Consolidated Water Co. Ltd.

Our business faces significant risks. These risks include those disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 as updated and supplemented by the risk factors included below. The risk factors below regarding the License supersede the risk factor in that Annual Report regarding the renegotiation of Cayman Water’s retail license. If any of the events or circumstances described in the referenced risks actually occurs, our business, financial condition or results of operations could be materially adversely affected and such events or circumstances could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. These risks should be read in conjunction with the other information set forth in this Quarterly Report as well as in our Annual Report on Form 10-K for the year ended December 31, 2025 and our other filings with the Securities and Exchange Commission.

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

CW-Bahamas’ accounts receivable balances (which include accrued interest) due from the WSC amounted to $23.5 million as of September 30, 2026. Approximately 64% of this September 30, 2026 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.

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, 2026, or prior periods.

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

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

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

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

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

The License has reduced, and may continue to reduce, the revenue and operating income we generate from our retail operations, and our retail profitability depends on future OfReg rate determinations and our compliance with the License.

Effective August 1, 2026, Cayman Water sells water under the License issued by OfReg, which established base rates that are lower than those under the 1990 License. Cayman Water’s retail operations generated approximately 27% of our consolidated revenue and 44% of our consolidated gross profit for the nine months ended September 30, 2026. Based on

our pro forma estimates, application of the License rate structure to historical volumes would have reduced our revenue by approximately $2.1 million for 2024 and $1.9 million for 2025 and $1.3 million for the period from January 1, 2026 to July 31, 2026. Future adjustments to base rates are subject to OfReg verification and approval, and recovery of energy costs is subject to an efficiency-based mechanism. OfReg may modify the License in specified circumstances, with or without our agreement, and may revoke or suspend the License upon specified events. Any of these factors could have a material adverse effect on our consolidated financial condition, results of operations and cash flows and could require us to record impairment losses on our retail segment assets.

Delays in obtaining permits and approvals for the Kalaeloa desalination plant have deferred, and may further defer, construction, revenue and cash flows from the project and could expose us to contractual remedies.

Kalaeloa Desalco must obtain federal, state and local permits and approvals before it can begin and complete construction of the 1.7 million gallons per day seawater reverse osmosis plant in Oahu, Hawaii. Permitting delays have deferred project milestones, and we now expect construction to begin in the first half of 2027 rather than late 2026. Several permits and approvals remain outstanding, including a Memorandum of Agreement from the State Historic Preservation Division. If schedule extensions from BWS are insufficient, BWS may attempt to assess liquidated damages, withhold milestone payments or terminate the contract, and cost increases during the delay may not be fully recovered. Any of these developments could have a material adverse effect on our consolidated results of operations and cash flows.

Our fixed-price design-build contracts, including PERC’s agreement with the City of Pismo Beach, expose us to cost overruns, performance requirements and liquidated damages.

In October 2026, PERC agreed to design and build the Central Coast Blue Advanced Water Purification Facility for the City of Pismo Beach, California for a fixed price of approximately $39.8 million. PERC must achieve Substantial Completion within 703 calendar days after commencement of services and will owe liquidated damages of $2,500 per day, up to 5% of the contract price, if Substantial Completion is late. PERC’s aggregate liability under the agreement is capped at $14.0 million, and the City may terminate the agreement for convenience. If our costs exceed our estimates or we fail to meet schedule or performance requirements, our consolidated results of operations and cash flows could be materially adversely affected.