.

Based upon the Company’s negotiated, arms-length purchase of the remaining 39 % equity interest in PERC from its minority shareholders for $ 7.8 million in January 2023, the fair value of the Company’s PERC reporting unit exceeded its carrying value by 79 % as of December 31, 2022.

Due to the factors discussed in the following paragraphs, the Company elected to test the goodwill associated with its manufacturing reporting unit for possible impairment for 2022 using the quantitative tests applied in prior years.

Approximately 80 % of Aerex’s revenue, and 89 % of Aerex’s gross profit, for the year ended December 31, 2020 were generated from sales to one customer.

While Aerex sells various products to this customer, Aerex’s revenue from this customer had historically been derived primarily from one specialized product.

In October 2020, this customer informed Aerex that, for inventory management purposes, it was suspending its purchases of the specialized product from Aerex following 2020 for a period of approximately one year.

This customer informed Aerex at that time that it expected to recommence its purchases of the specialized product from Aerex beginning with the first quarter of 2022.

As a result of this anticipated loss of revenue for Aerex, the Company updated its projections for its Manufacturing reporting unit’s future cash flows.

Such projections assumed, in part, that Aerex’s major customer would recommence its purchases from Aerex in 2022 but at a reduced aggregate amount, as compared to 2020.

Based upon these updated projections, the Company tested its manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020 using the discounted cash flow and guideline public company methods, with a weighting of 80 % and 20 % applied to these two methods, respectively.

As a result of these impairment tests, the Company determined that the estimated fair value of its manufacturing reporting unit exceeded its carrying value by approximately 31 % as of December 31, 2020.

In late July 2021, this former major customer communicated to Aerex that it expected to recommence its purchases of the specialized product from Aerex in 2022 and subsequent years, but informed Aerex that such purchases would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in 2020 and prior years.

The Company’s updated sales estimate for this customer based on this new information was substantially below the

anticipated sales to this customer for 2022 and subsequent years that the Company used in the discounted cash flow projections it prepared for purposes of testing its Manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020.

Furthermore, Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers were adversely impacted by the negative economic conditions (caused in part by the COVID-19 pandemic).

These negative economic conditions also increased Aerex’s raw material costs, resulted in raw material shortages and extended delivery times for such materials, and adversely affected the overall financial condition of Aerex’s current and prospective customers.

Accordingly, in light of this new information from Aerex’s former major customer, and the on-going weak economic conditions that the Company believed would continue through 2022, the Company updated its projections of future cash flows for the manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80 % and 20 % applied to these two methods, respectively.

Based upon this testing, the Company determined that the carrying value of its manufacturing reporting unit exceeded its fair value by $ 2.9 million, and the Company recorded an impairment loss to reduce its manufacturing segment’s goodwill by this amount for the three months ended June 30, 2021.

For the year ended December 31, 2022, the Company estimated the fair value of its manufacturing reporting unit by applying the discounted cash flow method, which relied upon seven-year discrete projections of operating results, working capital and capital expenditures, along with a terminal value subsequent to the discrete period.

These seven-year projections were based upon historical and anticipated future results, general economic and market conditions, and considered the impact of planned business and operational strategies.

The discount rates for the calculations represented the estimated cost of capital for market participants at the time of each analysis.

The Company also estimated the fair value of its manufacturing reporting unit for the year ended December 31, 2022 by applying the guideline public company method.

The Company weighted the fair values estimated for its manufacturing reporting unit under each method and summed such weighted fair values to estimate the overall fair value for the reporting unit.

The respective weightings the Company applied to each method for the year ended December 31, 2022 were 80 % to the discounted cash flow method and 20 % to the guideline public company method.

The fair value the Company estimated for its manufacturing reporting unit exceeded its carrying amount by 63 % as of December 31, 2022.

Investments where the Company does not exercise significant influence over the operating and financial policies of the investee and holds less than 20% of the voting stock are recorded at cost.

37 unchanged sentences

The Company designs, constructs, sells, operates and maintains, and provides consulting services related to water, wastewater and water reuse infrastructure through PERC.

All of PERC's customers are companies or governmental entities

located in the United States.

Effective October 2023, PERC acquired REC, a company that provides operations and maintenance and consulting services to companies and governmental entities located in the state of Colorado.

All of PERC's customers are companies or governmental entities located in the United States.

The Company provides operations and maintenance and consulting services to companies and governmental entities located in the state of Colorado through REC.

The Company also provides design, engineering, management, procurement and construction services for desalination infrastructure through DesalCo, which serves customers in the Cayman Islands, The Bahamas and the British Virgin Islands.

