Consolidated Water Co. Ltd.

Previous wording

For 2024, we elected to assess qualitative factors to determine whether it was necessary to perform the quantitative goodwill impairment testing we have conducted in prior years for our reporting units. We assessed the relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units are less than their carrying values. The events and circumstances assessed for each reporting unit included macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant events. Based upon this qualitative assessment, we determined that it is more likely than not that the fair values of our reporting units exceeded their carrying values as of December 31, 2024.

Current wording

For 2025, we elected to assess qualitative factors to determine whether it was necessary to perform quantitative goodwill impairment testing for our reporting units. We assessed the relevant events and circumstances to evaluate whether it is more likely than not that the fair values of such reporting units are less than their carrying values. The events and circumstances assessed for each reporting unit included macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant information. Based upon this qualitative assessment, we determined that it is more likely than not that the fair values of our reporting units exceeded their carrying values as of December 31, 2025.

Previous wording

In late July 2021, this former major customer communicated to Aerex that it expected to recommence its purchases of the specialized product from Aerex in 2022 and subsequent years, but informed Aerex that such purchases would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in 2020 and prior years. Our updated sales estimate for this customer based on this new information was substantially below the sales we anticipated to this customer for 2022 and subsequent years that we used in the discounted cash flow projections we prepared for purposes of testing our manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020. Furthermore, Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers were adversely impacted by negative economic conditions (caused in part by the COVID-19 pandemic). These negative economic conditions also increased Aerex’s raw material costs, resulted in raw material shortages and extended delivery times for such materials, and adversely affected the overall financial condition of Aerex’s current and prospective customers. Accordingly, in light of this new information from Aerex’s former major customer, and the on-going weak economic conditions that we believed would continue through 2022, we updated our projections of future cash flows for the manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively. Based upon this testing, we determined that the carrying value of our manufacturing reporting unit exceeded its fair value by $2.9 million, and we recorded an impairment loss to reduce our manufacturing segment’s goodwill by this amount for the three months ended June 30, 2021.

Current wording

In July 2021, a major customer communicated to Aerex that its purchases of a specialized product from Aerex in 2022 and subsequent years would be at substantially reduced annual amounts, as compared to the amounts it had purchased from Aerex in prior years. As a result, our updated sales estimate for this customer based on this new information was substantially below the sales we anticipated to this customer for 2022 and subsequent years that we used in the discounted cash flow projections we prepared for purposes of testing our manufacturing reporting unit’s goodwill for possible impairment as of December 31, 2020. Furthermore, Aerex’s efforts to replace the revenue previously generated from this customer with revenue from existing and new customers were adversely impacted by negative economic conditions (caused in part by the COVID-19 pandemic). These negative economic conditions also increased Aerex’s raw material costs, resulted in raw material shortages and extended delivery times for such materials, and adversely affected the overall financial condition of Aerex’s current and prospective customers. Accordingly, in light of this new information from Aerex’s major customer, and the on-going weak economic conditions that we believed would continue through 2022, we updated our projections of future cash flows for the manufacturing reporting unit and tested its goodwill for possible impairment as of June 30, 2021 using the discounted cash flow and guideline public company methods, with a weighting of 80% and 20% applied to these two methods, respectively. Based upon this testing, we determined that the carrying value of our manufacturing reporting unit exceeded its fair value by $2.9 million, and we recorded an impairment loss to reduce our manufacturing segment’s goodwill by this amount for the three months ended June 30, 2021.

