CONSOLIDATED WATER CO. LTD.

Six Months Ended June 30,

Cash paid for amounts included in measurement of liabilities:

Operating cash outflows for operating leases

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 30, 2026

☐ 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 August 5, 2026, 16,012,865 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 June 30, 2026 (Unaudited) and December 31, 2025	4
	Condensed Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 2026 and 2025	5
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2026 and 2025	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2026 and 2025	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4	Controls and Procedures	39

PART II	OTHER INFORMATION	39
Item 1A	Risk Factors	39
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 5	Other Information	41
Item 6	Exhibits	41

SIGNATURES		42

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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


		June 30,		December 31,
		2026		2025
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	132,629,006	$	123,788,390
Accounts receivable, net		28,627,416		32,768,537
Inventory		3,938,124		3,736,845
Prepaid expenses and other current assets		5,338,714		5,927,675
Contract assets		3,210,683		3,290,815
Current assets of discontinued operations		130,470		124,630
Total current assets		173,874,413		169,636,892
Property, plant and equipment, net		59,456,076		55,151,758
Construction in progress		4,084,969		6,695,656
Inventory, noncurrent		5,740,401		5,563,142
Investment in affiliates		1,110,504		1,186,849
Goodwill		12,861,404		12,861,404
Intangible assets, net		1,956,703		2,101,555
Operating lease right-of-use assets		2,744,138		2,930,441
Other assets		1,039,893		1,437,648
Total assets	$	262,868,501	$	257,565,345

LIABILITIES AND EQUITY
Current liabilities
Accounts payable, accrued expenses and other current liabilities	$	10,596,335	$	9,620,880
Accrued compensation		2,742,935		3,039,142
Dividends payable		2,281,679		2,285,317
Current maturities of operating leases		769,837		661,047
Current portion of long-term debt		13,110		47,549
Contract liabilities		12,407,026		11,528,634
Deferred revenue		104,847		248,719
Current liabilities of discontinued operations		319,693		271,159
Total current liabilities		29,235,462		27,702,447
Long-term debt, noncurrent		2,875		25,954
Deferred tax liabilities		554,290		707,444
Noncurrent operating leases		1,999,465		2,297,161
Other liabilities		78,000		153,000
Total liabilities		31,870,092		30,886,006
Commitments and contingencies
Equity
Consolidated Water Co. Ltd. stockholders' equity
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 47,734 and 39,507 shares, respectively		28,640		23,704
Common stock, $0.60 par value. Authorized 49,800,000 and 24,800,000 shares, respectively; issued and outstanding 16,000,190 and 15,945,233 shares, respectively		9,600,114		9,567,140
Additional paid-in capital		96,048,795		95,310,630
Retained earnings		119,965,649		116,749,048
Total Consolidated Water Co. Ltd. stockholders' equity		225,643,198		221,650,522
Non-controlling interests		5,355,211		5,028,817
Total equity		230,998,409		226,679,339
Total liabilities and equity	$	262,868,501	$	257,565,345

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 June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue	$	32,870,362	$	33,591,079	$	62,844,062	$	67,306,464
Cost of revenue		21,906,973		20,759,094		40,964,660		42,168,192
Gross profit		10,963,389		12,831,985		21,879,402		25,138,272
General and administrative expenses		7,243,022		7,580,238		14,662,090		15,304,197
Gain (loss) on asset dispositions, net		24,319		32,017		(32,886)		60,452
Income from operations		3,744,686		5,283,764		7,184,426		9,894,527

Other income (expense):
Interest income		645,585		756,988		1,292,813		1,373,582
Interest expense		(479)		(1,185)		(3,215)		(2,713)
Equity in the earnings of affiliates		61,421		52,279		113,030		82,753
Other		24,112		12,100		67,577		55,451
Other income, net		730,639		820,182		1,470,205		1,509,073
Income before income taxes		4,475,325		6,103,946		8,654,631		11,403,600
Provision for income taxes		267,746		795,807		470,446		1,005,924
Net income from continuing operations		4,207,579		5,308,139		8,184,185		10,397,676
Income from continuing operations attributable to non-controlling interests		170,259		129,378		326,394		294,805
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders		4,037,320		5,178,761		7,857,791		10,102,871
Net loss from discontinued operations		(105,574)		(82,556)		(148,616)		(215,637)
Net income attributable to Consolidated Water Co. Ltd. stockholders	$	3,931,746	$	5,096,205	$	7,709,175	$	9,887,234

Basic earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations	$	0.25	$	0.33	$	0.49	$	0.63
Discontinued operations		(0.01)		(0.01)		(0.01)		(0.01)
Basic earnings per share	$	0.25	$	0.32	$	0.48	$	0.62

Diluted earnings (loss) per common share attributable to Consolidated Water Co. Ltd. common stockholders
Continuing operations	$	0.25	$	0.32	$	0.49	$	0.63
Discontinued operations		(0.01)		—		(0.01)		(0.01)
Diluted earnings per share	$	0.24	$	0.32	$	0.48	$	0.62

Dividends declared per common and redeemable preferred shares	$	0.14	$	0.14	$	0.28	$	0.25

Weighted average number of common shares used in the determination of:
Basic earnings per share		16,000,190		15,916,685		16,000,136		15,916,278
Diluted earnings per share		16,108,177		16,044,311		16,107,696		16,043,532

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, 2025		39,507		$	23,704		15,945,233		$	9,567,140		$	95,310,630		$	116,749,048		$	5,028,817		$	226,679,339
Issue of share capital		—			—		54,761			32,857			(32,857)			—			—			—
Conversion of preferred stock		(196)			(117)		196			117			—			—			—			—
Buyback of preferred stock		(388)			(233)		—			—			(7,631)			—			—			(7,864)
Net income		—			—		—			—			—			3,777,429			156,135			3,933,564
Dividends declared		—			—		—			—			—			(2,246,985)			—			(2,246,985)
Stock-based compensation		—			—		—			—			395,898			—			—			395,898
Balance as of March 31, 2026		38,923			23,354		16,000,190			9,600,114			95,666,040			118,279,492			5,184,952			228,753,952
Issue of share capital		9,071			5,442		—			—			(5,442)			—			—			—
Buyback of preferred stock		(342)			(205)		—			—			(5,604)			—			—			(5,809)
Net income		—			—		—			—			—			3,931,746			170,259			4,102,005
Exercise of options		82			49		—			—			2,011			—			—			2,060
Dividends declared		—			—		—			—			—			(2,245,589)			—			(2,245,589)
Stock-based compensation		—			—		—			—			391,790			—			—			391,790
Balance as of June 30, 2026		47,734		$	28,640		16,000,190		$	9,600,114		$	96,048,795		$	119,965,649		$	5,355,211		$	230,998,409

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		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
Issue of share capital		8,534			5,120		—			—			(5,120)			—			—			—
Buyback of preferred stock		(69)			(41)		—			—			(1,530)			—			—			(1,571)
Net income		—			—		—			—			—			5,096,205			129,378			5,225,583
Exercise of options		549			329		—			—			9,894			—			—			10,223
Dividends declared		—			—		—			—			—			(2,234,434)			—			(2,234,434)
Stock-based compensation		—			—		—			—			396,040			—			—			396,040
Balance as of June 30, 2025		49,844		$	29,906		15,916,685		$	9,550,011		$	94,212,568		$	112,771,198		$	5,643,757		$	222,207,440

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)


	Six Months Ended June 30,
	2026		2025
Cash flows from operating activities
Net income attributable to Consolidated Water Co. Ltd. stockholders	$	7,709,175	$	9,887,234
Income from continuing operations attributable to non-controlling interests		326,394		294,805
Net income		8,035,569		10,182,039
Adjustments to reconcile net income to net cash provided by operating activities:
Foreign currency transaction adjustment - discontinued operations		—		248
Loss from discontinued operations		148,616		215,389
Depreciation and amortization		3,532,983		3,400,039
Deferred income tax benefit		(153,154)		(237,687)
Provision for (benefit from) credit losses		(32,252)		405,533
Amortization of operating lease right-of-use assets		330,876		313,854
Compensation expense relating to stock and stock option grants		787,688		695,411
(Gain) loss on asset dispositions, net		32,886		(60,452)
Equity in earnings of affiliates		(113,030)		(82,753)
Distribution of earnings from OC-BVI		189,375		272,700

