CONSOLIDATED WATER CO. LTD.

Three Months Ended March 31,

Cash paid for amounts included in measurement of liabilities:

Operating cash outflows for operating leases

Operating cash outflows for operating leases - discontinued operations

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 0-25248

CONSOLIDATED WATER CO. LTD.

(Exact name of registrant as specified in its charter)

CAYMAN ISLANDS		98-0619652
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

Regatta Office Park
Windward Three, 4th Floor, West Bay Road
P.O. Box 1114
Grand Cayman KY1-1102
Cayman Islands		N/A
(Address of principal executive offices)		(Zip Code)

(345) 945-4277

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, $0.60 par value		CWCO		The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒

Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of May 7, 2025, 15,916,685 shares of the registrant’s common stock, with US$0.60 par value, were outstanding.

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TABLE OF CONTENTS


	Description	Page
PART I	FINANCIAL INFORMATION	4
Item 1	Financial Statements	4

	Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024	4

	Condensed Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, 2025 and 2024	5

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2025 and 2024	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2025 and 2024	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4	Controls and Procedures	33

PART II	OTHER INFORMATION	34
Item 1A	Risk Factors	34
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 5	Other Information	36
Item 6	Exhibits	36

SIGNATURES		37

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Note Regarding Currency and Exchange Rates

Unless otherwise indicated, all references to “$” or “US$” are to United States dollars.

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

The exchange rate for conversion of Bahamas dollars (B$) into US$, as determined by the Central Bank of The Bahamas, has been fixed since 1973 at US$1.00 per B$1.00.

The official currency of the British Virgin Islands is the US$.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS


		March 31,		December 31,
		2025		2024
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	107,852,232	$	99,350,121
Accounts receivable, net		36,192,112		39,580,982
Inventory		7,156,002		8,960,350
Prepaid expenses and other current assets		4,173,867		5,153,984
Contract assets		9,517,668		4,470,243
Current assets of discontinued operations		169,707		272,485
Total current assets		165,061,588		157,788,165
Property, plant and equipment, net		53,543,342		52,432,282
Construction in progress		4,477,700		5,143,717
Inventory, noncurrent		5,487,970		5,338,961
Investment in affiliates		1,262,137		1,504,363
Goodwill		12,861,404		12,861,404
Intangible assets, net		2,532,722		2,696,815
Operating lease right-of-use assets		3,050,106		3,190,985
Other assets		2,091,996		2,356,489
Total assets	$	250,368,965	$	243,313,181

LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	9,618,600	$	9,057,179
Accrued compensation		3,949,591		3,336,946
Dividends payable		1,788,293		1,780,841
Current maturities of operating leases		636,075		634,947
Current portion of long-term debt		97,612		126,318
Contract liabilities		12,401,797		9,126,654
Deferred revenue		146,816		365,879
Current liabilities of discontinued operations		235,057		509,745
Total current liabilities		28,873,841		24,938,509
Long-term debt, noncurrent		56,838		70,320
Deferred tax liabilities		—		210,893
Noncurrent operating leases		2,473,687		2,630,812
Other liabilities		153,000		153,000
Total liabilities		31,557,366		28,003,534
Commitments and contingencies
Equity
Consolidated Water Co. Ltd. stockholders' equity
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 40,830 and 44,004 shares, respectively		24,498		26,402
Class A common stock, $0.60 par value. Authorized 24,655,000 shares; issued and outstanding 15,916,685 and 15,846,345 shares, respectively		9,550,011		9,507,807
Class B common stock, $0.60 par value. Authorized 145,000 shares; none issued		—		—
Additional paid-in capital		93,813,284		93,550,905
Retained earnings		109,909,427		106,875,581
Total Consolidated Water Co. Ltd. stockholders' equity		213,297,220		209,960,695
Non-controlling interests		5,514,379		5,348,952
Total equity		218,811,599		215,309,647
Total liabilities and equity	$	250,368,965	$	243,313,181

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

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CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)


	Three Months Ended March 31,
	2025		2024
Revenue	$	33,715,385	$	39,689,390
Cost of revenue		21,409,098		25,811,367
Gross profit		12,306,287		13,878,023
General and administrative expenses		7,723,959		6,564,029
Gain on asset dispositions and impairments, net		28,435		—
Income from operations		4,610,763		7,313,994

Other income (expense):
Interest income		616,594		334,142
Interest expense		(1,528)		(33,501)
Equity in the earnings of affiliates		30,474		77,566
Other		43,351		39,977
Other income, net		688,891		418,184
Income before income taxes		5,299,654		7,732,178
Provision for income taxes		210,117		621,696
Net income from continuing operations		5,089,537		7,110,482
Income from continuing operations attributable to non-controlling interests		165,427		169,068
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders		4,924,110		6,941,414
Net loss from discontinued operations		(133,081)		(467,066)
Net income attributable to Consolidated Water Co. Ltd. stockholders	$	4,791,029	$	6,474,348

Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations	$	0.31	$	0.44
Discontinued operations		(0.01)		(0.03)
Basic earnings per share	$	0.30	$	0.41

Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations	$	0.31	$	0.43
Discontinued operations		(0.01)		(0.03)
Diluted earnings per share	$	0.30	$	0.40

Dividends declared per common and redeemable preferred shares	$	0.11	$	0.095

Weighted average number of common shares used in the determination of:
Basic earnings per share		15,915,867		15,828,929
Diluted earnings per share		16,041,847		15,984,548

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

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CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Redeemable						Additional				Non-		Total
	preferred stock			Common stock			paid-in		Retained		controlling		stockholders’
	Shares	Dollars		Shares	Dollars		capital		earnings		interests		equity
Balance as of December 31, 2024	44,004	$	26,402	15,846,345	$	9,507,807	$	93,550,905	$	106,875,581	$	5,348,952	$	215,309,647
Issue of share capital	—		—	66,764		40,058		(40,058)		—		—		—
Conversion of preferred stock	(2,486)		(1,492)	2,486		1,492		—		—		—		—
Buyback of preferred stock	(688)		(412)	—		—		(9,727)		—		—		(10,139)
Net income	—		—	—		—		—		4,791,029		165,427		4,956,456
Exercise of options	—		—	1,090		654		12,793		—		—		13,447
Dividends declared	—		—	—		—		—		(1,757,183)		—		(1,757,183)
Stock-based compensation	—		—	—		—		299,371		—		—		299,371
Balance as of March 31, 2025	40,830	$	24,498	15,916,685	$	9,550,011	$	93,813,284	$	109,909,427	$	5,514,379	$	218,811,599


	Redeemable						Additional				Non-		Total
	preferred stock			Common stock			paid-in		Retained		controlling		stockholders’
	Shares	Dollars		Shares	Dollars		capital		earnings		interests		equity
Balance as of December 31, 2023	44,297	$	26,578	15,771,545	$	9,462,927	$	92,188,887	$	85,148,820	$	5,003,462	$	191,830,674
Issue of share capital	—		—	57,384		34,430		(34,430)		—		—		—
Buyback of preferred stock	(272)		(163)	—		—		(2,727)		—		—		(2,890)
Net income	—		—	—		—		—		6,474,348		169,068		6,643,416
Dividends declared	—		—	—		—		—		(1,510,082)		—		(1,510,082)
Stock-based compensation	—		—	—		—		279,875		—		—		279,875
Balance as of March 31, 2024	44,025	$	26,415	15,828,929	$	9,497,357	$	92,431,605	$	90,113,086	$	5,172,530	$	197,240,993