1 unchanged sentence

Substantially all of Aerex’s customers are U.S.

The Company generates construction, operations and maintenance, design and consulting revenue from PERC and DesalCo and generates manufacturing revenue from Aerex.

The Company also generates operations and maintenance and consulting revenue from REC.

The Company recognizes revenue for its construction and custom/specialized manufacturing contracts over time under the input method using costs incurred (which represents work performed) to date relative to the total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations as such measure best reflects the transfer of control of the promised good to the customer.

Kalaeloa Desalco has signed a contract with the Honolulu Board of Water Supply pursuant to which it is presently designing and expects to construct and operate a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii.

The Company generates construction, operations and maintenance, and design and consulting revenue from PERC and DesalCo;

construction revenue from Kalaeloa Desalco;

manufacturing revenue from Aerex;

and operations and maintenance and consulting revenue from REC.

The Company recognizes revenue for its construction and custom/specialized manufacturing contracts (and some of its design contracts) over time under the input method, using costs incurred (which represents work performed) to date relative to the total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations as such measure best reflects the transfer of control of the promised good to the customer.

Contract costs include labor, materials, subcontractor costs and other expenses.

1 unchanged sentence

Under this input method, the Company records revenue and recognizes profit or loss as work on the contract progresses.

The Company estimates total costs to be incurred and profit to be earned on each long-term, fixed price contract prior to commencement of work on the contract and updates these estimates as work on the contract progresses.

The Company estimates total costs to be incurred and profit to be earned on each long-term, fixed price contract prior to the commencement of work on the contract and updates these estimates as work on the contract progresses.

The cumulative amount of revenue recorded on a contract at a specified point in time is that percentage of total estimated revenue that incurred costs to date comprised of estimated total contract costs.

7 unchanged sentences

This adjustment increased basic and diluted earnings per share by $ 0.11 for the year ended December 31, 2023.

The Company has elected the “right to invoice” practical expedient for revenue recognition on its operations and maintenance, design and consulting contracts and recognizes revenue in the amount to which the Company has a right to invoice, recognizing this revenue from the transfer of goods or services to customers during the billing cycle.

The Company has elected the “right to invoice” practical expedient for revenue recognition on its operations and maintenance and consulting contracts and recognizes revenue in the amount to which the Company has a right to invoice, recognizing this revenue from the transfer of goods or services to customers during the billing cycle.

During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 13,696,856 , $ 18,613,466 and $ 77,411,792 , respectively, of its services revenue from the transfer of goods or services to customers over time.

4 unchanged sentences

Comparative amounts:

Certain amounts presented in the financial statements previously issued for 2023 and 2022 have been reclassified to conform to the current year’s presentation .

Revenue of $ 965,487 for 2024 presented in the services segment as design and consulting revenue in the financial statements previously issued for 2024 has been reclassified to construction revenue in the services segment information for 2024 provided herein to conform to the current period’s presentation.

Such reclassifications had no effect on consolidated or services segment revenue, gross profit, operating income or net income .

Cash and cash equivalents

Cash and cash equivalents are not restricted by the terms of the Company’s bank accounts as to withdrawal or use.

Cash and cash equivalents are not restricted as to withdrawal or use.

As of December 31, 2025 and 2024, the equivalent United States dollars of the Company’s cash and cash equivalents, including those accounts denominated in currencies other than the U.S.

34 unchanged sentences

( 121,833,354 )

Net contract asset /(liability)

Net contract liability

( 8,237,819 )

( 4,656,411 )

The above net balances are reflected in the accompanying consolidated balance sheet as follows:

3 unchanged sentences

( 9,126,654 )

Net contract asset /(liability)

Net contract liability

( 8,237,819 )

The significant decrease in contract assets from December 31, 2023 to December 31, 2024 is attributable to the completion of the construction contract with the WAC for the Red Gate plant in Grand Cayman and the completion of the construction contract with Liberty Utilities for a water treatment facility in Arizona.

During the year ended December 31, 2023, the Company adjusted its prior year estimates of the total contract costs for two of its construction contracts.

These changes in accounting estimates resulted in an increase in the services segment’s income from operations and the Company’s consolidated net income by $ 2,356,439 and $ 1,750,750 , respectively, for the year ended December 31, 2023.

This adjustment increased basic and diluted earnings per share by $ 0.11 for the year ended December 31, 2023.

( 4,656,411 )

The significant increase in contract liabilities from December 31, 2024 to December 31, 2025 is attributable to the Kalaeloa Desalco construction project with the Honolulu Board of Water Supply to construct and operate a seawater reverse osmosis desalination plant in Oahu, Hawaii.

