What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-27 compared with 2023-03-30 · 64 added, 69 removed, 285 unchanged (32% of the section changed)

23 unchanged sentences

In estimated millions of gallons per day.

As of December 31, 2023, Ramey Environmental Compliance, Inc.

performed operations, maintenance, and monitoring services for 72 wastewater and water treatment plants located in the Rocky Mountain and Eastern Plains Regions of Colorado.

We are a comprehensive water solutions company that serves a variety of customers through multiple product and service offerings.

Presently, we:

● produce and sell potable water through the development and operation of water infrastructure that employs reverse osmosis technology to produce potable water from seawater;

● develop, sell and manage water treatment and water reuse system infrastructure that meets regulatory, environmental and commercial needs and requirements;

● produce and sell potable water through the design, construction and operation of water infrastructure that employs reverse osmosis technology to produce potable water from seawater;

● design, construct, sell, operate and manage water production, water treatment and water reuse system infrastructure that meets regulatory, environmental and commercial needs and requirements;

● fabricate/manufacture specialized and custom equipment and products employed in the production and treatment of water for municipal, commercial and industrial purposes;

15 unchanged sentences

Cayman Water operates under an exclusive retail license granted by the Cayman Islands government to provide water to customers within a prescribed service area on Grand Cayman that includes the Seven Mile Beach and West Bay areas, two of the three most populated areas in the Cayman Islands.

Water owns and operates four seawater reverse osmosis desalination plants.

Cayman Water owns and operates four seawater reverse osmosis desalination plants.

Cayman Water and the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, are Grand Cayman’s only water utilities.

10 unchanged sentences

OC-Cayman provides bulk water under long-term contracts to the WAC, which distributes the water to properties located outside our exclusive retail license service area on Grand Cayman.

OC-Cayman built, sold and operates three seawater reverse osmosis desalination plants owned by the WAC.

OC-Cayman operates three seawater reverse osmosis desalination plants owned by the WAC.

Services Segment

DesalCo Limited (“DesalCo”).

A Cayman Islands company, DesalCo provides design, management, engineering and construction services for desalination projects as well as management and engineering services relating to municipal water distribution and treatment.

PERC Water Corporation (“PERC”).

On October 24, 2019, we purchased, through our wholly-owned U.S.

In October 2019, we purchased, through our wholly-owned U.S.

subsidiary, Consolidated Water U.S.

2 unchanged sentences

company headquartered in Fountain Valley, California.

PERC develops, builds, sells, operates and manages water, wastewater and water reuse infrastructure.

In August 2020, we purchased an additional 10% ownership interest of PERC, increasing our ownership of this subsidiary to 61%.

In January 2023, we acquired the remaining 39% ownership interest in PERC.

PERC designs, constructs, sells, operates and manages water, wastewater and water reuse infrastructure.

Ramey Environmental Compliance, Inc.

Effective October 1, 2023, we purchased, through our wholly-owned subsidiary PERC, a 100% ownership interest in REC, a Colorado company headquartered in Frederick, Colorado.

REC operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado.

DesalCo Limited (“DesalCo”).

Serving as a subcontractor to OC-Cayman, DesalCo designed and constructed the three reverse osmosis plants that OC-Cayman currently operates for (and previously sold to) the WAC and is presently constructing the new Red Gate plant for the WAC.

Kalaeloa Desalco LLC (“Kalaeloa Desalco”).

In September 2021, Kalaeloa Desalco was formed to pursue a project encompassing the design, construction, operations and maintenance of a seawater reverse osmosis desalination plant in Oahu, Hawaii.

In June 2023, Kalaeloa Desalco signed a definitive agreement with the Honolulu Board of Water Supply to design, build, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii.

Manufacturing Segment

2 unchanged sentences

company located in Fort Pierce, Florida, is an original equipment manufacturer of a wide range of specialized and custom products and systems applicable to desalination, municipal water treatment and industrial water and wastewater treatment.

Aerex’s products include reverse osmosis desalination equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.

Aerex’s products include reverse osmosis desalination

equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.

Aerex also offers engineering, design, consulting, inspection, training and equipment maintenance services to its customers.