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

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CONSOLIDATED WATER CO. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities
Net income attributable to Consolidated Water Co. Ltd. stockholders	$	4,791,029	$	6,474,348
Income from continuing operations attributable to non-controlling interests		165,427		169,068
Net income		4,956,456		6,643,416
Adjustments to reconcile net income to net cash provided by operating activities:
Foreign currency transaction adjustment - discontinued operations		251		(959)
Loss from discontinued operations		132,830		468,025
Depreciation and amortization		1,692,546		1,674,699
Deferred income tax benefit		(229,699)		(446,849)
Provision for credit losses		312,902		177,849
Amortization of operating lease right-of-use assets		154,696		165,591
Compensation expense relating to stock and stock option grants		299,371		279,875
Gain on asset dispositions and impairments, net		(28,435)		—
Equity in earnings of affiliates		(30,474)		(77,566)
Distribution of earnings from OC-BVI		272,700		227,250

Change in:
Accounts receivable		3,075,968		(3,715,214)
Contract assets		(5,047,425)		(1,787,438)
Inventory		1,467,930		1,746,438
Prepaid expenses and other assets		1,060,228		1,275,345
Accounts payable, accrued expenses and other current liabilities		1,174,066		721,635
Contract liabilities		3,275,143		(777,669)
Operating lease liabilities		(155,997)		(166,893)
Deferred revenue		(219,063)		(55,775)
Net cash provided by operating activities - continuing operations		12,163,994		6,351,760
Net cash used in operating activities - discontinued operations		(403,743)		(401,758)
Net cash provided by operating activities		11,760,251		5,950,002

Cash flows from investing activities
Additions to property, plant and equipment and construction in progress		(1,599,481)		(531,452)
Proceeds from asset dispositions		31,200		—
Net cash used in investing activities		(1,568,281)		(531,452)

Cash flows from financing activities
Dividends paid to common shareholders		(1,744,891)		(1,500,449)
Dividends paid to preferred shareholders		(4,840)		(4,208)
Buyback of redeemable preferred stock		(10,139)		(2,890)
Proceeds received from exercise of stock options		13,447		—
Principal repayments on long-term debt		(42,188)		(50,018)
Net cash used in financing activities		(1,788,611)		(1,557,565)
Net increase in cash and cash equivalents		8,403,359		3,860,985
Cash and cash equivalents at beginning of period		99,350,121		42,621,898
Cash and cash equivalents at beginning of period - discontinued operations		127,859		91,283
Less: cash and cash equivalents at end of period - discontinued operations		(29,107)		(396,525)
Cash and cash equivalents at end of period	$	107,852,232	$	46,177,641

Non-cash transactions:
Conversion (on a one-to-one basis) of 2,486 and 0, respectively, shares of redeemable preferred stock to common stock	$	1,492	$	—
Dividends declared but not paid	$	1,755,327	$	1,507,931
Transfers from inventory to property, plant and equipment and construction in progress	$	187,409	$	157,356
Transfers from construction in progress to property, plant and equipment	$	2,135,224	$	184,402
Transfers from prepaid expenses to property, plant and equipment	$	144,533	$	67,136

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

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CONSOLIDATED WATER CO. LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Principal activity

Consolidated Water Co. Ltd. and its subsidiaries (collectively, the “Company”) supply potable water, treat wastewater and water for reuse, and provide water-related products and services to customers in the Cayman Islands, The Bahamas, the United States and the British Virgin Islands. The Company produces potable water from seawater using reverse osmosis technology and sells this water to a variety of customers, including public utilities, commercial and tourist properties, residential properties and government facilities. The Company designs, constructs and sells water production and water treatment infrastructure and manages water infrastructure for commercial and governmental customers. The Company also manufactures a wide range of specialized and custom water industry related products and provides design, engineering, operating and other services applicable to commercial, municipal and industrial water production, supply and treatment.

2. Accounting policies

Basis of consolidation: The accompanying condensed consolidated financial statements include the accounts of the Company’s (i) wholly-owned subsidiaries, Aerex Industries, Inc. (“Aerex”), Aquilex, Inc. (“Aquilex”), Cayman Water Company Limited (“Cayman Water”), Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), Consolidated Water U.S. Holdings, Inc. (“CW-Holdings”), DesalCo Limited (“DesalCo”), Kalaeloa Desalco LLC (“Kalaeloa Desalco”), Ocean Conversion (Cayman) Limited (“OC-Cayman”), PERC Water Corporation ("PERC") and Ramey Environmental Compliance, Inc. (“REC”); and (ii) majority-owned subsidiaries Consolidated Water (Bahamas) Ltd. (“CW-Bahamas”), N.S.C. Agua, S.A. de C.V. (“NSC”), and Aguas de Rosarito S.A.P.I. de C.V. (“AdR”). The Company’s investment in its affiliate Ocean Conversion (BVI) Ltd. (“OC-BVI”) is accounted for using the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.

In September 2021, Kalaeloa Desalco was formed to pursue a project in Oahu, Hawaii. On June 2, 2023, Kalaeloa Desalco signed a definitive agreement with the Honolulu Board of Water Supply to design, construct, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii.

Effective October 1, 2023, the Company purchased, through its wholly-owned subsidiary PERC, a 100% ownership interest in REC, a Colorado company that operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains regions of Colorado. PERC acquired REC for approximately $4.1 million and recorded goodwill and intangible assets from this acquisition of $2,436,391 and $1,108,390, respectively.

The accompanying interim condensed consolidated financial statements are unaudited. These condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) that, in the opinion of management, are necessary to fairly present the Company’s consolidated financial position, results of operations and cash flows as of and for the periods presented. The consolidated results of operations for these interim periods are not necessarily indicative of the operating results for future periods, including the fiscal year ending December 31, 2025.

These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) relating to interim financial statements and in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted in these condensed consolidated financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Foreign currency: The Company’s reporting currency is the United States dollar (“US$”). The functional currency of the Company and its foreign operating subsidiaries (other than NSC, AdR, and CW-Cooperatief) is the currency for each

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respective country. The functional currency for NSC, AdR, and CW-Cooperatief is the US$. NSC and AdR conduct business in US$ and Mexican pesos and CW-Cooperatief conducts business in US$ and euros. The exchange rates for the Cayman Islands dollar and the Bahamian dollar are fixed to the US$. The exchange rates for conversion of Mexican pesos and euros into US$ vary based upon market conditions.

Net foreign currency gains arising from transactions and re-measurements were $29,642 and $24,197 for the three months ended March 31, 2025 and 2024, respectively, 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 and certificates of deposit at banks with original maturities of three months or less. Cash and cash equivalents as of March 31, 2025 and December 31, 2024 include approximately $5.3 million and $5.2 million, respectively, of certificates of deposits with original maturities of three months or less.

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, 2025 and December 31, 2024 were approximately $14.0 million and $7.7 million, respectively.

Goodwill and intangible assets: Goodwill represents the excess cost of an acquired business over the fair value of the assets and liabilities of the acquired business as of the date of acquisition. Goodwill and intangible assets recorded as a result of a business combination and determined to have an indefinite useful life are not amortized but are tested for impairment annually or upon the identification of a triggering event. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed periodically for impairment. The Company evaluates the possible impairment of goodwill annually as part of its reporting process for the fourth quarter of each fiscal year. Management identifies the Company’s reporting units for goodwill impairment testing purposes, which consist of Cayman Water, the bulk segment (which is comprised of CW-Bahamas and OC-Cayman), PERC, REC, and the manufacturing segment (i.e., Aerex), and determines the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. The Company determines the fair value of each reporting unit and compares these fair values to the carrying amounts of the reporting units. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, an impairment loss is recorded.

