ARTESIAN RESOURCES CORP (Form: 10-Q, Received: 05/08/2026 12:29:25)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 000-18516

ARTESIAN RESOURCES CORPORATION

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(Exact name of registrant as specified in its charter)

Delaware	51-0002090
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(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

664 Churchmans Road, Newark, Delaware 19702

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(Address of principal executive offices)

(302) 453 – 6900

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(Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	ARTNA	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑

Yes

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☑

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12(b)-2 of the Exchange Act.

Large Accelerated Filer ☐

Accelerated Filer ☐

Non-Accelerated Filer ☑

Smaller Reporting Company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐

Yes

☑

As of May 6, 2026, 9,442,986 shares of Class A Non-Voting Common Stock and 881,452 shares of Class B Common Stock were outstanding.

TABLE OF CONTENTS

ARTESIAN RESOURCES CORPORATION

FORM 10-Q

Part I	-	Financial Information:

Item 1	-	Financial Statements	Page(s)

		Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (unaudited)	3

		Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 (unaudited)	4

		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited)	5 – 6

		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three month periods ended March 31, 2026 and 2025 (unaudited)	7

		Notes to Unaudited Condensed Consolidated Financial Statements	8– 24

Item 2	-	Management's Discussion and Analysis of Financial Condition and Results of Operations	25– 31

Item 3	-	Quantitative and Qualitative Disclosures about Market Risk	32

Item 4	-	Controls and Procedures	32

Part II	-	Other Information	33

Item 1	-	Legal Proceedings	33

Item 1A	-	Risk Factors	33

Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3	-	Defaults Upon Senior Securities	33

Item 4	-	Mine Safety Disclosures	33

Item 5	-	Other Information	33

Item 6	-	Exhibits	34

Signatures

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

ARTESIAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

ASSETS		March 31, 2026		December 31, 2025
Utility plant, at original cost (less accumulated depreciation - 2026- $205,600; 2025 - $202,077)	$	812,275	$	801,694
Current assets
Cash and cash equivalents		4,255		52
Accounts and other receivables (less provision for expected credit loss 2026 - $349; 2025 - $340)		12,911		9,489
Income tax receivable		57		769
Unbilled operating revenues		1,824		1,910
Materials and supplies		3,303		3,716
Prepaid property taxes		1,118		1,808
Prepaid expenses and other		3,003		3,673
Total current assets		26,471		21,417
Other assets
Non‑utility property (less accumulated depreciation - 2026 - $1,162; 2025 - $1,146)		3,529		3,541
Other deferred assets		10,024		9,571
Goodwill		1,939		1,939
Operating lease right-of-use assets		413		414
Total other assets		15,905		15,465
Regulatory assets, net		12,287		12,653
Total Assets	$	866,938	$	851,229

LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity
Common stock	$	10,318	$	10,316
Preferred stock		-		-
Additional paid-in capital		144,668		144,492
Retained earnings		97,812		95,114
Total stockholders' equity		252,798		249,922
Long-term debt, net of current portion		183,447		174,276
		436,245		424,198
Current liabilities
Lines of credit		-		5,719
Current portion of long-term debt		2,486		2,132
Accounts payable		8,298		14,018
Accrued expenses		5,235		4,601
Overdraft payable		72		103
Accrued interest		1,366		916
Income taxes payable		1,960		389
Customer and other deposits		3,554		3,474
Other		3,194		2,370
Total current liabilities		26,165		33,722

Commitments and contingencies

Deferred credits and other liabilities
Net advances for construction		369		374
Operating lease liabilities		406		407
Regulatory liabilities		25,966		26,301
Deferred investment tax credits		391		395
Deferred income taxes		54,995		54,756
Total deferred credits and other liabilities		82,127		82,233

Net contributions in aid of construction		322,401		311,076
Total Liabilities and Stockholders' Equity	$	866,938	$	851,229

See notes to the condensed consolidated financial statements.

ARTESIAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

	For the Three Months Ended
	March 31,
		2026		2025
Operating revenues
Water sales	$	22,192	$	20,687
Other utility operating revenue		3,567		3,358
Non-utility operating revenue		2,015		1,841
Total Operating Revenues		27,774		25,886

Operating expenses
Utility operating expenses		13,153		12,324
Non-utility operating expenses		1,215		1,122
Depreciation and amortization		3,452		3,357
State and federal income taxes		2,059		1,851
Property and other taxes		1,619		1,686
Total Operating Expenses		21,498		20,340

Operating income		6,276		5,546

Other income
Allowance for funds used during construction (AFUDC)		498		566
Miscellaneous income		1,388		1,489

Income before interest charges		8,162		7,601

Interest charges		2,228		2,166

Net income applicable to common stock	$	5,934	$	5,435

Net income per common share:
Basic	$	0.58	$	0.53
Diluted	$	0.57	$	0.53

Weighted average common shares outstanding:
Basic		10,318		10,302
Diluted		10,324		10,306

Cash dividends per share of common stock	$	0.3136	$	0.3014

See notes to the condensed consolidated financial statements.

ARTESIAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Three Months Ended
	March 31,
		2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	5,934		$	5,435
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,452			3,357
Amortization of debt expense		88			88
Amortization of deferred income tax regulatory liability		(325	)		(325	)
Provision for expected credit loss		53			49
Deferred income taxes, net		235			(149	)
Stock compensation		92			46
AFUDC, equity portion		(349	)		(383	)

Changes in assets and liabilities, net of acquisitions:
Accounts and other receivables		(3,232	)		1,208
Income tax receivable		712			441
Unbilled operating revenues		86			104
Materials and supplies		413			(1,249	)
Income tax payable		1,571			1,256
Prepaid property taxes		690			992
Prepaid expenses and other		670			371
Other deferred assets		(462	)		(482	)
Regulatory assets		4			(4	)
Regulatory liabilities		(56	)		-
Accounts payable		(2,265	)		(36	)
Accrued expenses		124			(231	)
Accrued interest		450			404
Customer deposits and other, net		751			66
NET CASH PROVIDED BY OPERATING ACTIVITIES		8,636			10,958

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (net of AFUDC, equity portion)		(13,139	)		(10,398	)
Proceeds from sale of assets		16			3
NET CASH USED IN INVESTING ACTIVITIES		(13,123	)		(10,395	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments under lines of credit agreements		(10,933	)		(357	)
Borrowings under lines of credit agreements		5,214			357
Deferred debt issuance costs		(20	)		-
(Decrease) increase in overdraft payable		(31	)		269
Proceeds from contributions in aid of construction and advances		8,363			5,840
Payouts for contributions in aid of construction and advances		(276	)		(630	)
Net proceeds from issuance of common stock		84			85
Issuance of long–term debt		10,000			-
Dividends paid		(3,236	)		(3,104	)
Principal repayments of long-term debt		(475	)		(463	)
NET CASH PROVIDED BY FINANCING ACTIVITIES	$	8,690		$	1,997

ARTESIAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED

(Unaudited)

(In thousands)

	For the Three Months Ended
	March 31,
		2026		2025

NET INCREASE IN CASH AND CASH EQUIVALENTS	$	4,203	$	2,560

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		52		1,147

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	4,255	$	3,707

Supplemental Disclosures of Cash Flow Information:

	For the Three Months Ended
	March 31,
		2026			2025

Non-cash Investing and Financing Activity:
Utility plant received as construction advances and contributions in aid of construction	$	4,388		$	4,774

Contractual amounts of contributions in aid of construction due from developers included in accounts receivable and due from class action settlement funds included in other deferred assets (See Note 15 – Legal Proceedings)	$	1,835		$	216

Change in amounts included in accounts payable, accrued payables and other related to capital expenditures	$	(2,792	)	$	(1,810	)

Supplemental Disclosures of Cash Flow Information:
Interest paid	$	1,690		$	1,674
Income taxes paid	$	25		$	678
Income taxes refunded	$	165		$	50

See notes to the condensed consolidated financial statements.

ARTESIAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)





	Common Shares Outstanding	Common Shares Outstanding		$1 Par Value		$1 Par Value
	Class A Non-Voting (1) (3) (4)	Class B Voting (2)		Class A Non-Voting		Class B Voting		Additional Paid-in Capital		Retained Earnings			Total

Balance as of December 31, 2024	9,419	881	$	9,419	$	881	$	143,920	$	84,969		$	239,189

Net income	-	-		-		-		-		5,435			5,435
Cash dividends declared
Common stock	-	-		-		-		-		(3,104	)		(3,104	)
Issuance of common stock
Dividend reinvestment plan	3	-		3		-		82		-			85
Employee stock options and awards(4)	-	-		-		-		45		-			45
Employee Retirement Plan(3)	-	-		-		-		-		-			-
Balance as of March 31, 2025	9,422	881	$	9,422	$	881	$	144,047	$	87,300		$	241,650


	Common Shares Outstanding	Common Shares Outstanding		$1 Par Value		$1 Par Value
	Class A Non-Voting (1) (3) (4)	Class B Voting (2)		Class A Non-Voting		Class B Voting		Additional Paid-in Capital		Retained Earnings			Total

Balance as of December 31, 2025	9,435	881	$	9,435	$	881	$	144,492	$	95,114		$	249,922

Net income	-	-		-		-		-		5,934			5,934
Cash dividends declared													-
Common stock	-	-		-		-		-		(3,236	)		(3,236	)
Issuance of common stock
Dividend reinvestment plan	2	-		2		-		84		-			86
Employee stock options and awards(4)	-	-		-		-		92		-			92
Employee Retirement Plan(3)	-	-		-		-		-		-			-
Balance as of March 31, 2026	9,437	881	$	9,437	$	881	$	144,668	$	97,812		$	252,798

(1)

At March 31, 2026 and March 31, 2025, Class A Non-Voting Stock had 15,000,000 shares authorized. For the same periods, shares issued, inclusive of 28,970 treasury shares, were 9,465,922 and 9,450,519, respectively.

(2)

At March 31, 2026 and March 31, 2025, Class B Voting Stock had 1,040,000 shares authorized and 881,452 shares issued.

(3)

Artesian Resources Corporation registered 200,000 shares of Class A Non-Voting Stock, subsequently adjusted for stock splits, available for purchase through the Company’s 401(k) retirement plan.

(4)

Under the Equity Compensation Plan, effective December 9, 2015, or the 2015 Plan, and the 2025 Equity Compensation Plan, effective October 31, 2025, or the 2025 Plan, Artesian Resources Corporation authorized up to 331,500 shares and 263,932, respectively, of Class A Non-Voting Stock for issuance of grants in the form of stock options, stock units, dividend equivalents and other stock-based awards, subject to adjustment in certain circumstances as discussed in the Plan. The 2025 Plan replaces the 2015 Plan, and outstanding grants under the 2015 Plan shall continue in effect according to their terms, consistent with the 2015 Plan. Includes stock compensation expense for March 31, 2026 and March 31, 2025. See Note 8 – Stock Compensation Plans.

See notes to the condensed consolidated financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – GENERAL

Artesian Resources Corporation, or Artesian Resources, includes income from the earnings of all our wholly-owned subsidiaries. The terms "we", "our", "Artesian" and the "Company" as used herein refer to Artesian Resources and its subsidiaries.

DELAWARE REGULATED UTILITY SUBSIDIARIES

Artesian Water Company, Inc., or Artesian Water, our principal subsidiary, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware. In addition, Artesian Water provides services to other water utilities, including operations, and has contract operation agreements with private, municipal and state water providers. Artesian Water also provides water for public and private fire protection to customers in our service territories.

Artesian Wastewater Management, Inc., or Artesian Wastewater, operates as the parent holding company of Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI. Artesian Wastewater and TESI are regulated entities that own wastewater collection and treatment infrastructure and provide wastewater services to customers in Sussex County, Delaware as regulated public wastewater service companies.

MARYLAND REGULATED UTILITY SUBSIDIARIES

Artesian Water Maryland, Inc., or Artesian Water Maryland, distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland.

Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland, is authorized and able to provide regulated wastewater services to customers in the State of Maryland. It is currently not providing these services.

PENNSYLVANIA REGULATED UTILITY SUBSIDIARY

Artesian Water Pennsylvania, Inc., or Artesian Water Pennsylvania, provides water service to a residential community in Chester County, Pennsylvania.

OTHER NON-UTILITY SUBSIDIARIES

We have two other subsidiaries, neither of which are regulated. They are Artesian Utility Development, Inc., or Artesian Utility, and Artesian Development Corporation, or Artesian Development.