As of December 31, 2025, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $ 148.8 million in aggregate transaction price for contracts with an original expected length of greater than one year.

2 unchanged sentences

Property, plant and equipment and construction in progress

Land improvement

Plant and equipment

12 unchanged sentences

Through a series of transactions that began in 2012, NSC purchased 20.1 hectares of land for approximately $ 21.1 million on which the proposed Project’s plant was to be constructed.

In November 2015, the State of Baja California (the “State”) officially commenced the public tender for the Project.

A consortium (the “Consortium”) comprised of NSC and two other parties submitted its tender for the Project in April 2016 and in June 2016, the State designated the Consortium as the winner of the tender process for the Project.

In August 2016, NSC incorporated a new company under the name AdR to pursue completion of the Project and executed a shareholders agreement for AdR agreeing among other things that (i) AdR would purchase the land and other Project assets from NSC on the date that the Project begins commercial operation and (ii) AdR would enter into a Management and Technical Services Agreement with NSC effective on the first day that the Project begins commercial operation.

In November 2015, the State of Baja California (the “State”) officially commenced a public tender for the Project, and in June 2016 a consortium comprised of NSC and two other parties was selected by the State as the winner of the tender process for the Project.

NSC subsequently formed AdR to pursue the completion of the Project.

On August 22, 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the State Water Commission of Baja California (“CEA”), and the Government of Baja California, as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”).

The APP Contract required AdR to design, construct, finance and operate a seawater reverse osmosis desalination plant (and accompanying aqueduct) with a capacity of up to 100 million gallons per day in two phases:

the first with a capacity of 50 million gallons per day and an aqueduct to the Mexican public water system in Tijuana, Baja California and the second phase with a

capacity of 50 million gallons per day.

the first with a capacity of 50 million gallons per day and an aqueduct to the Mexican public water system in Tijuana, Baja California and the second phase with a capacity of 50 million gallons per day.

The first phase was to be operational within 36 months of commencing construction and the second phase was to be operational by January 2025.

1 unchanged sentence

At the end of the operating period, the plant and aqueduct would have been transferred to CEA.

On June 29, 2020, AdR received a letter (the “Letter”) from the Director General of CEA and the Director General of CESPT terminating the APP Contract.

On June 29, 2020, AdR received a letter (the “Letter”) from CEA and CESPT terminating the APP Contract.

The Letter requested that AdR provide an inventory of the assets that comprised the “Project Works” (as defined in the APP Contract) for the purpose of acknowledging and paying the non-recoverable expenses made by AdR in connection with the Project, with such reimbursement to be calculated in accordance with the terms of the APP Contract.

On August 28, 2020, AdR submitted their list of non-recoverable expenses, including those of NSC, to CEA and CESPT which was comprised of 51,144,525 United States dollars and an additional 137,333,114 Mexican pesos.

The Company believed CW-Cooperatief, as a Netherlands company, had certain rights relating to its investments in NSC and AdR under the Agreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican States entered into force as of October 1, 1999 (the “Treaty”).

On August 28, 2020, AdR submitted their list of non-recoverable expenses, including those of NSC, to CEA and CESPT which amounted to 51,144,525 United States dollars and an additional 137,333,114 Mexican pesos.

CW-Cooperatief, as a Netherlands company, had certain rights relating to its investments in NSC and AdR under the Agreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican States entered into force as of October 1, 1999 (the “Treaty”).

On April 16, 2021, CW-Cooperatief submitted a letter to the President of Mexico and other Mexican federal government officials alleging that the State’s termination of the APP Contract constituted a breach by Mexico of its international obligations under the Treaty, entitling CW-Cooperatief to full reparation, including monetary damages.

This letter invited Mexico to seek a resolution of this investment dispute through consultation and negotiation but stated that if the dispute cannot be resolved in this manner, CW-Cooperatief would refer the dispute to the International Centre for the Settlement of International Disputes for arbitration, as provided for in the Treaty.

On June 29, 2021, the Mexican Ministry of Economy responded to CW-Cooperatief’s letter and proposed to hold a consultation meeting.

Two such meetings were held on July 9, 2021 and August 2, 2021 on a confidential basis, without a resolution of the Company’s investment dispute.

In February 2022, CW-Cooperatief, filed a Request for Arbitration with the International Centre for Settlement of International Disputes (“ICSID”) requesting that the United Mexican States pay CW-Cooperatief damages in excess of US$ 51 million plus MXN$ 137 million (with the exact amount to be quantified in the proceedings), plus fees, costs and pre- and post-award interest.