For the year ended December 31, 2024, the Company elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing that was conducted in prior years for its reporting units. The Company assessed the relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units were 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 is more likely than not that the fair values of its reporting units exceeded their carrying values as of December 31, 2024.

Income taxes: The Company accounts for the income taxes arising from the operations of its United States subsidiaries under the asset and liability method. Deferred tax assets and liabilities, if any, are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to the extent any deferred tax asset may not be realized.

The Company is not presently subject to income taxes in the other countries in which it operates.

Revenue recognition: Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

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


	Three Months Ended March 31,
	2025		2024
Retail revenue	$	9,411,342	$	8,624,938
Bulk revenue		8,411,716		8,342,094
Services revenue		10,078,268		17,417,611
Manufacturing revenue		5,814,059		5,304,747
Total revenue	$	33,715,385	$	39,689,390

Services revenue consists of the following:


	Three Months Ended March 31,
	2025		2024
Construction revenue	$	2,218,230	$	9,203,662
Operations and maintenance revenue		7,725,298		7,099,354
Design and consulting revenue		134,740		1,114,595
Total services revenue	$	10,078,268	$	17,417,611

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

The Company recognizes revenue from retail water sales at the end of the billing cycle based on the water supplied to the customers’ premises. The amount of water supplied is determined and invoiced based upon water meter readings performed at the end of each month. All retail water contracts are month-to-month contracts. The Company has elected the “right to invoice” practical expedient for revenue recognition on its retail 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.

Bulk revenue

The Company produces and supplies water to government-owned utilities in the Cayman Islands and The Bahamas.

OC-Cayman provides bulk water to the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, under three agreements. 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 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.

Services and Manufacturing revenue

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

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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 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.

The Company, through Aerex, is a custom and specialty manufacturer of systems and products applicable to commercial, municipal and industrial water production and treatment. Substantially all of Aerex’s customers are U.S. companies.

Kalaeloa Desalco has signed and is presently executing a definitive agreement with the Honolulu Board of Water Supply to design, construct, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii.

The Company generates construction, operations and maintenance, design and consulting revenue from PERC and DesalCo, generates construction revenue from Kalaeloa 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. Contract costs include labor, materials, subcontractor costs and other expenses. The Company follows this method since it can make reasonably dependable estimates of the revenue and costs applicable to the various stages of a contract. 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 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. Due to the extended time it may take to complete many of the Company’s contracts and the scope and nature of the work required to be performed on those contracts, the estimations of total revenue and costs at completion are complicated and subject to many variables and, accordingly, are subject to changes. When adjustments in estimated total contract revenue or estimated total contract costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. The Company recognizes the full amount of any estimated loss on a contract at the time the estimates indicate such a loss. Any contract assets are classified as current assets. Contract liabilities on uncompleted contracts, if any, are classified as current liabilities.

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.

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For the three months ended March 31, 2025 and 2024, the Company recognized $2,180,261 and $9,397,093, respectively, of its services revenue from the transfer of goods or services to customers over time. The remaining services revenue of $7,898,007 and $8,020,518, respectively, was recognized from the transfer of goods or services to customers when invoiced. For the three months ended March 31, 2025 and 2024, the Company recognized all of its manufacturing revenue from the transfer of goods or services to customers over time.

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


	March 31,		December 31,
	2025		2024
Revenue recognized to date on contracts in progress	$	111,400,995	$	114,590,991
Amounts billed to date on contracts in progress		(117,315,578)		(121,833,354)
Retainage		3,030,454		2,585,952
Net contract asset /(liability)	$	(2,884,129)	$	(4,656,411)

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


	March 31,		December 31,
	2025		2024
Contract assets	$	9,517,668	$	4,470,243
Contract liabilities		(12,401,797)		(9,126,654)
Net contract asset /(liability)	$	(2,884,129)	$	(4,656,411)

As of March 31, 2025, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $149.3 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 $18.6 million during the remainder of the year ending December 31, 2025 and approximately $130.7 million thereafter. In addition, the Company recognized revenue of approximately $1.4 million for the three months ended March 31, 2025, that was included in the contract liability balance as of December 31, 2024.

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 2024 have been reclassified to conform to the current period’s presentation.

3. Segment information

The Company has five reportable segments: 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 bulk segment supplies potable water to government utilities in Grand Cayman and The Bahamas under long-term contracts. The services segment designs, constructs and sells water infrastructure and provides management and operating services to third parties. The manufacturing segment manufactures and services a wide range of custom and specialized water-related products applicable to commercial, municipal and industrial water production, supply and treatment. The corporate segment consists of various expenses of a general and administrative nature incurred at the parent company level, as well as the expenses incurred by Aquilex, a U.S. subsidiary that provides financial, engineering, information technology, administrative and supply chain management support services to all the Company’s subsidiaries and its affiliate.

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Frederick W. McTaggart, Chief Executive Officer and President, is the Company’s chief operating decision maker (“CODM”).

For the retail, bulk, services, and manufacturing segments, the CODM uses revenue, gross profit, and income before income taxes to assess segment performance and in deciding the allocation of resources to each segment. 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 fees) when making decisions regarding capital and resource allocation.

The accounting policies of the segments are consistent with those described in Note 2. All intercompany transactions are eliminated for segment presentation purposes. Intersegment revenue transactions are insignificant to the Company and are eliminated. Segment information previously disclosed in 2024 did not separately disclose those expenses currently reported in the corporate segment, as such expenses were previously included in the retail segment. The 2024 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 are presented below.


	Three Months Ended March 31, 2025
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Revenue	$	9,411,342	$	8,411,716	$	10,078,268	$	5,814,059	$	—	$	33,715,385
Cost of revenue		3,706,063		5,584,089		8,061,877		4,057,069		—		21,409,098
Gross profit		5,705,279		2,827,627		2,016,391		1,756,990		—		12,306,287
General and administrative expenses		788,812		346,081		2,195,338		664,078		3,729,650		7,723,959
Gain (loss) on asset dispositions and impairments, net		29,976		—		(1,541)		—		—		28,435
Income (loss) from operations		4,946,443		2,481,546		(180,488)		1,092,912		(3,729,650)		4,610,763
Interest income		32,866		204,103		143,319		1		236,305		616,594
Interest expense		—		—		(1,528)		—		—		(1,528)
Income (loss) from affiliates		—		—		—		(34,004)		64,478		30,474
Other		28,308		14,933		36		74		—		43,351
Other income, net		61,174		219,036		141,827		(33,929)		300,783		688,891
Income (loss) before income taxes		5,007,617		2,700,582		(38,661)		1,058,983		(3,428,867)		5,299,654
Provision (benefit) for income taxes		—		—		(35,893)		246,010		—		210,117
Net income (loss) from continuing operations		5,007,617		2,700,582		(2,768)		812,973		(3,428,867)		5,089,537
Income from continuing operations attributable to non-controlling interests		—		165,427		—		—		—		165,427
Net income (loss) from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	5,007,617	$	2,535,155	$	(2,768)	$	812,973	$	(3,428,867)		4,924,110
Net loss from discontinued operations												(133,081)
Net income attributable to Consolidated Water Co. Ltd. stockholders											$	4,791,029

