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What changed in Consolidated Water Co. Ltd.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Consolidated Water Co. Ltd.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+236 added−232 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-27)

Top changes in Consolidated Water Co. Ltd.'s 2024 10-K

236 paragraphs added · 232 removed · 190 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

67 edited+5 added−5 removed58 unchanged
Biggest changeThe provision for credit losses has historically represented less than 1% of our total annual retail sales. In addition to their past due invoice balance, customers that have had their service disconnected must pay re-connection charges. ​ Historically, demand on our water production and pipeline distribution has varied throughout the year.
Biggest changeIn addition to their past due invoice balance, customers that have had their service disconnected must pay re-connection charges. ​ Demand on our water production and pipeline distribution varies throughout the year. Demand depends upon various factors, most notably rainfall amounts and the number of tourists visiting Grand Cayman during any particular time of the year.
NSC was formed to pursue a project encompassing the design, construction, ownership and operation of a 100 million gallon per day seawater reverse osmosis desalination plant which was to be located in northern Baja California, Mexico and accompanying pipeline to deliver water to the Mexican potable water system (the “Project”). ​ In August 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the Comisión Estatal del Agua de Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”). ​ In June 2020, the Director General of CEA and the Director General of CESPT terminated the APP Contract.
NSC and AdR were formed to pursue a project encompassing the design, construction, ownership and operation of a 100 million gallon per day seawater reverse osmosis desalination plant which was to be located in northern Baja California, Mexico and accompanying pipeline to deliver water to the Mexican potable water system (the “Project”). ​ In August 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the Comisión Estatal del Agua de Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”). ​ In June 2020, the Director General of CEA and the Director General of CESPT terminated the APP Contract.
Aerex has manufactured key components for some of our desalination plants and we expect Aerex to continue to do so from time to time, however, our other businesses are not dependent on Aerex. ​ Our access to seawater for processing into potable water is granted through our licenses and contracts with governments of the various jurisdictions in which we operate. ​ Seasonal Variations in Our Business ​ Demand for our water in the Cayman Islands, The Bahamas and the British Virgin Islands is affected by variations in the level of tourism and rainfall.
Aerex has manufactured key components for our desalination plants and we expect Aerex to continue to do so from time to time, however, our other businesses are not dependent on Aerex. ​ Our access to seawater for processing into potable water is granted through our licenses and contracts with governments of the various jurisdictions in which we operate. ​ Seasonal Variations in Our Business ​ Demand for our water in the Cayman Islands, The Bahamas and the British Virgin Islands is affected by variations in the level of tourism and rainfall.
The WAC in turn distributes that water to properties in Grand Cayman outside of our retail license area. ​ The water we provide to the WAC is produced at three seawater reverse osmosis desalination plants in Grand Cayman owned by the WAC but designed and built by DesalCo and operated by OC-Cayman: the North Sound, Red Gate and North Side Water Works (“NSWW”) plants, which have production capacities of approximately 1.6 million, 1.3 million and 2.4 million gallons of water per day, respectively.
The WAC in turn distributes that water to properties in Grand Cayman outside of our retail license area. ​ The water we provide to the WAC is produced at three seawater reverse osmosis desalination plants in Grand Cayman owned by the WAC but designed and built by DesalCo and operated by OC-Cayman: the North Sound, Red Gate and North Side Water Works (“NSWW”) plants, which have production capacities of approximately 1.6 million, 2.6 million and 2.4 million gallons of water per day, respectively.
Information contained on our website is not incorporated by reference into this Annual Report, and you should not consider information contained on our website as part of this Annual Report. ​ We have adopted a written code of conduct and ethics that applies to all of our employees and Directors, including, but not limited to, our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions.
Information contained on our website is not incorporated by reference into this Annual Report, and you should not consider information contained on our website as part of this Annual Report. ​ We have adopted a written code of conduct and ethics that applies to all of our employees and Directors, including, but not limited to, our Chief Executive Officer, Chief Financial Officer, and principal accounting officer or controller, or persons performing similar functions.
Cayman Water operates under an exclusive retail license granted by the Cayman Islands government to provide water to customers within a prescribed service area on Grand Cayman that includes the Seven Mile Beach and West Bay areas, two of the three most populated areas in the Cayman Islands. Cayman Water owns and operates four seawater reverse osmosis desalination plants.
Cayman Water operates under an exclusive retail license granted by the Cayman Islands government to provide water to customers within a prescribed service area on Grand Cayman that includes the Seven Mile Beach and West Bay areas, two of the three most populated areas in the Cayman Islands. Cayman Water owns and operates three seawater reverse osmosis desalination plants.
The following summary of regulatory developments and legislation does not purport to describe all present and proposed regulation and legislation that may affect our businesses. Legislative or regulatory requirements currently applicable to our businesses may change in the future. Any such changes could impose new obligations on us that may adversely affect our businesses and operating results.
The following summary of regulatory developments and legislation does not purport to describe all present and proposed regulation and legislation that may affect our businesses. Legislative or regulatory requirements currently applicable to our businesses may change in the future. Any such changes could impose new obligations on us that may adversely affect our business and operating results.
In the British Virgin Islands, SUEZ/Veolia operates seawater reverse osmosis desalination plants in West End, Tortola, and on Virgin Gorda and generally bids against OC-BVI for projects. Seven Seas Water owns and operates a 2.75 million gallon per day desalination plant in Parakeeta Bay, Tortola for the British Virgin Islands government.
In the British Virgin Islands, Veolia operates seawater reverse osmosis desalination plants in West End, Tortola, and on Virgin Gorda and generally bids against OC-BVI for projects. Seven Seas Water owns and operates a 2.75 million gallon per day desalination plant in Parakeeta Bay, Tortola for the British Virgin Islands government.
We own the land for our ACWW and West Bay plants. The current aggregate production capacity of the two plants located at ACWW is 3.0 million gallons of water per day. The production capacity of the West Bay plant is 1,000,000 gallons of water per day. ​ Electricity to our plants is supplied by Caribbean Utilities Co.
We own the land for our ACWW and West Bay plants. The current aggregate production capacity of the two plants located at ACWW is 3.0 million gallons of water per day. The production capacity of the West Bay plant is 1.0 million gallons of water per day. ​ Electricity is supplied to our plants by Caribbean Utilities Co.
In the event of a tied vote of the Directors, the President of the Caribbean Water and Wastewater Association, a regional trade association comprised primarily of government representatives, is entitled to appoint a junior director to cast a deciding vote. ​ Through DesalCo, we provide certain engineering and administrative services to OC-BVI for a monthly fee and a bonus arrangement which provides for payment of 4% of the net operating income of OC-BVI. ​ We account for our investment in OC-BVI using the equity method of accounting. ​ OC-BVI sells bulk water to BVIW&S, which distributes the water through its own pipeline system to residential, commercial and tourist properties on the islands of Tortola and Jost Van Dyke in the British Virgin Islands. ​ OC-BVI owns and operates a desalination plant located at Bar Bay, Tortola with a capacity of 720,000 gallons per day.
In the event of a tied vote of the Directors, the President of the Caribbean Water and Wastewater Association, a regional trade association comprised primarily of government representatives, is entitled to appoint a junior director to cast a deciding vote. ​ Through DesalCo, we provide certain engineering and administrative services to OC-BVI for a monthly fee and a bonus arrangement which provides for payment of 4% of the net operating income of OC-BVI. ​ We account for our investment in OC-BVI using the equity method of accounting. ​ OC-BVI sells bulk water to BVIW&S, which distributes the water through its own pipeline system to residential, commercial and tourist properties on the islands of Tortola and Jost Van Dyke in the British Virgin Islands. 10 Table of Contents ​ OC-BVI owns and operates a desalination plant located at Bar Bay, Tortola with a capacity of 720,000 gallons per day.
We have competed with such companies as SUEZ/Veolia, IDE Technologies and small local contractors for bulk water supply contracts with the WAC and expect to compete with these and other companies for any new water supply contracts awarded by the WAC. ​ The Bahamas .
We have competed with such companies as Veolia, IDE Technologies and small local contractors for bulk water supply contracts with the WAC and expect to compete with these and other companies for any new water supply contracts awarded by the WAC. ​ The Bahamas .
We believe this integration leads to cost savings, faster project completion times, reduction of raw material usage, and smoother operational processes. ​ Overall, our strategies and technologies reflect a holistic approach to wastewater treatment, emphasizing efficiency, environmental sensitivity, and the production of high-quality treated water for various reuse applications. 11 Table of Contents ​ Raw Materials and Sources of Supply ​ All materials, parts and supplies essential to our business operations are obtained from multiple sources and we use the latest industry technology.
We believe this integration leads to cost savings, faster project completion times, reduction of raw material usage, and smoother operational processes. ​ Overall, our strategies and technologies reflect a holistic approach to wastewater treatment, emphasizing efficiency, environmental sensitivity, and the production of high-quality treated water for various reuse applications. ​ Raw Materials and Sources of Supply ​ All materials, parts and supplies essential to our business operations are obtained from multiple sources and we use the latest industry technology.
For additional information about our business segments and geographical information about our operating revenue and long-lived assets, see Note 14 to our consolidated financial statements at ITEM 8 of this Annual Report. ​ Retail Water Operations ​ For fiscal years 2023 and 2022, our retail water operations accounted for approximately 17%, and 27%, respectively, of our consolidated revenue.
For additional information about our business segments and geographical information about our operating revenue and long-lived assets, see Note 14 to our consolidated financial statements at ITEM 8 of this Annual Report. ​ Retail Water Operations ​ For fiscal years 2024, 2023, and 2022, our retail water operations accounted for approximately 24%, 17%, and 27%, respectively, of our consolidated revenue.
Pursuant to the 1990 license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman: Seven Mile Beach and West Bay. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement.
Pursuant to the 1990 license, Cayman Water has the exclusive right to produce potable water and distribute 7 Table of Contents it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman: Seven Mile Beach and West Bay. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement.
In August 2020, we purchased an additional 10% ownership interest of PERC, increasing our ownership of this subsidiary to 61%. In January 2023, we acquired the remaining 39% ownership interest in PERC. PERC designs, constructs, sells, operates and manages water, wastewater and water reuse infrastructure. ​ Ramey Environmental Compliance, Inc. (“REC”).
In August 2020, we purchased an additional 10% ownership interest of PERC, increasing our ownership of this subsidiary to 61%. In January 2023, we acquired the remaining 39% ownership interest in PERC. PERC designs, constructs, sells, operates and manages water, wastewater and water reuse infrastructure in the United States. ​ Ramey Environmental Compliance, Inc. (“REC”).
REC operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado. ​ Manufacturing Operations ​ For fiscal years 2023 and 2022, our manufacturing operations accounted for approximately 10% and 7%, respectively, of our consolidated revenue.
REC operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado. ​ Manufacturing Operations ​ For fiscal years 2024, 2023, and 2022, our manufacturing operations accounted for approximately 13%, 10% and 7%, respectively, of our consolidated revenue.
Our agreement with the WAC for the Red Gate plant expires in 2034. ​ Bulk Water Operations in The Bahamas ​ We sell bulk water in The Bahamas through our majority-owned subsidiary, CW-Bahamas, to the WSC, which distributes the water through its own pipeline system to residential, commercial and tourist properties on the Island of New Providence. ​ We supply bulk water in The Bahamas from our Windsor and Blue Hills plants. ​ Our water supply agreement with the WSC for our Windsor plant, which has a capacity of 2.8 million gallons per day, expires in August 2033 and requires us to deliver and requires the WSC to purchase a minimum of 16.8 million gallons per week. ​ We supply water from the Blue Hills plant, our largest seawater reverse osmosis desalination facility with a capacity of 12.0 million gallons per day, under the terms of a water supply agreement with the WSC that expires in March 2032 that requires us to deliver and requires the WSC to purchase a minimum of 63.0 million gallons of water each week. ​ The high-pressure pumps at our Windsor and Blue Hills plants in The Bahamas are diesel engine-driven.
Our agreement with the WAC for the Red Gate plant expires in 2034. ​ Bulk Water Operations in The Bahamas ​ We sell bulk water in The Bahamas through our majority-owned subsidiary, CW-Bahamas, to the WSC, which distributes the water through its own pipeline system to residential, commercial and tourist properties on the Island of New Providence. ​ We supply bulk water in The Bahamas from our Windsor and Blue Hills plants. ​ Our water supply agreement with the WSC for our Windsor plant, which has a capacity of 2.8 million gallons per day, expires in August 2033 and requires us to deliver and requires the WSC to purchase a minimum of 16.8 million gallons per week. ​ We supply water from the Blue Hills plant, our largest seawater reverse osmosis desalination facility with a capacity of 12.0 million gallons per day, under the terms of a water supply agreement with the WSC that expires in March 2032 that requires us to deliver and requires the WSC to purchase a minimum of 63.0 million gallons of water each week. ​ The high-pressure pumps at our Windsor and Blue Hills plants in The Bahamas are powered by diesel engines.
Presently, we do not have any outstanding issues with any regulatory authority. ​ Human Capital ​ We are committed to a work environment that is welcoming, inclusive and encouraging. To achieve our plans and goals, it is imperative that we attract and retain top talent.
Presently, we do not have any outstanding issues with any regulatory authority. ​ Human Capital ​ We are committed to a work environment that is safe, welcoming and encouraging. To achieve our plans and goals, it is imperative that we attract and retain top talent.