On May 29, 2024, the Company, through CW-Cooperatief;

In May 2024, the Company, through CW-Cooperatief;

NSC, and AdR, entered into a settlement agreement (the “Settlement Agreement”) with the State and Banco Nacional de Obras y Servicios Públicos, S.N.C., as trustee under the trust agreement for the trust named Fondo Nacional de Infraestructura (the “Trust”).

16 unchanged sentences

( 1,086,744 )

( 2,371,049 )

Gain on sale of land and project documentation

Depreciation expense

Intangible assets

22 unchanged sentences

Amortization expense was $ 595,260 , $ 656,370 and $ 574,093 for the years ended December 31, 2025, 2024 and 2023, respectively.

The Company’s leases consist primarily of leases for office and warehouse space.

The Company’s leases consist principally of leases for office and warehouse space.

For leases with terms greater than twelve months, the related asset and obligation are recorded at the present value of the lease payments over the term.

6 unchanged sentences

Lease costs for such short-term leases are expensed on a straight-line basis over the lease term.

Effective May 1, 2024, the Company entered into a new office lease for the existing office located in Grand Cayman, Cayman Islands under similar terms compared to the prior lease.

This new lease has a term of five years from the commencement date with an option for an additional five-year term.

All lease assets denominated in a foreign currency are measured using the exchange rate at the commencement of the lease.

2 unchanged sentences

The following table presents the lease-related assets and liabilities and their respective classification on the consolidated balance sheets:

Prepaid expenses and other current assets

Operating lease right-of-use assets

Total lease right-of-use assets

Total operating lease right-of-use assets

Current maturities of operating leases

32 unchanged sentences

Year Ended December 31,

Total current income tax expense (benefit)

Total deferred income tax expense (benefit)

Total current income tax provision (benefit)

Total deferred income tax provision (benefit)

Total provision for (benefit from) income taxes

A reconciliation of the U.S.

statutory federal tax rate to the effective rate for the years ended December 31, 2024, 2023, and 2022 is as follows:

statutory federal tax rate to the effective rate for the year ended December 31, 2025:

Year Ended December 31,

statutory federal tax rate

State and local income taxes, net of federal effect (a)

Foreign tax effects - tax rate differential

Cayman Islands

( 1,265,705 )

( 1,363,912 )

Nontaxable or nondeductible items

Other adjustments

Effective tax rate

(a) State taxes in California made up the majority (greater than 50 percent) of the tax effect in the State and local income taxes category.

Below is a tabular rate reconciliation previously disclosed for the years ended December 31, 2024 and 2023:

Year Ended December 31,

statutory federal rate

1 unchanged sentence

Foreign rate differential

Research and development tax credit

( 2,365,946 )

( 2,172,793 )

Permanent items

Change in valuation allowance

Effective tax rate

The tax effects of significant items comprising the Company’s net long-term deferred tax liability as of December 31, 2025 and 2024 were as follows:

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Net deferred tax liabilities

Discontinued Operations

Deferred tax assets:

Operating loss carryforwards - Mexico

Land basis difference - Mexico

Start-up costs - Mexico

Valuation allowances

( 15,678,994 )

As of December 31, 2025, the Company’s continuing operations have a federal net loss carryforward of approximately $ 914,000 and a state net loss carryforward of approximately $ 552,000 .

The net operating losses (“NOLs”) generated in taxable years beginning before January 1, 2018, may be carried forward up to 20 taxable years.

The unused federal NOLs will expire on various dates starting from 2030.

The unused federal NOLs

will expire on various dates starting from 2030.

For NOLs generated in taxable years beginning after December 31, 2017, they are carried forward indefinitely until used and never expire.

The Company made tax payments, net of refunds received during the year ended December 31, 2025, as follows:

United States

Earnings per share

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Basic EPS is computed by dividing net income (less preferred stock dividends) available to common stockholders by the weighted average number of common shares outstanding during the period.

The computation of diluted EPS assumes the issuance of common shares for all potential

common shares outstanding during the reporting period and, if dilutive, the effect of stock options as computed under the treasury stock method.

The computation of diluted EPS assumes the issuance of common shares for all potential common shares outstanding during the reporting period and, if dilutive, the effect of stock options as computed under the treasury stock method.