Previous wording

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

Current wording

We design, construct, and sell desalination infrastructure through DesalCo, which serves customers in the Cayman Islands, The Bahamas, and the British Virgin Islands. We design, construct, and sell wastewater, water reuse, and water production infrastructure in the United States through PERC and Kalaeloa Desalco. Aerex is a custom and specialty manufacturer in

Previous wording

We recognize revenue for our construction and our specialized/custom manufacturing contracts (and some of our design contracts)over time under the input method using costs incurred (which represents work performed) to date relative to the total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations, as such measure best reflects the transfer of control of the promised good to the customer. Contract costs include labor, materials, subcontractor costs and other expenses. We follow this method since we can make reasonably dependable estimates of the revenue and costs applicable to the various stages of a contract. Under this input method, we record revenue and recognize profit or loss as work on the contract progresses. We estimate total costs to be incurred and profit to be earned on each long-term, fixed price contract prior to commencement of work on the contract and update these estimates as work on the contract progresses. The cumulative amount of revenue recorded on a contract at a specified point in time is that percentage of total estimated revenue that incurred costs to date comprised of estimated total contract costs. Due to the extended time it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimations of total revenue and costs at completion are complicated and subject to many variables and, accordingly, are subject to changes. When adjustments in estimated total contract revenue or estimated total contract costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. We recognize the full amount of any estimated loss on a contract at the time the estimates indicate such a loss.

Current wording

We recognize revenue for our construction and our specialized/custom manufacturing contracts (and some of our design contracts)over time under the input method using costs incurred (which represents work performed) to date relative to the total estimated costs at completion to measure progress toward satisfying a contract’s performance obligations, as such measure best reflects the transfer of control of the promised good to the customer. Contract costs include labor, materials, subcontractor costs and other expenses. We follow this method since we can make reasonably dependable estimates of the revenue and costs applicable to the various stages of a contract. Under this input method, we record revenue and recognize profit or loss as work on the contract progresses. We estimate total costs to be incurred and profit to be earned on each long-term, fixed price contract prior to commencement of work on the contract and update these estimates as work on the contract progresses. The cumulative amount of revenue recorded on a contract at a specified point in time is that percentage of total estimated revenue that incurred costs to date comprise of estimated total contract costs. Due to the extended time it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimations of total revenue and costs at completion are complicated and subject to many variables and, accordingly, are subject to changes. When adjustments in estimated total contract revenue or estimated total contract costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. We recognize the full amount of any estimated loss on a contract at the time the estimates indicate such a loss.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included under Part I, Item 1. “Financial Statements” of this Quarterly Report and our consolidated financial statements and accompanying notes

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included under Part I, Item 1. “Financial Statements” of this Quarterly Report and our consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for our fiscal year ended December 31, 2025 (“2025 Form 10-K”) and the information set forth under Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Form 10-K.

Previous wording

Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2025 was $5,532,344 ($0.34 per share on a fully diluted basis), as compared to net income of $4,454,464 ($0.28 per share on a fully diluted basis) for 2024.

Current wording

Including discontinued operations, net income attributable to Consolidated Water Co. Ltd. stockholders for 2026 was $3,777,429 ($0.23 per share on a fully diluted basis), as compared to net income of $4,791,029 ($0.30 per share on a fully diluted basis) for 2025. Our net losses from discontinued operations for 2026 and 2025 were ($43,042) and ($133,081), respectively. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for a discussion of our discontinued operations.

Previous wording

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2025 was $5,569,564 ($0.34 per share on a fully diluted basis), as compared to net income from continuing operations of $4,957,318 ($0.31 per share on a fully diluted basis) for 2024.

Current wording

Net income from continuing operations attributable to Consolidated Water Co. Ltd. stockholders for 2026 was $3,820,471 ($0.24 per share on a fully diluted basis), as compared to net income from continuing operations of $4,924,110 ($0.31 per share on a fully diluted basis) for 2025.

Previous wording

Revenue for 2025 increased to $35,118,706 from $33,390,557 in 2024, as a result of revenue increases in the retail, services and manufacturing segments. These increases were partially offset by a slight decline in revenue for the bulk segment. Gross profit for 2025 was $12,945,909 (37% of total revenue) as compared to $11,634,658 (35% of total revenue) for 2024. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows.

Current wording

Revenue for 2026 decreased to $29,973,700 from $33,715,385 in 2025 as a result of revenue decreases in the manufacturing and retail segments, which were partially offset by revenue increases in the bulk and services segments. Gross profit for 2026 was $10,916,013 (36% of total revenue) as compared to $12,306,287 (37% of total revenue) for 2025. For further discussion of revenue and gross profit see the “Results by Segment” discussion and analysis that follows.