Demand in The Bahamas was not affected to the same degree by the drop in tourism resulting from the COVID-19 pandemic. ​ The business conducted by Aerex and PERC is generally not subject to seasonal variations. ​ Government Regulations, Custom Duties and Taxes ​ Our operations and activities are subject to the governmental regulations and taxes of the countries in which we operate.
Demand for our water in The Bahamas was not affected to the same degree by the drop in tourism resulting from the COVID-19 pandemic. ​ The business conducted by Aerex, REC, and PERC is generally not subject to seasonal variations. ​ Government Regulations, Custom Duties and Taxes ​ Our operations and activities are subject to the governmental regulations and taxes of the countries in which we operate.
Aerex, a U.S. company located in Fort Pierce, Florida, is an original equipment manufacturer of a wide range of specialized and custom products and systems applicable to desalination, municipal water treatment and industrial water and wastewater treatment. Aerex’s products include reverse osmosis desalination 6 Table of Contents equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.
Aerex, a U.S. company located in Fort Pierce, Florida, is an original equipment manufacturer of a wide range of specialized and custom products and systems applicable to desalination, municipal water treatment and industrial water and wastewater treatment. Aerex’s products include reverse osmosis desalination equipment, membrane separation equipment, filtration equipment, piping systems, vessels and custom fabricated components.
We have been advised by the Government of the Cayman Islands that we will not receive any duty concessions in any new retail water license signed with the government. ​ The Bahamas ​ Under the current laws of the Commonwealth of The Bahamas, no income, corporation, capital gains or similar taxes are payable by us.
We have been advised by the 12 Table of Contents Government of the Cayman Islands that we will not receive any duty concessions in any new retail water license signed with the government. ​ The Bahamas ​ Under the current laws of the Commonwealth of The Bahamas, no income, corporation, capital gains or similar taxes are payable by us.
We maintain a standby generator with sufficient capacity to operate essential equipment at our Windsor and Blue Hills plants and are able to produce 100% of the production capacity with these plants during temporary interruptions in the electricity supply from BPL. ​ Services Operations ​ For fiscal years 2023 and 2022, our services operations accounted for approximately 54% and 31%, respectively, of our consolidated revenue. ​ We provide design, engineering and construction services for desalination infrastructure projects through DesalCo, an original equipment manufacturer of seawater reverse osmosis desalination plants.
We maintain a standby generator with sufficient capacity to operate essential equipment at our Windsor and Blue Hills plants and are able to produce 100% of the production capacity with these plants during temporary interruptions in the electricity supply from BPL. ​ 9 Table of Contents Services Operations ​ For fiscal years 2024, 2023, and 2022, our services operations accounted for approximately 38%, 54% and 31%, respectively, of our consolidated revenue. ​ We provide design, engineering and construction services for desalination infrastructure projects through DesalCo, an original equipment manufacturer of seawater reverse osmosis desalination plants.
This water supply agreement expires March 2031. ​ OC-BVI purchases electrical power to operate this plant from the BVI Electricity Corporation and operates diesel engine-driven emergency power generators which can produce 100% of the plant’s production capacity when the BVI Electricity Corporation is unable to provide power to the plant. ​ 10 Table of Contents OC-BVI’s plant on the island of Jost Van Dyke has a capacity of 60,000 gallons per day.
This water supply agreement expires in March 2031. ​ OC-BVI purchases electrical power to operate this plant from the BVI Electricity Corporation and operates diesel engine-driven emergency power generators which can produce 100% of the plant’s production capacity when the BVI Electricity Corporation is unable to provide power to the plant. ​ OC-BVI’s plant on the island of Jost Van Dyke has a capacity of 60,000 gallons per day.
Presently, we: ​ ● produce and sell potable water through the design, construction and operation of water infrastructure that employs reverse osmosis technology to produce potable water from seawater; ● design, construct, sell, operate and manage water production, water treatment and water reuse system infrastructure that meets regulatory, environmental and commercial needs and requirements; ● fabricate/manufacture specialized and custom equipment and products employed in the production and treatment of water for municipal, commercial and industrial purposes; and ● provide water-related management and consulting services. ​ We expect to continue to expand and diversify our products, services and markets to meet the ever-expanding global demand for water. ​ Key elements of our strategy include: ​ Market expansion.
Presently, we: ​ ● produce and sell potable water through the design, construction and operation of water infrastructure that employs reverse osmosis technology to produce potable water from seawater; ● design, construct, sell, operate and manage water production, water treatment and water reuse infrastructure tailored to meet the regulatory, environmental and commercial requirements of our clients; ● fabricate/manufacture specialized and custom equipment and products employed in the production and treatment of water for municipal, commercial and industrial purposes; and ● provide water-related management and consulting services. ​ We expect to continue to expand and diversify our products, services and markets to meet the ever-expanding global demand for clean water. ​ Key elements of our strategy include: ​ Market expansion.
We have 20 management employees and 52 administrative and clerical employees. The remaining employees are engaged in engineering, purchasing, plant maintenance and operations, pipe laying and repair, leak detection, new customer connections, meter reading and laboratory analysis of water quality. We have no collective bargaining agreements with our employees, and none are represented by labor unions.
We have 23 management employees and 60 administrative and clerical employees. The remaining employees are engaged in engineering, purchasing, plant maintenance and operations, pipe laying and repair, leak detection, new customer connections, meter reading and laboratory analysis of water quality. We have no collective bargaining agreements with our employees, and none are represented by labor unions.
Additionally, MBR's capability to handle more challenging influent makes it a versatile solution for a variety of wastewater treatment needs. ​ We employ various methods to improve the aesthetic and environmental integration of our clients’ facilities.
Additionally, MBR's capability to handle more challenging influent makes it a versatile solution for a variety of wastewater treatment needs. ​ 11 Table of Contents We employ various methods to improve the aesthetic and environmental integration of our clients’ facilities.
Our corporate organizational structure as of December 31, 2023 is as follows: ​ ​ 5 Table of Contents ​ Retail Segment ​ Cayman Water Company Limited (“Cayman Water”) .
Our corporate organizational structure as of December 31, 2024 is as follows: ​ ​ 5 Table of Contents Retail Segment ​ Cayman Water Company Limited (“Cayman Water”) .
The plants we operate for the WAC are located on land owned by the WAC. ​ Our agreement with the WAC for the North Sound and NSWW plants expire in 2026.
The plants we operate for the WAC are located on land owned by the WAC. ​ Our agreement with the WAC for the North Sound and NSWW plants expires in 2026.
OC-BVI is licensed by the British Virgin Islands government to discharge concentrated seawater into the sea. ​ At several of our locations, hydrogen sulfide gas is present in the seawater and we are contractually obligated to operate our plants in a manner designed to prevent the emission of airborne gas into the environment. ​ United States.
OC-BVI is licensed by the British Virgin Islands government to discharge concentrated seawater into the sea. ​ At several of our locations, hydrogen sulfide gas is present in the seawater and we are contractually obligated to operate our plants in a manner designed to remove hydrogen sulfide gas from our product water and to prevent the emission of airborne hydrogen sulfide gas into the environment. ​ United States.
In June 2023, Kalaeloa Desalco signed a definitive agreement with the Honolulu Board of Water Supply to design, build, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Manufacturing Segment ​ Aerex Industries, Inc. (“Aerex”) .
In June 2023, Kalaeloa Desalco signed a definitive agreement with the Honolulu Board of Water Supply to design, build, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Development of this plant is currently underway. Manufacturing Segment ​ Aerex Industries, Inc. (“Aerex”) .
We manufacture and service a wide range of specialized and custom water-related products and systems applicable to commercial, municipal and industrial water production, supply and treatment. In 2023, our manufacturing operations generated approximately 10% of our consolidated revenue. ​ ● Affiliate Operations.
We manufacture and service a wide range of specialized and custom water-related products and systems applicable to commercial, municipal and industrial water production, supply and treatment. In 2024, our manufacturing operations generated approximately 13% of our consolidated revenue. ​ ● Affiliate Operations.
In August 2022, the Cayman Islands government lifted the COVID-19 pandemic related travel restrictions that had eliminated tourist travel to the Cayman Islands since March 2020. 8 Table of Contents ​ Bulk Water Operations ​ For fiscal years 2023 and 2022, our bulk water operations accounted for approximately 19%, and 35%, respectively, of our consolidated revenue.
In August 2022, the Cayman Islands government lifted the COVID-19 pandemic related travel restrictions that had eliminated tourist travel to the Cayman Islands since March 2020. ​ Bulk Water Operations ​ For fiscal years 2024, 2023, and 2022, our bulk water operations accounted for approximately 25%, 19%, and 35%, respectively, of our consolidated revenue.
DesalCo also provides management and procurement services for desalination plants and engineering services relating to municipal water production, distribution and treatment. DesalCo also conducts research and development. DesalCo sometimes tests new components and technology offered by suppliers in our business and, at times, collaborates with suppliers in the development of their 9 Table of Contents products.
DesalCo also provides management and procurement services for desalination plants and engineering services relating to municipal water production, distribution and treatment. DesalCo sometimes tests new components and technology offered by suppliers in our business and, at times, collaborates with suppliers in the development of their products.
We design, construct and sell water production and water treatment plants, and we manage and operate water production plants, and water treatment and reuse infrastructure for third parties. We also provide water related consulting services. In 2023, our services operations generated approximately 54% of our consolidated revenue. ​ ● Manufacturing Operations.
We design, construct and sell water production and water treatment plants, and we manage and operate water production plants, and water treatment and reuse infrastructure, for third parties. We also provide water related consulting services. In 2024, our services operations generated approximately 38% of our consolidated revenue. ​ ● Manufacturing Operations.
Aerex competes in the highly fragmented industry for manufactured water production and treatment equipment and systems against a large number of manufacturers, fabricators and service providers, many of which have greater resources than Aerex. ​ PERC and REC compete in the highly fragmented industry for water treatment and water reuse infrastructure development and management against a large number of companies, many of which have greater resources than PERC and REC. ​ Environmental and Health Regulatory Matters ​ Cayman Islands.
Aerex competes in the highly fragmented industry for manufactured water production and treatment equipment and systems against a large number of manufacturers, fabricators and service providers, many of which have greater resources than Aerex. ​ PERC and REC compete in the highly fragmented industry for water treatment and water reuse infrastructure development and management against a large number of companies, many of which have greater resources than PERC and REC such as Veolia, Inframark, and Jacobs Solutions. ​ Environmental and Health Regulatory Matters ​ Cayman Islands.
We have competed with companies such as SUEZ/Veolia, IDE Technologies, and TSG for the contracts with The Bahamas government to build and operate seawater desalination plants in the past. We expect to compete with these companies and others for any future water supply contracts in The Bahamas. 13 Table of Contents ​ British Virgin Islands .
We have competed with companies such as Veolia, IDE Technologies, and TSG for the contracts with The Bahamas government to build and operate seawater desalination plants in the past. We expect to compete with these companies and others for any future water supply contracts in The Bahamas. ​ British Virgin Islands .
In order to do so, we aim to have a safe and encouraging workplace, with opportunities for our employees to grow and develop professionally, supported by strong compensation, benefits, and other incentives.
In order to do so, we aim to provide a workplace with opportunities for our employees to grow and develop professionally, supported by strong compensation, benefits, and other incentives.
We continue to pay the royalty of 7.5% of revenue we collect required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
We continued to pay the royalty of 7.5% of the revenue we collected as required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
We expect that OC-BVI will be required to compete against SUEZ/Veolia, Seven Seas Water, TSG and other parties for any future business opportunities that may arise in the British Virgin Islands. ​ United States .
We expect that OC-BVI will likely compete against Veolia, Seven Seas Water, TSG and other parties for any future business opportunities that may arise in the British Virgin Islands. ​ United States .
We own 50% of the voting rights and 43.53% of the equity rights of Ocean Conversion (BVI) Ltd., which produces and supplies bulk water to the British Virgin Islands Water and Sewerage Department. ​ As of December 31, 2023, the number of water production and water treatment plants we and our affiliate operated in each country, and the production capacities of these plants, were as follows: ​ ​ ​ ​ ​ ​ Water Production Plant Location Plants Capacity (1) Cayman Islands 6 ​ 9.3 Bahamas 2 ​ 14.8 British Virgin Islands 2 ​ 0.8 Total 10 24.9 (1) In millions of gallons per day. ​ ​ ​ ​ ​ ​ Water Treatment Plant Location Plants Capacity (1) United States 31 ​ 59.7 ​ ​ ​ ​ ​ (1) In estimated millions of gallons per day. ​ As of December 31, 2023, Ramey Environmental Compliance, Inc. performed operations, maintenance, and monitoring services for 72 wastewater and water treatment plants located in the Rocky Mountain and Eastern Plains Regions of Colorado. ​ 4 Table of Contents Strategy ​ We are a comprehensive water solutions company that serves a variety of customers through multiple product and service offerings.
We own 50% of the voting rights and 43.53% of the equity rights of Ocean Conversion (BVI) Ltd., which produces and supplies bulk water to the British Virgin Islands Water and Sewerage Department. ​ As of December 31, 2024, the number of water production and water treatment plants we and our affiliate operated in each country, and the production capacities of these plants, were as follows: ​ ​ ​ ​ ​ ​ Water Production Plant Location Plants Capacity (1) Cayman Islands 6 ​ 10.6 Bahamas 2 ​ 14.8 British Virgin Islands 2 ​ 0.8 Total 10 26.2 (1) In millions of gallons per day. ​ ​ ​ ​ ​ ​ Water Treatment Plant Location Plants Capacity (1) United States 29 ​ 58.0 ​ ​ ​ ​ ​ (1) In estimated millions of gallons per day. ​ In addition to the above plants, as of December 31, 2024, our wholly owned subsidiary, Ramey Environmental Compliance, Inc., performed operations, maintenance, and monitoring services for 64 wastewater and water treatment plants located in the Rocky Mountain and Eastern Plains Regions of Colorado. ​ 4 Table of Contents Strategy ​ We are a comprehensive water solutions company that serves a variety of customers through multiple product and service offerings.