Change in:
Accounts receivable		4,173,373		(2,752,672)
Contract assets		80,132		(1,288,787)
Inventory		(698,058)		2,204,575
Prepaid expenses and other assets		890,957		1,425,094
Accounts payable, accrued expenses and other current liabilities		1,409,231		3,074,188
Accrued compensation		(296,207)		(527,635)
Contract liabilities		878,392		3,772,012
Operating lease liabilities		(333,479)		(316,457)
Deferred revenue		(143,872)		250,677
Other liabilities		(75,000)		—
Net cash provided by operating activities - continuing operations		18,645,026		20,945,316
Net cash used in operating activities - discontinued operations		(73,751)		(422,311)
Net cash provided by operating activities		18,571,275		20,523,005

Cash flows from investing activities
Additions to property, plant and equipment and construction in progress		(5,194,216)		(4,215,997)
Proceeds from asset dispositions		61,071		38,986
Net cash used in investing activities		(5,133,145)		(4,177,011)

Cash flows from financing activities
Dividends paid to common shareholders		(4,485,232)		(3,494,871)
Dividends paid to preferred shareholders		(10,980)		(9,331)
Buyback of redeemable preferred stock		(13,673)		(11,710)
Proceeds received from exercise of stock options		2,060		23,670
Principal repayments on long-term debt		(57,518)		(74,141)
Net cash used in financing activities		(4,565,343)		(3,566,383)
Net increase in cash and cash equivalents		8,872,787		12,779,611
Cash and cash equivalents at beginning of period		123,788,390		99,350,121
Cash and cash equivalents at beginning of period - discontinued operations		13,776		127,859
Less: cash and cash equivalents at end of period - discontinued operations		(45,947)		(10,992)
Cash and cash equivalents at end of period	$	132,629,006	$	112,246,599

Non-cash transactions:
Dividends declared but not paid	$	2,246,709	$	2,235,314
Transfers from inventory to property, plant and equipment and construction in progress	$	319,520	$	289,589
Transfers from construction in progress to property, plant and equipment	$	7,197,487	$	2,251,146
Right-of-use assets obtained in exchange for new operating lease liabilities	$	144,573	$	412,308
Transfers from prepaid expenses to property, plant and equipment	$	6,082	$	509,333
Expenditures for property, plant and equipment and construction in progress not yet paid	$	103,667	$	663,787

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.

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, 2026.

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, 2025.

Foreign currency: The Company’s reporting currency is the United States dollar (“US$”). The functional currency of the Company and its foreign operating subsidiaries (other than NSC, AdR, and CW-Cooperatief) is the currency for each respective country. The functional currency for NSC, AdR, and CW-Cooperatief is the US$. 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 $16,866 and $16,345 for the three months ended June 30, 2026 and 2025, respectively, and $51,702 and $45,987 for the six months ended June 30, 2026 and 2025 and are included in “Other income (expense) - Other” in the accompanying condensed consolidated statements of income.

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Cash and cash equivalents: Cash and cash equivalents consist of demand deposits at banks, certificates of deposit at banks with original maturity of three months or less and a money market fund with a brokerage firm. Cash and cash equivalents as of June 30, 2026 and December 31, 2025 include $17.2 million and $17.0 million, respectively, of certificates of deposits with original maturities of three months or less and $18.4 million and $18.1 million, respectively, in the money market fund.

Certain transfers from the Company’s Bahamas bank accounts to Company bank accounts in other countries require the approval of the Central Bank of The Bahamas. The equivalent United States dollar cash balances held in The Bahamas as of June 30, 2026 and December 31, 2025 were approximately $18.8 million and $12.0 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, 2025, the Company elected to assess qualitative factors to determine whether it was necessary to perform quantitative goodwill impairment testing 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 information. Based upon this qualitative assessment, the Company determined that it is more likely than not that the fair values of its reporting units exceeded their carrying values as of December 31, 2025.

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 June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Retail revenue	$	8,660,947	$	8,638,026	$	17,238,005	$	18,049,368
Bulk revenue		9,934,060		8,274,816		18,678,829		16,686,532
Services revenue		11,585,573		11,448,202		22,836,917		21,526,470
Manufacturing revenue		2,689,782		5,230,035		4,090,311		11,044,094
Total revenue	$	32,870,362	$	33,591,079	$	62,844,062	$	67,306,464

Services revenue consists of the following:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Construction revenue	$	5,338,043	$	2,825,935	$	7,439,180	$	5,044,167
Operations and maintenance revenue		6,044,002		8,255,408		14,932,460		15,980,704
Design and consulting revenue		203,528		366,859		465,277		501,599
Total services revenue	$	11,585,573	$	11,448,202	$	22,836,917	$	21,526,470

Retail revenue

The Company produces and supplies water to end-users, including residential, commercial and governmental customers in the Cayman Islands under an exclusive water production and supply concession and water utility license issued to Cayman Water by the Cayman Islands government and the Utilities Regulation and Competition Office (“OfReg”), respectively, to provide water in two of the three most populated areas on Grand Cayman. Customers are billed on a monthly basis based on metered consumption and bills are typically collected within 30 to 45 days after the billing date. 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 three agreements with the Water and Sewerage Corporation of The Bahamas (“WSC”), which distributes such water through its own pipeline system to residential, commercial and tourist properties on the islands of New Providence and Cat Island.

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

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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 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.

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

The Company recognizes revenue for its construction and custom/specialized manufacturing contracts (and some of its design contracts) over time under the input method, using costs incurred (which represents work performed) to date relative to the total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations as such measure best reflects the transfer of control of the promised good to the customer. Contract costs include labor, materials, subcontractor costs and other expenses. 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 comprise 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 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 and six months ended June 30, 2026 and 2025, the Company recognized all of its manufacturing revenue from the transfer of goods or services to customers over time. The following table presents the services revenue recognized from the transfer of goods or services to customers over time and when invoiced under the right to invoice practical expedient:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue recognized over time	$	5,373,750	$	3,104,731	$	7,583,913	$	5,284,992
Revenue recognized when invoiced		6,211,823		8,343,471		15,253,004		16,241,478
Total services revenue	$	11,585,573	$	11,448,202	$	22,836,917	$	21,526,470

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


	June 30,		December 31,
	2026		2025
Revenue recognized to date on contracts in progress	$	117,595,070	$	127,237,229
Amounts billed to date on contracts in progress		(128,609,583)		(138,121,977)
Retainage		1,818,170		2,646,929
Net contract liability	$	(9,196,343)	$	(8,237,819)

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


	June 30,		December 31,
	2026		2025
Contract assets	$	3,210,683	$	3,290,815
Contract liabilities		(12,407,026)		(11,528,634)
Net contract liability	$	(9,196,343)	$	(8,237,819)

As of June 30, 2026, the Company had unsatisfied or partially unsatisfied performance obligations for contracts in progress representing approximately $144.8 million in aggregate transaction price for contracts with an original expected length of greater than one year. The Company expects to earn revenue as it satisfies its performance obligations under those contracts in the amount of approximately $11.2 million during the remainder of the year ending December 31, 2026 and approximately $133.6 million thereafter. In addition, the Company recognized revenue of approximately $1.2 million for the six months ended June 30, 2026, that was included in the contract liability balance as of December 31, 2025.

Practical Expedients and Exemptions

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

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 water production and supply concession and water utility license issued to Cayman Water by the Cayman Islands government and OfReg, respectively. The bulk segment supplies potable water to government utilities in Grand Cayman and The Bahamas under long-term contracts. 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 the budget and the prior period for major corporate expenses (such as employee costs, insurance and professional fees) when making decisions regarding capital and resource allocation.

The accounting policies of the segments are consistent with those described in Note 2. All intercompany transactions are eliminated for segment presentation purposes. Intersegment revenue transactions are insignificant to the Company and are eliminated.