The following summarizes information related to the computation of basic and diluted EPS:

5 unchanged sentences

( 1,086,744 )

( 2,371,049 )

Net income available to common shares in the determination of basic earnings per common share

5 unchanged sentences

common stockholders

Interim dividends declared on Class A common stock and redeemable preferred stock for each quarter of the respective years ended December 31, 2024, 2023, and 2022, were as follows:

Interim dividends declared on common stock and redeemable preferred stock for each quarter of the years ended December 31, 2025, 2024, and 2023, were as follows:

First Quarter

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The CODM considers actual versus budget and current period versus prior period variances on a monthly, quarterly, and annual basis for each of these financial measures.

The CODM also considers variances from budget and prior period for major corporate expenses (such as employee costs, insurance and professional fee) when making decisions regarding capital and resource allocation.

The CODM also considers variances from the budget and the prior period for major corporate expenses (such as employee costs, insurance and professional fees) when making decisions regarding capital and resource allocation.

The accounting policies of the segments are consistent with those described in Note 2.

1 unchanged sentence

Intersegment revenue transactions are insignificant to the Company and are eliminated.

Segment information previously disclosed in 2023 and 2022 did not separately disclose those expenses currently reported in the corporate segment, as such expenses were previously included in the retail segment.

The 2023 and 2022 segment information provided herein has been recast to conform to the current period presentation.

Segment information previously disclosed in 2023 did not separately disclose those expenses currently reported in the corporate segment, as such expenses were previously included in the retail segment.

The 2023 segment information provided herein has been recast to conform to the current period presentation.

The Company’s segments are strategic business units that are managed separately because each segment sells different products and/or services, serves customers with distinctly different needs and generates different gross profit margins.

The Company’s income statements by segment, significant segment expenses, and segment assets are presented below.

The following sets forth the Company’s income statements by segment.

Year Ended December 31, 2025

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General and administrative expenses

Gain on asset dispositions and impairments, net

Gain on asset dispositions, net

Income (loss) from operations

2 unchanged sentences

Interest expense

Income from affiliates

Other income, net

Income (loss) from affiliates

Other income (loss), net

Income (loss) before income taxes

6 unchanged sentences

( 13,640,479 )

Net income from discontinued operations

Net loss from discontinued operations

Net income attributable to Consolidated Water Co.

The Company’s cost of revenue consists of:

Year Ended December 31, 2024

Manufacturing

Subcontractor and other project costs

Employee costs

Retail license royalties

Other cost of revenue segment expenses above primarily include chemicals and other supplies, government fees and licenses, and freight costs.

The Company’s general and administrative expenses consist of:

Year Ended December 31, 2024

Manufacturing

Employee costs

Professional fees

Depreciation and amortization

Other general and administrative segment expenses primarily include Board of Directors fees and expenses, maintenance, office rent, amortization of intangible assets, and investor relations costs.

As of December 31, 2024

Manufacturing

Cash and cash equivalents

Accounts receivable, net

Inventory, current and non-current

Contract assets

Property, plant and equipment, net

Construction in progress

Intangibles, net

Total segment assets

Assets of discontinued operations

Year Ended December 31, 2023

Manufacturing

Cost of revenue

General and administrative expenses

Gain (loss) on asset dispositions and impairments, net

Gain on asset dispositions, net

Income (loss) from operations

2 unchanged sentences

Interest expense

Income from affiliate

Income from affiliates

Other income, net

1 unchanged sentence

( 13,172,245 )

Provision (benefit) for income taxes

Provision for income taxes

Net income (loss) from continuing operations

3 unchanged sentences

( 13,190,321 )

Net loss from discontinued operations

( 1,086,744 )

Net income from discontinued operations

Net income attributable to Consolidated Water Co.

The Company’s cost of revenue consists of:

Year Ended December 31, 2023

Manufacturing

Subcontractor and other project costs

Employee costs

Retail license royalties

Other cost of revenue segment expenses above primarily include chemicals and other supplies, government fees and licenses, and freight costs.

The Company’s general and administrative expenses consist of:

Year Ended December 31, 2023

Manufacturing

Employee costs

Professional fees

Depreciation and amortization

Other general and administrative segment expenses primarily include Board of Directors fees and expenses, maintenance, office rent, amortization of intangible assets, and investor relations costs.

As of December 31, 2023

Manufacturing

Cash and cash equivalents

Accounts receivable, net

Inventory, current and non-current

Contract assets

Property, plant and equipment, net

Construction in progress

Intangibles, net

Total segment assets

Assets of discontinued operations

Year Ended December 31, 2022

Manufacturing

Cost of revenue

General and administrative expenses

Gain (loss) on asset dispositions and impairments, net

Gain (loss) on asset dispositions, net

Income (loss) from operations

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Income from affiliate

Net loss on put/call options

Other income (loss), net

Other income, net

Income (loss) before income taxes

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Retail license royalties

Year Ended December 31, 2024

Manufacturing

Subcontractor and other project costs

Employee costs

Retail license royalties

Year Ended December 31, 2023

Manufacturing

Subcontractor and other project costs

Employee costs

Retail license royalties

Other cost of revenue segment expenses above primarily include chemicals and other supplies, government fees and licenses, and freight costs.