We operate all but one of the reverse osmosis desalination plants owned by the WAC on Grand Cayman and supply water under two agreements held by OC-Cayman with the WAC. ​ According to the most recent information published by the Economics and Statistics Office of the Cayman Islands Government, the population of the Cayman Islands was estimated in 2022 to be 81,546 after the 2021 census count.
We operate all but one of the reverse osmosis desalination plants owned by the WAC on Grand Cayman and supply water under three agreements held by OC-Cayman with the WAC. ​ According to the most recent information published by the Economics and Statistics Office of the Cayman Islands Government, the population of the Cayman Islands was estimated in 2023 to be 84,738 after the 2021 census count.
In 2023, our retail water operations generated approximately 17% of our consolidated revenue. ​ ● Bulk Water Operations. We produce potable water from seawater utilizing reverse osmosis technology and supply this water to government-owned distributors in the Cayman Islands and The Bahamas. In 2023, our bulk water operations generated approximately 19% of our consolidated revenue. ​ ● Services Operations .
In 2024, our retail water operations generated approximately 24% of our consolidated revenue. ​ ● Bulk Water Operations. We produce potable water from seawater utilizing reverse osmosis technology and supply this water to government-owned distributors in the Cayman Islands and The Bahamas. In 2024, our bulk water operations generated approximately 25% of our consolidated revenue. ​ ● Services Operations .
When a development is completed, the developer then transfers operation and maintenance of the pipeline to us. ​ We bill our customers 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.
When a development is completed, the developer then transfers operation and maintenance of the pipeline to us. ​ We bill our customers on a monthly basis based on metered consumption and bills are typically collected within 30 to 45 days after the billing date.
The 7 Table of Contents most recent express extension of the license expired on January 31, 2018.
The most recent express extension of the license expired on January 31, 2018.
We continue to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
From that date until February 18, 2025, we continued to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
As a result of our decades of experience in seawater desalination, we believe our expertise and experience with respect to the development and operation of desalination plants and similar facilities is easily transferable to locations outside of our current operating areas. ​ Wastewater Treatment Technology ​ Our approach to wastewater treatment integrates advanced technologies and processes to ensure high-quality water reuse while addressing environmental and operational concerns.
As a result of our decades of experience in seawater desalination, we believe our expertise and experience with respect to the development and operation of desalination plants and similar facilities is easily transferable to locations outside of our historical operating areas as demonstrated by the recent award to us of a reverse osmosis desalination project in Honolulu, Hawaii, USA. ​ Wastewater Treatment Technology ​ Our approach to wastewater treatment integrates advanced technologies and processes to ensure high-quality water reuse while addressing environmental and operational concerns.
According to statistics published by the Bahamas Ministry of Tourism, in 2023 as compared to 2022, the number of air arrivals increased 17% to approximately 1,327,000 and cruise ship arrivals increased 46% to approximately 3,114,000. ​ British Virgin Islands . The British Virgin Islands are a British Overseas Territory and are situated east of Puerto Rico.
According to statistics published by the Bahamas Ministry of Tourism, in 2024 as compared to 2023, the number of air arrivals decreased by 1% to approximately 1,320,000 and cruise ship arrivals increased by 25% to approximately 3,901,000. ​ British Virgin Islands . The British Virgin Islands are a British Overseas Territory and are situated east of Puerto Rico.
According to the figures published by the Department of Tourism Statistics Information Center, in 2023 as compared to 2022, tourist air arrivals increased over 50% to approximately 429,000 and tourist cruise ship arrivals increased 70% to approximately 1,270,000. ​ We believe that our water sales in the Cayman Islands are more positively impacted by stay-over tourists that arrive by air than by those arriving by cruise ship, since cruise ship tourists generally only visit the island for one day or less and do not remain on the island overnight.
According to the figures published by the Department of Tourism Statistics Information Center, in 2024 as compared to 2023, tourist air arrivals increased by 2% to approximately 438,000 and tourist cruise ship arrivals decreased by 15% to approximately 1,076,000. ​ We believe that our water sales in the Cayman Islands are more positively impacted by stay-over tourists that arrive by air than by those arriving by cruise ship, since cruise ship tourists generally only visit the island for less than one day and do not stay in hotels or condominiums.
We are also required to pay a value added tax on materials and services we purchase. ​ 12 Table of Contents Markets and Service Areas ​ We operate in the Cayman Islands, The Bahamas, the United States and the British Virgin Islands.
We are also required to pay a value added tax on materials and services we purchase and bill a value added tax for the water we sell. ​ Markets and Service Areas ​ We operate in the Cayman Islands, The Bahamas, the United States and the British Virgin Islands.
We consider our relationships with our employees to be very good. ​ 14 Table of Contents Available Information ​ Our website address is http://www.cwco.com.
We consider our relationship with our employees to be very good. ​ Available Information ​ Our website address is http://www.cwco.com.
In August 2020, we acquired an additional 10% of PERC, increasing our ownership of this subsidiary to 61%. In January 2023, we acquired the remaining 39% ownership interest in PERC. PERC designs, constructs and sells wastewater and water reuse infrastructure. PERC also provides management services for wastewater and water reuse infrastructure under long-term operations and maintenance contracts.
In August 2020, we acquired an additional 10% of PERC, increasing our ownership of this subsidiary to 61%. In January 2023, we acquired the remaining 39% ownership interest in PERC. PERC designs, constructs, sells, operates and manages water, wastewater and water reuse infrastructure.
Although we have no competition within our exclusive retail license service area for potable water, our ability to expand our service area is at the discretion of the Cayman Islands government.
The Cayman Islands government, through the WAC, supplies water to parts of Grand Cayman located outside of our licensed service area. Although we have no competition within our exclusive retail license service area for potable water, our ability to expand our service area is at 13 Table of Contents the discretion of the Cayman Islands government.
We have historically experienced low employee turnover. ​ As of March 20, 2024, we employed a total of 293 persons, 63 in the Cayman Islands, 209 in the United States, 19 in The Bahamas and two in The Netherlands. We also managed the five employees of OC-BVI in the British Virgin Islands.
We have historically experienced low employee turnover. 14 Table of Contents ​ As of March 10, 2025, we employed a total of 307 persons, 62 in the Cayman Islands, 226 in the United States, 17 in The Bahamas and two in The Netherlands. We also managed the five employees of OC-BVI in the British Virgin Islands.
As a result of the cancellation of the APP Contract, we discontinued all development activities associated with the Project and commenced active marketing efforts to sell the land NSC purchased for the Project.
As a result of the cancellation of the APP Contract, we discontinued all development activities associated with the Project and in June 2024 we sold the land NSC purchased for the Project.
Accordingly, the assets and liabilities of CW-Cooperatief, NSC and AdR, as well as all expenses we incur in connection with our on-going international arbitration with the Mexico government to obtain reimbursement for the costs we incurred in connection with the Project are reported as discontinued operations in our consolidated financial statements. ​ Our Operations ​ For fiscal year 2023, our retail water, bulk water, services and manufacturing segments generated approximately 17%, 19%, 54% and 10%, respectively, of our consolidated revenue.
Accordingly, the assets and liabilities of CW-Cooperatief, NSC and AdR, as well as all expenses we incurred in connection with our international arbitration with the Mexico government to obtain reimbursement for the costs we incurred in connection with the Project are reported as discontinued operations in our consolidated financial statements.
In prior years, during emergencies, we have purchased water from the WAC for brief periods of time and have also sold potable water to the WAC from our retail plants. ​ Our pipeline system on Grand Cayman covers the Seven Mile Beach and West Bay areas and consists of approximately 100 miles of potable water pipeline.
From time to time, the WAC has purchased water from our retail plants. ​ Our pipeline system on Grand Cayman covers the Seven Mile Beach and West Bay areas and consists of approximately 100 miles of potable water pipeline. We extend our distribution system periodically as demand warrants.
Pursuant to our license granted by the Cayman Islands government, we have the exclusive right to provide potable, piped water within our licensed service area on Grand Cayman. The last express extension of this license expired on January 31, 2018.
Pursuant to our license granted by the Cayman Islands government, we have the exclusive right to provide potable, piped water within our licensed service area on Grand Cayman. ​ We are the only non-government-owned public water utility on Grand Cayman.
We extend our distribution system periodically as demand warrants. We have a main pipe loop covering the Seven Mile Beach and West Bay areas. We place extensions of smaller diameter pipe off our main pipe to service new developments in our service area.
We have a main pipe loop covering the Seven Mile Beach and West Bay areas. We place extensions of smaller diameter pipe off our main pipe to service new developments in our service area. This system of building branches from the main pipe keeps construction costs low and allows us to provide service to new areas in a timely manner.
Presently, DesalCo is providing management and purchasing services to our affiliate OC-BVI in the British Virgin Islands. In the past, DesalCo has provided consulting services to the WSC and constructed the desalination plants sold by OC-Cayman to the WAC.
Presently, DesalCo is providing engineering, management and purchasing services to our affiliate OC-BVI in the British Virgin Islands.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ See also ITEM 1A.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ Under the new regulatory legislation passed in October 2016, Cayman Water must first be granted a concession by the government before obtaining a new (or renewing the old) retail operations license.
In September 2021, Kalaeloa Desalco was formed to pursue a project encompassing the design, construction, operations and maintenance of a seawater reverse osmosis desalination plant in Oahu, Hawaii.
Serving as a subcontractor to OC-Cayman, DesalCo designed and constructed the four reverse osmosis plants that OC-Cayman currently operates for (and previously sold to) the WAC. ​ Kalaeloa Desalco LLC (“Kalaeloa Desalco”). In September 2021, Kalaeloa Desalco was formed to pursue a project encompassing the design, construction, operations and maintenance of a seawater reverse osmosis desalination plant in Oahu, Hawaii.
Serving as a contractor to OC-Cayman, DesalCo is presently constructing the new Red Gate desalination plant for the WAC. ​ In October 2019, we acquired 51% of the common stock of PERC, a U.S. company headquartered in Fountain Valley, California, which commenced operations in 1998.
In the past, DesalCo has provided consulting services to the WSC and constructed the desalination plants sold by OC-Cayman to the WAC. ​ In October 2019, we acquired 51% of the common stock of PERC, a U.S. company headquartered in Fountain Valley, California, which commenced operations in 1998.
The COVID-19 pandemic and the resulting cessation of tourism to the Cayman Islands significantly reduced demand for our water.
In general, the majority of tourists come from the United States during the winter which is also the dry season in the Cayman Islands. The COVID-19 pandemic and the resulting cessation of tourism to the Cayman Islands significantly reduced demand for our water.
Aerex also offers engineering, design, consulting, inspection, training and equipment maintenance services to its customers. ​ Affiliate ​ Ocean Conversion (BVI) Ltd. (“OC-BVI”) . We own 50% of the voting stock of OC-BVI, a British Virgin Islands company, which sells bulk water to the Government of the British Virgin Islands Water and Sewerage Department.
Management’s Discussion of Results of Operations and in Note 14 of the notes to our consolidated financial statements. ​ Affiliate ​ Ocean Conversion (BVI) Ltd. (“OC-BVI”). We own 50% of the voting stock of OC-BVI, a British Virgin Islands company, which sells bulk water to the Government of the British Virgin Islands Water and Sewerage Department.
We include Aquilex in our retail segment for financial segment reporting purposes; however, it provides services to all four of our business segments. ​ Bulk Segment ​ Consolidated Water (Bahamas) Limited (“CW-Bahamas”). We own 90.9% of CW-Bahamas, which provides bulk water under long-term contracts to the Water and Sewerage Corporation of The Bahamas (“WSC”), a government agency.
Cayman Water and the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, are Grand Cayman’s only water utilities. ​ Bulk Segment ​ Consolidated Water (Bahamas) Limited (“CW-Bahamas”). We own 90.9% of CW-Bahamas, which provides bulk water under long-term contracts to the Water and Sewerage Corporation of The Bahamas (“WSC”), a government agency.
Cayman Water and the Water Authority-Cayman (“WAC”), a government-owned utility and regulatory agency, are Grand Cayman’s only water utilities. ​ Aquilex, Inc. (“Aquilex”) . Aquilex, a U.S. company located in Coral Springs, Florida, provides financial, engineering, information technology, administrative and supply chain management support services to our subsidiaries and affiliate.
Aerex also offers engineering, design, consulting, inspection, training and equipment maintenance services to its customers. ​ 6 Table of Contents Corporate ​ Aquilex, Inc. (“Aquilex”) . Aquilex, a U.S. company located in Coral Springs, Florida, provides financial, engineering, information technology, administrative and supply chain management support services to all our subsidiaries and our affiliate.
This system of building branches from the main pipe keeps construction costs low and allows us to provide service to new areas in a timely manner. Developers are responsible for laying the pipeline within their developments at their own cost, but in accordance with our specifications.
Developers are responsible for laying the pipeline within their developments at their own cost, but in accordance with our specifications.