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


	Three Months Ended June 30, 2026
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Revenue	$	8,660,947	$	9,934,060	$	11,585,573	$	2,689,782	$	—	$	32,870,362
Cost of revenue		3,805,970		6,722,244		9,686,546		1,692,213		—		21,906,973
Gross profit		4,854,977		3,211,816		1,899,027		997,569		—		10,963,389
General and administrative expenses		899,499		340,147		1,474,321		519,072		4,009,983		7,243,022
Gain (loss) on asset dispositions, net		24,589		—		(270)		—		—		24,319
Income (loss) from operations		3,980,067		2,871,669		424,436		478,497		(4,009,983)		3,744,686
Interest income		28,819		184,812		245,179		—		186,775		645,585
Interest expense		—		—		(237)		—		(242)		(479)
Income (loss) from affiliates		—		—		—		(429)		61,850		61,421
Other		17,203		6,222		384		90		213		24,112
Other income (loss), net		46,022		191,034		245,326		(339)		248,596		730,639
Income (loss) before income taxes		4,026,089		3,062,703		669,762		478,158		(3,761,387)		4,475,325
Provision for income taxes		—		—		164,460		103,286		—		267,746
Net income (loss) from continuing operations		4,026,089		3,062,703		505,302		374,872		(3,761,387)		4,207,579
Income from continuing operations attributable to non-controlling interests		—		170,259		—		—		—		170,259
Net income (loss) from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	4,026,089	$	2,892,444	$	505,302	$	374,872	$	(3,761,387)		4,037,320
Net loss from discontinued operations												(105,574)
Net income attributable to Consolidated Water Co. Ltd. stockholders											$	3,931,746

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	Three Months Ended June 30, 2025
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Revenue	$	8,638,026	$	8,274,816	$	11,448,202	$	5,230,035	$	—	$	33,591,079
Cost of revenue		3,775,758		5,738,907		8,056,883		3,187,546		—		20,759,094
Gross profit		4,862,268		2,535,909		3,391,319		2,042,489		—		12,831,985
General and administrative expenses		985,617		394,750		1,993,042		530,552		3,676,277		7,580,238
Gain on asset dispositions, net		840		—		31,177		—		—		32,017
Income (loss) from operations		3,877,491		2,141,159		1,429,454		1,511,937		(3,676,277)		5,283,764
Interest income		45,049		227,470		261,335		1		223,133		756,988
Interest expense		—		—		(1,185)		—		—		(1,185)
Income (loss) from affiliate		—		—		—		(259)		52,538		52,279
Other		7,395		6,942		(1,996)		90		(331)		12,100
Other income, net		52,444		234,412		258,154		(168)		275,340		820,182
Income (loss) before income taxes		3,929,935		2,375,571		1,687,608		1,511,769		(3,400,937)		6,103,946
Provision (benefit) for income taxes		—		—		414,180		381,627		—		795,807
Net income (loss) from continuing operations		3,929,935		2,375,571		1,273,428		1,130,142		(3,400,937)		5,308,139
Income from continuing operations attributable to non-controlling interests		—		129,378		—		—		—		129,378
Net income (loss) from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	3,929,935	$	2,246,193	$	1,273,428	$	1,130,142	$	(3,400,937)		5,178,761
Net loss from discontinued operations												(82,556)
Net income attributable to Consolidated Water Co. Ltd. stockholders											$	5,096,205

The Company’s cost of revenue consists of:


	Three Months Ended June 30, 2026
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Subcontractor and other project costs	$	—	$	—	$	5,695,513	$	936,861	$	—	$	6,632,374
Employee costs		839,289		498,755		3,629,642		570,508		—		5,538,194
Electricity		1,221,993		1,052,291		13,725		12,169		—		2,300,178
Fuel oil		—		3,133,366		—		—		—		3,133,366
Depreciation		653,116		766,520		106,954		76,814		—		1,603,404
Maintenance		233,542		334,914		141,964		67,784		—		778,204
Insurance		181,101		323,492		18,577		—		—		523,170
Retail license royalties		550,265		—		—		—		—		550,265
Other		126,664		612,906		80,171		28,077		—		847,818
	$	3,805,970	$	6,722,244	$	9,686,546	$	1,692,213	$	—	$	21,906,973


	Three Months Ended June 30, 2025
	Retail		Bulk		Services		Manufacturing			Corporate		Total
Subcontractor and other project costs	$	—	$	—	$	3,633,272	$	2,435,559		$	—	$	6,068,831
Employee costs		761,403		518,088		4,160,205		608,921			—		6,048,617
Electricity		1,156,000		1,064,256		35,329		11,561			—		2,267,146
Fuel oil		—		1,842,264		—		—			—		1,842,264
Depreciation		621,297		692,319		93,095		36,455			—		1,443,166
Maintenance		320,220		637,300		78,677		67,403			—		1,103,600
Insurance		174,656		405,169		21,278		—			—		601,103
Retail license royalties		553,400		—		—		—			—		553,400
Other		188,782		579,511		35,027		27,647			—		830,967
	$	3,775,758	$	5,738,907	$	8,056,883	$	3,187,546		$	—	$	20,759,094

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

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The Company’s general and administrative expenses consist of:


	Three Months Ended June 30, 2026
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Employee costs	$	462,030	$	92,355	$	968,512	$	310,232	$	2,118,294	$	3,951,423
Professional fees		12,374		25,308		62,284		3,989		704,774		808,729
Insurance		107,342		96,570		9,202		63,784		224,812		501,710
Depreciation and amortization		12,054		6,312		62,751		26,667		22,251		130,035
Other		305,699		119,602		371,572		114,400		939,852		1,851,125
	$	899,499	$	340,147	$	1,474,321	$	519,072	$	4,009,983	$	7,243,022


	Three Months Ended June 30, 2025
	Retail		Bulk		Services		Manufacturing			Corporate		Total
Employee costs	$	390,735	$	90,072	$	1,290,094	$	297,007		$	2,089,738	$	4,157,646
Professional fees		12,287		19,587		176,093		24,152			621,134		853,253
Insurance		104,977		96,818		34,225		74,751			221,051		531,822
Depreciation and amortization		10,268		5,091		161,104		26,059			16,967		219,489
Other		467,350		183,182		331,526		108,583			727,387		1,818,028
	$	985,617	$	394,750	$	1,993,042	$	530,552		$	3,676,277	$	7,580,238

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


	Six Months Ended June 30, 2026
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Revenue	$	17,238,005	$	18,678,829	$	22,836,917	$	4,090,311	$	—	$	62,844,062
Cost of revenue		7,448,127		12,458,230		18,113,702		2,944,601		—		40,964,660
Gross profit		9,789,878		6,220,599		4,723,215		1,145,710		—		21,879,402
General and administrative expenses		1,802,106		744,370		3,260,317		1,004,980		7,850,317		14,662,090
Gain (loss) on asset dispositions, net		(52,165)		—		19,279		—		—		(32,886)
Income (loss) from operations		7,935,607		5,476,229		1,482,177		140,730		(7,850,317)		7,184,426
Interest income		75,052		362,319		485,054		1		370,387		1,292,813
Interest expense		—		—		(2,973)		—		(242)		(3,215)
Income (loss) from affiliates		—		—		—		(9,062)		122,092		113,030
Other		43,061		16,245		385		7,558		328		67,577
Other income (loss), net		118,113		378,564		482,466		(1,503)		492,565		1,470,205
Income (loss) before income taxes		8,053,720		5,854,793		1,964,643		139,227		(7,357,752)		8,654,631
Provision (benefit) for income taxes		—		—		480,509		(10,063)		—		470,446
Net income (loss) from continuing operations		8,053,720		5,854,793		1,484,134		149,290		(7,357,752)		8,184,185
Income from continuing operations attributable to non-controlling interests		—		326,394		—		—		—		326,394
Net income (loss) from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	8,053,720	$	5,528,399	$	1,484,134	$	149,290	$	(7,357,752)		7,857,791
Net loss from discontinued operations												(148,616)
Net income attributable to Consolidated Water Co. Ltd. stockholders											$	7,709,175

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	Six Months Ended June 30, 2025
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Revenue	$	18,049,368	$	16,686,532	$	21,526,470	$	11,044,094	$	—	$	67,306,464
Cost of revenue		7,481,821		11,322,996		16,118,760		7,244,615		—		42,168,192
Gross profit		10,567,547		5,363,536		5,407,710		3,799,479		—		25,138,272
General and administrative expenses		1,774,429		740,831		4,188,380		1,194,630		7,405,927		15,304,197
Gain on asset dispositions, net		30,816		—		29,636		—		—		60,452
Income (loss) from operations		8,823,934		4,622,705		1,248,966		2,604,849		(7,405,927)		9,894,527
Interest income		77,915		431,573		404,654		2		459,438		1,373,582
Interest expense		—		—		(2,713)		—		—		(2,713)
Income from affiliates		—		—		—		(34,263)		117,016		82,753
Other		35,703		21,875		(1,960)		164		(331)		55,451
Other income, net		113,618		453,448		399,981		(34,097)		576,123		1,509,073
Income (loss) before income taxes		8,937,552		5,076,153		1,648,947		2,570,752		(6,829,804)		11,403,600
Provision for income taxes		—		—		378,287		627,637		—		1,005,924
Net income (loss) from continuing operations		8,937,552		5,076,153		1,270,660		1,943,115		(6,829,804)		10,397,676
Income from continuing operations attributable to non-controlling interests		—		294,805		—		—		—		294,805
Net income (loss) from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	8,937,552	$	4,781,348	$	1,270,660	$	1,943,115	$	(6,829,804)		10,102,871
Net income from discontinued operations												(215,637)
Net income attributable to Consolidated Water Co. Ltd. stockholders											$	9,887,234

