What the changes say
- Cayman Islands retail water license and OfReg negotiations threaten operating income.
- Bahamas accounts receivable delinquency remains a primary cash flow concern.
What changed since the prior 10-K
New
- New
In October 2016, the Government of the Cayman Islands passed legislation which created OfReg and, in April 2017, passed supplemental legislation which transferred responsibility for the economic regulation of the water utility sector and the negotiations with us for a new retail license to OfReg
Cayman Water received a new concession on February 18, 2025, maintaining the 1990 license terms while retail license negotiations with OfReg continue.
- New
new license from OfReg is negotiated and enacted. Negotiations between Cayman Water and OfReg for the new license remain on-going
OfReg negotiations could restructure the retail license and significantly reduce Cayman Water operating income, cash flows, and asset values.
- New
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
Moody's downgraded The Bahamas credit rating, though management believes no material credit loss allowance is needed for WSC accounts receivable.
- New
Substantial changes to fiscal, regulation and other federal policies could adversely affect our business, financial condition, operating results and cash flows
Trade policies, tariffs, and international regulations could adversely impact our business operations and customers in the U.S. and other countries.
- New
of competent jurisdiction in the United States courts, lack of due service of process in the United States proceeding and the possibility that enforcement or recognition of the United States judgment would be contrary to the public policy of the Cayman Islands
United States court judgments, such as treble damages under securities acts, may be unenforceable in Cayman Islands courts.
Dropped
- Dropped
1990 license as operative notwithstanding the expiration of the express extension. We continued to pay a royalty of 7.5% of the revenue we collected as required under the 1990 license
- Dropped
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
Description of OfReg creation and regulatory powers in the Cayman Islands.
- Dropped
brought in courts or jurisdictions located outside of the United States, rights predicated upon the United States securities laws
Reworded
- 72% rewritten
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
Updated WSC receivable figures to $20.7 million for 2025 (71% delinquent) and $22.6 million as of February 2026 (75% delinquent).
- 63% rewritten
Service of process and enforcement of legal proceedings commenced against us in the United States may be difficult to obtain
Updated non-US resident officer and director count to six of 15 as of March 9, 2026.
- 51% rewritten
The profitability of our contracts is dependent upon our ability to accurately estimate construction and operating costs
Retained the exact text regarding cost estimation uncertainties for construction, manufacturing, and operating contracts.
- 45% rewritten
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
Updated retail segment financial contributions, showing 2025 revenue at 26% and gross profit at 39% of consolidated totals.
All 23 risk factors
Headings as the filing states them, in filing order.
Other
- 01Our 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 negotiations45% rewritten
- 02In October 2016, the Government of the Cayman Islands passed legislation which created OfReg and, in April 2017, passed supplemental legislation which transferred responsibility for the economic regulation of the water utility sector and the negotiations with us for a new retail license to OfRegNew
- 03new license from OfReg is negotiated and enacted. Negotiations between Cayman Water and OfReg for the new license remain on-goingNew
- 04Periodically, 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 affected72% rewritten
- 05We 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 occurNew
- 06The profitability of our contracts is dependent upon our ability to accurately estimate construction and operating costs51% rewritten
- 07Substantial changes to fiscal, regulation and other federal policies could adversely affect our business, financial condition, operating results and cash flowsNew
- 08A significant portion of our consolidated revenue is derived from our water supply agreements with the WSC. The loss of the WSC as a customer would adversely affect us
- 09Our operations are affected by tourism and are subject to seasonal fluctuations and other factors beyond our control that could affect the demand for our water
- 10Performance shortfalls under any of our bulk supply contracts could result in penalties or cancellation of the contract
- 11Our operations could be harmed by natural disasters such as hurricanes or earthquakes
- 12Contamination of our water may cause disruption in our services and adversely affect our revenue
- 13Potential government decisions, actions and regulations could negatively affect our operations
- 14Unforeseen environmental costs could adversely affect our business and results of operations
- 15If 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
- 16We rely on the efforts of key employees. Our failure to retain these employees could adversely affect our results of operations
- 17Our business could be adversely affected by cyber threats or other interruptions in information technology, communications networks and operations
- 18We are exposed to credit risk through our relationships with several customers
- 19We are exposed to the risk of variations in currency exchange rates
- 20We may not pay dividends in the future. If dividends are paid, they may be in lesser amounts than past dividends
- 21Service of process and enforcement of legal proceedings commenced against us in the United States may be difficult to obtain63% rewritten
- 22of competent jurisdiction in the United States courts, lack of due service of process in the United States proceeding and the possibility that enforcement or recognition of the United States judgment would be contrary to the public policy of the Cayman IslandsNew
- 23The relatively low trading volume of our stock may adversely impact the ability to sell our shares
Other Consolidated Water 10-Ks
- FY2024 10-K risk factors21 risks
The company relies heavily on a retail license in the Cayman Islands that is currently under renegotiation with OfReg. Accounts receivable from the Bahamas subsidiary face substantial collection delays, with $28.4 million due and 81% delinquent. A material weakness in internal controls over financial reporting was identified for IT general controls. A single bulk customer, WSC, accounts for 22% of consolidated revenue.
Filed Mar 17, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.