Removed
Serving as a subcontractor to OC-Cayman, DesalCo designed and constructed the three reverse osmosis plants that OC-Cayman currently operates for (and previously sold to) the WAC and is presently constructing the new Red Gate plant for the WAC. ​ Kalaeloa Desalco LLC (“Kalaeloa Desalco”).
Added
The expenses incurred by Aquilex to support the operations of our business segments, along with other various general and administrative expenses incurred by our company, are reported as “Corporate” in the segment information included in Item 7.
Removed
Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
Added
We are presently in the process of liquidating CW-Cooperatief, NSC and AdR. ​ Our Operations ​ For fiscal year 2024, our retail water, bulk water, services and manufacturing segments generated approximately 24%, 25%, 38% and 13%, respectively, of our consolidated revenue.
Removed
Demand depends upon various factors, most notably rainfall amounts and the number of tourists during any particular time of the year. In general, the majority of tourists come from the United States during the winter which is also the dry season in the Cayman Islands.
Added
On February 18, 2025, Cayman Water received a new concession from the government that authorizes and maintains the terms of the 1990 license until a new license from OfReg is negotiated and enacted. ​ See also ITEM 1A. RISK FACTORS and ITEM 7.
Removed
However, we continue to operate under the terms of this license, providing water services to the level and quality specified in the 1990 license and in accordance with its legal obligations, treating those obligations set forth in the license as operative notwithstanding the expiration of the express extension.
Added
Receivables not collected within 45 days subject the customer to disconnection from water 8 Table of Contents service. The provision for credit losses has historically represented less than 1% of our total annual retail sales.
Removed
Negotiations for a new license are on-going. ​ We are the only non-government-owned public water utility on Grand Cayman. The Cayman Islands government, through the WAC, supplies water to parts of Grand Cayman located outside of our licensed service area.
Added
PERC also provides management services for water, wastewater and water reuse infrastructure under long-term operations and maintenance contracts.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

28 edited+6 added−3 removed46 unchanged
Biggest changeAn inability by us to substitute feed water from an uncontaminated water source or to adequately treat the contaminated plant feed water or our processed water in a cost-effective manner may have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ Potential government decisions, actions and regulations could negatively affect our operations. ​ We are subject to the local regulations of the countries in which we operate, all of which are subject to change.
Biggest changeAn inability by us to substitute feed water from an uncontaminated water source or to adequately treat the contaminated plant feed water or our processed water in a cost-effective manner may have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ Our internal controls over financial reporting were not considered to be effective as of December 31, 2024, and our independent auditors may not be able to certify as to their effectiveness in the future, which could adversely affect our business results and operations. ​ A material weakness was identified in our internal control over financial reporting as of December 31, 2024.
The cost of materials and services and the cost of the delivery of such services may increase significantly after we submit our bid for contract, which could cause the gross profit for a contract to be less than we anticipated when the bid was made.
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.
We could also experience data losses that would impair our ability to manage our business operations, including accounting and project costs, manage our water and distribution systems or process transactions and have a negative impact on our reputation and loss of confidence of our customers, suppliers and others, any of which could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows and our business in general. ​ We are exposed to credit risk through our relationships with several customers. ​ We are subject to credit risk posed by possible defaults in payment by our bulk water customers in the Cayman Islands, The Bahamas and the British Virgin Islands.
We could also experience data losses that would impair our ability to manage our business operations, including accounting and project costs, manage our water and distribution systems or process transactions and have a negative impact on our reputation and loss of confidence of our customers, suppliers and others, any of which could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows and our business in general. ​ We are exposed to credit risk through our relationships with several customers. ​ We are subject to credit risk posed by possible defaults in payment by our customers in the Cayman Islands, The Bahamas, the United States, and the British Virgin Islands.
In particular, the loss of the services of Frederick W. McTaggart, our President and Chief Executive Officer, could be detrimental to our operations and our continued success. Mr. McTaggart has an employment agreement expiring on December 31, 2026. Each year, the term of this agreement may be extended for an additional year. However, we cannot guarantee that Mr.
In particular, the loss of the services of Frederick W. McTaggart, our President and Chief Executive Officer, could be detrimental to our operations and our continued success. Mr. McTaggart has an employment agreement expiring on December 31, 2027. Each year, the term of this agreement may be extended for an additional year. However, we cannot guarantee that Mr.
In 2023 and 2022, we generated approximately 17% and 27%, respectively, of our consolidated revenue and 26% and 44%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement.
In 2024, 2023, and 2022, we generated approximately 24%, 17% and 27%, respectively, of our consolidated revenue and 38%, 26% and 44%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government in order to provide the parties with additional time to negotiate the terms of a new license agreement.
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.
Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ 16 Table of Contents 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.
In addition, it may be difficult for investors to enforce, in original actions brought in courts or jurisdictions located outside of the United States, rights predicated upon the United States securities laws. ​ Based on the advice of our Cayman Islands legal counsel, we believe no reciprocal statutory enforcement of foreign judgments exists between the United States and the Cayman Islands, and that foreign judgments originating from the United States are not directly enforceable in the Cayman Islands.
In addition, it may be difficult for investors to enforce, in original actions 20 Table of Contents brought in courts or jurisdictions located outside of the United States, rights predicated upon the United States securities laws. ​ Based on the advice of our Cayman Islands legal counsel, we believe no reciprocal statutory enforcement of foreign judgments exists between the United States and the Cayman Islands, and that foreign judgments originating from the United States are not directly enforceable in the Cayman Islands.
These currencies have been fixed to the United States dollar for more than 20 years. Consequently, we do not employ hedging strategies against the foreign currency exchange rate risk associated with conducting business in foreign currencies while reporting in United States dollars.
These currencies have been fixed to the United States dollar for more than 50 years. Consequently, we do not employ hedging strategies against the foreign currency exchange rate risk associated with conducting business in foreign currencies while reporting in United States dollars.
McTaggart will continue to work for us during the term of his agreement or will extend his employment agreement with us. ​ Our business could be adversely affected by cyber threats or other interruptions in information technology, communications networks and operations. ​ As part of our operations, we rely on computer systems to process transactions and communicate with our customers, suppliers and other third parties.
McTaggart will continue to work for us during the term of his agreement or will extend his employment agreement with us. ​ 19 Table of Contents Our business could be adversely affected by cyber threats or other interruptions in information technology, communications networks and operations. ​ As part of our operations, we rely on computer systems to process transactions and communicate with our customers, suppliers and other third parties.
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 December 31, 2023. ​ In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded the Government of The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
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 December 31, 2024. ​ In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
During the COVID-19 pandemic, the resulting cessation of tourism to the Cayman Islands through August 2022 significantly reduced demand for our water. ​ Performance shortfalls under any of our bulk supply contracts could result in penalties or cancellation of the contract. ​ Our bulk water supply agreements require us to meet specified minimum quality, quantity and energy consumption guarantees.
During the COVID-19 pandemic, the resulting cessation of tourism to the Cayman Islands through August 2022 significantly reduced the demand for our water. ​ 17 Table of Contents Performance shortfalls under any of our bulk supply contracts could result in penalties or cancellation of the contract. ​ Our bulk water supply agreements require us to meet specified minimum quality, quantity and energy consumption guarantees.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and 20 Table of Contents sellers of our common stock at any given time. This presence in turn depends on the individual decisions of investors and general economic and market conditions over which we have no control.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market of willing buyers and sellers of our common stock at any given time. This presence in turn depends on the individual decisions of investors and general economic and market conditions over which we have no control.
For example, a United States judgment awarding remedies unobtainable in any legal action in the courts of the Cayman Islands, such as treble damages, would likely not be enforceable under any circumstances. ​ The relatively low trading volume of our stock may adversely impact the ability to sell our shares. ​ The average daily trading volume of our common stock in 2023 was approximately 131,600 shares, a much lower trading volume than that of many other companies listed on the NASDAQ Global Select Market.
For example, a United States judgment awarding remedies unobtainable in any legal action in the courts of the Cayman Islands, such as treble damages, would likely not be enforceable under any circumstances. ​ The relatively low trading volume of our stock may adversely impact the ability to sell our shares. ​ The average daily trading volume of our common stock in 2024 was approximately 118,000 shares, a much lower trading volume than that of many other companies listed on the NASDAQ Global Select Market.
Approximately 80% of this December 31, 2023 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.
Approximately 81% of this December 31, 2024 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.
We continue to pay a royalty of 7.5% of the revenue we collect as required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
We continued to pay a royalty of 7.5% of the revenue we collected as required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
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 $26.9 million as of December 31, 2023.
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 $28.4 million as of December 31, 2024.
In addition, six of our 14 Directors and Officers reside outside the United States.
In addition, six of our 13 Directors and Officers reside outside the United States.
Each of these risks, as well as other risks and uncertainties not presently known to us or that we currently deem immaterial, could adversely affect our business, results of operations, cash flows and financial condition, and cause the value of our common stock to decline, which may result in the loss of part, or all, of your investment. ​ Our exclusive license to provide water to retail customers in the Cayman Islands has not been expressly extended and we are presently unable to predict the outcome of our on-going negotiations relating to this license. ​ We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area.
Each of these risks, as well as other risks and uncertainties not presently known to us or that we currently deem immaterial, could adversely affect our business, results of operations, cash flows and financial condition, and cause the value of our common stock to decline, which may result in the loss of part, or all, of your investment. ​ Our exclusive license to provide water to retail customers in the Cayman Islands is presently under renegotiation with OfReg, the Cayman Islands government utility regulatory authority, and we are presently unable to predict the outcome of these on-going negotiations. ​ We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area.
A natural disaster could also disrupt the delivery of equipment and supplies, 17 Table of Contents including electricity, necessary to our operations.
A natural disaster could also disrupt the delivery of equipment and supplies, including electricity, necessary to our operations.
Any government that regulates our operations may issue legislation or adopt new regulations, including but not limited to: ​ ● restricting foreign ownership (by us); ● providing for the expropriation of our assets by the government; ● providing for nationalization of public utilities by the government; ● providing for different water quality standards; ● unilaterally changing or renegotiating our license and agreements; ● restricting the transfer of U.S. currency; or ● causing currency exchange fluctuations/devaluations or enacting changes in tax laws. ​ As new laws and regulations are issued, we may be required to modify our operations and business strategy, which we may be unable to do in a cost-effective manner.
Any government that regulates our operations may issue legislation or adopt new regulations, including but not limited to: ​ ● restricting foreign ownership (by us); ● providing for the expropriation of our assets by the government; ● providing for nationalization of public utilities by the government; ● providing for different water quality standards; ● unilaterally changing or renegotiating our license and agreements; ● restricting the importation or use, and/or imposing tariffs on certain goods and materials from foreign countries; 18 Table of Contents ● restricting the transfer of U.S. currency; or ● causing currency exchange fluctuations/devaluations or enacting changes in tax laws. ​ As new laws and regulations are issued, we may be required to modify our operations and business strategy, which we may be unable to do in a cost-effective manner.
The loss of the WSC as a customer would adversely affect us. ​ One bulk water customer, the WSC, accounted for approximately 17% of our consolidated revenue for 2023.
The loss of the WSC as a customer would adversely affect us. ​ One bulk water customer, the WSC, accounted for approximately 22% of our consolidated revenue for 2024.
Any construction, manufacturing, and operating costs for our contracts that significantly exceed our initial estimates could have a material adverse impact our consolidated financial condition, results of operations, and cash flows. 16 Table of Contents ​ Certain of PERC’s contracts with its customers may be terminated at any time at the customer’s convenience or with relatively short advance notice.
Any construction, manufacturing, and operating costs for our contracts that significantly exceed our initial estimates could have a material adverse impact our consolidated financial condition, results of operations, and cash flows. ​ Certain of PERC’s contracts with its customers, including the contract with the Board of Water Supply of the City of Honolulu, Hawaii, may be terminated at any time at the customer’s convenience or with relatively short advance notice.
Supplemental legislation was passed by the Government of the Cayman Islands in April 2017, which transferred responsibility for economic regulation of the water utility sector and the negotiations with us for a new retail license from the WAC to OfReg 15 Table of Contents in May 2017.
Supplemental legislation was passed by the Government of the Cayman Islands in April 2017, which transferred responsibility for economic regulation of the water utility sector and the negotiations with us for a new retail license from the WAC to OfReg in May 2017. We began license negotiations with OfReg in July 2017 and such negotiations are ongoing.
Moody’s iterated these ratings in April and October 2023, noting that such ratings are “stable.” ​ If CW-Bahamas is unable to collect a significant portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable.
Moody’s has maintained these ratings through the date of its most current report issued in October 2024. ​ If CW-Bahamas is unable to collect a significant portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable.
We continue to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
From that date through February 18, 2025, we continued to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 15 Table of Contents 1990 license as operative notwithstanding the expiration of the express extension.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ We are presently unable to determine what impact the resolution of our retail license negotiations will have on our cash flows, financial condition or results of operations but such resolution could result in a material reduction (or the loss) of the operating income and cash flows we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying values of our retail segment assets.
On February 18, 2025, Cayman Water received a new concession from government that authorizes and maintains the terms of the 1990 license until a new license from OfReg is negotiated and enacted. ​ We are presently unable to determine what impact the resolution of our retail license negotiations with OfReg will have on our cash flows, financial condition or results of operations but such resolution could result in a material reduction (or the loss) of the operating income and cash flows we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying values of our retail segment assets.