The Company’s cost of revenue consists of:


	Six Months Ended June 30, 2026
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Subcontractor and other project costs	$	—	$	28,750	$	9,539,528	$	1,423,663	$	—	$	10,991,941
Employee costs		1,633,426		962,665		7,879,037		1,122,036		—		11,597,164
Electricity		2,371,179		2,103,363		41,901		22,455		—		4,538,898
Fuel oil		—		4,975,131		—		—		—		4,975,131
Depreciation		1,299,367		1,516,859		214,481		152,344		—		3,183,051
Maintenance		419,376		1,054,880		274,835		157,664		—		1,906,755
Insurance		365,671		632,629		36,547		—		—		1,034,847
Retail license royalties		1,083,877		—		—		—		—		1,083,877
Other		275,231		1,183,953		127,373		66,439		—		1,652,996
	$	7,448,127	$	12,458,230	$	18,113,702	$	2,944,601	$	—	$	40,964,660


	Six Months Ended June 30, 2025
	Retail		Bulk		Services		Manufacturing			Corporate		Total
Subcontractor and other project costs	$	—	$	—	$	7,090,674	$	5,719,701		$	—	$	12,810,375
Employee costs		1,519,271		1,061,388		8,430,568		1,198,142			—		12,209,369
Electricity		2,329,586		2,107,642		68,356		22,364			—		4,527,948
Fuel oil		—		3,662,320		—		—			—		3,662,320
Depreciation		1,235,181		1,381,835		183,693		75,317			—		2,876,026
Maintenance		540,845		1,038,942		206,194		167,358			—		1,953,339
Insurance		346,190		856,776		47,562		—			—		1,250,528
Retail license royalties		1,151,486		—		—		—			—		1,151,486
Other		359,262		1,214,093		91,713		61,733			—		1,726,801
	$	7,481,821	$	11,322,996	$	16,118,760	$	7,244,615		$	—	$	42,168,192

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

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The Company’s general and administrative expenses consist of:


	Six Months Ended June 30, 2026
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Employee costs	$	917,364	$	181,741	$	2,161,997	$	611,504	$	4,276,339	$	8,148,945
Professional fees		24,548		44,599		240,814		35,789		1,340,554		1,686,304
Insurance		233,458		193,787		42,863		125,431		436,024		1,031,563
Depreciation and amortization		22,929		11,821		127,400		53,992		44,113		260,255
Other		603,807		312,422		687,243		178,264		1,753,287		3,535,023
	$	1,802,106	$	744,370	$	3,260,317	$	1,004,980	$	7,850,317	$	14,662,090


	Six Months Ended June 30, 2025
	Retail		Bulk		Services		Manufacturing			Corporate		Total
Employee costs	$	771,595	$	178,881	$	2,292,473	$	638,567		$	4,263,025	$	8,144,541
Professional fees		27,449		40,852		516,093		91,714			1,245,824		1,921,932
Insurance		208,848		193,827		71,325		159,560			436,000		1,069,560
Depreciation and amortization		20,848		10,418		316,795		52,238			34,038		434,337
Other		745,689		316,853		991,694		252,551			1,427,040		3,733,827
	$	1,774,429	$	740,831	$	4,188,380	$	1,194,630		$	7,405,927	$	15,304,197

The Company’s segment assets are presented below.


	As of June 30, 2026
	Retail		Bulk		Services		Manufacturing			Corporate		Total
Cash and cash equivalents	$	18,235,488	$	29,204,272	$	50,839,226	$	7,746,078		$	26,603,942	$	132,629,006
Accounts receivable, net	$	3,387,398	$	18,991,018	$	4,716,648	$	1,504,678		$	27,674	$	28,627,416
Inventory, current and non-current	$	3,504,917	$	5,353,438	$	118,564	$	701,606		$	—	$	9,678,525
Contract assets	$	—	$	—	$	1,730,196	$	1,480,487		$	—	$	3,210,683
Property, plant and equipment, net	$	31,856,818	$	21,047,548	$	1,489,340	$	4,874,576		$	187,794	$	59,456,076
Construction in progress	$	3,830,127	$	15,992	$	—	$	238,850		$	—	$	4,084,969
Intangibles, net	$	—	$	—	$	1,528,924	$	427,779		$	—	$	1,956,703
Goodwill	$	1,170,511	$	1,948,875	$	7,756,807	$	1,985,211		$	—	$	12,861,404
Total segment assets	$	63,430,680	$	77,257,158	$	72,585,380	$	19,427,647		$	30,037,166	$	262,738,031
Assets of discontinued operations												$	130,470
Total assets												$	262,868,501


	As of December 31, 2025
	Retail		Bulk		Services		Manufacturing		Corporate		Total
Cash and cash equivalents	$	15,693,394	$	20,343,683	$	46,444,679	$	6,620,358	$	34,686,276	$	123,788,390
Accounts receivable, net	$	3,274,109	$	20,882,114	$	6,364,226	$	2,240,036	$	8,052	$	32,768,537
Inventory, current and non-current	$	3,555,946	$	4,999,261	$	24,178	$	720,602	$	—	$	9,299,987
Contract assets	$	—	$	—	$	1,144,943	$	2,145,872	$	—	$	3,290,815
Property, plant and equipment, net	$	32,371,991	$	16,284,441	$	1,666,099	$	4,608,544	$	220,683	$	55,151,758
Construction in progress	$	1,348,572	$	5,316,061	$	—	$	31,023	$	—	$	6,695,656
Intangibles, net	$	—	$	—	$	1,627,110	$	474,445	$	—	$	2,101,555
Goodwill	$	1,170,511	$	1,948,875	$	7,756,807	$	1,985,211	$	—	$	12,861,404
Total segment assets	$	59,410,635	$	71,300,554	$	69,172,997	$	19,454,784	$	38,101,745	$	257,440,715
Assets of discontinued operations											$	124,630
Total assets											$	257,565,345

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

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

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders	$	4,037,320	$	5,178,761	$	7,857,791	$	10,102,871
Less: preferred stock dividends		(6,683)		(6,978)		(12,132)		(11,469)
Net income from continuing operations available to common shares in the determination of basic earnings per common share		4,030,637		5,171,783		7,845,659		10,091,402
Loss from discontinued operations		(105,574)		(82,556)		(148,616)		(215,637)
Net income available to common shares in the determination of basic earnings per common share	$	3,925,063	$	5,089,227	$	7,697,043	$	9,875,765

Weighted average number of common shares in the determination of basic earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders		16,000,190		15,916,685		16,000,136		15,916,278
Plus:
Weighted average number of preferred shares outstanding during the period		40,749		42,510		40,004		42,114
Potential dilutive effect of unexercised options and unvested stock grants		67,238		85,116		67,556		85,140
Weighted average number of shares used for determining diluted earnings per common share attributable to Consolidated Water Co. Ltd. common stockholders		16,108,177		16,044,311		16,107,696		16,043,532

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 a public tender for the Project, and in June 2016 a consortium comprised of NSC and two other parties was selected by the State as the winner of the tender process for the Project. Shortly thereafter, NSC formed its wholly owned subsidiary, AdR, to pursue the completion of the Project.

Following a public tender process for the Project in which NSC and its consortium were declared the winners, in August 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 APP Contract further provided that AdR would operate and maintain the plant and aqueduct for a period of 37 years starting from the commencement of operation of the first phase.

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In June 2020, AdR received a letter from CEA and CESPT terminating the APP Contract.

CW-Cooperatief, as a Netherlands company, had certain rights relating to its investments in NSC and AdR under the Agreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican States entered into force as of October 1, 1999 (the “Treaty”). In February 2022, CW-Cooperatief filed a Request for Arbitration with the International Centre for Settlement of International Disputes (“ICSID”) requesting that the United Mexican States pay CW-Cooperatief damages in excess of US$51 million plus MXN$137 million (with the exact amount to be quantified in the proceedings), plus fees, costs and pre- and post-award interest.