5 unchanged sentences

Depreciation and amortization

Other general and administrative segment expenses primarily include Board of Directors fees and expenses, maintenance, office rent, amortization of intangible assets, and investor relations costs.

Year Ended December 31, 2024

Manufacturing

Employee costs

Professional fees

Depreciation and amortization

Year Ended December 31, 2023

Manufacturing

Employee costs

Professional fees

Depreciation and amortization

General and administrative segment expenses set forth in the “Other” category above include Board of Directors fees and expenses, maintenance, office rent, information technology costs, amortization of intangible assets, provisions for credit losses and investor relations costs.

The Company’s segment assets are presented below.

As of December 31, 2025

Manufacturing

Cash and cash equivalents

Accounts receivable, net

Inventory, current and non-current

Contract assets

Property, plant and equipment, net

Construction in progress

Intangibles, net

Total segment assets

Assets of discontinued operations

As of December 31, 2024

Manufacturing

Cash and cash equivalents

Accounts receivable, net

Inventory, current and non-current

Contract assets

Property, plant and equipment, net

Construction in progress

Intangibles, net

Total segment assets

Assets of discontinued operations

Revenue earned by major geographic region was:

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The Company has an employee stock option plan for four long-serving employees of the Company.

Under the plan, these employees are granted in each calendar year, as long as the employee is a participant in the Employee Share Incentive

Plan, options to purchase common shares.

Under the plan, these employees are granted in each calendar year, as long as the employee is a participant in the Employee Share Incentive Plan, options to purchase common shares.

The price at which the option may be exercised is the closing market price on the grant date, which is the 40 th day after the date of the Company’s Annual Shareholder Meeting.

3 unchanged sentences

The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the table below.

Expected volatilities are based on historical volatilities of the Company’s common stock.

Expected volatilities are based on historical volatilities of the Company’s

common stock.

The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding.

3 unchanged sentences

2008 Equity Incentive Plan

On May 14, 2008, the Company’s stockholders approved the 2008 Equity Incentive Plan (the “2008 Plan”) and reserved 1,500,000 shares of the Company’s Class A common shares for issuance under this plan.

All Directors, executives and key employees of the Company or its affiliates are eligible for participation in the 2008 Plan which provides for the issuance of options, restricted stock and stock equivalents at the discretion of the Board.

On May 14, 2008, the Company’s stockholders approved the 2008 Equity Incentive Plan (the “2008 Plan”) and reserved 1,500,000 shares of the Company’s common shares for issuance under this plan.

All Directors, executives and key employees of the Company or its affiliates are eligible for participation in the 2008 Plan which provides for the issuance of common stock options, shares of common stock and common stock equivalents at the discretion of the Board.

The Company measures and recognizes compensation expense at fair value for all share-based payments, including stock options.

48 unchanged sentences

The Company recognized stock-based compensation for these share grants of $ 372,752 , $ 333,140 and $ 341,394 for the years ended December 31, 2025, 2024 and 2023, respectively.

Other Stock Expense

In 2025, the Company issued 2,000 shares of its common stock for professional services at an expense to the Company of $ 69,440 .

Retirement benefits

12 unchanged sentences

As of December 31, 2025 and 2024, the carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued expenses, accrued compensation, dividends payable and other current liabilities approximate their fair values due to the short-term maturities of these instruments.

Under US GAAP, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

US GAAP guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s

assumptions about the factors market participants would use in valuing the asset or liability.

The guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements.

The Company reviews its fair value hierarchy classifications on a quarterly basis.

Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

As of December 31, 2025 and 2024, the Company does not have assets and liabilities measured at fair value to present in the fair value hierarchy.

1 unchanged sentence

The Company has entered into employment agreements with certain executives, which expire through December 31, 2028 and provide for, among other things, base annual salaries in an aggregate amount of approximately $ 5.4 million, performance bonuses and various employee benefits.

The Company has purchase obligations totaling approximately $ 15.6 million through December 31, 2025.

The Company has purchase obligations totaling approximately $ 10.9 million as of December 31, 2025.

Contingencies

The Company sells water through its Cayman Water retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area.

Although the 1990 license has not been expressly extended after January 2018, the Company continues to supply water under the terms of the 1990 license, as further discussed in the following paragraph.

