What changed in this filing

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Item 1. Financial Statements

2026-08-10 compared with 2026-05-11 · 181 added, 64 removed, 493 unchanged (33% of the section changed)

38 unchanged sentences

Common stock, $ 0.60 par value.

Authorized 24,800,000 shares;

Authorized 49,800,000 and 24,800,000 shares, respectively;

issued and outstanding 16,000,190 and 15,945,233 shares, respectively

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

42 unchanged sentences

Balance as of March 31, 2026

Issue of share capital

Buyback of preferred stock

Exercise of options

Dividends declared

( 2,245,589 )

Stock-based compensation

Balance as of June 30, 2026

preferred stock

10 unchanged sentences

Balance as of March 31, 2025

Issue of share capital

Buyback of preferred stock

Exercise of options

Dividends declared

( 2,234,434 )

Stock-based compensation

Balance as of June 30, 2025

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

6 unchanged sentences

Deferred income tax benefit

Provision for credit losses

Provision for (benefit from) credit losses

Amortization of operating lease right-of-use assets

13 unchanged sentences

Deferred revenue

Other liabilities

Net cash provided by operating activities - continuing operations

29 unchanged sentences

Transfers from construction in progress to property, plant and equipment

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

Transfers from prepaid expenses to property, plant and equipment

36 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 $ 34,836 and $ 29,642 for the three months ended March 31, 2026 and 2025, respectively and are included in “Other income (expense) - Other” in the accompanying condensed consolidated statements of income.

Net foreign currency gains arising from transactions and re-measurements were $ 16,866 and $ 16,345 for the three months ended June 30, 2026 and 2025, respectively, and $ 51,702 and $ 45,987 for the six months ended June 30, 2026 and 2025 and are included in “Other income (expense) - Other” in the accompanying condensed consolidated statements of income.

Cash and cash equivalents:

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

Cash and cash equivalents as of March 31, 2026 and December 31, 2025 include $ 17.1 million and $ 17.0 million, respectively, of certificates of deposits with original maturities of three months or less and $ 18.3 million and $ 18.1 million, respectively, in the money market fund.

Cash and cash equivalents as of June 30, 2026 and December 31, 2025 include $ 17.2 million and $ 17.0 million, respectively, of certificates of deposits with original maturities of three months or less and $ 18.4 million and $ 18.1 million, respectively, in the money market fund.

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 held in The Bahamas as of March 31, 2026 and December 31, 2025 were approximately $ 11.9 million and $ 12.0 million, respectively.

The equivalent United States dollar cash balances held in The Bahamas as of June 30, 2026 and December 31, 2025 were approximately $ 18.8 million and $ 12.0 million, respectively.

Goodwill and intangible assets:

20 unchanged sentences

The following table presents the Company’s revenue disaggregated by revenue source.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Retail revenue

3 unchanged sentences

Services revenue consists of the following:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Construction revenue

3 unchanged sentences

Retail revenue

The Company produces and supplies water to end-users, including residential, commercial and governmental customers in the Cayman Islands under an exclusive retail license issued to Cayman Water by the Cayman Islands government to provide water in two of the three most populated areas on Grand Cayman.

The Company produces and supplies water to end-users, including residential, commercial and governmental customers in the Cayman Islands under an exclusive water production and supply concession and water utility license issued to Cayman Water by the Cayman Islands government and the Utilities Regulation and Competition Office (“OfReg”), respectively, to provide water in two of the three most populated areas on Grand Cayman.

Customers are billed on a monthly basis based on metered consumption and bills are typically collected within 30 to 45 days after the billing date.

7 unchanged sentences

The WAC in turn distributes such water to properties in Grand Cayman outside of Cayman Water’s retail license area.

The Company sells bulk water in The Bahamas through its majority-owned subsidiary, CW-Bahamas, under two agreements with the Water and Sewerage Corporation of The Bahamas (“WSC”), which distributes such water through its own pipeline system to residential, commercial and tourist properties on the island of New Providence.