In 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:


	June 30,		December 31,
	2026		2025
Cash	$	45,947	$	13,776
Prepaid expenses and other current assets		84,523		110,854
Total assets of discontinued operations	$	130,470	$	124,630

Total liabilities of discontinued operations	$	319,693	$	271,159


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Loss from discontinued operations	$	(105,574)	$	(82,556)	$	(148,616)	$	(215,637)

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

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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:


		June 30,		December 31,
		2026		2025
ASSETS
Noncurrent
Operating lease right-of-use assets		$	2,744,138	$	2,930,441
Total operating lease right-of-use assets		$	2,744,138	$	2,930,441

LIABILITIES
Current
Current maturities of operating leases		$	769,837	$	661,047
Noncurrent
Noncurrent operating leases			1,999,465		2,297,161
Total lease liabilities		$	2,769,302	$	2,958,208

Weighted average remaining lease term:
Operating leases			3.8 years		4.2 years

Weighted average discount rate:
Operating leases			6.55%		6.55%

The components of lease costs were as follows:


		Three Months Ended June 30,					Six Months Ended June 30,
		2026		2025			2026		2025
Operating lease costs		$	226,220	$	219,578		$	435,791	$	427,133
Short-term lease costs			62,900		100,303			120,652		199,328
Lease costs - discontinued operations			1,167		1,921			2,343		4,618
Total lease costs		$	290,287	$	321,802		$	558,786	$	631,079

Supplemental cash flow information related to leases is as follows:

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


Years ending December 31,		Total
2026		$	484,371
2027			903,681
2028			837,819
2029			546,333
2030			302,193
Thereafter			76,064
Total future lease payments			3,150,461
Less: imputed interest			(381,159)
Total lease obligations			2,769,302
Less: current obligations			(769,837)
Noncurrent lease obligations		$	1,999,465

7. Fair value

As of June 30, 2026 and December 31, 2025, the carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued expenses, accrued compensation, dividends payable and other current liabilities approximate their fair values due to the short-term maturities of these instruments. As of June 30, 2026 and December 31, 2025, the Company does not have assets and liabilities measured at fair value to present in the fair value hierarchy.

8. Commitments and contingencies

Cayman Water

Prior to the License Date (as defined below), Cayman Water’s retail operations sold water under a license issued in July 1990 by the Cayman Islands government (the “1990 License”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area. For the three months ended June 30, 2026 and 2025, the Company generated approximately 26% and 26%, respectively, of its consolidated revenue and 44% and 38%, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 License. For the six months ended June 30, 2026 and 2025, the Company generated approximately 27% and 27%, respectively, of its consolidated revenue and 45% and 42%, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 License.

The 1990 License was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government to provide the parties with additional time to negotiate the terms of a new license agreement. The most recent express extension of the 1990 License expired on January 31, 2018, and from that date until February 18, 2025, the Company continued to operate under the terms of the 1990 License, treating such terms as operative notwithstanding the expiration of the express extension.

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

In 2016, the Cayman Islands government passed legislation creating OfReg, which is an independent and accountable regulatory body charged with protecting the rights of consumers, encouraging affordable utility services and promoting competition. Supplemental legislation passed in April 2017 transferred responsibility for the economic regulation of the water utility sector, including the negotiations with the Company for a new retail license, to OfReg. The Company began negotiations with OfReg in 2017, which negotiations continued until the issuance of the License (as defined below).

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

On June 18, 2026, OfReg notified Cayman Water that, at a meeting held on June 11, 2026, the OfReg Board of Directors had approved the issuance to Cayman Water of a new license (the “License”) to produce and distribute potable water within its licensed service area (the “License Area”). The License has a stated commencement date of August 1, 2026 (the “License Date”) and, subject to its terms and conditions, continues for a period of 25 years from the License Date. The License establishes a long-term regulatory framework for Cayman Water’s retail water operations in the License Area following an extended period of uncertainty and negotiations with OfReg. Subject to the terms and conditions of the License, Cayman Water has the exclusive right to produce, distribute and sell potable water within the License Area during the license term, and the License requires Cayman Water to carry on the business normally conducted by a water utility in the License Area throughout the term of the License, using its best efforts to maintain sufficient water production capacities and distribution capabilities, and to plan for, serve and extend service to applicants in the License Area, subject to the terms of the License.

The License provides that Cayman Water’s base rates, monthly meter rental fees and certain other rates and charges will be as set forth in the License. Effective on the License Date, the base rates for water sold to consumers by Cayman Water in the License Area will be CI$16.23 per 1,000 gallons for the first 3,000 gallons supplied in any month to residential consumers, CI$21.21 per 1,000 gallons for residential consumption above 3,000 gallons, CI$19.90 per 1,000 gallons for the first 3,000 gallons supplied in any month to commercial consumers, CI$21.21 per 1,000 gallons for commercial consumption above 3,000 gallons, CI$17.77 per 1,000 gallons for the first 3,000 gallons supplied in any month to public authority consumers, CI$19.01 per 1,000 gallons for public authority consumption above 3,000 gallons and CI$13.32 per 1,000 gallons for trucked water consumers. The License also provides for monthly meter rental fees based on meter size, as well as annual adjustments to base rates and certain fees, effective each July 1 following the License Date, in accordance with the rate cap adjustment mechanism described in the License, subject to OfReg verification and approval requirements. The exchange rate for conversion of Cayman Islands dollars (CI$) into United States dollars (US$), as determined by the Cayman Islands Monetary Authority, has been fixed since April 1974 at US$1.20 per CI$1.00.

In addition to base rates and monthly meter rental fees, the License permits Cayman Water to recover from consumers, through a separate energy cost charge, the reasonable cost of electricity used to produce and distribute water, subject to an efficiency-based mechanism that limits recovery when specific energy consumption exceeds the maximum acceptable amount set forth in the License and shares certain efficiency savings with consumers when specific energy consumption is below the target level set forth in the License. The License also contemplates statutory fee and regulatory fee charges as separate pass-through charges to consumers; however, those fees have not yet been prescribed by the Cayman Islands Parliament.

The License contains customary regulatory provisions for Cayman Water’s water utility operations, including provisions relating to renewal, modification, assignability, revocation or suspension, accounts and financial reporting, regulatory access to information, design and construction of new works, water quality, metering, consumer protection, business continuity planning, dispute resolution and notices. The License does not renew automatically upon expiration of its term, but Cayman Water may apply to OfReg for renewal not earlier than 36 months and not later than 24 months prior to the expiration of the term. Neither the License nor any obligations or benefits conferred by it may be assigned or transferred in whole or in part without OfReg’s prior written consent.

The License may be modified by written consent of OfReg and Cayman Water, subject to any special conditions concerning modification set forth in the License. The License also provides that OfReg must, immediately upon the direction of the Cabinet of the Cayman Islands, modify the License for reasons of security, public interest or health of the general population of the Cayman Islands, with or without Cayman Water’s agreement, and establishes procedures for other modifications proposed by OfReg.

The License may be revoked or suspended by OfReg upon the occurrence of specified events, including: fundamental breach of the License; persistent breaches of any condition attached to the License or failure to comply with applicable directives or water sector legislation; certain insolvency events; failure to pay specified fees or financial commitments for

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a continuous period in excess of three months after the relevant due date; certain offences under the Water Sector Regulation Act; obtaining the License by a fraudulent, false or misleading representation or in another illegal manner; or failure to meet demand in a reasonable manner and time, as determined by OfReg in its discretion, acting reasonably. The License also contains provisions addressing suspension, reinstatement, revocation and, in certain circumstances following revocation or non-renewal, potential compulsory divestiture of all mechanical, electrical and other equipment and all civil engineering works or plant, including appurtenances, owned by Cayman Water and used by Cayman Water in its licensed water production and distribution operations, including completed new works.

OC-Cayman

OC-Cayman’s agreements with the WAC to operate and maintain the North Sound and North Side Water Works plants were originally scheduled to expire on July 1, 2026. The agreements have been extended through March 31, 2027. Revenue recognized under the North Sound agreement was $325,659 and $609,601 for the three and six months ended June 30, 2026, respectively. Revenue recognized under the North Side Water Works agreement was $406,617 and $801,023 for the three and six months ended June 30, 2026, respectively.

CW-Bahamas

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $18.8 million and $20.7 million as of June 30, 2026 and December 31, 2025, respectively. Approximately 64% and 71% of the accounts receivable balances were delinquent as of those dates, respectively.

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 government of The Bahamas. All previous delinquent accounts receivable from the WSC, including accrued interest thereon, were eventually paid in full. Based upon this payment history, CW-Bahamas has not provided a material allowance for credit losses for its accounts receivable from the WSC as of June 30, 2026 or prior periods.

In a report dated April 30, 2026, Moody’s Investor Services (“Moody’s”) upgraded The Bahamas’ long-term issuer and senior unsecured ratings to Ba3 from B1. Moody’s also raised The Bahamas’ local currency ceiling to Baa2 from Baa3 and its foreign currency ceiling to Baa3 from Ba1. Based upon the Company’s review of this Moody’s correspondence, CW-Bahamas continues to believe that no material allowance for credit losses is required for CW-Bahamas’ accounts receivable from the WSC.