10 unchanged sentences

CW-Cooperatief owns 99.9% of NSC, a Mexican company.

NSC was formed to pursue a project encompassing the design, construction, ownership and operation of a 100 million gallon per day seawater reverse osmosis desalination plant which

was to be located in northern Baja California, Mexico and accompanying pipeline to deliver water to the Mexican potable water system (the “Project”).

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

On June 29, 2020, the Director General of CEA and the Director General of CESPT terminated the APP Contract.

NSC was formed to pursue a project encompassing the design, construction, ownership and operation of a 100 million gallon per day seawater reverse osmosis desalination plant which was to be located in northern Baja California, Mexico and accompanying pipeline to deliver water to the Mexican potable water system (the “Project”).

In August 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the Comisión Estatal del Agua de Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”).

In June 2020, the Director General of CEA and the Director General of CESPT terminated the APP Contract.

As a result of the cancellation of the APP Contract, we discontinued all development activities associated with the Project and commenced active marketing efforts to sell the land NSC purchased for the Project.

7 unchanged sentences

We sell water through our 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 was not expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.

Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.

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:

1 unchanged sentence

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 license expired on January 31, 2018.

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

We continue 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 our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.

9 unchanged sentences

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Material Commitments, Expenditures and Contingencies - Cayman Water Retail License .

Our retail operations in the Cayman Islands produce potable water at four seawater reverse osmosis desalination plants in Grand Cayman located at our Abel Castillo Water Works (“ACWW”), Britannia and West Bay sites.

We own the land for our ACWW and West Bay plants and have entered into a lease for the land for our Britannia plant that expires January 1, 2027.

Our retail operations in the Cayman Islands produce potable water at three seawater reverse osmosis desalination plants in Grand Cayman located at our Abel Castillo Water Works (“ACWW”) and West Bay sites.

We own the land for our ACWW and West Bay plants.

The current aggregate production capacity of the two plants located at ACWW is 3.0 million gallons of water per day.

The production capacity of the Britannia plant is 715,000 gallons of water per day.

The production capacity of the West Bay plant is 1,000,000 gallons of water per day.

14 unchanged sentences

Receivables not collected within 45 days subject the customer to disconnection from water service.

Bad debts have historically represented less than 1% of our total annual retail sales.

The provision for credit losses has historically represented less than 1% of our total annual retail sales.

In addition to their past due invoice balance, customers that have had their service disconnected must pay re-connection charges.

10 unchanged sentences

The WAC in turn distributes that water to properties in Grand Cayman outside of our retail license area.

The water we provide to the WAC is produced at three seawater reverse osmosis desalination plants in Grand Cayman owned by the WAC but designed, built and operated by OC-Cayman:

the North Sound, Red Gate and North Side Water

Works (“NSWW”) plants, which have production capacities of approximately 1.6 million, 1.3 million and 2.4 million gallons of water per day, respectively.

The water we provide to the WAC is produced at three seawater reverse osmosis desalination plants in Grand Cayman owned by the WAC but designed and built by DesalCo and operated by OC-Cayman:

the North Sound, Red Gate and North Side Water Works (“NSWW”) plants, which have production capacities of approximately 1.6 million, 1.3 million and 2.4 million gallons of water per day, respectively.

The plants we operate for the WAC are located on land owned by the WAC.

Our agreement with the WAC for the North Sound and Red Gate plants expires in 2024.

Our agreement with the WAC for the NSWW plant expires in 2026.

Our agreement with the WAC for the North Sound and NSWW plants expire in 2026.

Our agreement with the WAC for the Red Gate plant expires in 2034.

Bulk Water Operations in The Bahamas

11 unchanged sentences

DesalCo also conducts research and development.

DesalCo sometimes tests new components and technology offered by suppliers in our business and, at times, collaborates with suppliers in the development of their products.

DesalCo sometimes tests new components and technology offered by suppliers in our business and, at times, collaborates with suppliers in the development of their

Presently, DesalCo is providing management and purchasing services to our affiliate OC-BVI in the British Virgin Islands.