The Company sells bulk water in The Bahamas through its majority-owned subsidiary, CW-Bahamas, under three agreements with the Water and Sewerage Corporation of The Bahamas (“WSC”), which distributes such water through its own pipeline system to residential, commercial and tourist properties on the islands of New Providence and Cat Island.

The Company has elected the “right to invoice” practical expedient for revenue recognition on its bulk water sale 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.

1 unchanged sentence

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.

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.

19 unchanged sentences

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.

For the three months ended March 31, 2026 and 2025, the Company recognized $ 2,210,163 and $ 2,180,261 , respectively, of its services revenue from the transfer of goods or services to customers over time.

The remaining services revenue of $ 9,041,181 and $ 7,898,007 , respectively, was recognized from the transfer of goods or services to customers when invoiced.

For the three months ended March 31, 2026 and 2025, the Company recognized all of its manufacturing revenue from the transfer of goods or services to customers over time.

For the three and six months ended June 30, 2026 and 2025, the Company recognized all of its manufacturing revenue from the transfer of goods or services to customers over time.

The following table presents the services revenue recognized from the transfer of goods or services to customers over time and when invoiced under the right to invoice practical expedient:

Three Months Ended June 30,

Six Months Ended June 30,

Revenue recognized over time

Revenue recognized when invoiced

Total services revenue

Revenue recognized and amounts billed on contracts in progress are summarized as follows:

14 unchanged sentences

( 8,237,819 )

As of March 31, 2026, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $ 148.7 million in aggregate transaction price for contracts with an original expected length of greater than one year .

As of June 30, 2026, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $ 144.8 million in aggregate transaction price for contracts with an original expected length of greater than one year .

The Company expects to earn revenue as it satisfies its performance obligations under those contracts in the amount of approximately $ 11.2 million during the remainder of the year ending December 31, 2026 and approximately $ 133.6 million thereafter .

In addition, the Company recognized revenue of approximately $ 653,000 for the three months ended March 31, 2026, that was included in the contract liability balance as of December 31, 2025.

In addition, the Company recognized revenue of approximately $ 1.2 million for the six months ended June 30, 2026, that was included in the contract liability balance as of December 31, 2025.

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

Comparative amounts:

Certain amounts presented in the financial statements previously issued for 2025 have been reclassified to conform to the current period’s presentation .

Segment information

1 unchanged sentence

retail, bulk, services, manufacturing and corporate.

The retail segment operates the water utility for the Seven Mile Beach and West Bay areas of Grand Cayman pursuant to an exclusive license granted by the Cayman Islands government.

The retail segment operates the water utility for the Seven Mile Beach and West Bay areas of Grand Cayman pursuant to an exclusive water production and supply concession and water utility license issued to Cayman Water by the Cayman Islands government and OfReg, respectively.

The bulk segment supplies potable water to government utilities in Grand Cayman and The Bahamas under long-term contracts.

12 unchanged sentences

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

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

Manufacturing

18 unchanged sentences

Net income attributable to Consolidated Water Co.

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Manufacturing

6 unchanged sentences

Interest expense

Income from affiliate

Income (loss) from affiliate

Other income, net

10 unchanged sentences

The Company’s cost of revenue consists of:

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

Manufacturing

2 unchanged sentences

Retail license royalties

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Manufacturing

4 unchanged sentences

The Company’s general and administrative expenses consist of:

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

Manufacturing

2 unchanged sentences

Depreciation and amortization

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Manufacturing

3 unchanged sentences

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

Six Months Ended June 30, 2026

Manufacturing

Cost of revenue

General and administrative expenses

Gain (loss) on asset dispositions, net

Income (loss) from operations

( 7,850,317 )

Interest income

Interest expense

Income (loss) from affiliates

Other income (loss), net

Income (loss) before income taxes

( 7,357,752 )

Provision (benefit) for income taxes

Net income (loss) from continuing operations

( 7,357,752 )

Income from continuing operations attributable to non-controlling interests

Net income (loss) from continuing operations attributable to Consolidated Water Co.