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 significantly increase its 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 Supply Guarantees

The contracts to supply water to the WSC from its Blue Hills, Windsor and Cat Island plants require CW-Bahamas to guarantee delivery of a minimum quantity of water per week. 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 contracts. The Blue Hills contract expires in 2032 and requires CW-Bahamas to deliver 63.0 million gallons of water each week. The Windsor contract expires in 2033 and requires CW-Bahamas to deliver 16.8 million gallons of water each week. The Cat Island contract expires in 2041 and requires the two plants located in Bennett’s Harbour and New Bight to deliver 504,000 gallons of water each week per plant. CW-Bahamas has been in compliance with the supply guarantees under these contracts for all periods since the inception of the contracts.

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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.

9. Impact of recent accounting standards

Adoption of new accounting standards:

None.

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 on its financial statements.

10. Subsequent events

The Company evaluated subsequent events through the time of the filing of this report on Form 10-Q. Other than as disclosed herein, the Company is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on its condensed consolidated financial statements.

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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;

●	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 2025 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 2025, we elected to assess qualitative factors to determine whether it was necessary to perform quantitative goodwill impairment testing 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 information. 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, 2025.

In July 2021, a major customer communicated to Aerex that its purchases of a specialized product from Aerex in 2022 and subsequent years would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in prior years. As a result, 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 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.

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.

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, water reuse, and water production infrastructure in the United States through PERC and Kalaeloa Desalco. Aerex is a custom and specialty manufacturer in

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the United States of water-related systems and products applicable to commercial, municipal and industrial water production and treatment.

We recognize revenue for our construction and our specialized/custom manufacturing contracts (and some of our design contracts) over time under the input method using costs incurred (which represents work performed) to date relative to the total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations, as such measure best reflects the transfer of control of the promised good to the customer. Contract costs include labor, materials, subcontractor costs and other expenses. 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 comprise 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.

Material Development and Entry into a Material Agreement

Prior to the License Date (as defined below), we sold water under a license issued in July 1990 by the Cayman Islands government (the “1990 License”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area. For the three months ended June 30, 2026 and 2025, the Company generated approximately 26% and 26%, respectively, of its consolidated revenue and 44% and 38%, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 License. For the six months ended June 30, 2026 and 2025, the Company generated approximately 27% and 27%, respectively, of its consolidated revenue and 45% and 42%, respectively, of its consolidated gross profit from the retail water operations conducted under the 1990 License.

The 1990 License was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government to provide the parties with additional time to negotiate the terms of a new license agreement. The most recent express extension of the 1990 License expired on January 31, 2018, and from that date until February 18, 2025, Cayman Water continued to operate under the terms of the 1990 License, treating such terms as operative notwithstanding the expiration of the express extension.

In 2016, the Cayman Islands government passed legislation creating the Utility Regulation and Competition Office (“OfReg”), which is an independent and accountable regulatory body charged with protecting the rights of consumers, encouraging affordable utility services and promoting competition. Supplemental legislation passed in April 2017 transferred responsibility for the economic regulation of the water utility sector, including the negotiations with the Company for a new retail license, to OfReg. We began negotiations with OfReg in 2017, which negotiations continued until the issuance of the License (as defined below).

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

On June 18, 2026, OfReg notified Cayman Water that, at a meeting held on June 11, 2026, the OfReg Board of Directors had approved the issuance to Cayman Water of a new license (the “License”) to produce and distribute potable water within its licensed service area (the “License Area”). The License has a stated commencement date of August 1, 2026 (the “License Date”) and, subject to its terms and conditions, continues for a period of 25 years from the License Date. The License establishes a long-term regulatory framework for our retail water operations in the License Area following an extended period of uncertainty and negotiations with OfReg. Subject to the terms and conditions of the License, Cayman Water has the exclusive right to produce, distribute and sell potable water within the License Area during the license term, and the License requires Cayman Water to carry on the business normally conducted by a water utility in the License Area throughout the term of the License, using its best efforts to maintain sufficient water production capacities and distribution capabilities, and to plan for, serve and extend service to applicants in the License Area, subject to the terms of the License.

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Regulation Act; obtaining the License by a fraudulent, false or misleading representation or in another illegal manner; or failure to meet demand in a reasonable manner and time, as determined by OfReg in its discretion, acting reasonably. The License also contains provisions addressing suspension, reinstatement, revocation and, in certain circumstances following revocation or non-renewal, potential compulsory divestiture of all mechanical, electrical and other equipment and all civil engineering works or plant, including appurtenances, owned by Cayman Water and used by Cayman Water in its licensed water production and distribution operations, including completed new works.

Based on our pro forma estimates, if the base rates, energy cost charges and monthly meter rental fees contemplated by the License had been applied to Cayman Water’s historical volumes, historical energy cost and meter base, we estimate that our revenue and operating income would have been approximately $2.1 million, $1.9 million and $1.1 million lower for 2024, 2025 and the first six months of 2026, respectively, than under the prior rate structure. These estimates are presented for illustrative purposes only; are based on historical volumes, historical energy cost, historical meter base and other assumptions; do not reflect statutory fee or regulatory fee charges that have not yet been prescribed; and are not necessarily indicative of the revenue or results of operations that Cayman Water will achieve under the License.

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, 2025 (“2025 Form 10-K”) and the information set forth under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Form 10-K.

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Consolidated Results

Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2026 was $3,931,746 ($0.24 per share on a fully diluted basis), as compared to net income of $5,096,205 ($0.32 per share on a fully diluted basis) for 2025. Our net losses from discontinued operations for 2026 and 2025 were ($105,574) and ($82,556), respectively. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for a discussion of our discontinued operations.

The following discussion and analysis of our consolidated results of operations and results of operations by segment for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 relates only to our continuing operations.

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2026 was $4,037,320 ($0.25 per share on a fully diluted basis), as compared to net income from continuing operations of $5,178,761 ($0.32 per share on a fully diluted basis) for 2025.

Revenue for 2026 decreased to $32,870,362 from $33,591,079 in 2025 as a result of a revenue decrease in the manufacturing segment, which was partially offset by revenue increases in the retail, bulk and services segments. Gross profit for 2026 was $10,963,389 (33% of total revenue) as compared to $12,831,985 (38% of total revenue) for 2025. 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 decreased to $7,243,022 for 2026 as compared to $7,580,238 for 2025. The decrease was primarily due to a decrease in employee costs of approximately $206,000 from 2025 to 2026, as well as slight decreases in various other expenses.

Other income, net, decreased to $730,639 for 2026 as compared to $820,182 for 2025, primarily due to a decrease in interest earned on balances of interest-earning assets.

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Results by Segment

Retail Segment:

The retail segment generated $3,980,067 in income from operations for 2026 as compared to $3,877,491 for 2025.

Revenue generated by retail water operations remained consistent at $8,660,947 for 2026 as compared to $8,638,026 for 2025 despite an overall decrease of approximately 2% in the volume of water sold from 2025 to 2026. The impact of this drop in the volume of water sold on 2026 revenue was mitigated by (i) an increase in the rate charged to a major non-potable water customer; and (ii) an increase in the volume of water sold to this major non-potable water customer from 2025 to 2026.

Retail segment gross profit remained relatively consistent at $4,854,977 (56% of retail revenue) for 2026 as compared to $4,862,268 (56% of retail revenue) for 2025.

Retail G&A expenses decreased to $899,499 for 2026 compared to $985,617 for 2025 primarily due to incremental information technology expenses incurred in 2025.

Bulk Segment:

The bulk segment contributed $2,871,669 and $2,141,159 to our income from operations for 2026 and 2025, respectively.

Bulk segment revenue was $9,934,060 and $8,274,816 for 2026 and 2025, respectively. The increase in revenue for 2026 results principally from an increase in the pass-through energy rate charged by CW-Bahamas which is attributable to an increase in energy costs from 2025 to 2026. To a lesser extent, bulk revenue increased in 2026 due to revenue earned from CW-Bahamas’ new plants on Cat Island, The Bahamas.

Gross profit for our bulk segment increased to $3,211,816 (32% of bulk revenue) for 2026 as compared to $2,535,909 (31% of bulk revenue) for 2025. The improvement in bulk segment gross profit reflects maintenance expenses that were approximately $302,000 lower in 2026 than in 2025 and decreases in other operating expenses.

Bulk segment G&A expenses also remained relatively consistent at $340,147 for 2026 as compared to $394,750 for 2025.