In the past, DesalCo has provided consulting services to the WSC and constructed and sold desalination plants to the WAC, and is presently constructing the Red Gate desalination plant for the WAC.

On October 24, 2019, we acquired 51% of the common stock of PERC, a U.S.

In the past, DesalCo has provided consulting services to the WSC and constructed the desalination plants sold by OC-Cayman to the WAC.

Serving as a contractor to OC-Cayman, DesalCo is presently constructing the new Red Gate desalination plant for the WAC.

In October 2019, we acquired 51% of the common stock of PERC, a U.S.

company headquartered in Fountain Valley, California, which commenced operations in 1998.

In August 2020, we acquired an additional 10% of PERC, increasing our ownership of this subsidiary to 61%.

PERC develops, builds, and sells wastewater and water reuse infrastructure.

In January 2023, we acquired the remaining 39% ownership interest in PERC.

PERC designs, constructs and sells wastewater and water reuse infrastructure.

PERC also provides management services for wastewater and water reuse infrastructure under long-term operations and maintenance contracts.

PERC’s primary markets are California and the Southwest U.S., but it conducts business in other areas of the U.S.

In January 2023, we acquired the remaining 39% ownership interest in PERC.

Effective October 1, 2023, we purchased, through our wholly-owned subsidiary PERC, a 100% ownership interest in REC, a Colorado company headquartered in Frederick, Colorado.

REC operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado.

Manufacturing Operations

For fiscal years 2023 and 2022, our manufacturing operations accounted for approximately 10% and 7%, respectively, of our consolidated revenue.

Our manufacturing operations consist of Aerex, an original equipment manufacturer and service provider of a wide range of specialized and custom products applicable to desalination, municipal water treatment and

industrial water and wastewater treatment.

Aerex’s products include reverse osmosis desalination equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.

14 unchanged sentences

This water supply agreement expires March 2031.

OC-BVI purchases electrical power to operate this plant from BVI Electric Co.

and operates diesel engine-driven emergency power generators which can produce 100% of the plant’s production capacity when BVI Electric Co.

is unable to provide power to the plant.

OC-BVI purchases electrical power to operate this plant from the BVI Electricity Corporation and operates diesel engine-driven emergency power generators which can produce 100% of the plant’s production capacity when the BVI Electricity Corporation is unable to provide power to the plant.

OC-BVI’s plant on the island of Jost Van Dyke has a capacity of 60,000 gallons per day.

1 unchanged sentence

Pursuant to the contract, OC-BVI is operating the plant on a year-to-year basis until the BVI government informs OC-BVI of its intention to extend the existing contract or enter into a new agreement.

We purchase electrical power to operate this plant from BVI Electric Co.

We purchase electrical power to operate this plant from the BVI Electricity Corporation.

Reverse Osmosis Technology

3 unchanged sentences

seawater) is pressurized and the fresh water is separated from the saline water by passing through a semi-permeable membrane which rejects the salts.

The saline water is first passed through a pretreatment system, which generally consists of fine filtration and treatment chemicals, if required.

The saline water is first passed through a pretreatment system, which generally consists of fine filtration and, if required, treatment chemicals.

Pre-treatment removes suspended solids and organics which could cause fouling of the membrane surface.

4 unchanged sentences

We believe that this technology is the most effective and efficient conversion process for our markets.

we are always seeking ways to maximize efficiencies in our current processes and investigating new, more efficient processes to convert seawater to potable water.

However, we are always seeking ways to maximize efficiencies in our current processes and investigating new, more efficient processes to convert seawater to potable water.

The equipment at our desalination plants is among the most energy efficient available and we monitor and maintain the equipment in an efficient manner.

1 unchanged sentence

Wastewater Treatment Technology

Our wastewater treatment comprises various technologies which rely on the action of microorganisms to treat wastewater.

The sequential batch reactor (“SBR”) technology we typically use is a conventional, proven method which has been used to treat organic wastewater for many years.

More than 1,000 SBR treatment facilities are in use in the United States ranging in size from 10,000 gallons per day to 22 million gallons per day.