Previous wording

General and administrative (“G&A”) expenses on a consolidated basis increased to $7,218,722 for 2025 as compared to $6,955,969 for 2024. The increase in G&A expenses for 2025 arises principally from incremental employee costs of approximately $193,000 attributable to new hires and salary increases.

Current wording

General and administrative (“G&A”) expenses on a consolidated basis decreased to $7,419,068 for 2026 as compared to $7,723,959 for 2025. An increase in employee costs of approximately $211,000 from 2025 to 2026 was more than offset by a decrease in professional fees and reductions in various other expenses.

Previous wording

Other income, net, remained relatively consistent at $811,227 for 2025 as compared to $724,040 for 2024.

Current wording

Other income, net, remained relatively consistent at $739,566 for 2026 as compared to $688,891 for 2025.

Previous wording

As a result of the revenue increase, retail segment gross profit increased in both total dollars and as a percentage of revenue to $14,890,629 (58% of retail revenue) for 2025 from $13,564,393 (56% of retail revenue) for 2024.

Current wording

As a result of the revenue decrease, retail segment gross profit decreased in both total dollars and as a percentage of revenue to $4,934,901 (58% of retail revenue) for 2026 as compared to $5,705,279 (61% of retail revenue) for 2025.

Previous wording

Retail G&A expenses increased to $2,726,531 for 2025 compared to $2,335,807 for 2024 primarily as a result of incremental information technology expenses to approximately $240,000 for the ongoing implementation of a new utility billing system.

Current wording

Retail G&A expenses increased to $902,607 for 2026 compared to $788,812 for 2025 primarily as a result of incremental employee costs of just over $74,000.

Previous wording

The manufacturing segment contributed $1,414,367 and $843,804 to our income from operations in 2025 and 2024, respectively.

Current wording

The bulk segment contributed $2,604,560 and $2,481,546 to our income from operations for 2026 and 2025, respectively.

Previous wording

Bulk segment G&A expenses remained relatively consistent at $1,008,123 for 2025 as compared to $1,088,639 for 2024.

Current wording

Bulk segment G&A expenses also remained relatively consistent at $404,223 for 2026 as compared to $346,081 for 2025.

Previous wording

Gross profit for the services segment increased to $3,844,421 (27% of services revenue) in 2025 from $3,268,512 (26% of services revenue) in 2024 due to the overall increase in revenue.

Current wording

Gross profit for the services segment increased to $2,824,188 (25% of services revenue) in 2026 from $2,016,391 (20% of services revenue) in 2025 due to the increase in O&M revenue.

Previous wording

Corporate G&A expenses remained relatively consistent at $3,585,104 for 2025 as compared to $3,572,073 for 2024.

Current wording

Corporate G&A expenses remained relatively consistent at $3,840,334 for 2026 as compared to $3,729,650 for 2025.

Previous wording

Contract liabilities increased by $2.6 million due to a $3.2 million increase for the Kalaeloa Desalco construction project.

Current wording

Contract liabilities increased by $1.3 million due to an $874,000 increase in PERC and a $567,000 increasein the Kalaeloa Desalco construction project.

Previous wording

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

Current wording

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

Previous wording

Our projected liquidity requirements for the balance of 2025 include capital expenditures for our existing operations of approximately $4.5 million, which includes approximately $1.3 million to be incurred during 2025 for a project in The Bahamas and $266,000 for new equipment for Aerex’s manufacturing facility. We paid approximately $2.3 million for dividends in October 2025. Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board.

Current wording

Our projected liquidity requirements for the balance of 2026 include capital expenditures for our existing operations of approximately $8.6 million. We paid approximately $2.3 million for dividends in April 2026. Our liquidity requirements may also include future quarterly dividends, if such dividends are declared by our Board.

Previous wording

As of September 30, 2025, we had cash and cash equivalents of $123.6 million and working capital of $141.7 million.