We are also subject to credit risk posed by possible defaults in payment by our customers in the United States. Adverse economic conditions affecting, or financial difficulties of, those parties could impair their ability to pay us or cause them to delay payment. We depend on these parties to pay us on a timely basis.
Adverse economic conditions affecting, or financial difficulties of, those parties could impair their ability to pay us or cause them to delay payment. We depend on these parties to pay us on a timely basis. Our outstanding accounts receivable are not covered by collateral or credit insurance.
In addition, any complaints or lawsuits against us based on water quality and contamination may receive negative publicity that can damage our reputation and adversely affect our business and trading price of our common stock. 18 Table of Contents If we fail to abide by laws, rules and regulations relating to human and workers’ rights, we could be subject to various actions and our reputation, business and financial results could be adversely affected. ​ We are subject to various federal, state, local and foreign laws and regulations concerning human rights, including laws prohibiting discrimination, harassment, and forced or child labor, and establishing wage and hour standards.
If we fail to abide by laws, rules and regulations relating to human and workers’ rights, we could be subject to various actions and our reputation, business and financial results could be adversely affected. ​ We are subject to various federal, state, local and foreign laws and regulations concerning human rights, including laws prohibiting discrimination, harassment, and forced or child labor, and establishing wage and hour standards.
Removed
Although the 1990 license has not been expressly extended after January 2018, we continue to supply water under the terms of the 1990 license, as discussed in the following paragraphs.
Added
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ Under the new regulatory legislation passed in October 2016, Cayman Water must first be granted a concession by the government before obtaining a new (or renewing the old) retail operations license.
Removed
We began license negotiations with OfReg in July 2017 and such negotiations are ongoing.
Added
The material weakness related to insufficient information technology general controls designed to monitor direct changes to databases within two accounting systems during the period January 1, 2024 through October 31, 2024.
Removed
Our 19 Table of Contents outstanding accounts receivable are not covered by collateral or credit insurance.
Added
Although we have taken actions to remediate this weakness, we cannot conclude that our remediation effort has been successful until such time as we have completed sufficient testing of the remediation process and the accompanying internal controls and procedures that rely on the information technology general controls.
Added
We cannot assure you that our remediation efforts will be successful or that other material weaknesses and control deficiencies will not be discovered in the future.
Added
If we identify any other material weaknesses in our internal control over financial reporting, it may cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. ​ Potential government decisions, actions and regulations could negatively affect our operations. ​ We are subject to the local regulations of the countries in which we operate, all of which are subject to change.
Added
In addition, any complaints or lawsuits against us based on water quality and contamination may receive negative publicity that can damage our reputation and adversely affect our business and trading price of our common stock.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor a discussion regarding risks from cybersecurity threats that have or are reasonably likely to affect the company, see the risk factor titled “Our business could be adversely affected by cyber threats or other interruptions to information technology, communications networks and operations.” in Item 1A of this Annual Report on Form 10-K. ​
Biggest changeFor a discussion regarding risks from cybersecurity threats that have or are reasonably likely to affect the company, see the risk factor titled “Our business could be adversely affected by cyber threats or other interruptions to information technology, communications networks and operations.” in Item 1A of this Annual Report on Form 10-K. ​ 22 Table of Contents
Cybersecurity training and employee phishing simulations; c. Ongoing vulnerability assessment, identification, and remediation; d. Cyber incident response, IT disaster recovery, and business continuity plans; e. Identity and access management controls; f. Automated patch management and security updates; g. Network isolation of key operations environments; and h. Email filtering with attachment inspection and targeted threat protection.
Cybersecurity training and employee phishing simulations; c. Ongoing vulnerability assessment, identification, and remediation; 21 Table of Contents d. Cyber incident response, IT disaster recovery, and business continuity plans; e. Identity and access management controls; f. Automated patch management and security updates; g. Network isolation of key operations environments; and h. Email filtering with attachment inspection and targeted threat protection.
Our cybersecurity program also focuses on providing training and awareness to our employees and contractors on cybersecurity best practices. 21 Table of Contents Cybersecurity Governance Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other IT risks.
Our cybersecurity program also focuses on providing training and awareness to our employees and contractors on cybersecurity best practices. Cybersecurity Governance Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other IT risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis lease expired in August 2021 and is currently on a month-to-month basis. ​ REC leases approximately 7,500 square feet of office space in Frederick, Colorado that serves as its corporate headquarters under a lease that expires on October 1, 2029. ​ Mexico Properties ​ NSC and AdR own 20.1 hectares and 0.18 hectares of land, respectively, in Rosarito Beach, Baja California, Mexico. ​
Biggest changeWe are presently evaluating a renewal of this lease as well as possible new locations for PERC’s corporate headquarters. ​ REC leases approximately 7,500 square feet of office space in Frederick, Colorado that serves as its corporate headquarters under a lease that expires on October 1, 2029. ​ ITEM 3. LEGAL PROCEEDINGS ​ Not applicable. ​ ​ ITEM 4.
The plant is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from Bahamas Power and Light to power all other loads in the plant. The plant is contained within a 12,000 sq. ft. steel building, and a warehouse, workshop and offices are contained within a 2,600 sq. ft. concrete building.
The plant is powered by a combination of diesel engine-driven high-pressure pumps and electrical power purchased from Bahamas Power and Light to power all other loads in the plant. The plant is contained within a 12,000 sq. 23 Table of Contents ft. steel building, and a warehouse, workshop and offices are contained within a 2,600 sq. ft. concrete building.
This site contains a 5,000 square foot concrete building which houses our water production facility, a 2,400 square foot building which houses the potable water distribution pumps, a water quality testing laboratory, and office space and water storage capacity consisting of three potable water tanks each with a capacity of 1.0 million gallons. ​ Britannia Plant ​ Although we own our Britannia seawater reverse osmosis desalination plant which is located in the Seven Mile Beach area, this plant is not currently operational.
This site contains a 5,000 square foot concrete building which houses our water production facility, a 2,400 square foot building which houses the potable water distribution pumps, a water quality testing laboratory, and office space and water storage capacity consisting of three potable water tanks each with a capacity of 1.0 million gallons. ​ Britannia Plant ​ We own our Britannia seawater reverse osmosis desalination plant located in the Seven Mile Beach area which has been decommissioned.
We have the legal right to maintain (and expand or contract as necessary) these systems on public and private land within our licensed service area. ​ Corporate Office ​ We occupy approximately 5,700 square feet of office space at the Regatta Office Park, West Bay Road, Grand Cayman, Cayman Islands under a lease that expires in April 2024.
We have the legal right to maintain (and expand or contract as necessary) these systems on public and private land within our licensed service area. ​ Corporate Office ​ We occupy approximately 5,800 square feet of office space at the Regatta Office Park, West Bay Road, Grand Cayman, Cayman Islands under a lease that expires in April 2029. ​ Other Property ​ In October 2022, Cayman Water purchased for $2.94 million approximately 2.8 acres of land in the West Bay area of Grand Cayman.
However, we still have and operate a potable water storage tank with a capacity 22 Table of Contents of 840,000 gallons, potable water high service pumps, and various ancillary equipment.
However, we still have and operate on this site, a potable water storage tank with a capacity of 840,000 gallons, potable water high service pumps, and various ancillary equipment to repump water produced by our other plants.
Cayman Water expects to use this site for the construction of a new headquarters, emergency operations center and warehouse facility at some point in the future. ​ Bahamas Properties ​ Windsor Plant ​ Our Windsor water production facility, located in Nassau, New Providence, has a production capacity of 2.8 million gallons per day.
We also plan to relocate our current warehouse facility from the ACWW site to this proposed new location at some point in the future. ​ Bahamas Properties ​ Windsor Plant ​ Our Windsor water production facility, located in Nassau, New Providence, has a production capacity of 2.8 million gallons per day.
Properties ​ Aerex owns a 30,000 square foot manufacturing facility located on 6.4 acres of land in Fort Pierce, Florida and has approximately 6,000 square feet of office space in downtown Fort Pierce under a lease that expires on June 30, 2026. ​ 23 Table of Contents Our Aquilex warehouse consists of 4,100 square feet located in Sunrise, Florida that has been leased through September 2025.
Properties ​ Aerex owns a 30,000 square foot manufacturing facility located on 6.4 acres of land in Fort Pierce, Florida and has approximately 6,000 square feet of office space in downtown Fort Pierce under a lease that expires on June 30, 2026. We are in the process of expanding Aerex’s manufacturing facility to 47,500 square feet.
Our Aquilex office consists of 6,500 square feet located in Coral Springs, Florida that has been leased through March 2026. ​ PERC leases approximately 4,100 square feet of office space in Fountain Valley, California that serves as its corporate headquarters.
The anticipated completion date for this expansion is June 2025. ​ Our Aquilex warehouse consists of 4,100 square feet located in Sunrise, Florida that has been leased through September 2025. Our Aquilex office consists of 6,500 square feet located in Coral Springs, Florida that has been leased through March 2026.
Removed
We expect to renew this lease. ​ Other Property ​ In October 2022, Cayman Water purchased for $2.94 million approximately 2.8 acres of land in the West Bay area of Grand Cayman.
Added
Cayman Water expects to use this site for the construction of new corporate and operations offices, customer service center, and emergency operations center.
Added
We are presently evaluating lease renewals as well as possible new locations for both our Aquilex headquarters and its warehouse. ​ PERC subleases approximately 4,100 square feet of office space in Fountain Valley, California that serves as its corporate headquarters. This lease expires in August 2025.
Added
MINE SAFETY DISCLOSURE S ​ Not applicable. ​ 24 Table of Contents PART II ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed0 unchanged
Biggest changeHowever, the 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. ​ Listed below, for each quarter of the last two fiscal years, are the per share dividends declared on our issued and outstanding shares of common shares and redeemable preferred stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 First Quarter ​ $ 0.085 ​ $ 0.085 Second Quarter ​ 0.085 ​ 0.085 Third Quarter ​ 0.095 ​ 0.085 Fourth Quarter ​ 0.095 ​ 0.085 ​ ​ $ 0.36 ​ $ 0.34 ​ Exchange Controls and Other Limitations Affecting Security Holders ​ Our Company is not subject to any governmental laws, decrees or regulations in the Cayman Islands which restrict the export or import of capital, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities.
Biggest changeHowever, the 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. ​ Listed below, for each quarter of the last three fiscal years, are the per share dividends declared on our issued and outstanding shares of common shares and redeemable preferred stock. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 2022 First Quarter ​ $ 0.095 ​ $ 0.085 ​ $ 0.085 Second Quarter ​ 0.095 ​ 0.085 ​ 0.085 Third Quarter ​ 0.11 ​ 0.095 ​ 0.085 Fourth Quarter ​ 0.11 ​ 0.095 ​ 0.085 ​ ​ $ 0.41 ​ $ 0.36 ​ $ 0.34 ​ Exchange Controls and Other Limitations Affecting Security Holders ​ Our Company is not subject to any governmental laws, decrees or regulations in the Cayman Islands which restrict the export or import of capital, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities.
The Cayman Islands does not impose any limitations on the right of non-resident owners to hold or vote our common stock. There are no exchange control restrictions in the Cayman Islands. ​ The information required by Item 201(d) of Regulation S-K is provided under ITEM 12.
The Cayman Islands does not impose any limitations on the right of non-resident owners to hold or vote our common stock. There are no exchange control restrictions in the Cayman Islands. ​ 25 Table of Contents The information required by Item 201(d) of Regulation S-K is provided under ITEM 12.
EXECUTIVE COMPENSATION”. ​ 25 Table of Contents Currently 2,023,850 Bahamian Depository Receipts (“BDRs”) that constitute ownership of 404,770 shares of our common stock are listed and traded on the Bahamian International Stock Exchange. Our common shares that underlie these BDRs are held in a custodial account in The Bahamas.
EXECUTIVE COMPENSATION”. ​ Currently 2,023,850 Bahamian Depository Receipts (“BDRs”) that constitute ownership of 404,770 shares of our common stock are listed and traded on the Bahamian International Stock Exchange. Our common shares that underlie these BDRs are held in a custodial account in The Bahamas.
The BDRs are entitled to dividend payments, when declared, on our common stock in proportion to the BDRs’ relative value to our common stock. ​ Holders ​ As of March 20, 2024, we had 706 holders of record of our common stock. ​ Dividends ​ Our Board of Directors declares and approves any and all dividends. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
The BDRs are entitled to dividend payments, when declared, on our common stock in proportion to the BDRs’ relative value to our common stock. ​ Holders ​ As of March 10, 2025, we had 695 holders of record of our common stock. ​ Dividends ​ Our Board of Directors declares and approves any and all dividends. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS of this Annual Report. ​
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS of this Annual Report. ​ ITEM 6. [RESERVED] ​ ​
On December 12, 2023, we issued a total of 22,831 shares of our common stock to our Directors under our Non-Executive Directors’ Share Plan in consideration for their service on our Board of Directors and the committees thereof. See “ITEM 11.