Increasingly, we utilize membrane bioreactor (“MBR”) technology which utilizes micro or ultra-filtration membranes to enhance biological wastewater treatment.

The improvements offered by MBR technology include a reduced physical footprint for the facility, higher quality treated effluent and the ability to treat more challenging influent.

PERC has improved upon the standard SBR and MBR processes and whenever possible locates its equipment in concealed areas and in aesthetically pleasing buildings that minimize foul odors.

Our approach to wastewater treatment integrates advanced technologies and processes to ensure high-quality water reuse while addressing environmental and operational concerns.

Typical technology uses include that of micro and ultra filtration, reverse osmosis, and ultraviolet advanced oxidation systems, often with sodium hypochlorite or hydrogen peroxide as oxidizers, to meet the stringent water quality parameters set by California.

This is particularly relevant for applications like Title 22 reuse and Indirect Potable Reuse, where safety and quality are paramount.

We utilize Membrane Bioreactor (“MBR”) technology, which is a wastewater treatment process that has been used for several decades to produce high quality recycled water for non-potable reuse.

MBR technology, which integrates micro or ultra-filtration membranes with biological wastewater treatment processes, offers several advantages.

These include a reduced physical footprint, which is crucial in areas where space is at a premium, and the production of higher quality treated effluent, which is vital for ensuring the safety and reliability of water reuse.

Additionally, MBR's capability to handle more challenging influent makes it a versatile solution for a variety of wastewater treatment needs.

We employ various methods to improve the aesthetic and environmental integration of our clients’ facilities.

We conceal equipment and housing technologies in buildings that are both aesthetically pleasing and odor friendly, thereby addressing two of the common challenges in wastewater treatment facilities:

odor and visual impact.

This not only enhances the quality of life for nearby residents but also demonstrates a commitment to environmental stewardship.

Furthermore, the vertical integration of technology within our operations constitutes a strategic approach to improving efficiency in construction and operational phases.

We believe this integration leads to cost savings, faster project completion times, reduction of raw material usage, and smoother operational processes.

Overall, our strategies and technologies reflect a holistic approach to wastewater treatment, emphasizing efficiency, environmental sensitivity, and the production of high-quality treated water for various reuse applications.

Raw Materials and Sources of Supply

18 unchanged sentences

Cayman Islands

The Cayman Islands are a British Overseas Territory with a stable political climate since 1670, when the Treaty of Madrid ceded the Cayman Islands to England.

The King of England appoints the Governor of the Cayman Islands to make laws with the advice and consent of the Parliament of the Cayman Islands.

The Parliament of the Cayman Islands consists of 19 elected members and two members appointed by the Governor from the Civil Service.

The Cabinet is responsible for day-to-day government operations.

The Cabinet consists of the Premier and six other ministers who are chosen by the Premier from its 19 popularly elected members, and the two Civil Service members.

The elected members choose from among themselves a leader, who is designated the Premier, and is in effect the leader of the elected government.

The Governor has reserved powers and the United Kingdom retains full control over foreign affairs and defense.

The Cayman Islands are a common law jurisdiction and have adopted a legal system similar to that of the United Kingdom.

The Cayman Islands have no taxes on profits, income, distributions, capital gains or appreciation.

2 unchanged sentences

We have been advised by the Government of the Cayman Islands that we will not receive any duty concessions in any new retail water license signed with the government.

The Commonwealth of The Bahamas is an independent nation and a constitutional parliamentary democracy with the King of England as the constitutional head of state.

The basis of the Bahamian law and legal system is the English common law tradition with a Supreme Court, Court of Appeals, and a Magistrates court.

Under the current laws of the Commonwealth of The Bahamas, no income, corporation, capital gains or similar taxes are payable by us.

1 unchanged sentence

We are also required to pay a value added tax on materials and services we purchase.

British Virgin Islands

The British Virgin Islands (“BVI”) is a British Overseas Territory, with the King of England as the Head of State and His Majesty’s representative, the Governor, responsible for external affairs, defense and internal security, the Civil Service and administration of the courts.

Since 1967, the BVI has held responsibility for its own internal affairs.