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	Three Months Ended March 31, 2024
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Revenue	$	8,624,938	$	8,342,094	$	17,417,611	$	5,304,747	$	—	$	39,689,390
Cost of revenue		3,551,344		5,565,258		12,668,939		4,025,826		—		25,811,367
Gross profit		5,073,594		2,776,836		4,748,672		1,278,921		—		13,878,023
General and administrative expenses		766,698		344,141		1,597,854		517,702		3,337,634		6,564,029
Income (loss) from operations		4,306,896		2,432,695		3,150,818		761,219		(3,337,634)		7,313,994
Interest income		56,593		204,319		73,204		1		25		334,142
Interest expense		(31,123)		—		(2,378)		—		—		(33,501)
Income from affiliate		—		—		—		—		77,566		77,566
Other		20,599		5,960		601		11,660		1,157		39,977
Other income, net		46,069		210,279		71,427		11,661		78,748		418,184
Income (loss) before income taxes		4,352,965		2,642,974		3,222,245		772,880		(3,258,886)		7,732,178
Provision (benefit) for income taxes		—		—		778,286		169,153		(325,743)		621,696
Net income (loss) from continuing operations		4,352,965		2,642,974		2,443,959		603,727		(2,933,143)		7,110,482
Income from continuing operations attributable to non-controlling interests		—		169,068		—		—		—		169,068
Net income (loss) from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	4,352,965	$	2,473,906	$	2,443,959	$	603,727	$	(2,933,143)		6,941,414
Net loss from discontinued operations												(467,066)
Net income attributable to Consolidated Water Co. Ltd. stockholders											$	6,474,348

The Company’s cost of revenue consists of:


	Three Months Ended March 31, 2025
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Subcontractor and other project costs	$	—	$	—	$	3,457,402	$	3,284,142	$	—	$	6,741,544
Employee costs		757,868		543,300		4,270,363		589,221		—		6,160,752
Electricity		1,173,586		1,043,386		33,027		10,803		—		2,260,802
Fuel oil		—		1,820,056		—		—		—		1,820,056
Depreciation		613,884		689,516		90,598		38,862		—		1,432,860
Maintenance		220,625		401,642		127,517		99,955		—		849,739
Insurance		171,534		451,607		26,284		—		—		649,425
Retail license royalties		598,086		—		—		—		—		598,086
Other		170,480		634,582		56,686		34,086		—		895,834
	$	3,706,063	$	5,584,089	$	8,061,877	$	4,057,069	$	—	$	21,409,098


	Three Months Ended March 31, 2024
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Subcontractor and other project costs	$	—	$	—	$	7,899,850	$	3,297,314	$	—	$	11,197,164
Employee costs		676,857		494,411		4,456,690		574,365		—		6,202,323
Electricity		1,262,250		900,432		72,693		9,113		—		2,244,488
Fuel oil		—		2,109,673		—		—		—		2,109,673
Depreciation		610,745		664,675		92,637		40,193		—		1,408,250
Maintenance		182,994		403,666		108,297		67,160		—		762,117
Insurance		170,049		397,941		4,982		—		—		572,972
Retail license royalties		522,184		—		—		—		—		522,184
Other		126,265		594,460		33,790		37,681		—		792,196
	$	3,551,344	$	5,565,258	$	12,668,939	$	4,025,826	$	—	$	25,811,367

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

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The Company’s general and administrative expenses consist of:


	Three Months Ended March 31, 2025
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Employee costs	$	380,860	$	88,809	$	1,002,379	$	341,560	$	2,173,287	$	3,986,895
Professional fees		15,162		21,265		340,000		67,562		624,690		1,068,679
Insurance		103,871		97,009		37,100		84,809		214,949		537,738
Depreciation and amortization		10,580		5,327		155,691		26,179		17,071		214,848
Other		278,339		133,671		660,168		143,968		699,653		1,915,799
	$	788,812	$	346,081	$	2,195,338	$	664,078	$	3,729,650	$	7,723,959


	Three Months Ended March 31, 2024
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Employee costs	$	360,897	$	85,571	$	934,141	$	280,621	$	1,968,756	$	3,629,986
Professional fees		22,200		16,429		88,287		3,330		447,259		577,505
Insurance		90,983		91,773		56,228		60,394		204,688		504,066
Depreciation and amortization		9,276		6,815		159,114		25,955		20,449		221,609
Other		283,342		143,553		360,084		147,402		696,482		1,630,863
	$	766,698	$	344,141	$	1,597,854	$	517,702	$	3,337,634	$	6,564,029

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.

The Company’s segment assets are presented below.


	As of March 31, 2025
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Cash and cash equivalents	$	19,590,795	$	20,476,902	$	41,443,086	$	1,620,997	$	24,720,452	$	107,852,232
Accounts receivable, net	$	3,719,025	$	25,961,825	$	5,974,673	$	512,067	$	24,522	$	36,192,112
Inventory, current and non-current	$	3,430,692	$	5,133,101	$	826,704	$	3,253,475	$	—	$	12,643,972
Contract assets	$	—	$	—	$	1,331,507	$	8,186,161	$	—	$	9,517,668
Property, plant and equipment, net	$	32,917,197	$	17,888,288	$	948,957	$	1,597,357	$	191,543	$	53,543,342
Construction in progress	$	627,517	$	2,208,200	$	—	$	1,641,983	$	—	$	4,477,700
Intangibles, net	$	—	$	—	$	1,988,277	$	544,445	$	—	$	2,532,722
Goodwill	$	1,170,511	$	1,948,875	$	7,756,807	$	1,985,211	$	—	$	12,861,404
Total segment assets	$	63,355,243	$	75,452,021	$	63,654,305	$	19,757,550	$	27,980,139	$	250,199,258
Assets of discontinued operations											$	169,707
Total assets											$	250,368,965


	As of December 31, 2024
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Cash and cash equivalents	$	19,167,484	$	13,339,206	$	34,181,902	$	4,768,376	$	27,893,153	$	99,350,121
Accounts receivable, net	$	3,223,190	$	28,807,257	$	6,593,276	$	946,846	$	10,413	$	39,580,982
Inventory, current and non-current	$	3,437,771	$	4,865,117	$	167,856	$	5,828,567	$	—	$	14,299,311
Contract assets	$	—	$	—	$	1,204,522	$	3,265,721	$	—	$	4,470,243
Property, plant and equipment, net	$	31,689,586	$	18,093,155	$	858,352	$	1,601,501	$	189,688	$	52,432,282
Construction in progress	$	1,951,559	$	2,480,999	$	—	$	711,159	$	—	$	5,143,717
Intangibles, net	$	—	$	—	$	2,129,037	$	567,778	$	—	$	2,696,815
Goodwill	$	1,170,511	$	1,948,875	$	7,756,807	$	1,985,211	$	—	$	12,861,404
Total segment assets	$	62,994,011	$	71,743,161	$	56,792,772	$	20,095,648	$	31,415,104	$	243,040,696
Assets of discontinued operations											$	272,485
Total assets											$	243,313,181

4. Earnings per share

Earnings per share (“EPS”) is computed on a basic and diluted basis. 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.

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


	Three Months Ended March 31,
	2025		2024
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	4,924,110	$	6,941,414
Less: preferred stock dividends		(4,491)		(4,182)
Net income from continuing operations available to common shares in the determination of basic earnings per common share		4,919,619		6,937,232
Loss from discontinued operations		(133,081)		(467,066)
Net income available to common shares in the determination of basic earnings per common share	$	4,786,538	$	6,470,166

Weighted average number of common shares in the determination of basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders		15,915,867		15,828,929
Plus:
Weighted average number of preferred shares outstanding during the period		41,712		44,180
Potential dilutive effect of unexercised options and unvested stock grants		84,268		111,439
Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders		16,041,847		15,984,548

5. 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.

In November 2015, the State of Baja California (the “State”) officially commenced the 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 phase was to be operational within 36 months of commencing construction and the second phase was to be operational by January 2025. The APP Contract further required AdR to operate and maintain the plant and aqueduct for a period of 37 years starting from the commencement of operation of the first phase. 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 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 amounted to 51,144,525 United States dollars and an additional 137,333,114 Mexican pesos.