( 7,357,752 )

Net loss from discontinued operations

Net income attributable to Consolidated Water Co.

Six Months Ended June 30, 2025

Manufacturing

Cost of revenue

General and administrative expenses

Gain on asset dispositions, net

Income (loss) from operations

( 7,405,927 )

Interest income

Interest expense

Income from affiliates

Other income, net

Income (loss) before income taxes

( 6,829,804 )

Provision for income taxes

Net income (loss) from continuing operations

( 6,829,804 )

Income from continuing operations attributable to non-controlling interests

Net income (loss) from continuing operations attributable to Consolidated Water Co.

( 6,829,804 )

Net income from discontinued operations

Net income attributable to Consolidated Water Co.

The Company’s cost of revenue consists of:

Six Months Ended June 30, 2026

Manufacturing

Subcontractor and other project costs

Employee costs

Retail license royalties

Six Months Ended June 30, 2025

Manufacturing

Subcontractor and other project costs

Employee costs

Retail license royalties

Cost of revenue segment expenses set forth in the “Other” category above primarily include chemicals and other supplies, government fees and licenses, and freight costs.

The Company’s general and administrative expenses consist of:

Six Months Ended June 30, 2026

Manufacturing

Employee costs

Professional fees

Depreciation and amortization

Six Months Ended June 30, 2025

Manufacturing

Employee costs

Professional fees

Depreciation and amortization

The Company’s segment assets are presented below.

As of March 31, 2026

As of June 30, 2026

Manufacturing

25 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income from continuing operations attributable to Consolidated Water Co.

10 unchanged sentences

Discontinued operations - Mexico project development

In 2010, the Company began the pursuit, through its Netherlands subsidiary, CW-Cooperatief, and its Mexico subsidiary, NSC, of a project (the “Project”) that encompassed the construction, operation and minority ownership of a 100 million gallons per day seawater reverse osmosis desalination plant to be located in northern Baja California, Mexico and accompanying pipelines to deliver water to the Mexican potable water system.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.

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 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.

6 unchanged sentences

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”).

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.

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.

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”).

10 unchanged sentences

Total liabilities of discontinued operations

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Loss from discontinued operations

6 unchanged sentences

These leases contain both lease and non-lease components, which the Company has elected to treat as a single lease component.

The Company elected not to recognize leases that have an original lease term, including reasonably certain renewal or purchase obligations, of twelve months or less in its condensed consolidated balance sheets for all classes of underlying assets.

The Company elected not to recognize leases that have an original lease term, including reasonably certain

renewal or purchase obligations, of twelve months or less in its condensed consolidated balance sheets for all classes of underlying assets.

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

13 unchanged sentences

The components of lease costs were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease costs

3 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid for amounts included in measurement of liabilities:

Operating cash outflows for operating leases

Future lease payments relating to the Company’s operating lease liabilities from continuing operations as of March 31, 2026 were as follows:

Future lease payments relating to the Company’s operating lease liabilities from continuing operations as of June 30, 2026 were as follows:

Years ending December 31,

4 unchanged sentences

Noncurrent lease obligations

As of March 31, 2026 and December 31, 2025, 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.

As of March 31, 2026 and December 31, 2025, the Company does not have assets and liabilities measured at fair value to present in the fair value hierarchy.

As of June 30, 2026 and December 31, 2025, 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.

As of June 30, 2026 and December 31, 2025, the Company does not have assets and liabilities measured at fair value to present in the fair value hierarchy.

Commitments and 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.

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:

Seven Mile Beach and West Bay.

For the three months ended March 31, 2026 and 2025, the Company generated approximately 29 % and 28 %, respectively, of its consolidated revenue and 45 % and 46 %, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 license.

The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement.

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, 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 its 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.