Current wording

As of March 31, 2026, we had cash and cash equivalents of $126.3 million and working capital of $144.3 million.

Previous wording

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $16.8 million and $28.4 million as of September 30, 2025 and December 31, 2024, respectively. Approximately 66% and 81% of the accounts receivable balances were delinquent as of those dates, respectively. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.

Current wording

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $23.9 million and $20.7 million as of March 31, 2026 and December 31, 2025, respectively. Approximately 75% and 71% of the accounts receivable balances were delinquent as of those dates, respectively. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.

Previous wording

From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC. When these delays occur, we hold discussions and meetings with representatives of the WSC and the government of The Bahamas. All previous delinquent accounts receivable from the WSC, including accrued interest thereon, were eventually paid in full. Based upon this payment history, we have not provided for a material allowance for credit losses for CW-Bahamas’ accounts receivable from the WSC as of September 30, 2025.

Current wording

From time to time (including presently), CW-Bahamas has experienced delays in collecting its accounts receivable from the WSC. When these delays occur, we hold discussions and meetings with representatives of the WSC and the government of The Bahamas. All previous delinquent accounts receivable from the WSC, including accrued interest thereon, were eventually paid in full. Based upon this payment history, we have not provided for a material allowance for credit losses for CW-Bahamas’ accounts receivable from the WSC as of March 31, 2026, or prior periods.

Previous wording

We continue to be in frequent contact with officials of The Bahamas government, who continue to express their intention to eliminate CW-Bahamas delinquent accounts receivable balances in the near future. However, we are unable to determine when such reduction will occur.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Discussion of Cash Flows for the Nine Months Ended September 30, 2025

Current wording

Discussion of Cash Flows for the Three Months Ended March 31, 2026

Previous wording

Our cash and cash equivalents increased to $123,554,648 as of September 30, 2025 from $99,350,121 as of December 31, 2024.

Current wording

Our cash and cash equivalents increased to $126,331,873 as of March 31, 2026 from $123,788,390 as of December 31, 2025.

Previous wording

Net cash provided by our operating activities was $35,932,833. This net cash reflects the net income generated for the nine months ended September 30, 2025 of $15,890,319 as adjusted for (i) various items included in the determination of net income that do not affect cash flows during the year; and (ii) changes in the other components of working capital. Significant adjustments included depreciation and amortization of $5,163,826, a decrease in accounts receivable of $10,290,048, a decrease in inventory of $3,610,403, an increase in contract assets of $2,261,618, and an increase in contract liabilities of $2,555,352.

Current wording

Net cash provided by our operating activities was $6,543,681. This net cash reflects the net income generated for the three months ended March 31, 2026 of $3,933,564 as adjusted for (i) various items included in the determination of net income that do not affect cash flows during the year; and (ii) changes in the other components of working capital. Significant adjustments included depreciation and amortization of $1,754,705, an increase in accounts receivable of $3,453,459, a decrease in prepaid expenses and other assets of $1,564,843, a decrease in contract assets of $1,996,967, and an increase in contract liabilities of $1,346,535.

Previous wording

Net cash used in our investing activities was $6,045,599 primarily for additions to property, plant and equipment and construction in progress.

Current wording

Net cash used in our investing activities was $1,682,253 primarily for additions to property, plant and equipment and construction in progress.

Previous wording

Net cash used by our financing activities was $5,784,451, almost all of which related to the payment of dividends.

Current wording

Net cash used by our financing activities was $2,311,849, almost all of which related to the payment of dividends.

Previous wording

We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area. Pursuant to the 1990 license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman Island: Seven Mile Beach and West Bay. For the three months ended September 30, 2025 and 2024, we generated approximately 22% and 23%, respectively, of our consolidated revenue and 33% and 34%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license. For the nine months ended September 30, 2025 and 2024, we generated approximately 25% and 23%, respectively, of our consolidated revenue and 39% and 36%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license.