Pursuant to the 1990 license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman Island:

3 unchanged sentences

The most recent express extension of the 1990 license expired on January 31, 2018.

From that date until February 18, 2025, the Company continued to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with its understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.

The Company continued to pay the royalty of 7.5 % of the revenue that Cayman Water collects as required under the 1990 license.

In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).

OfReg is an independent and accountable regulatory body with a view of protecting the

rights of consumers, encouraging affordable utility services and promoting competition.

OfReg, which began operations in January 2017, has the ability to supervise, monitor and regulate multiple utility undertakings and markets.

Supplemental legislation was passed by the Government of the Cayman Islands in April 2017, which transferred responsibility for the economic regulation of the water utility sector and the negotiations with the Company for a new retail license from the WAC to OfReg in May 2017.

The Company began license negotiations with OfReg in July 2017 and such negotiations are ongoing.

The Company has been informed during its retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of its license in a manner that could significantly reduce the operating income and cash flows the Company has historically generated from its retail license.

Under the new regulatory legislation passed in October 2016, Cayman Water must first be granted a concession by the government before obtaining a new (or renewing the old) retail operating license.

On February 18, 2025, Cayman Water received a new concession from the government that authorizes and maintains the terms of the 1990 license until a new license is negotiated and enacted.

The Company is presently unable to determine what impact the resolution of its retail license negotiations will have on its consolidated financial condition or results of operations but such resolution could result in a material reduction (or the loss) of the operating income and cash flows the Company has historically generated from Cayman Water’s retail operations and could require the Company to record impairment losses to reduce the carrying values of its retail segment assets.

From that date until February 18, 2025, the Company continued to operate under the terms of the 1990 license, treating such terms as operative notwithstanding the expiration of the express extension.

The Company continues to pay the royalty of 7.5 % of the revenue that Cayman Water collects as required under the 1990 license.

In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”) and, in April 2017, passed supplemental legislation which transferred responsibility for the economic regulation of the water utility sector and the negotiations with the Company for a new retail license to OfReg.

Under the new regulatory legislation passed in October 2016, Cayman Water was required to first be granted a concession by the government before obtaining a new (or renewing the old) retail operating license.

On February 18, 2025, Cayman Water received a new concession from the government that authorizes and maintains the terms of the 1990 license until a new license from OfReg is negotiated and enacted.

Negotiations between Cayman Water and OfReg for the new license remain on-going.

The Company has been informed during its retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of the license in a manner that could significantly reduce the operating income and cash flows the Company has historically generated from its retail license.

The Company is presently unable to determine what impact the resolution of its retail license negotiations will have on its consolidated financial condition, results of operations or cash flows but such resolution could result in a material reduction (or the loss) of the operating income and cash flows the Company has historically generated from Cayman Water’s retail operations and could require the Company to record impairment losses to reduce the carrying values of its retail segment assets.

Such impairment losses could have a material adverse impact on the Company’s consolidated financial condition and results of operations.

1 unchanged sentence

Approximately 71 % and 81 % of the accounts receivable balances were delinquent as of those dates, respectively.

As of February 28, 2026, this receivable amounted to $ 22.6 million, of which 75 % was delinquent.

From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.

When these delays occur, the Company holds discussions and meetings with representatives of the WSC and The Bahamas government, and as a result, payment schedules are developed for WSC’s delinquent accounts receivable.

When these delays occur, the Company holds discussions and meetings with representatives of the WSC and the government of The Bahamas.

All previous delinquent accounts receivable from the WSC, including accrued interest thereon, were eventually paid in full.

Based upon this payment history, CW-Bahamas has not provided a material allowance for credit losses for its accounts receivable from the WSC as of December 31, 2024.

Based upon this payment history, CW-Bahamas has not provided a material allowance for credit losses for its accounts receivable from the WSC as of December 31, 2025, or prior periods.

In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.

Moody’s also lowered The Bahamas’ local currency ceiling to Baa3 from Baa2 and its foreign currency ceiling to Ba1 from Baa3.

Moody’s has maintained these ratings through the date of its most current report issued in October 2024.

Moody’s has maintained these ratings through the date of its most current report issued in April 2025.

Based upon the Company’s review of this Moody’s correspondence, the CW-Bahamas continues to believe that no material allowance for credit losses is required for CW-Bahamas’ accounts receivable from the WSC.

If CW-Bahamas is unable to collect a sufficient portion of its delinquent accounts receivable, one or more of the following events may occur:

3 unchanged sentences

Any of these events could have a material adverse impact on the Company’s consolidated financial condition, results of operations, and cash flows.