On December 17, 2024, we issued a total of 11,448 shares of our common stock to our Directors under our Non-Executive Directors’ Share Plan in consideration for their service on our Board of Directors and the committees thereof. See “ITEM 11.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information ​ Our Class A common stock is listed on the NASDAQ Global Select Market and trades under the symbol “CWCO”. ​ No trading market exists for our redeemable preferred stock, which is only issued to, or purchased by, long-term employees of our company. ​ On January 3, 2023, March 31, 2023 and January 2, 2024, we issued a total of 25,986 shares, 13,797 shares and 29,392 shares of our common stock, respectively, to Executive Officers under our 2008 Equity Incentive Plan.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ Market Information ​ Our Class A common stock is listed on the NASDAQ Global Select Market and trades under the symbol “CWCO”. ​ No trading market exists for our redeemable preferred stock, which is only issued to, or purchased by, our long-term employees. ​ On January 2, 2024, March 27, 2024 and January 2, 2025, we issued a total of 29,392 shares, 26,742 shares and 24,875 shares of our common stock, respectively, to Executive Officers under our 2008 Equity Incentive Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

77 edited+32 added−33 removed62 unchanged
Biggest changeWe cannot presently determine the outcome of the discussions and we have not terminated our efforts to obtain relief through the international arbitration process as a result of these discussions. ​ We cannot provide any assurances that we will be able to obtain reimbursement for any expenses or investments made with respect to the Project. ​ 32 Table of Contents As a result of the cancellation of the APP Contract, in 2020 we discontinued all development activities associated with the Project and commenced active marketing efforts to sell the land NSC purchased for the Project.
Biggest changeAs a result of the cancellation of the Project we discontinued all development activities associated with the Project, commenced marketing efforts to sell the land NSC purchased for the Project, and initiated international arbitration against 33 Table of Contents the Government of Mexico to recover the costs we had incurred for the Project.
LIQUIDITY AND CAPITAL RESOURCES ​ Certain transfers from our Bahamas bank accounts 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.
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.
The most recent express extension of the license expired on January 31, 2018.
The most recent express extension of the license expired on January 31, 2018.
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 WSC is currently paying us under the contract.
If the WSC requires the water and we do not meet this minimum, we are required to pay the WSC for the difference between the minimum and actual gallons delivered at a per gallon rate equal to the price per gallon that the WSC is currently paying us under the contract.
Our payment of any future cash dividends will depend upon our earnings, financial condition, cash flows, capital requirements and other factors our Board of Directors deems relevant in determining the amount and timing of such dividends. ​ Dividend Reinvestment and Common Stock Purchase Plan ​ This plan is available to our shareholders, who may reinvest all or a portion of their common stock dividends into shares of common stock at prevailing market prices and may also invest optional cash payments to purchase additional shares at prevailing market prices as part of this plan. ​ Impact of Inflation ​ Under the terms of our Cayman Islands license and our water sales agreements in The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis.
Our payment of any future cash dividends will depend upon our earnings, financial condition, cash flows, capital requirements and other factors our Board of Directors deems relevant in determining the amount and timing of such dividends. ​ Dividend Reinvestment and Common Stock Purchase Plan ​ This plan is available to our shareholders, who may reinvest all or a portion of their common stock dividends into shares of common stock at prevailing market prices and may also invest optional cash payments to purchase additional shares at prevailing market prices as part of this plan. ​ Impact of Inflation ​ Under the terms of our Cayman Islands license and our bulk water sales agreements in The Cayman Islands, The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis.
The following table sets forth the comparative combined production capacity of our retail and bulk segments and our affiliate as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations 2023 ​ 2022 Location Plants Capacity (1) Location Plants Capacity (1) Cayman Islands 6 ​ 9.3 Cayman Islands 7 ​ 9.9 Bahamas 2 ​ 14.8 ​ Bahamas ​ 2 ​ 14.8 British Virgin Islands 2 ​ 0.8 ​ British Virgin Islands ​ 2 ​ 0.8 ​ 10 ​ 24.9 ​ ​ ​ 11 ​ 25.5 (1) In millions of gallons per day. ​ Effective October 1, 2023, the Company purchased, through its wholly-owned subsidiary PERC, a 100% ownership interest in Ramey Environmental Compliance, Inc., a Colorado company that operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado.
The following table sets forth the comparative combined production capacity of our retail and bulk segments and our affiliate as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations Water Production Plants ​ 2024 ​ 2023 ​ 2022 Location Plants Capacity (1) Plants Capacity (1) Plants Capacity (1) Cayman Islands 6 ​ 10.6 6 ​ 9.3 ​ 7 ​ 9.9 Bahamas 2 ​ 14.8 ​ 2 ​ 14.8 ​ 2 ​ 14.8 British Virgin Islands 2 ​ 0.8 ​ 2 ​ 0.8 ​ 2 ​ 0.8 ​ 10 ​ 26.2 ​ 10 ​ 24.9 ​ 11 ​ 25.5 (1) In millions of gallons per day. ​ Effective October 1, 2023, the Company purchased, through its wholly-owned subsidiary PERC, a 100% ownership interest in Ramey Environmental Compliance, Inc., a Colorado company that operates and maintains water and wastewater treatment facilities and provides technical services to clients throughout the Rocky Mountain and Eastern Plains Regions of Colorado.
The increase in bulk segment revenue from 2022 to 2023 is attributable to a 6% increase in water volume and an increase in energy costs for CW-Bahamas, which increased the energy pass-through component of CW-Bahamas’ rates. ​ Gross profit for the bulk segment was $10,466,926 (30% of bulk revenue) and $9,958,854 (30% of bulk revenue) for 2023 and 2022, respectively.
The increase in bulk segment revenue from 2022 to 2023 was attributable to a 6% increase in water volume and an increase in energy costs for CW-Bahamas, which increased the energy pass-through component of CW-Bahamas’ rates. ​ Gross profit for the bulk segment was $10,466,926 (30% of bulk revenue) and $9,958,854 (30% of bulk revenue) for 2023 and 2022, respectively.
The remainder of the G&A increase is attributable to increases across a variety of categories including provision for credit losses of $408,489. ​ Other income, net, increased to $828,313 in 2023, as compared to $464,810 in 2022 due to an increase in interest income of approximately $249,000 primarily due to a higher balance of interest earning assets, and an increase of approximately $68,000 in the equity in earnings of and profit-sharing income from our affiliate, OC-BVI, and an unrealized loss recorded in 2022 of $128,000 for the valuation of the put/call options associated with the initial acquisition of a controlling interest in PERC.
The remainder of the G&A increase was attributable to increases across a variety of categories including the provision for credit losses of $408,489. ​ Other income, net, increased to $828,313 in 2023, as compared to $464,810 in 2022 due to an increase in interest income of approximately $249,000 primarily due to a higher balance of interest earning assets, and an increase of approximately $68,000 in the equity in earnings of and profit-sharing income from our affiliate, OC-BVI, and an unrealized loss recorded in 2022 of $128,000 for the valuation of the put/call options associated with the initial acquisition of a controlling interest in PERC.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Annual Report. ​ Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 ​ Discontinued Operations – Mexico Project Development In 2010, we began the pursuit, through our Netherlands subsidiary, Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), and our Mexico subsidiary, N.S.C. Agua, S.A. de C.V.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, of this Annual Report. ​ Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 ​ Discontinued Operations – Mexico Project Development In 2010, we began the pursuit, through our Netherlands subsidiary, Consolidated Water Cooperatief, U.A. (“CW-Cooperatief”), and our Mexico subsidiary, N.S.C. Agua, S.A. de C.V.
Accordingly, in light of this new information from Aerex’s former major customer, and the on-going weak economic conditions that we believed would continue through 2022, we updated our projections 29 Table of Contents 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.
Accordingly, in light of this new information from Aerex’s former major customer, and the on-going weak economic conditions that we believed would continue through 2022, we updated our projections of future cash flows for the manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively.
The growth in manufacturing revenue for 2023 reflects increased production activity due to relief in supply chain and economic conditions that had resulted in significant product delivery delays in 2022. ​ Manufacturing segment gross profit was $4,024,469 (23% of manufacturing revenue) and $1,129,225 (18% of manufacturing revenue) for 2023 and 2022, respectively.
The growth in manufacturing revenue for 2023 reflected increased production activity due to relief in supply chain and economic conditions that had resulted in significant product delivery delays in 2022. ​ Manufacturing segment gross profit was $4,024,469 (23% of manufacturing revenue) and $1,129,225 (18% of manufacturing revenue) for 2023 and 2022, respectively.
(“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.
(“NSC”), of a project (the “Project”) that encompassed the construction, operation and minority ownership of a 100 million gallons per day seawater reverse osmosis desalination plant to be located in northern Baja California, Mexico and accompanying pipeline to deliver water to the Mexican potable water system.
The most significant increase in G&A expenses for 2023 relates to employee costs, which increased by $2,480,517 from 2022 to 2023 due to increased stock compensation, higher bonus accruals, pay raises and new hires. Professional fees also increased by $251,813 from 2022 to 2023.
The most significant increase in G&A expenses for 2023 related to employee costs, which increased by $2,480,517 from 2022 to 2023 due to increased stock compensation, higher bonus accruals, pay raises and new hires. Professional fees also increased by $251,813 from 2022 to 2023.
In 2023 and 2022, we generated approximately 17% and 27%, respectively, of our consolidated revenue and 26% and 44%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government to provide the parties with additional time to negotiate the terms of a new license agreement.
In 2024, 2023, and 2022 we generated approximately 24%, 17% and 27%, respectively, of our consolidated revenue and 38%, 26% and 44%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. ​ The 1990 license was originally scheduled to expire in July 2010 but was extended several times by the Cayman Islands government to provide the parties with additional time to negotiate the terms of a new license agreement.
We continue to pay a royalty of 7.5% of the revenue we collect as required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
We continued to pay a royalty of 7.5% of the revenue we collect as required under the 1990 license. ​ In October 2016, the Government of the Cayman Islands passed legislation which created a new utilities regulation and competition office (“OfReg”).
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.
Our updated sales estimate for this customer based on this new information was substantially below the sales we anticipated 28 Table of Contents 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.
The APP Contract required AdR to design, construct, finance and operate a seawater reverse osmosis desalination plant (and accompanying aqueduct) with a capacity of up to 100 million gallons per day in two phases: the first with a capacity of 50 million gallons per day and an aqueduct to the Mexican potable water system in Tijuana, Baja California and the second phase with a capacity of 50 million gallons per day.
The 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 30 Table of Contents and an aqueduct to the Mexican potable water system in Tijuana, Baja California and the second phase with a capacity of 50 million gallons per day.
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, 2023.
Based upon this qualitative assessment, we determined that it is more likely than not that the fair values of our reporting units exceeded their carrying values as of December 31, 2024 and 2023.
For 2023, we elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing we have conducted in prior years for our reporting units.
For 2024 and 2023, we elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing we have conducted in prior years for our reporting units.
Approximately 80% of the $150 million price for the construction of this plant is subject to adjustment based upon changes in inflation indices from the date the contract was executed to the date construction begins.
Approximately 80% of the $147 million price for the construction of this plant is subject to adjustment based upon changes in inflation indices from the date the contract was executed to the date construction begins.
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.
Contract costs include labor, materials, subcontractor costs and other 29 Table of Contents 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.
Supplemental legislation was passed by the Government of the Cayman Islands in April 2017, which transferred responsibility for economic regulation of the water utility sector and the retail license negotiations from the WAC to OfReg in May 2017. We began license negotiations with OfReg in July 2017 and such negotiations are continuing.
Supplemental 38 Table of Contents legislation was passed by the Government of the Cayman Islands in April 2017, which transferred responsibility for economic regulation of the water utility sector and the retail license negotiations from the WAC to OfReg in May 2017. We began license negotiations with OfReg in July 2017 and such negotiations are continuing.
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.
The cumulative amount of revenue recorded on a contract at a specified point in time is that percentage of total estimated revenue that incurred costs to date comprised of estimated total contract costs.
Due to the extended time it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimations of total revenue and costs at completion are complicated and subject to many variables and, accordingly, are 30 Table of Contents subject to changes.
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.
Management 28 Table of Contents 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, 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.
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.
The Windsor plant and the Blue Hills plant are located in Nassau, New Providence and have a total installed capacity of 14.8 million gallons per day. CW-Bahamas supplies water from these plants to the Water and Sewerage Corporation of The Bahamas (“WSC”) under long-term supply agreements.
The Windsor plant and the Blue Hills plant are located in Nassau, New Providence and have a total installed capacity of 14.8 million gallons per day. CW-Bahamas supplies water from these plants to the WSC under long-term supply agreements.
The following table sets forth the comparative combined estimated production capacity of our services segment as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations 2023 ​ 2022 Location Plants Capacity (1) Location Plants Capacity (1) United States 31 ​ 59.7 United States 27 ​ 52.5 (1) In estimated millions of gallons per day. ​ As of December 31, 2023, REC performed operations, maintenance, and monitoring services for 72 wastewater and water treatment plants located in the Rocky Mountain and Eastern Plains Regions of Colorado. ​ Cayman Islands ​ We have been operating our business on Grand Cayman since 1973 and have been using reverse osmosis technology to convert seawater to potable water since 1989.
The following table sets forth the comparative combined estimated production capacity of our subsidiary PERC as of December 31 of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comparative Operations Water Treatment Plants ​ 2024 ​ 2023 ​ 2022 Location Plants Capacity (1) Plants Capacity (1) Plants ​ Capacity (1) United States 29 ​ 58.0 31 ​ 59.7 ​ 27 ​ 52.5 (1) In estimated millions of gallons per day. ​ As of December 31, 2024 and 2023, REC performed operations, maintenance, and monitoring services for 64 and 72, respectively, wastewater and water treatment plants located in the Rocky Mountain and Eastern Plains Regions of Colorado. ​ Cayman Islands ​ We have been operating our business on Grand Cayman since 1973 and have been using reverse osmosis technology to convert seawater to potable water since 1989.
Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board. ​ As of December 31, 2023, we had cash and cash equivalents of $42.6 million and working capital of $88.8 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 ​ CW-Bahamas’ accounts receivable balance (which include accrued interest) due from the WSC amounted to $26.9 million as of December 31, 2023.
Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board. ​ As of December 31, 2024, we had cash and cash equivalents of $99.4 million and working capital of $132.8 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 ​ CW-Bahamas’ accounts receivable balance (which include accrued interest) due from the WSC amounted to $28.4 million as of December 31, 2024.
We design, construct, and sell wastewater and water reuse infrastructure in the U.S. through PERC. Aerex, is a custom and specialty manufacturer in the U.S. of water treatment-related systems and products applicable to commercial, municipal and industrial water production.
We design, construct, and sell wastewater and water reuse infrastructure in the United States through PERC and Kalaeloa Desalco. Aerex is a custom and specialty manufacturer in the United States of water treatment-related systems and products applicable to commercial, municipal and industrial water production.
The Blue Hills contract expires in 2032 and requires us to deliver 63.0 million gallons of water each week.
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.
(“NuWater”) submitted its tender for the Project in April 2016 and in June 2016, the State designated the Consortium as the winner of the tender process for the Project. ​ In August 2016, NSC and NuWater incorporated a new company under the name Aguas de Rosarito S.A.P.I. de C.V.
A consortium (the “Consortium”) comprised of NSC and two other parties submitted its tender for the Project in April 2016 and in June 2016, the State designated the Consortium as the winner of the tender process for the Project. ​ In August 2016, NSC incorporated a new company under the name Aguas de Rosarito S.A.P.I. de C.V.
Dividends ● On January 31, 2023, we paid a dividend of $0.085 to shareholders of record on January 3, 2023. ● On April 28, 2023, we paid a dividend of $0.085 to shareholders of record on April 3, 2023. ● On July 31, 2023, we paid a dividend of $0.085 to shareholders of record on July 3, 2023. ● On October 31, 2023, we paid a dividend of $0.095 to shareholders of record on October 2, 2023 . ● On January 31, 2024, we paid a dividend of $0.095 to shareholders of record on January 2, 2024. ● On February 20, 2024, our Board declared a dividend of $0.095 payable on April 30, 2024 to shareholders of record on April 1, 2024. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
Dividends ● On January 31, 2024, we paid a dividend of $0.095 to shareholders of record on January 2, 2024. ● On April 30, 2024, we paid a dividend of $0.095 to shareholders of record on April 1, 2024. ● On July 31, 2024, we paid a dividend of $0.095 to shareholders of record on July 1, 2024. ● On October 31, 2024, we paid a dividend of $0.11 to shareholders of record on October 1, 2024 . ● On January 31, 2025, we paid a dividend of $0.11 to shareholders of record on January 2, 2025. ● On February 18, 2025, our Board declared a dividend of $0.11 payable on April 30, 2025 to shareholders of record on April 1, 2025. ​ We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985.
This net cash provided reflects net income generated for the year ended December 31, 2023 of $30,159,182 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.
This net cash provided reflects net income generated for the year ended December 31, 2024 of $28,815,144 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.
We continue to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
From that date to February 18, 2025, we continued to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
Moody’s iterated these ratings in April and October 2023, noting that such ratings are “stable.” Based upon our review of this Moody’s correspondence, we continue to believe that no material allowance for credit losses is required for CW-Bahamas’ accounts receivable from the WSC. ​ If CW-Bahamas is unable to collect a sufficient portion of its delinquent accounts receivable, one or more of the following events may occur: (i) CW-Bahamas may not have sufficient liquidity to meet its obligations; (ii) we may be required to cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable.
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 37 Table of Contents cease the recognition of revenue on CW-Bahamas’ water supply agreements with the WSC; and (iii) we may be required to provide a material allowance for credit losses for CW-Bahamas’ accounts receivable.
Such accounts receivable balances due from The Bahamas government amounted to $26.9 million as of December 31, 2023. See further discussion of this matter at ITEM 7.
Such accounts receivable balances due from The Bahamas government amounted to $28.4 million as of December 31, 2024. See further discussion of this matter at ITEM 7.
The increase in manufacturing gross profit in dollars reflects the increase in revenue.
The increase in manufacturing gross profit in dollars reflected the increase in revenue.
During 2023, we supplied approximately 4.8 billion gallons of water to the WSC from these plants, as compared to 4.6 billion gallons during 2022. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable.
During 2024, we supplied approximately 4.8 billion gallons of water to the WSC from these plants, which is consistent with the 4.8 billion gallons supplied during 2023. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable.
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. ​ Following an assessment by the State of Baja, California (the “State”) of the need for such a desalination plant and the passage of enabling legislation in November 2015, the State officially commenced the required public tender for the Project.
Through a series of transactions that began in 2012, NSC purchased 20.1 hectares of land for approximately $21.1 million on which the proposed Project’s plant was to be constructed. ​ In November 2015, the State of Baja California (the “State”) officially commenced the public tender for the Project.
Our Grand Cayman operations consist of three company-owned seawater reverse osmosis desalination plants which provide water to approximately 8,095 retail residential and commercial connections within a government licensed area and three government-owned seawater reverse osmosis plants which supply bulk water to the WAC.
Our Grand Cayman operations consist of three company-owned seawater reverse osmosis desalination plants which (as of December 31, 2024) provide water to 8,174 retail residential and commercial connections within a government licensed area and three 26 Table of Contents government-owned seawater reverse osmosis plants which supply bulk water to the WAC.
We exercised our call option in the fourth quarter of 2022 and acquired the remaining 39% of PERC in January 2023. ​ Results by Segment ​ Retail Segment: ​ The retail segment incurred a loss from operations of ($660,253) for 2023 as compared to a loss from operations of ($1,187,013) for 2022. ​ Revenue generated by our retail water operations increased to $30,158,051 in 2023 from $25,954,013 in 2022 principally due to a 15% increase in the volume of water sold.
We exercised our call option in the fourth quarter of 2022 and acquired the remaining 39% of PERC in January 2023. ​ Results by Segment ​ Retail Segment: ​ The retail segment generated $13,266,942 in income from operations for 2023 compared to $10,756,282 for 2022. ​ Revenue generated by our retail water operations increased to $30,158,051 in 2023 from $25,954,013 in 2022 principally due to a 15% increase in the volume of water sold.
We 27 Table of Contents continue to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
From that date until February 18, 2025, we continued to operate under the terms of the 1990 license, providing water services to the level and quality specified in the 1990 license and in accordance with our understanding of its legal obligations, treating those obligations set forth in the 1990 license as operative notwithstanding the expiration of the express extension.
This adjustment increased basic and diluted earnings per share by $0.11 for the year ended December 31, 2023. 34 Table of Contents ​ G&A expenses for the services segment increased to $4,271,808 for 2023 as compared to $3,461,294 for 2022 principally due to an increase of approximately $384,000 in employee costs attributable to pay raises, new hires and increased bonus accruals and the addition of approximately $366,000 in G&A expenses from REC as a result of our acquisition of this company effective October 1, 2023.
This adjustment increased basic and diluted earnings per share by $0.11 for the year ended December 31, 2023. ​ G&A expenses for the services segment increased to $4,271,808 for 2023 as compared to $3,461,294 for 2022 principally due to an increase of approximately $384,000 in employee costs attributable to pay raises, new hires and increased bonus accruals and the addition of approximately $366,000 in G&A expenses from REC as a result of our acquisition of this company effective October 1, 2023. 35 Table of Contents Manufacturing Segment: ​ The manufacturing segment contributed $2,188,418 to our income from operations for 2023 as compared to incurring an operating loss of ($358,748) for 2022. ​ Manufacturing segment revenue was $17,491,474 and $6,324,465 for 2023 and 2022, respectively.
Any of these events could have a material adverse impact on our consolidated financial condition, results of operations, and cash flows. ​ 36 Table of Contents Discussion of Cash Flows for the Year Ended December 31, 2023 ​ Our cash and cash equivalents decreased to $42,621,898 as of December 31, 2023 from $50,711,751 as of December 31, 2022. ​ Cash Flows from Operating Activities ​ Net cash provided by our operating activities was $7,970,762.
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 Year Ended December 31, 2024 ​ Our cash and cash equivalents increased to $99,350,121 as of December 31, 2024 from $42,621,898 as of December 31, 2023. ​ Cash Flows from Operating Activities ​ Net cash provided by our operating activities was $36,515,532.
Consequently, should we be required (or elect) to transfer any profits generated by our U.S. operations to our parent company in the Cayman Islands, the amount of any such funds transferred would be subject to a 30% withholding tax. ​ Liquidity Position ​ Our projected liquidity requirements for 2024 include capital expenditures for our existing operations of approximately $9.5 million, which includes $2.8 million to be incurred in 2024 for our new West Bay plant.
Consequently, should we be required (or elect) to transfer any profits generated by our U.S. subsidiaries from U.S. operations to our company in the Cayman Islands, we would be required to pay a withholding tax of 30% on the amount of any such funds transferred. ​ Liquidity Position ​ Our projected liquidity requirements for 2025 include capital expenditures for our existing operations of approximately $10.3 million, which includes $926,000 to be incurred in 2025 for our new West Bay plant and $1.8 million for the expansion of Aerex’s manufacturing facility.
Our net losses from discontinued operations for 2023 and 2022 were ($1,086,744) and ($2,371,049), respectively. ​ Consolidated Results ​ Including discontinued operations, net income attributable to Consolidated Water Co.
We received the proceeds from the sale of the land and documentation in June 2024. ​ Our net losses from discontinued operations for 2023 and 2022 were ($1,086,744) and ($2,371,049), respectively. ​ Consolidated Results ​ Including discontinued operations, net income attributable to Consolidated Water Co.
We paid approximately $1.6 million for dividends in January 2024.
We paid approximately $1.8 million for dividends in January 2025.
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.
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. 27 Table of Contents 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.
In general, our operating and maintenance contracts are adjusted annually for the impacts of inflation. ​ While PERC’s operations and maintenance contracts are generally adjusted for inflation on an annual basis, such adjustment for some of these contracts is limited to 3% annually. ​ Kalaeloa Desalco, which is jointly owned by PERC and CW-Holdings, has signed a definitive agreement with the Honolulu Board of Water Supply to design, build, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii.
Furthermore, our manufacturing segment has in the past been adversely impacted by significant increases in raw material costs and our manufacturing and services segments could suffer similar adverse impacts in the future. ​ While our operations and maintenance contracts are generally adjusted for inflation on an annual basis, such adjustment for some of these contracts is limited to 3% annually. ​ Kalaeloa Desalco has signed a definitive agreement with the Honolulu Board of Water Supply to design, construct, operate and maintain a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii.
The increase in operations and maintenance revenue from 2022 to 2023 is attributable to new contracts and increased revenue on existing contracts. Design and consulting revenue generated by the services segment was $1,291,581 and $3,066,996 in 2023 and 2022, respectively.
Design and consulting revenue generated by the services segment was $1,291,581 and $3,066,996 in 2023 and 2022, respectively.
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. ​ ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK ​ Not applicable. ​ 40 Table of Contents
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. ​ 40 Table of Contents
The sales volume increase reflects increased tourist activity on Grand Cayman, as tourism on the island in 2022 was lower than historical levels due to the lingering impact of the COVID-19 pandemic.
The sales volume increase reflects increased tourist activity on Grand Cayman, as tourism on the island in 2022 was lower than historical levels due to the lingering impact of the COVID-19 pandemic. Retail revenue also increased by approximately $1,014,639 due to higher energy costs which increased the energy pass-through component of our retail water rates.
(“AdR”) to pursue completion of the Project and executed a shareholders agreement for AdR agreeing among other things that (i) AdR would purchase the land and other Project assets from NSC on the date that the Project begins commercial operation and (ii) AdR would enter into a Management and Technical Services Agreement with NSC effective on the first day that the Project begins commercial operation.
(“AdR”) to pursue completion of the Project and executed a shareholders agreement for AdR agreeing among other things that (i) AdR would purchase the land and other Project assets from NSC on the date that the Project begins commercial operation and (ii) AdR would enter into a Management and Technical Services Agreement with NSC effective on the first day that the Project begins commercial operation. ​ On August 22, 2016, the Public Private Partnership Agreement for the Project (the “APP Contract”) was executed between AdR, the State Water Commission of Baja California (“CEA”), the Government of Baja California as represented by the Secretary of Planning and Finance and the Public Utilities Commission of Tijuana (“CESPT”).
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that the Cayman Islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ The Cayman Islands government could seek to grant a third party a license to service some or all of Cayman Water’s present service area.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. See further discussion of this matter at ITEM 7.
Gross profit as a percentage of revenue increased due to increased revenue and the resulting reduced impact of fixed factory overhead on this financial measure. ​ G&A expenses for the manufacturing segment increased to $1,838,284 for 2023 as compared to $1,485,342 for 2022 principally due to an increase of approximately $129,000 in employee costs attributable to pay raises, new hires and increased bonus accruals. ​ FINANCIAL CONDITION ​ The significant changes in the components of our consolidated balance sheet as of December 31, 2023 as compared to December 31, 2022 (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 increased by approximately $11.2 million primarily due to a $10.3 million increase in CW-Bahamas’ accounts receivable.
This increase in employee costs is attributable to pay raises as well as increased stock compensation and bonus accruals arising from the Company’s improved financial results from 2022 to 2023. ​ FINANCIAL CONDITION ​ The significant changes in the components of our consolidated balance sheet as of December 31, 2024 as compared to December 31, 2023 (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 increased by approximately $1.4 million primarily due to an increase in CW-Bahamas’ accounts receivable.