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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 April 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.

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”). Under the Settlement Agreement, CW-Cooperatief requested that ICSID discontinue the arbitration and on May 31, 2024, ICSID issued an order discontinuing the arbitration. Pursuant to the Settlement Agreement, the Trust purchased the 20.1 hectares of land on which the Project’s plant was to be constructed, including related rights of way (the “Land”), on an “as-is” basis, from NSC for MXN$596,144,000. The sale of the Land to the Trust was closed on June 14, 2024 at which time the MXN$596,144,000 was paid to the Company and converted at the prevailing exchange rate on that date into US$31,959,685.

In connection with the Settlement Agreement on June 14, 2024, the State also paid NSC MXN$20,000,000 to purchase certain documentation owned by NSC relating to the Project.

As a result of the Settlement Agreement: (i) the parties have been released from all obligations owed to each other in connection with the APP Contract and the arbitration; and (ii) no party to the Settlement Agreement may institute any legal proceedings against another party thereto with respect to the matters which have been addressed by the Settlement Agreement.

Summarized financial information for the discontinued Mexico project development operation is as follows:


	March 31,		December 31,
	2025		2024
Cash	$	29,107	$	127,859
Prepaid expenses and other current assets		140,600		144,626
Total assets of discontinued operations	$	169,707	$	272,485

Total liabilities of discontinued operations	$	235,057	$	509,745


	Three Months Ended March 31,
	2025		2024
Revenue	$	—	$	—
Loss from discontinued operations	$	(133,081)	$	(467,066)
Gain on sale of land and project documentation	$	—	$	—
Depreciation expense	$	—	$	—

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6. Leases

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. Many of these leases contain rental escalation clauses which are factored into the determination of the lease payments when appropriate. When available, the lease payments are discounted using the rate implicit in the lease; however, the Company’s current leases do not provide a readily determinable implicit rate. Therefore, the Company’s incremental borrowing rate is estimated to discount the lease payments based on information available at the lease commencement.

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

All lease assets denominated in a foreign currency are measured using the exchange rate at the commencement of the lease. All lease liabilities denominated in a foreign currency are remeasured using the exchange rate as of the condensed consolidated balance sheet date.

Lease assets and liabilities

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


	March 31,		December 31,
	2025		2024
ASSETS
Current
Prepaid expenses and other current assets	$	27,984	$	41,801
Noncurrent
Operating lease right-of-use assets		3,050,106		3,190,985
Total lease right-of-use assets	$	3,078,090	$	3,232,786

LIABILITIES
Current
Current maturities of operating leases	$	636,075	$	634,947
Noncurrent
Noncurrent operating leases		2,473,687		2,630,812
Total lease liabilities	$	3,109,762	$	3,265,759

Weighted average remaining lease term:
Operating leases		4.8 years		5.0 years

Weighted average discount rate:
Operating leases		6.56%		6.56%

The components of lease costs were as follows:


	Three Months Ended March 31,
	2025		2024
Operating lease costs	$	207,555	$	205,872
Short-term lease costs		99,025		69,709
Lease costs - discontinued operations		2,697		12,120
Total lease costs	$	309,277	$	287,701

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Supplemental cash flow information related to leases is as follows:

Future lease payments relating to the Company’s operating lease liabilities from continuing operations as of March 31, 2025 were as follows:


Years ending December 31,	Total
2025	$	626,130
2026		763,783
2027		732,904
2028		749,143
2029		455,209
Thereafter		314,007
Total future lease payments		3,641,176
Less: imputed interest		(531,414)
Total lease obligations		3,109,762
Less: current obligations		(636,075)
Noncurrent lease obligations	$	2,473,687

7. Fair value

As of March 31, 2025 and December 31, 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.

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

8. Commitments and contingencies

Cayman Water

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, 2025 and 2024, the Company generated approximately 28% and 22%, respectively, of its consolidated revenue and 46% and 37%, 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, 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 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”). 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 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 is negotiated and enacted. Negotiations between Cayman Water and OfReg on the new license recently recommenced.

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

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CW-Bahamas

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $25.5 million and $28.4 million as of March 31, 2025 and December 31, 2024, respectively. Approximately 78% and 81% of the accounts receivable balances were delinquent as of those dates, respectively.

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. 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, 2025.

If CW-Bahamas is unable to collect a sufficient portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) the Company may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) the Company may be required to provide an additional allowance for credit losses for CW-Bahamas’ accounts receivable. 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

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 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. CW-Bahamas has been in compliance with the performance 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.

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9. Impact of recent accounting standards

Adoption of new accounting standards:

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 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Effect of newly issued but not yet effective accounting standards:

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. 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. The Company is currently evaluating the impact of this guidance.

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 evaluating the impact of this guidance.

10. Subsequent events

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.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our future revenue, future plans, objectives, expectations and events, assumptions and estimates. Forward-looking statements can be identified by use of the words or phrases “will,” “will likely result,” “are expected to,” “will continue,” “estimate,” “project,” “potential,” “believe,” “plan,” “anticipate,” “expect,” “intend,” or similar expressions and variations of such words. Statements that are not historical facts are based on our current expectations, beliefs, assumptions, estimates, forecasts and projections for our business and the industry and markets related to our business.

The forward-looking statements contained in this report are not guarantees of future performance and involve assumptions and certain risks and uncertainties which are difficult to predict. Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Important factors which may affect these actual outcomes and results include, without limitation:

●	tourism and weather conditions in the areas we serve;

●	the economic, political and social conditions of each country in which we conduct or plan to conduct business;

●	our relationships with the government entities and other customers we serve;

●	regulatory matters, including resolution of the negotiations for the renewal of our retail license on Grand Cayman;

●	our ability to successfully enter new markets; and

●	other factors, including those “Risk Factors” set forth under Part II, Item 1A. “Risk Factors” in this Quarterly Report and in our 2024 Annual Report on Form 10-K.

The forward-looking statements in this Quarterly Report speak as of its date. We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained in this Quarterly Report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based, except as may be required by law.

References herein to “we,” “our,” “ours” and “us” refer to Consolidated Water Co. Ltd. and its subsidiaries.

Critical Accounting Policies and Estimates

Our critical accounting policies relate to (i) the valuations of our goodwill, intangible assets and long-lived assets; and (ii) revenue recognition on our construction and manufacturing contracts.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Our actual results could differ significantly from such estimates and assumptions.

The application of our critical accounting policies involves estimates or assumptions that constitute “critical accounting estimates” for us because:

●	the nature of these estimates or assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

●	the impact of the estimates and assumptions on financial condition and results of operations is material.

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Goodwill and Intangible Assets

Goodwill represents the excess cost of an acquired business over the fair value of the assets and liabilities of the acquired business as of the date of acquisition. Goodwill and intangible assets recorded as a result of a business combination and determined to have an indefinite useful life are not amortized but are tested for impairment annually or upon the identification of a triggering event. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed periodically for impairment. We evaluate the possible impairment of goodwill annually as part of our reporting process for the fourth quarter of each fiscal year. Management identifies our reporting units for goodwill impairment testing purposes, which consist of Cayman Water, the bulk segment (which is comprised of CW-Bahamas and OC-Cayman), PERC, REC, and the manufacturing segment (i.e., Aerex), and determines the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. We determine the fair value of each reporting unit and compare these fair values to the carrying amounts of the reporting units. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, an impairment loss is recorded.