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $ 23.9 million and $ 20.7 million as of March 31, 2026 and December 31, 2025, respectively.

Prior to the License Date (as defined below), Cayman Water’s retail operations sold water 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.

For the three months ended June 30, 2026 and 2025, the Company generated approximately 26 % and 26 %, respectively, of its consolidated revenue and 44 % and 38 %, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 License.

For the six months ended June 30, 2026 and 2025, the Company generated approximately 27 % and 27 %, respectively, of its consolidated revenue and 45 % and 42 %, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 License.

The 1990 License was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government to provide the parties with additional time to negotiate the terms of a new license agreement.

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

On February 18, 2025, Cayman Water received a concession from the Cayman Islands government that authorized and maintained the terms of the 1990 License until a new license was negotiated and enacted.

In 2016, the Cayman Islands government passed legislation creating OfReg, which is an independent and accountable regulatory body charged with protecting the rights of consumers, encouraging affordable utility services and promoting competition.

Supplemental legislation passed in April 2017 transferred responsibility for the economic regulation of the water utility sector, including the negotiations with the Company for a new retail license, to OfReg.

The Company began negotiations with OfReg in 2017, which negotiations continued until the issuance of the License (as defined below).

The Company had previously disclosed that OfReg and its predecessor informed the Company during the negotiations that the Cayman Islands government sought to restructure the terms of the license in a manner that could significantly reduce the operating income and cash flows the Company historically generated from the 1990 License.

On June 18, 2026, OfReg notified Cayman Water that, at a meeting held on June 11, 2026, the OfReg Board of Directors had approved the issuance to Cayman Water of a new license (the “License”) to produce and distribute potable water within its licensed service area (the “License Area”).

The License has a stated commencement date of August 1, 2026 (the “License Date”) and, subject to its terms and conditions, continues for a period of 25 years from the License Date.

The License establishes a long-term regulatory framework for Cayman Water’s retail water operations in the License Area following an extended period of uncertainty and negotiations with OfReg.

Subject to the terms and conditions of the License, Cayman Water has the exclusive right to produce, distribute and sell potable water within the License Area during the license term, and the License requires Cayman Water to carry on the business normally conducted by a water utility in the License Area throughout the term of the License, using its best efforts to maintain sufficient water production capacities and distribution capabilities, and to plan for, serve and extend service to applicants in the License Area, subject to the terms of the License.

The License provides that Cayman Water’s base rates, monthly meter rental fees and certain other rates and charges will be as set forth in the License.

Effective on the License Date, the base rates for water sold to consumers by Cayman Water in the License Area will be CI$ 16.23 per 1,000 gallons for the first 3,000 gallons supplied in any month to residential consumers, CI$ 21.21 per 1,000 gallons for residential consumption above 3,000 gallons, CI$ 19.90 per 1,000 gallons for the first 3,000 gallons supplied in any month to commercial consumers, CI$ 21.21 per 1,000 gallons for commercial consumption above 3,000 gallons, CI$ 17.77 per 1,000 gallons for the first 3,000 gallons supplied in any month to public authority consumers, CI$ 19.01 per 1,000 gallons for public authority consumption above 3,000 gallons and CI$ 13.32 per 1,000 gallons for trucked water consumers.

The License also provides for monthly meter rental fees based on meter size, as well as annual adjustments to base rates and certain fees, effective each July 1 following the License Date, in accordance with the rate cap adjustment mechanism described in the License, subject to OfReg verification and approval requirements.

The exchange rate for conversion of Cayman Islands dollars (CI$) into United States dollars (US$), as determined by the Cayman Islands Monetary Authority, has been fixed since April 1974 at US$ 1.20 per CI$1.00.

In addition to base rates and monthly meter rental fees, the License permits Cayman Water to recover from consumers, through a separate energy cost charge, the reasonable cost of electricity used to produce and distribute water, subject to an efficiency-based mechanism that limits recovery when specific energy consumption exceeds the maximum acceptable amount set forth in the License and shares certain efficiency savings with consumers when specific energy consumption is below the target level set forth in the License.