OC-Cayman’s agreements with the WAC to operate and maintain the North Sound and North Side Water Works plants were originally scheduled to expire on July 1, 2026. The agreements have been extended through March 31, 2027. Revenue recognized under the North Sound and North Side Water Works agreements for the three months ended June 30, 2026 was $325,659 and $406,617, respectively.

Services Segment:

The services segment generated $424,436 and $1,429,454 in income from operations for 2026 and 2025.

Services segment revenue was $11,585,573 for 2026 as compared to $11,448,202 for 2025. Construction revenue increased to $5,338,043 for 2026 as compared to $2,825,935 for 2025 due to incremental revenue generated by a project in Colorado and a project in California. Revenue generated under operations and maintenance (“O&M”) contracts decreased to $6,044,002 in 2026 as compared to $8,255,408 in 2025 due primarily to the expiration of PERC’s contracts with two customers in the first quarter of 2026. These contracts in the aggregate generated approximately $1.9 million in revenue in 2025. Design and consulting revenue decreased to $203,528 for 2026 from $366,859 for 2025.

Gross profit for the services segment decreased to $1,899,027 (16% of services revenue) in 2026 from $3,391,319 (30% of services revenue) in 2025 due to the decreases in O&M and design and consulting revenue.

G&A expenses for the services segment decreased to $1,474,321 for 2026 as compared to $1,993,042 for 2025 primarily due to a decrease in headcount that lowered employee costs by approximately $322,000.

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In June 2023, we (through our subsidiary Kalaeloa Desalco) executed a contract with the Honolulu Board of Water Supply (“BWS”) to construct and operate a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii, and since that time we have been engaged in the design and development phase for construction of the plant. We have achieved major project milestones under this phase of the project, including (i) successful pilot plant testing, (ii) receipt of confirmation from BWS that we are able to produce water that is a “reasonable match” to the quality of BWS’s current water supply and that we are able to produce water that causes “no detrimental impact” to the BWS water system or their customers’ assets, and (iii) completion of the plant design.

We are required to obtain federal, state, regional and local permits, licenses and other government approvals as a condition to commencing and completing construction and initiating operations. The permitting process for a project of this scale and complexity is inherently iterative and subject to review by multiple regulatory authorities, public comment procedures and, in certain instances, interagency coordination. During the year ended December 31, 2025, and continuing through the time of the filing of this Quarterly Report on Form 10-Q, we and BWS have experienced delays in obtaining certain required permits and related governmental approvals. These delays have resulted in a corresponding deferral of certain project milestones and a delay in the commencement of plant construction.

Pursuant to the terms of the contract, we are entitled to extensions of time for performance should delays arise from the failure to obtain required permits or other governmental approvals, provided that we have satisfied certain contractually specified conditions, including the exercise of all reasonable efforts to obtain such permits or other governmental approvals. We believe that we have complied in all material respects with the contractual prerequisites necessary to obtain relief in respect of such delays. BWS has granted change orders to Kalaeloa Desalco to reflect the impact of delays in the project schedule. However, Kalaeloa Desalco may require additional change orders from BWS for pending governmental approvals to further extend the completion date of the plant construction and until such formal change orders, amendments or written confirmations are executed, there can be no assurance as to the timing, scope or terms of any such extensions, or if such extensions will be granted at all.

The ultimate duration and economic burden of the permitting process remain subject to factors outside of our control, including the workload and resource constraints of applicable regulatory authorities, the timing and outcome of required public processes, the resolution of technical comments or requests for supplemental information and the potential for administrative or judicial challenges. To the extent that Kalaeloa Desalco does not receive the anticipated extensions of time, or if the extensions granted are insufficient to accommodate the full period of delay, Kalaeloa Desalco could be exposed to contractual remedies available to the BWS, which may include the assessment of liquidated damages, the withholding of milestone payments, or termination of the contract.

At the time of the filing of this Quarterly Report on Form 10-Q, Kalaeloa Desalco is continuing to advance the permitting process, respond to regulatory inquiries and coordinate with the BWS to mitigate project schedule impacts. Kalaeloa Desalco also is evaluating potential adjustments to sequencing and procurement activities designed to reduce the effect of the delays on the overall project economics. In July 2026, Kalaeloa Desalco received a Limited Notice to Proceed from BWS, authorizing the procurement of various long-lead equipment for the Kalaeloa seawater reverse osmosis desalination facility. The Limited Notice to Proceed releases approximately $6 million in project funds, enabling Kalaeloa Desalco to procure critical long-lead equipment.

Although we do not currently expect the permitting delays to result in a material adverse effect on our consolidated financial position, the deferral of construction activities has shifted anticipated revenue recognition and associated cash flows related to the Hawaii desalination plant project into future periods. We will continue to assess the impact of these developments on our estimates of total project costs, timing of performance obligations and variable consideration, and will update our disclosures as appropriate in future periodic or current reports.

Manufacturing Segment:

The manufacturing segment generated $478,497 and $1,511,937 in income from operations for 2026 and 2025.

Manufacturing revenue decreased to $2,689,782 for 2026, as compared to $5,230,035 for 2025. The decrease in manufacturing revenue for 2026 resulted from a decrease in the total dollar amount of purchase orders. We believe, based

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on current projections, that manufacturing revenue for the full 2026 fiscal year will be less than the manufacturing revenue generated for the 2025 fiscal year.

Manufacturing gross profit decreased to $997,569 (37% of manufacturing revenue) for 2026 as compared to $2,042,489 (39% of manufacturing revenue) for 2025 due to the decrease in revenue.

G&A expenses for the manufacturing segment remained relatively consistent at $519,072 for 2026 as compared to $530,552 for 2025.

Corporate Segment:

Corporate G&A expenses increased to $4,009,983 for 2026 as compared to $3,676,277 for 2025 due to slight increases in various expense categories.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Consolidated Results

Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2026 was $7,709,175 ($0.48 per share on a fully diluted basis), as compared to net income of $9,887,234 ($0.62 per share on a fully diluted basis) for 2025. Our net losses from discontinued operations for 2026 and 2025 were ($148,616) and ($215,637), respectively. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for a discussion of our discontinued operations.

The following discussion and analysis of our consolidated results of operations and results of operations by segment for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 relates only to our continuing operations.

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2026 was $7,857,791 ($0.49 per share on a fully diluted basis), as compared to net income from continuing operations of $10,102,871 ($0.63 per share on a fully diluted basis) for 2025.

Revenue for 2026 decreased to $62,844,062 from $67,306,464 in 2025 due to revenue decreases in the manufacturing segment and, to a lesser extent, the retail segment. Gross profit for 2026 was $21,879,402 (35% of total revenue) as compared to $25,138,272 (37% of total revenue) for 2025. 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 decreased to $14,662,090 for 2026 as compared to $15,304,197 for 2025 due to decreases in professional fees, amortization expense and the provision for credit losses.

Other income, net, decreased to $1,470,205 for 2026 as compared to $1,509,073 for 2025, primarily due to a decrease in interest earned on balances of interest-earning assets, offset by an increase in equity in earnings of affiliates.

Results by Segment

Retail Segment:

The retail segment generated $7,935,607 in income from operations for 2026 as compared to $8,823,934 for 2025.

Revenue generated by retail water operations decreased to $17,238,005 in 2026 from $18,049,368 in 2025 due to a 6.3% decrease in the volume of water sold. The decrease in the volume of water sold in 2026 as compared to 2025 is attributable to significantly greater rainfall on Grand Cayman in 2026, as 2025 rainfall was well below historical norms.

As a result of the decrease in revenue, retail segment gross profit decreased in total dollars and as a percentage of revenue to $9,789,878 (57% of retail revenue) for 2026 as compared to $10,567,547 (59% of retail revenue) for 2025.

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Retail G&A expenses remained consistent at $1,802,106 for 2026 as compared to $1,774,429 for 2025.

Bulk Segment:

The bulk segment contributed $5,476,229 and $4,622,705 to our income from operations for 2026 and 2025, respectively.

Bulk segment revenue was $18,678,829 and $16,686,532 for 2026 and 2025, respectively. The increase in revenue for 2026 results principally from an increase in the pass-through energy rate charged by CW-Bahamas which is attributable to an increase in energy costs from 2025 to 2026. To a lesser extent, bulk revenue increased for 2026 due to revenue earned by CW-Bahamas from its new plants on Cat Island, The Bahamas.

Gross profit for our bulk segment increased to $6,220,599 (33% of bulk revenue) for 2026 from $5,363,536 (32% of bulk revenue) for 2025. The improvement in bulk segment gross profit reflects insurance expense for CW-Bahamas that was approximately $226,000 lower in 2026 than in 2025.