For 2024, we elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing we have conducted in prior years for our reporting units. We assessed the 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, we determined that it is more likely than not that the fair values of our reporting units exceeded their carrying values as of December 31, 2024.

In 2020, approximately 80% of Aerex’s revenue, and 89% of Aerex’s gross profit 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, we updated our projections for our 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, we tested our 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, we determined that the estimated fair value of our 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. Our updated sales estimate for this customer based on this new information was substantially below the sales we anticipated to this customer for 2022 and subsequent years that we used in the discounted cash flow projections we prepared for purposes of testing our 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 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 we believed would continue through 2022, we updated our 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, we determined that the carrying value of our manufacturing reporting unit exceeded its fair value by $2.9 million, and we recorded an impairment loss to reduce our manufacturing segment’s goodwill by this amount for the three months ended June 30, 2021.

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Long-lived Assets

We review the carrying amounts of our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, we recognize an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measure the impairment loss based on the difference between the carrying amount and fair value.

On June 29, 2020, our Mexico subsidiary, AdR, received a letter from the State of Baja California (the “State”) terminating AdR’s contract with the State involving the construction and operation of a desalination plant in Rosarito California and accompanying aqueduct to deliver the water produced by this plant to the Mexican public water system. As a result of the cancellation of this contract, we recorded an impairment loss for rights of way acquired for the contract’s proposed aqueduct of approximately ($3.0 million) in 2020.

Construction and Manufacturing Contract Revenue Recognition

We design, construct, and sell desalination infrastructure through DesalCo, which serves customers in the Cayman Islands, The Bahamas, and the British Virgin Islands. We design, construct, and sell wastewater and water reuse infrastructure in the United States through PERC and Kalaeloa Desalco. Aerex is a custom and specialty manufacturer in the United States of water treatment-related systems and products applicable to commercial, municipal and industrial water production.

We recognize revenue for our construction and our specialized/custom 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. Contract costs include labor, materials, subcontractor costs and other expenses. We follow this method since we can make reasonably dependable estimates of the revenue and costs applicable to the various stages of a contract. Under this input method, we record revenue and recognize profit or loss as work on the contract progresses. We estimate 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 update 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. Due to the extended time it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimations of total revenue and costs at completion are complicated and subject to many variables and, accordingly, are subject to changes. When adjustments in estimated total contract revenue or estimated total contract costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. We recognize the full amount of any estimated loss on a contract at the time the estimates indicate such a loss.

The cost estimates we prepare in connection with our construction and manufacturing contracts are subject to inherent uncertainties. Because we base our contract prices on our estimation of future construction and manufacturing costs, the profitability of our construction and manufacturing contracts is highly dependent on our ability to estimate these costs accurately, as almost all of our construction and manufacturing contracts are fixed-price contracts. The cost of materials, labor and subcontractors could increase significantly after we sign a construction or manufacturing contract, which could cause the gross profit for a contract to decline from our previous estimates, adversely affecting our recognition of revenue and gross profit for the contract. Construction or manufacturing contract costs that significantly exceed our initial estimates could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows.

RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included under Part I, Item 1. “Financial Statements” of this Quarterly Report and our consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for our fiscal year ended December 31, 2024 (“2024 Form 10-K”) and the

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information set forth under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Form 10-K.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Discontinued Operations – Mexico Project Development

In 2010, we began the pursuit, through our Netherlands subsidiary, Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), and our Mexico subsidiary, N.S.C. Agua, S.A. de C.V. (“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 pipeline 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.

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”), 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 potable 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 July 2024. The APP Contract further required AdR to operate and maintain the plant and aqueduct for a period of 37 years starting from the commencement of operation of the first phase. At the end of the operating period, ownership of the plant and aqueduct would have been transferred to CEA.

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.

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 could not 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.

In February 2022, CW-Cooperatief, filed a Request for Arbitration with the International Centre for Settlement of International Disputes 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, we, 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

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for the trust named Fondo Nacional de Infraestructura (the “Trust”). Under the Settlement Agreement, CW-Cooperatief requested that ICSID discontinue the arbitration and on May 31, 2024, ICSID issued an order discontinuing the arbitration. Pursuant to the Settlement Agreement, the Trust purchased the 20.1 hectares of land on which the Project’s plant was to be constructed, including related rights of way (the “Land”), on an “as-is” basis, from NSC for MXN$596,144,000. The sale of the Land to the Trust was closed on June 14, 2024 at which time the MXN$596,144,000 was paid to us and converted at the prevailing exchange rate on that date into US$31,959,685.

In connection with the Settlement Agreement on June 14, 2024, the State also paid NSC MXN$20,000,000 to purchase certain documentation owned by NSC relating to the Project.

We are presently in the process of legally terminating/dissolving CW-Cooperatief, NSC and AdR and will continue to incur expenses for these subsidiaries while such process is completed.

Our net losses from discontinued operations for the three months ended March 31, 2025 and 2024 were ($133,081) and ($467,066), respectively.

Consolidated Results

Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2025 was $4,791,029 ($0.30 per share on a fully diluted basis), as compared to net income of $6,474,348 ($0.40 per share on a fully diluted basis) for 2024.

The following discussion and analysis of our consolidated results of operations and results of operations by segment for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 relates only to our continuing operations.

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2025 was $4,924,110 ($0.31 per share on a fully diluted basis), as compared to net income from continuing operations of $6,941,414 ($0.43 per share on a fully diluted basis) for 2024.

Revenue for 2025 decreased to $33,715,385 from $39,689,390 in 2024, as a result of a significant decrease in services segment revenue. Gross profit for 2025 was $12,306,287 (37% of total revenue) as compared to $13,878,023 (35% of total revenue) for 2024. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows.

General and administrative (“G&A”) expenses on a consolidated basis increased to $7,723,959 for 2025 as compared to $6,564,029 for 2024. The increase in G&A expenses for 2025 arises principally from (i) incremental legal costs and other professional fees totaling $491,174 (which includes $139,000 in costs related to a legal settlement); (ii) added employee costs of $356,909 attributable to new hires, salary increases and a retirement payment of $158,000 made to a former executive; and (iii) a net increase of approximately $135,000 in the provision for credit losses.

Other income, net, increased to $688,891 for 2025 as compared to $418,184 for 2024 primarily due to approximately $282,000 of additional interest income resulting from additional interest earned on higher balances of interest earning assets.

Results by Segment

Retail Segment:

The retail segment generated $4,946,443 in income from operations for 2025 compared to $4,306,896 for 2024.

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Revenue generated by our retail water operations increased to $9,411,342 in 2025 from $8,624,938 in 2024 due to a 13% increase in the volume of water sold.

As a result of the revenue increase retail segment gross profit increased in both total dollars and as a percentage of revenue to $5,705,279 (61% of retail revenue) for 2025 from $5,073,594 (59% of retail revenue) for 2024.

Retail G&A expenses remained relatively consistent at $788,812 for 2025 as compared to $766,698 for 2024.

Bulk Segment:

The bulk segment generated $2,481,546 and $2,432,695 in income from operations for 2025 and 2024, respectively.

Bulk segment revenue was $8,411,716 and $8,342,094 for 2025 and 2024, respectively. The slight increase in bulk revenue from 2024 to 2025 reflects the impact of OC-Cayman’s new Red Gate II contract and an amendment of its North Sound contract, both of which became effective May 1, 2024. The increase in revenue from both of these contracts offsets a decrease in revenue for CW-Bahamas resulting from lower energy prices, which decreased the pass-through energy component of CW-Bahamas rates.

Consistent with the increase in revenue, gross profit for our bulk segment increased slightly to $2,827,627 (34% of bulk revenue) for 2025 as compared to $2,776,836 (33% of bulk revenue) for 2024.