The BVI Constitution provides for the people of the BVI to be represented by a ministerial system of government, led by an elected Premier, a Cabinet of Ministers and the House of Assembly.

The House of Assembly consists of 13 elected representatives, the Attorney General, and the Speaker.

The judicial system, based on English law, is under the direction of the Eastern Caribbean Supreme Court, which includes the High Court of Justice and the Court of Appeal.

The ultimate appellate court is the Privy Council in London.

Markets and Service Areas

7 unchanged sentences

According to the most recent information published by the Economics and Statistics Office of the Cayman Islands Government, the population of the Cayman Islands was estimated in 2022 to be 81,546 after the 2021 census count.

According to the figures published by the Department of Tourism Statistics Information Center, in 2022 as compared to 2021, tourist air arrivals increased over 1000% to approximately 284,000 and tourist cruise ship arrivals increased from zero to approximately 743,000.

According to the figures published by the Department of Tourism Statistics Information Center, in 2023 as compared to 2022, tourist air arrivals increased over 50% to approximately 429,000 and tourist cruise ship arrivals increased 70% to approximately 1,270,000.

We believe that our water sales in the Cayman Islands are more positively impacted by stay-over tourists that arrive by air than by those arriving by cruise ship, since cruise ship tourists generally only visit the island for one day or less and do not remain on the island overnight.

4 unchanged sentences

A 2022 census placed the population of New Providence at approximately 297,000.

more recent estimates suggest it is approximately 275,000.

According to statistics published by the Bahamas Ministry of Tourism, the number of cruise ship arrival and air arrival tourists to New Providence were approximately 590,000 and 320,000, respectively, in 2020 and were approximately 465,000 and 650,000, respectively, in 2021.

The most current data published by the Bahamas Ministry of Tourism for 2022 shows that the number of cruise ship arrival and air arrival tourists were approximately 2,136,000 and 1,137,000, respectively.

According to statistics published by the Bahamas Ministry of Tourism, in 2023 as compared to 2022, the number of air arrivals increased 17% to approximately 1,327,000 and cruise ship arrivals increased 46% to approximately 3,114,000.

British Virgin Islands .

16 unchanged sentences

In the British Virgin Islands, SUEZ/Veolia operates seawater reverse osmosis desalination plants in West End, Tortola, and on Virgin Gorda and generally bids against OC-BVI for projects.

Seven Seas Water owns and operates a 2.75 million gallon per day desalination plant in Parakeeta Bay, Tortola for the British Virgin Islands

We expect that OC-BVI will be required to compete against SUEZ/Veolia, Seven Seas Water and other parties for any future business opportunities that may arise in the British Virgin Islands.

Seven Seas Water owns and operates a 2.75 million gallon per day desalination plant in Parakeeta Bay, Tortola for the British Virgin Islands government.

We expect that OC-BVI will be required to compete against SUEZ/Veolia, Seven Seas Water, TSG and other parties for any future business opportunities that may arise in the British Virgin Islands.

United States .

Aerex competes in the highly fragmented industry for manufactured water production and treatment equipment and systems against a large number of manufacturers, fabricators and service providers, many of which have greater resources than Aerex.

Similar to Aerex, PERC competes in the highly fragmented industry for water treatment and water reuse infrastructure development and management against a large number of companies, many of which have greater resources than PERC.

PERC and REC compete in the highly fragmented industry for water treatment and water reuse infrastructure development and management against a large number of companies, many of which have greater resources than PERC and REC.

Environmental and Health Regulatory Matters

10 unchanged sentences

Consistent with other U.S.

companies, Aerex and PERC must comply with various federal laws and regulations, such as those administered by the U.S.

companies, Aerex, PERC, Kalaeloa Desalco and REC must comply with various federal laws and regulations, such as those administered by the U.S.

Environmental Protection Agency and the Occupational Safety and Health Administration, as well as state and local laws and regulations.

12 unchanged sentences

We consider our relationships with our employees to be very good.

During the COVID-19 pandemic, we implemented a number of significant safety measures based on current guidelines recommended by the Centers for Disease Control for employees who work at our facilities.

Available Information

11 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 1. Business