Bulk segment G&A expenses also remained consistent at $744,370 for 2026 as compared to $740,831 for 2025.

OC-Cayman’s agreements with the WAC to operate and maintain the North Sound and North Side Water Works plants were originally scheduled to expire on July 1, 2026. The agreements have been extended through March 31, 2027. Revenue recognized under the North Sound and North Side Water Works agreements for the six months ended June 30, 2026 was $609,601 and $801,023, respectively.

Services Segment:

The services segment generated $1,482,177 and $1,248,966 in income from operations for 2026 and 2025.

Services segment revenue increased to $22,836,917 for 2026 from $21,526,470 for 2025. Construction revenue increased to $7,439,180 for 2026 as compared to $5,044,167 for 2025 due to incremental revenue generated by a project in Colorado and a project in California. Revenue generated under O&M contracts decreased to $14,932,460 in 2026 as compared to $15,980,704 in 2025 due to the expiration of contracts with two significant customers of PERC. Design and consulting revenue decreased to $465,277 for 2026 from $501,599 for 2025.

Gross profit for the services segment decreased to $4,723,215 (21% of services revenue) in 2026 from $5,407,710 (25% of services revenue) in 2025 due to the decrease in O&M revenue.

G&A expenses for the services segment decreased to $3,260,317 for 2026 as compared to $4,188,380 for 2025 primarily due to a decreases in (i) the provision for credit losses; (ii) professional fees; and (iii) the completion of the amortization of certain intangible assets associated with the acquisition of REC.

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Manufacturing Segment:

The manufacturing segment generated $140,730 and $2,604,849 in income from operations for 2026 and 2025.

Manufacturing revenue decreased to $4,090,311 for 2026, as compared to $11,044,094 for 2025. The decrease in manufacturing revenue for 2026 resulted from a decrease in the total dollar amount of new purchase orders. We believe, based on current projections, that manufacturing revenue for the full 2026 fiscal year will be less than the manufacturing revenue generated for the 2025 fiscal year.

Manufacturing gross profit decreased to $1,145,710 (28% of manufacturing revenue) for 2026 as compared to $3,799,479 (34% of manufacturing revenue) for 2025 due to the decrease in revenue.

G&A expenses for the manufacturing segment decreased to $1,004,980 for 2026 as compared to $1,194,630 for 2025 due primarily to a decrease in the provision for credit losses.

Corporate Segment:

Corporate G&A expenses increased to $7,850,317 for 2026 as compared to $7,405,927 for 2025 due to an increase in directors’ fees and expenses and smaller increases in various other expenses.

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FINANCIAL CONDITION

The significant changes in the components of our condensed consolidated balance sheet as of June 30, 2026 as compared to December 31, 2025 (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 $4.1 million primarily due to the $1.9 million decrease in CW-Bahamas’ accounts receivable and a $1.7 million decrease in PERC accounts receivable.

Property, plant and equipment, net, increased by approximately $4.3 million primarily due to a transfer from construction in progress upon the completion of the CW-Bahamas’ Cat Island plants.

Construction in progress decreased by approximately $2.6 million, primarily due to a $5.3 million transfer of the Cat Island plants to property, plant and equipment, offset by a $2.3 million increase for work underway on a Cayman Islands 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 to our parent company in the Cayman Islands, we will be required to pay a withholding tax of 30% on the amount of any such funds transferred.

Liquidity Position

Our projected liquidity requirements for the balance of 2026 include capital expenditures for our existing operations of approximately $4.8 million. We paid approximately $2.3 million for dividends in July 2026. Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board.

As of June 30, 2026, we had cash and cash equivalents of $132.6 million and working capital of $144.6 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

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 government of The Bahamas. All previous delinquent accounts receivable from the WSC, including accrued interest thereon, were eventually paid in full. Based upon this payment history, we have not provided for a material allowance for credit losses for CW-Bahamas’ accounts receivable from the WSC as of June 30, 2026, or prior periods.

We continue to be in frequent contact with officials of The Bahamas government, who continue to express their intention to significantly reduce CW-Bahamas’ delinquent accounts receivable balances. However, we are unable to determine when or if such reduction will occur.

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and its foreign currency ceiling to Baa3 from Ba1. 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 significantly increase our 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 Six Months Ended June 30, 2026

Our cash and cash equivalents increased to $132,629,006 as of June 30, 2026 from $123,788,390 as of December 31, 2025.

Cash Flows from Operating Activities

Net cash provided by our operating activities was $18,571,275. This net cash reflects the net income generated for the six months ended June 30, 2026 of $8,035,569 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. Significant adjustments included depreciation and amortization of $3,532,983, a decrease in accounts receivable of $4,173,373, a decrease in prepaid expenses and other assets of $890,957, and an increase in accounts payable, accrued expenses and other current liabilities of $1,409,231.

Cash Flows from Investing Activities

Net cash used in our investing activities was $5,133,145 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 $4,565,343, almost all of which related to the payment of dividends.

Material Commitments, Expenditures and Contingencies

CW-Bahamas Supply Guarantees

Our contracts to supply water to the WSC from our Blue Hills, Windsor and Cat Island 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 contracts. 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. The Cat Island contract expires in 2041 and requires the two plants located in Bennett’s Harbour and New Bight to deliver 504,000 gallons of water each week per plant.

Adoption of New Accounting Standards

None.

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 on our financial statements.

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Dividends

●	On January 30, 2026, we paid a dividend of $0.14 to shareholders of record on January 2, 2026.

●	On April 30, 2026, we paid a dividend of $0.14 to shareholders of record on April 1, 2026.

●	On June 2, 2026, our Board declared a dividend of $0.14 payable on July 31, 2026 to shareholders of record on July 1, 2026.

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 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. We had not increased the water rates for Cayman Water since January 2018 (despite the inflation that has occurred since that date) due to the pendency of our negotiations with OfReg for a new retail license. Under the License issued by OfReg in June 2026 and effective as of the License Date of August 1, 2026, Cayman Water’s base rates are subject to annual adjustment beginning each July 1 following the License Date in accordance with the rate cap adjustment mechanism described in the License, subject to OfReg verification and approval requirements. Denial by OfReg of any requested rate adjustment, or approval of an adjustment that is less than the increase in our costs, 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 many of these contracts is capped at 3% annually.

Kalaeloa Desalco has signed a contract with the Honolulu Board of Water Supply pursuant to which it presently expects to construct and operate a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Approximately 80% of the approximate $148 million price for the construction of this plant is subject to adjustment based upon changes in inflation indices from September 29, 2022 (the date that was 120 days after the original proposal was submitted) until the date that the notice to proceed with construction is issued by the client.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk from December 31, 2025 to the end of the period covered by this report.

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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.

Changes in Internal Control Over Financial Reporting

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, 2025 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, 2025 and our other filings with the Securities and Exchange Commission.

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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 $18.8 million as of June 30, 2026. Approximately 64% of this June 30, 2026 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.

In a report dated April 30, 2026, Moody’s Investor Services (“Moody’s”) upgraded The Bahamas’ long-term issuer and senior unsecured ratings to Ba3 from B1. Moody’s also raised The Bahamas’ local currency ceiling to Baa2 from Baa3 and its foreign currency ceiling to Baa3 from Ba1. Based upon 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 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 significantly increase our 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, 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.

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

In June 2026, we issued 9,071 shares of preferred stock to 130 employees for services rendered. The issuance of preferred stock to 62 of these employees was exempt from registration under Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”), because the shares were issued outside the United States to non-U.S. persons (as defined in Regulation S). The issuance of preferred stock to the remaining 68 employees, who are U.S. persons, was exempt under Section 4(a)(2) of the Securities Act. These U.S. persons are knowledgeable, sophisticated, and experienced

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in making investment decisions of this kind and received adequate information about us or had adequate access to such information, including through their business relationship with us.

In June 2026, we also issued 82 shares of preferred stock to two employees pursuant to the exercise of stock options for cash at a price of $25.13 per share. The two employees are U.S. persons, and the issuance of such shares was exempt under Section 4(a)(2) of the Securities Act. These U.S. persons are knowledgeable, sophisticated and experienced in making investment decisions of this kind and received adequate information about us or had adequate access to such information, including through their business relationship with us.

ITEM 5. OTHER INFORMATION

During the quarter ended June 30, 2026, 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
10.1		Water Production and Distribution Licence issued by the Utility Regulation and Competition Office to Cayman Water Company Limited (incorporated by reference to Exhibit 10.1 filed as part of our Form 8-K filed June 24, 2026, Commission File No. 0-25248).
10.24		2027 Employee Stock Incentive Plan
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: August 10, 2026