Bulk segment G&A expenses remained relatively consistent at $346,081 for 2025 as compared to $344,141 for 2024.

Services Segment:

The services segment incurred a loss from operations of ($180,488) for 2025, as compared to generating income from operations of $3,150,818 for 2025.

Services segment revenue decreased to $10,078,268 for 2025 from $17,417,611 for 2024. Construction revenue declined to $2,218,230 for 2025 as compared to $9,203,662 for 2024. Construction revenue for 2024 was significantly greater due to $4.8 million of additional revenue generated from PERC’s contract with Liberty Utilities. Such contract was substantially completed in the second quarter of 2024. Revenue generated under operations and maintenance contracts increased to $7,725,298 for 2025 as compared to $7,099,354 for 2024 as a result of incremental revenue generated by both PERC and REC.

Gross profit for the services segment decreased to $2,016,391 (20% of services revenue) in 2025 from $4,748,672 (27% of services revenue) in 2024 due to the substantial decline in construction revenue.

G&A expenses for the services segment increased to $2,195,338 for 2025 as compared to $1,597,854 for 2024 primarily due to incremental legal costs and other professional fees of $251,713 (which includes $139,000 in costs related to a legal settlement) and a net increase of approximately $183,000 in the provision for credit losses.

Manufacturing Segment:

The manufacturing segment contributed $1,092,912 and $761,219 to our income from operations in 2025 and 2024, respectively.

Manufacturing revenue increased to $5,814,059 from $5,304,747 for 2025 and 2024, respectively, due to increased production activity.

Manufacturing gross profit was $1,756,990 (30% of manufacturing revenue) for 2025 as compared to a gross profit of $1,278,921 (24% of manufacturing revenue) for 2024. The increase in manufacturing gross profit in dollars and as a percentage of revenue results from increased production activity and a higher margin product mix.

G&A expenses for the manufacturing segment remained relatively consistent at $664,078 for 2025 as compared to $517,702 for 2024.

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Corporate

Corporate G&A expenses increased to $3,729,650 for 2025 as compared to $3,337,634 for 2024 due to approximately $205,000 in incremental employee costs arising from pay raises and a retirement payment of $158,000 made to a former executive and incremental legal costs and other professional fees of $177,431.

FINANCIAL CONDITION

The significant changes in the components of our condensed consolidated balance sheet as of March 31, 2025 as compared to December 31, 2024 (other than the change in our cash and cash equivalents, which is discussed later in “LIQUIDITY AND CAPITAL RESOURCES”) and the reasons for these changes are discussed in the following paragraphs.

Accounts receivable decreased by approximately $3.4 million primarily due to a $2.9 million decrease in CW-Bahamas’ accounts receivable as well as decreases in the services and manufacturing segments accounts receivable of $618,603 and $434,779, respectively. These decreases were offset by an increase in the retail segment accounts receivable of $495,835.

Current inventory decreased by approximately $1.8 million primarily due to a decrease of $2.6 million in Aerex’s inventory resulting from production activity, which was partially offset by an increase in PERC’s current inventory of $658,848.

Prepaid expenses and other current assets decreased by approximately $980,000 primarily due to a decrease in prepaid insurance.

Contract assets increased by approximately $5.0 million primarily due to a $4.9 million increase in the manufacturing segment contract assets attributable to work started in the first quarter for one major client.

Property, plant and equipment, net, increased by approximately $1.1 million primarily due to the expansion of the new West Bay plant in Cayman Islands.

Contract liabilities increased by $3.3 million primarily due to one PERC construction project.

LIQUIDITY AND CAPITAL RESOURCES

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

The Cayman Islands does not have a tax treaty with the United States. Consequently, should we be required (or elect) to transfer any profits generated by our U.S. subsidiaries from U.S. operations to our company in the Cayman Islands, we would be required to pay a withholding tax of 30% on the amount of any such funds transferred.

Liquidity Position

Our projected liquidity requirements for 2025 include capital expenditures for our existing operations of approximately $9.1 million, which includes approximately $800,000 to be incurred during 2025 for a project in The Bahamas and $1.2 million for the expansion of Aerex's manufacturing facility. We paid approximately $1.8 million for dividends in April 2025. Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board.

As of March 31, 2025, we had cash and cash equivalents of $107.9 million and working capital of $136.2 million.

With the exception of the liquidity matter relating to CW-Bahamas that is discussed in the paragraphs that follow, we are not presently aware of anything that would lead us to believe that we will not have sufficient liquidity to meet our needs.

CW-Bahamas Liquidity

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the accounts receivable balances were delinquent as of those dates, respectively. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.

From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC. When these delays occur, we hold discussions and meetings with representatives of the WSC and The Bahamas government. All previous delinquent accounts receivable from the WSC, including accrued interest thereon, were eventually paid in full. Based upon this payment history, we have not provided for a material allowance for credit losses for CW-Bahamas’ accounts receivable from the WSC as of March 31, 2025.

We continue to be in frequent contact with officials of The Bahamas government, who continue to express their intention to significantly reduce CW-Bahamas accounts receivable balances in the near future; however, we cannot provide any assurance as to when such reduction will occur.

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 our review of this Moody’s correspondence, we continue 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: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable. Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows.

Discussion of Cash Flows for the Three Months Ended March 31, 2025

Our cash and cash equivalents increased to $107,852,232 as of March 31, 2025 from $99,350,121 as of December 31, 2024.

Cash Flows from Operating Activities

Net cash provided by our operating activities was $11,760,251. This net cash reflects the net income generated for the three months ended March 31, 2025 of $4,956,456 as adjusted for (i) various items included in the determination of net income that do not affect cash flows during the year; and (ii) changes in the other components of working capital. The more significant of such items and changes in working capital components included depreciation and amortization of $1,692,546, a decrease in accounts receivable of $3,075,968, an increase in contract assets of $5,047,425 and an increase in contract liabilities of $3,275,143.

Cash Flows from Investing Activities

Net cash used in our investing activities was $1,568,281 primarily for additions to property, plant and equipment and construction in progress.

Cash Flows from Financing Activities

Net cash used by our financing activities was $1,788,611, almost all of which related to the payment of dividends.

Material Commitments, Expenditures and Contingencies

Cayman Water Retail License

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Seven Mile Beach and West Bay. For the three months ended March 31, 2025 and 2024, we generated approximately 28% and 22%, respectively, of our consolidated revenue and 46% and 37%, respectively, of our 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 license expired on January 31, 2018. From that date until February 18, 2025, we 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 our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension. We continued to pay a royalty of 7.5% of the revenue we collect 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 economic regulation of the water utility sector and the retail license negotiations from the WAC to OfReg in May 2017. We began license negotiations with OfReg in July 2017 and such negotiations are continuing. We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license.

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 operations 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. Negotiations between Cayman Water and OfReg for the new license have recently recommenced.

We are presently unable to determine what impact the resolution of our retail license negotiations will have on our cash flows, 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 we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying value of our retail segment assets. Such impairment losses could have a material adverse impact on our consolidated financial condition and results of operations.

CW-Bahamas Performance Guarantees

Our contracts to supply water to the WSC from our Blue Hills and Windsor plants require us to guarantee delivery of a minimum quantity of water per week. If the WSC requires the water and we do not meet this minimum, we are 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 us under the contract. The Blue Hills contract expires in 2032 and requires us to deliver 63.0 million gallons of water each week. The Windsor contract expires in 2033 and requires us to deliver 16.8 million gallons of water each week. We have been in compliance with the performance guarantees under these contracts for all periods since the inception of the contracts.