Based upon our negotiated, arms-length purchase of the remaining 39% equity interest in PERC from its minority shareholders for $7.8 million in January 2023, the fair value of our PERC reporting unit exceeded its carrying value by 79% as of December 31, 2022. ​ Due to the factors discussed in the following paragraphs, we elected to test the goodwill associated with our manufacturing reporting unit for possible impairment for 2022 using the quantitative tests applied in prior years. ​ Approximately 80% of Aerex’s revenue, and 89% of Aerex’s gross profit, for the year ended December 31, 2020 were generated from sales to one customer.
Due to the factors discussed in the following paragraphs, we elected to test the goodwill associated with our manufacturing reporting unit for possible impairment for 2022 using the quantitative tests applied in prior years. In 2020, approximately 80% of Aerex’s revenue, and 89% of Aerex’s gross profit were generated from sales to one customer.
Material Commitments, Expenditures and Contingencies ​ Cayman Water Retail License ​ We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area.
Cash used for additions to property, plant and equipment and construction in progress was $6,696,580. ​ Cash Flows from Financing Activities ​ Net cash used by our financing activities was $6,712,154, almost all of which related to the payment of dividends. ​ Material Commitments, Expenditures and Contingencies Cayman Water Retail License ​ We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area.
We recognized approximately $64.0 million in revenue for the Liberty Utilities contract in 2023. This contract was certified substantially complete in January 2024 and the remaining work on the plant will be completed by June 2024. Revenue generated under operations and maintenance contracts was $19,368,365 and $14,152,158 in 2023 and 2022, respectively.
We recognized approximately $64.0 million in revenue for the Liberty Utilities contract in 2023. Revenue generated under operations and maintenance contracts was $19,368,365 and $14,152,158 in 2023 and 2022, respectively. The increase in operations and maintenance revenue from 2022 to 2023 is attributable to new contracts and increased revenue on existing contracts.
To date, AdR has not received a formal response from CEA or CESPT to its submission of non-recoverable expenses. ​ We believe CW-Cooperatief, as a Netherlands company, has certain rights relating to its investments in NSC and AdR under the Agreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican States entered into force as of October 1, 1999 (the “Treaty”).
On August 28, 2020, AdR submitted their list of non-recoverable expenses, including those of NSC, to CEA and CESPT which was comprised of 51,144,525 United States dollars and an additional 137,333,114 Mexican pesos. ​ We believed CW-Cooperatief, as a Netherlands company, had certain rights relating to its investments in NSC and AdR under the Agreement on Promotion, Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the United Mexican States entered into force as of October 1, 1999 (the “Treaty”).
Therefore, the impact of inflation on 39 Table of Contents our gross profit, measured in consistent dollars, historically has not been material. However, we have not increased our retail water rates since January 2018 (despite the inflation that has occurred since that date) due to the lack of a resolution of our negotiations with OfReg for a new retail license.
However, while we have received annual inflation adjustments for the rates we charge under our bulk water agreements, we have not increased the retail water rates for Cayman Water since January 2018 (despite the inflation that has occurred since that date) due to the lack of a resolution of our negotiations with OfReg for a new retail license.
Two such meetings were held on July 9, 2021 and August 2, 2021 on a confidential basis, without a resolution of our investment dispute. ​ ​On February 9, 2022, CW-Cooperatief, filed a Request for Arbitration with the International Centre for Settlement of International Disputes requesting that the United Mexican States pay CW-Cooperatief damages in excess of US$51 million plus MXN$137 million (with the exact amount to be quantified in the proceedings), plus fees, costs and pre- and post-award interest. ​ CW-Cooperatief intends to pursue vigorously the relief sought in the arbitration, in addition to pursuing all other legal remedies and courses of action available under the operative contracts and applicable law with respect to its rights, damages, fees and expenses.
Two such meetings were held on July 9, 2021 and August 2, 2021 on a confidential basis, without a resolution of our investment dispute. ​ In February 2022, CW-Cooperatief, filed a Request for Arbitration with the International Centre for Settlement of International Disputes requesting that the United Mexican States pay CW-Cooperatief damages in excess of US$51 million plus MXN$137 million (with the exact amount to be quantified in the proceedings), plus fees, costs and pre- and post-award interest. ​ On May 29, 2024, we, through CW-Cooperatief, NSC, and AdR entered into a settlement agreement (the “Settlement Agreement”) with the State and Banco Nacional de Obras y Servicios Públicos, S.N.C., as trustee under the trust agreement for the trust named Fondo Nacional de Infraestructura (the “Trust”).
Moody’s also lowered The Bahamas’ local currency ceiling to Baa3 from Baa2 and its foreign currency ceiling to Ba1 from Baa3.
Moody’s also lowered The Bahamas’ local currency ceiling to Baa3 from Baa2 and its foreign currency ceiling to Ba1 from Baa3. Moody’s has maintained these ratings through the date of its most current report issued in October 2024.
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 December 31, 2023.
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 December 31, 2024. ​ CW-Bahamas held discussions with the WSC in March 2024 and with representatives of The Bahamas Government in April 2024 during which CW-Bahamas was informed that the Government intended to substantially reduce CW-Bahamas’ accounts receivable from the WSC before the end of 2024.
The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of this guidance.
We are currently evaluating the impact of this guidance. ​ 39 Table of Contents In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.
The more significant of such items and changes in working capital components included depreciation and amortization of $6,576,454, an increase in accounts receivable of $10,970,521 attributable principally to CW-Bahamas, an increase in contract assets of $18,639,335 due primarily to the Red Gate and Liberty Utilities construction contracts, a decrease in contract liabilities of $2,566,910 and an increase in accounts payable, accrued expenses and accrued compensation of $3,161,386. ​ Cash Flows from Investing Activities ​ Net cash used by our investing activities was $10,887,019.
The more significant of such items and changes in working capital components included the gain from the sale of land and project documentation from discontinued operations of $12,134,766, depreciation and amortization of $6,691,658, an increase in accounts receivable of $1,796,919 attributable principally to CW-Bahamas, a decrease in contract assets of $17,082,814 due primarily to the Red Gate and Liberty Utilities construction contracts, an increase in contract liabilities of $2,889,643 and a decrease in accounts payable, accrued expenses and other current liabilities of $2,370,274. ​ Cash Flows from Investing Activities ​ Net cash provided by our investing activities was $26,961,421 primarily due to the sale of land and project documentation from discontinued operations in Mexico.
However, as set forth in the 1990 license, “the Governor hereby agrees that upon the expiry of the term of this Licence or any extension thereof, he will not grant a licence or franchise to any other person or company for the processing, distribution, sale and supply of water within the Licence Area without having first offered such a licence or franchise to the Company on terms no less favourable than the terms offered to such other person or company.” ​ We are presently unable to determine what impact the resolution of our retail license negotiations will have on our cash flows, financial condition or results of operations but such resolution could result in a material reduction (or the loss) of the operating income and cash flows we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying value of our retail segment assets.
On February 18, 2025, Cayman Water received a new concession from the government that authorizes and maintains the terms of the 1990 license until a new license is negotiated and enacted. ​ We are presently unable to determine what impact the resolution of our retail license negotiations will have on our cash flows, financial condition or results of operations but such resolution could result in a material reduction (or the loss) of the operating income and cash flows we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying value of our retail segment assets.
At the end of the operating period, ownership of the plant and aqueduct would have been transferred to CEA.
At the end of the operating period, ownership of the plant and aqueduct would have been transferred to CEA. ​ On June 29, 2020, AdR received a letter (the “Letter”) from the Director General of CEA and the Director General of CESPT terminating the APP Contract.
Property, plant and equipment, net, increased by approximately $3.4 million primarily due to the commissioning of the West Bay seawater desalination plant at the end of the year. Construction in progress decreased by approximately $3.2 million primarily due to the commissioning of the West Bay seawater desalination plant at the end of the year.
Property, plant and equipment, net, decreased by approximately $3.5 million due to the scheduled depreciation of fixed assets. Construction in progress increased by approximately $4.6 million primarily due to $2.1 million spent on the CW-Bahamas Cat Island plant construction and $1.7 million spent on the new West Bay plant in Cayman Islands.
Accounts payable, accrued expenses and other current liabilities increased by approximately $3.2 million primarily due to a $4.0 million increase in subcontractor costs payable for PERC’s contract with Liberty Utilities and Kalaeloa Desalco’s contract with the Board of Water Supply of the City and County of Honolulu, Hawaii .
This decrease was offset by an increase in Aerex’s accounts payable of approximately $1.4 million as well as an increase in CW-Bahamas’ accrued expenses and purchase orders of approximately $1.2 million. 36 Table of Contents Contract liabilities increased by approximately $2.9 million primarily due to a $2.6 million increase in the services segment in connection with Kalaeloa Desalco’s contract with the Board of Water Supply of the City and County of Honolulu, Hawaii.
CW-Bahamas has been unable to pay a dividend to its shareholders since August 2022 due to liquidity constraints. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.
The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. ​ From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC.
We continue to pay the royalty required under the 1990 license. We have been informed during our retail license negotiations that the Cayman Islands government seeks to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license.
We have been informed during our retail license negotiations, both by OfReg and its predecessor in these negotiations, that they seek to restructure the terms of our license in a manner that could significantly reduce the operating income and cash flows we have historically generated from our retail license. ​ Under the new regulatory legislation passed in October 2016, Cayman Water must first be granted a concession by the government before obtaining a new (or renewing the old) retail operations license.
Business development expenses increased by approximately $182,000 primarily due to the costs associated with the acquisition of REC (which was completed in November 2023). ​ Bulk Segment: ​ The bulk segment contributed $8,742,382 and $8,393,729 to our income from operations for 2023 and 2022, respectively. ​ Bulk segment revenue was $34,595,058 and $32,991,066 for 2023 and 2022, respectively.
Retail segment gross profit increased to $16,266,822 (54% of retail revenue) for 2023 as compared to $13,405,250 (52% of retail revenue) for 2022 due to the revenue increase. 34 Table of Contents ​ Retail G&A expenses increased to $2,978,164 for 2023 as compared to $2,609,571 for 2022 primarily due to an increase in employee costs of approximately $164,000 due to pay raises and new hires. ​ Bulk Segment: ​ The bulk segment contributed $8,742,382 and $8,393,729 to our income from operations for 2023 and 2022, respectively. ​ Bulk segment revenue was $34,595,058 and $32,991,066 for 2023 and 2022, respectively.
Manufacturing Segment: ​ The manufacturing segment contributed $2,188,418 to our income from operations for 2023 as compared to incurring an operating loss of ($358,748) for 2022. ​ Manufacturing segment revenue was $17,491,474 and $6,324,465 for 2023 and 2022, respectively.
Manufacturing Segment: ​ The manufacturing segment contributed $2,867,405 and $2,188,418 to our income from operations in 2024 and 2023, respectively. ​ Manufacturing revenue remained relatively consistent at $17,595,414 and $17,491,474 for 2024 and 2023, respectively. ​ Manufacturing gross profit was $5,324,212 (30% of manufacturing revenue) for 2024 as compared to a gross profit of $4,024,469 (23% of manufacturing revenue) for 2023.
As of February 29, 2024, this receivable amounted to $24.6 million. ​ CW-Bahamas held discussions with the WSC in March 2024 during which the WSC stated that the Government intends to substantially reduce CW-Bahamas’ accounts receivable from the WSC over the course of 2024. ​ In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded the Government of The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
We continue to be in frequent contact with officials of the Bahamas government, who continue to express their intention to significantly reduce CW-Bahamas accounts receivable balances in the near future, however we cannot provide any assurance as to when such reduction will occur. ​ In a report dated October 6, 2022, Moody’s Investor Services (“Moody’s”) downgraded The Bahamas’ long-term issuer and senior unsecured ratings to B1 from Ba3.
Contract liabilities decreased by approximately $2.6 million primarily due to a $6.9 million reduction by the services segment in connection with PERC’s contract with Liberty Utilities and a decrease in Aerex’s contract liabilities of $1.6 35 Table of Contents million.
Current inventory increased by $2.9 million primarily due to an increase in Aerex’s inventory arising from production activity. Contract assets decreased by approximately $17.1 million primarily due to a $16.5 million decrease in the services segment contract assets attributable to the completion of the Liberty Utilities and the Red Gate II projects.
The impact of this adoption was not material to our consolidated financial statements. Effect of Newly Issued but not yet Effective Accounting Standards ​ In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures .
We have been in compliance with the performance guarantees under these contracts for all periods since the inception of the contracts. ​ Adoption of New Accounting Standards ​ In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures .
Approximately 80% of the December 31, 2023 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.
Approximately 81% of the December 31, 2024 accounts receivable balance was delinquent as of that date. As of February 28, 2025, this receivable amounted to $22.5 million, of which 77% was delinquent.
Removed
This license expired in January 2018 but as discussed in the following paragraph we continue to provide water under the terms of this license.
Added
We continued to pay the royalty of 7.5% required under the 1990 license. On February 18, 2025, we received a new concession from the Cayman Islands government that authorizes and maintains the terms of our previous license until a new license is negotiated and enacted.
Removed
Our retail license negotiations have also been impacted by the passage of new legislation and the establishment of a new water regulatory body in the Cayman Islands. See further discussion of this matter at ITEM 7.

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