Current wording

We sell water through our retail operations under a license issued in July 1990 by the Cayman Islands government (the “1990 license”) that granted Cayman Water the exclusive right to provide potable water to customers within its licensed service area. Pursuant to the 1990 license, Cayman Water has the exclusive right to produce potable water and distribute it by pipeline to its licensed service area, which consists of two of the three most populated areas of Grand Cayman Island: Seven Mile Beach and West Bay. For the three months ended March 31, 2026 and 2025, we generated approximately 29% and 28%, respectively, of our consolidated revenue and 45% and 46%, respectively, of our consolidated gross profit from the retail water operations conducted under the 1990 license.

Previous wording

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 its 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 consolidated financial condition, results of operations, or cash flows but such resolution could result in a material reduction (or the loss) of the operating income and cash flows we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying

Current wording

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 its 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 consolidated financial condition, results of operations, or cash flows but such resolution could result in a material reduction (or the loss) of the operating income and cash flows we have historically generated from our retail operations and could require us to record impairment losses to reduce the carrying values of our retail segment assets. Such impairment losses could have a material adverse impact on ourconsolidated financial condition and results of operations.

Previous wording

In November 2024, the FASB issued ASU 2024-03,*Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.*The ASU requires public companies to disclose, in the notes to financial statements, specific information about certain costs and expenses at each interim and annual reporting period. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact of this guidance.

Current wording

In November 2024, the FASB issued ASU 2024-03,*Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.*The ASU requires public companies to disclose, in the notes to financial statements, specific information about certain costs and expenses at each interim and annual reporting period. The amended ASU is effective on a prospective basis for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact of this guidance on our financial statements.

Previous wording

We have paid dividends to owners of our common stock and redeemable preferred stock since we began declaring dividends in 1985. Our payment of any future cash dividends will depend upon our earnings, financial condition, cash

Current wording

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

Previous wording

Under the terms of our bulk water sales agreements in The Cayman Islands, The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis. Therefore, the impact of inflation on our gross profit from these revenue sources, measured in consistent dollars, historically has not been material. However, while we have received annual inflation adjustments for the rates we charge under our bulk water agreements, we were unable to increase the water rates for Cayman Water since January 2018 (despite the inflation that has occurred since that date) due to the delayed resolution of our negotiations with OfReg for a new retail license. While we believe that we are entitled to apply to OfReg for future rate adjustments under the terms of the February 18, 2025 concession agreement with the Cayman Islands government, the denial by OfReg of such application or approval of an increase that is less than the increase in our costs could adversely affect the profitability of our retail segment. Furthermore, our manufacturing segment has in the past been adversely impacted by significant increases in raw material costs and our manufacturing and services segments could suffer similar adverse impacts in the future.

Current wording

Under the terms of our bulk water sales agreements in The Cayman Islands, The Bahamas and the British Virgin Islands, our water rates are automatically adjusted for inflation on an annual basis. Therefore, the impact of inflation on our gross profit from these revenue sources, measured in consistent dollars, historically has not been material. However, while we have received annual inflation adjustments for the rates we charge under our bulk water agreements, we have not applied to increase the water rates for Cayman Water since January 2018 (despite the inflation that has occurred since that date) due to the delayed resolution of our negotiations with OfReg for a new retail license. While we believe that we are entitled to apply to OfReg for future rate adjustments under the terms of the February 18, 2025 concession agreement with the Cayman Islands government, the denial by OfReg of such application or approval of an increase that is less than the increase in our costs could adversely affect the profitability of our retail segment. Furthermore, our manufacturing segment has in the past been adversely impacted by significant increases in raw material costs and our manufacturing and services segments could suffer similar adverse impacts in the future.

Previous wording

Kalaeloa Desalco has signed a contract with the Honolulu Board of Water Supply pursuant to which it is presently designing and expects to construct and operate a 1.7 million gallons per day seawater reverse osmosis desalination plant in Oahu, Hawaii. Approximately 80% of the $147 million price for the construction of this plant is subject to adjustment based upon changes in inflation indices from September 29, 2022 (the date that was 120 days after the original proposal was submitted) until the date that the notice to proceed with construction is issued by the client.

Current wording

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