Adoption of New Accounting Standards

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 did not have a material impact on our consolidated financial position, results of operations or cash flows.

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Effect of Newly Issued but not yet Effective Accounting Standards

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. 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. We are currently evaluating the impact of this guidance.

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. We are currently evaluating the impact of this guidance.

Dividends

●	On January 31, 2025, we paid a dividend of $0.11 to shareholders of record on January 2, 2025.

●	On April 30, 2025, we paid a dividend of $0.11 to shareholders of record on April 1, 2025.

We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985. Our payment of any future cash dividends will depend upon our earnings, financial condition, cash flows, capital requirements and other factors our Board of Directors deems relevant in determining the amount and timing of such dividends.

Dividend Reinvestment and Common Stock Purchase Plan

This plan is available to our shareholders, who may reinvest all or a portion of their common stock dividends into shares of common stock at prevailing market prices and may also invest optional cash payments to purchase additional shares at prevailing market prices as part of this plan.

Impact of Inflation

Under the terms of our Cayman Islands license and our bulk water sales agreements in The Cayman Islands, The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis. Therefore, the impact of inflation on our gross profit from these revenue sources, measured in consistent dollars, historically has not been material. However, while we have received annual inflation adjustments for the rates we charge under our bulk water agreements, we have not increased the retail water rates for Cayman Water since January 2018 (despite the inflation that has occurred since that date) due to the lack of a resolution of our negotiations with OfReg for a new retail license. This lack of a rate increase over the long-term could adversely affect the profitability of our retail segment. Furthermore, our manufacturing segment has in the past been adversely impacted by significant increases in raw material costs and our manufacturing and services segments could suffer similar adverse impacts in the future.

While our operations and maintenance contracts are generally adjusted for inflation on an annual basis, such adjustment for some of these contracts is limited to 3% annually.

Kalaeloa Desalco has signed a definitive agreement with the Honolulu Board of Water Supply to design, construct, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Approximately 80% of the $147 million price for the construction of this plant is subject to adjustment based upon changes in inflation indices from the date the contract was executed to the date construction begins.

Increases in fuel and energy costs and other items could create additional credit risks for us, as our customers’ ability to pay our invoices could be adversely affected by such increases.

In periods of high inflation, our consolidated results of operations and cash flows could be materially adversely affected.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk from December 31, 2024 to the end of the period covered by this report.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission (the “SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the possible controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial and accounting officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel 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 in the United States of America.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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Remediation of Previously Identified Material Weakness over Financial Reporting

We previously identified and disclosed in Item 9a. Controls and Procedures, in our 2024 Annual Report on Form 10-K, filed with the SEC on March 17, 2025, that an information technology general control (“ITGC”) specific to change management was not sufficiently designed during the period January 1, 2024 through October 31, 2024. Effective November 1, 2024, the ITGC deficiency was remediated. Certain annual and quarterly business process controls (automated and manual) could have been adversely affected due to the insufficient design of this ITGC and therefore determined to be ineffective during this time period. Due to the insufficient number of control occurrences available for testing operating effectiveness for these business process controls, along with the number of business process controls that management was not able to consider effective as of December 31, 2024, our management concluded that such deficiencies represented a material weakness in our internal control over financial reporting as of December 31, 2024.

In the fourth quarter of 2024 and the first quarter of 2025, our management obtained the sufficient number of control occurrences for testing operating effectiveness for the majority of these business process controls and successfully remediated this material weakness as of March 31, 2025.

Changes in Internal Control Over Financial Reporting

Except for the completed remediation relating to the material weakness discussed previously, there were no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1A. RISK FACTORS

Our business faces significant risks. These risks include those disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as supplemented by the additional risk factors included below. If any of the events or circumstances described in the referenced risks actually occurs, our business, financial condition or results of operations could be materially adversely affected and such events or circumstances could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. These risks should be read in conjunction with the other information set forth in this Quarterly Report as well as in our Annual Report on Form 10-K for the year ended December 31, 2024 and in our other periodic reports on Form 10-Q and Form 8-K.

Our exclusive license to provide water to retail customers in the Cayman Islands is presently under renegotiation with OfReg, the Cayman Islands government utility regulatory authority, and we are presently unable to predict the outcome of these on-going negotiations.

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. 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, 2025 and 2024, we generated approximately 28% and 22%, respectively, of our consolidated revenue and 46% and 37%, respectively, of our 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 license expired on January 31, 2018. From that date through February 18, 2025, we 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 our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension. We continued to pay a royalty of 7.5% of the revenue we collected as required under the 1990 license.

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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 economic regulation of the water utility sector and the negotiations with us for a new retail license from the WAC to OfReg in May 2017. We began license negotiations with OfReg in July 2017 and such negotiations are ongoing. We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license.

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

We are presently unable to determine what impact the resolution of our retail license negotiations with OfReg will have on our cash flows, 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 we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying values of our retail segment assets. Such impairment losses could have a material adverse impact on our consolidated financial condition and results of operations.

Periodically, our Bahamas subsidiary experiences substantial delays in the collection of its accounts receivable. As a result, our Bahamas subsidiary could have insufficient liquidity to continue operations, and our consolidated financial results could be materially adversely affected.

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $25.5 million as of March 31, 2025. Approximately 78% of this March 31, 2025 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.

If CW-Bahamas is unable to collect a significant portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable. Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows.

The profitability of our contracts is dependent upon our ability to accurately estimate construction and operating costs.

The cost estimates we prepare in connection with the construction and operation of our water plants, the water infrastructure we construct and sell to third parties, and our manufacturing contracts, are subject to inherent uncertainties. Additionally, the terms of our water supply contracts may require us to guarantee the price of water on a per unit basis,

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subject to certain annual inflation and monthly energy cost adjustments, and to assume the risk that the costs associated with producing this water may be greater than anticipated. Because we base our contract prices in part on our estimation of future construction, manufacturing and operating costs, the profitability of our plants and our manufacturing and operations and maintenance contracts is dependent on our ability to estimate these costs accurately. The cost of materials and services and the cost of the delivery of such services may increase significantly after we submit our bid for a contract, which could cause the gross profit for a contract to be less than we anticipated when the bid was made. The profit margins we initially expect to generate from an operations and maintenance contract could be further reduced if future operating costs for that contract exceed our estimates of such costs. Any construction, manufacturing, and operating costs for our contracts that significantly exceed our initial estimates could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows.

Substantial changes to fiscal, regulation and other federal policies could adversely affect our business, financial condition, operating results and cash flows.

Significant changes in, and uncertainty with respect to, legislation, regulation, government policy and economic conditions could adversely affect our business. Specific legislative and regulatory proposals that could have a material impact on us include, but are not limited to, modifications to international trade policy (such as tariffs); public company reporting requirements; and environmental regulation.

We 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 our business, or the business or habits of our customers. Our business operations, as well as the businesses of our customers on which we are 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 our consolidated financial condition, results of operations and cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during the three months ended March 31, 2025.

ITEM 5. OTHER INFORMATION

During the quarter ended March 31, 2025, no directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) of the Company adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS


Exhibit Number		Exhibit Description
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1		Section 1350 Certification of Chief Executive Officer
32.2		Section 1350 Certification of Chief Financial Officer
101.INS		XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Document
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


CONSOLIDATED WATER CO. LTD.

By:	/s/ Frederick W. McTaggart
	Frederick W. McTaggart
	Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ David W. Sasnett
	David W. Sasnett
	Executive Vice President & Chief Financial Officer
	(Principal Financial and Accounting Officer)

Date: May 12, 2025