CW-Bahamas Performance Guarantees

CW-Bahamas Supply Guarantees

The contracts to supply water to the WSC from the Blue Hills and Windsor plants require CW-Bahamas to guarantee delivery of a minimum quantity of water per week.

2 unchanged sentences

The Windsor contract expires in 2033 and requires CW-Bahamas to deliver 16.8 million gallons of water each week.

Bahamas has been in compliance with the performance guarantees under these contracts for all periods since the inception of the contracts.

Related party transactions

The Company, through PERC, purchases engineering and technology support services from various companies formerly affiliated with PERC, as a former minority shareholder in these companies was also a minority shareholder of PERC.

On January 4, 2023, as a result of CW-Holdings' exercise of a call option in October 2022, CW-Holdings purchased the remaining 39 % ownership interest in PERC.

After giving effect to this purchase, CW-Holdings owns 100 % of the outstanding capital stock of PERC and, consequently, transactions with the formerly affiliated companies no longer constitute related party transactions.

During the year ended December 31, 2022, the Company made total purchases of services from these companies of approximately $ 2,695,000 .

These total purchases are included in the Company’s cost of revenue in the accompanying consolidated statements of income.

PERC entered into a sublease agreement with one of these formerly affiliated companies that commenced on March 14, 2021 and ended August 31, 2021.

This lease was subsequently extended on an annual basis until August 31, 2025.

During the year ended December 31, 2022, the Company recognized approximately $ 97,000 of expense related to this lease.

This lease expense is included in the Company's general and administrative expenses in the accompanying consolidated statements of income.

CW-Bahamas has been in compliance with the supply guarantees under these contracts for all periods since the inception of the contracts.

Fiscal, Regulation and Other Federal Policies

Significant changes in, and uncertainty with respect to, legislation, regulation, government policy and economic conditions could adversely affect the Company’s business.

Specific legislative and regulatory proposals that could have a material impact on the Company include, but are not limited to, modifications to international trade policy (such as tariffs);

public company reporting requirements;

and environmental regulation.

The Company cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the U.S.

and other countries, what products may be subject to such actions, or what actions may be taken by the other countries in retaliation.

Accordingly, it is difficult to predict how such actions may impact the Company’s business, or the business or habits of its customers.

The Company’s business operations, as well as the businesses of its customers on which it is substantially dependent, are located in countries at risk for escalating trade disputes, including the U.S.

Any resulting trade wars could have a significant adverse effect on world trade and could adversely impact the Company’s consolidated financial condition, results of operations and cash flows.

Supplemental disclosure of cash flow information

1 unchanged sentence

Interest paid in cash

Income taxes paid in cash

Issuance of 5,904 , 13,309 and 9,295 , respectively, shares of redeemable preferred stock for services rendered

Issuance of 68,832 , 68,864 and 72,597 , respectively, shares of common stock for services rendered

Conversion (on a one-to- one basis) of 5,968 , 8,848 and 6,585 , respectively, shares of redeemable preferred stock to common stock

Dividends declared but not paid

Issuance of 0 , 368,383 and 0 , respectively, shares of common stock for the purchase of non-controlling interest in PERC

Transfers from inventory to property, plant and equipment and construction in progress

1 unchanged sentence

Right-of-use assets obtained in exchange for new operating lease liabilities

Purchase of equipment through issuance of long-term debt

Transfers from prepaid expenses to property, plant and equipment

Transfers from prepaid expenses to inventory

Transfers from prepaids to inventory

Expenditures for property, plant and equipment and construction in progress not yet paid

Impact of recent accounting standards

Adoption of new accounting standards:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an

explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The adoption of ASU 2023-07 did not have a material impact on the Company’s financial position, results of operations or cash flows.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The Company adopted the standard as of December 31, 2025, including a recast of 2024 and 2023 information, by including the additional required disclosures within the notes to the consolidated financial statements.

The adoption this guidance did not impact the Company’s consolidated financial position, results of operations or cash flows.

Effect of newly issued but not yet effective accounting standards:

2 unchanged sentences

The ASU requires public companies to disclose, in the notes to financial statements, specific information about certain costs and expenses at each interim and annual reporting period.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date.

The ASU amends the effective date of ASU 2024-03 to clarify that all business entities are required to adopt the guidance in annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

The Company is currently evaluation the impact of this guidance.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The amended ASU is effective on a prospective basis for annual periods beginning after December 15, 2026.

The Company is currently evaluating the impact of this guidance on its financial statements.

Subsequent events

3 unchanged sentences

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 8. Financial Statements and Supplementary Data