The License also contemplates statutory fee and regulatory fee charges as separate pass-through charges to consumers;

however, those fees have not yet been prescribed by the Cayman Islands Parliament.

The License contains customary regulatory provisions for Cayman Water’s water utility operations, including provisions relating to renewal, modification, assignability, revocation or suspension, accounts and financial reporting, regulatory access to information, design and construction of new works, water quality, metering, consumer protection, business continuity planning, dispute resolution and notices.

The License does not renew automatically upon expiration of its term, but Cayman Water may apply to OfReg for renewal not earlier than 36 months and not later than 24 months prior to the expiration of the term.

Neither the License nor any obligations or benefits conferred by it may be assigned or transferred in whole or in part without OfReg’s prior written consent.

The License may be modified by written consent of OfReg and Cayman Water, subject to any special conditions concerning modification set forth in the License.

The License also provides that OfReg must, immediately upon the direction of the Cabinet of the Cayman Islands, modify the License for reasons of security, public interest or health of the general population of the Cayman Islands, with or without Cayman Water’s agreement, and establishes procedures for other modifications proposed by OfReg.

The License may be revoked or suspended by OfReg upon the occurrence of specified events, including:

fundamental breach of the License;

persistent breaches of any condition attached to the License or failure to comply with applicable directives or water sector legislation;

certain insolvency events;

failure to pay specified fees or financial commitments for

a continuous period in excess of three months after the relevant due date;

certain offences under the Water Sector Regulation Act;

obtaining the License by a fraudulent, false or misleading representation or in another illegal manner;

or failure to meet demand in a reasonable manner and time, as determined by OfReg in its discretion, acting reasonably.

The License also contains provisions addressing suspension, reinstatement, revocation and, in certain circumstances following revocation or non-renewal, potential compulsory divestiture of all mechanical, electrical and other equipment and all civil engineering works or plant, including appurtenances, owned by Cayman Water and used by Cayman Water in its licensed water production and distribution operations, including completed new works.

OC-Cayman’s agreements with the WAC to operate and maintain the North Sound and North Side Water Works plants were originally scheduled to expire on July 1, 2026.

The agreements have been extended through March 31, 2027.

Revenue recognized under the North Sound agreement was $325,659 and $609,601 for the three and six months ended June 30, 2026, respectively.

Revenue recognized under the North Side Water Works agreement was $406,617 and $801,023 for the three and six months ended June 30, 2026, respectively.

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $ 18.8 million and $ 20.7 million as of June 30, 2026 and December 31, 2025, respectively.

Approximately 64 % and 71 % of the accounts receivable balances were delinquent as of those dates, respectively.

2 unchanged sentences

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 March 31, 2026 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 April 2025.

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 June 30, 2026 or prior periods.

In a report dated April 30, 2026, Moody’s Investor Services (“Moody’s”) upgraded The Bahamas’ long-term issuer and senior unsecured ratings to Ba3 from B1.

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

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

5 unchanged sentences

CW-Bahamas Supply Guarantees

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

If the WSC requires the water and CW-Bahamas does not meet this minimum, CW-Bahamas is required to pay the WSC for the difference between the minimum and actual gallons delivered at a per gallon rate equal to the price per gallon that the WSC is currently paying CW-Bahamas under the contract.

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

The Blue Hills contract expires in 2032 and requires CW-Bahamas to deliver 63.0 million gallons of water each week.

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

The Cat Island contract expires in 2041 and requires the two plants located in Bennett’s Harbour and New Bight to deliver 504,000 gallons of water each week per plant.

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

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

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.

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

1 unchanged sentence

The Company evaluated subsequent events through the time of the filing of this report on Form 10-Q.

The Company is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on its condensed consolidated financial statements.

Other than as disclosed herein, the Company is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on its condensed consolidated financial statements.

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