Artesian Utility designs and builds water and wastewater infrastructure and provides contract water and wastewater operation services on the Delmarva Peninsula to private, municipal and governmental institutions. Artesian Utility also evaluates land parcels, provides recommendations to developers on the size of water or wastewater facilities and the type of technology that should be used for treatment at such facilities and operates water and wastewater facilities in Delaware for municipal and governmental agencies. Artesian Utility also contracts with developers and government agencies for design and construction of wastewater infrastructure throughout the Delmarva Peninsula.

Artesian Utility currently operates wastewater treatment facilities for the Town of Middletown, in southern New Castle County, Delaware, or Middletown, under a 20-year contract that expires in July 2039. Artesian Utility currently operates three wastewater treatment systems with a combined capacity of up to approximately 3.8 mgd. The wastewater treatment facilities in Middletown provide reclaimed wastewater for use in spray irrigation on public and agricultural lands in the area.

Artesian Utility also offers the following protection plans to customers, the Water Service Line Protection Plan, or WSLP Plan, and the Sewer Service Line Protection Plan, or SSLP Plan (collectively, SLP Plan or SLP Plans). The WSLP Plan covers all parts, material and labor required to repair or replace participating customers' leaking water service lines up to an annual limit. The SSLP Plan covers all parts, material and labor required to repair or replace participating customers' leaking or clogged sewer lines up to an annual limit. The Company also maintains the Internal Service Line Protection Plan, or ISLP Plan, in which the Company discontinued enrolling new customers effective January 2026. For customers that were previously enrolled, the ISLP Plan enhances available coverage to include water and wastewater lines within customers' residences up to an annual limit.

Artesian Development is a real estate holding company that owns properties, including land approved for office buildings, a water treatment plant and wastewater facility, as well as property for current operations, including an office facility in Sussex County, Delaware.

NOTE 2 – BASIS OF PRESENTATION

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, for Form 10-Q. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information provided not misleading. Accordingly, these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes thereto in the Company's annual report on Form 10-K for fiscal year 2025 as filed with the SEC on March 16, 2026.

The unaudited condensed consolidated financial statements include the accounts of Artesian Resources Corporation and its wholly-owned subsidiaries, including its principal operating company, Artesian Water. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments (unless otherwise noted) necessary to present fairly the Company's balance sheet position as of March 31, 2026, the results of its operations for the three-month periods ended March 31, 2026 and March 31, 2025, its cash flows for the three-month periods ended March 31, 2026 and March 31, 2025 and the changes in stockholders’ equity for the three month-periods ended March 31, 2026 and March 31, 2025. The December 31, 2025 Condensed Consolidated Balance Sheet was derived from the Company’s December 31, 2025 audited consolidated financial statements but does not include all disclosures and notes normally provided in annual financial statements.

The results of operations for the interim periods presented are not necessarily indicative of the results for the full year or for future periods.

Regulated Utility Accounting

The accounting records of Artesian Water, Artesian Wastewater, and TESI are maintained in accordance with the uniform system of accounts as prescribed by the Delaware Public Service Commission, or the DEPSC. The accounting records of Artesian Water Maryland and Artesian Wastewater Maryland are maintained in accordance with the uniform system of accounts as prescribed by the Maryland Public Service Commission, or the MDPSC. The accounting records of Artesian Water Pennsylvania are maintained in accordance with the uniform system of accounts as prescribed by the Pennsylvania Public Utility Commission, or the PAPUC. All these subsidiaries follow the provisions of Accounting Standards Codification, or ASC, 980, Regulated Operations, which provides guidance for companies in regulated industries. These regulated subsidiaries account for the majority of our operating revenue. See Note 16 – Business Segment Information to our Unaudited Condensed Consolidated Financial Statements for a full description of our segment information.

Use of Estimates in the Preparation of Unaudited Condensed Consolidated Financial Statements

The unaudited condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the U.S., which require management to make certain estimates and assumptions that could impact the Company’s financial condition, results of operations and cash flows. Actual results could differ from management's estimates. Management makes certain estimates and assumptions regarding unbilled revenues, reserve for revenues associated with temporary rates expected to be refunded, accounting for income taxes, credit losses and reserves for bad debt, lease agreements, goodwill and contingent assets and liabilities.

Utility Plant

All additions to utility plant are recorded at cost. Business combinations pursuant to ASC 805, Business Combinations, may result in a purchase price allocation and the acquired assets are required to be evaluated by the applicable regulatory agency. Cost includes direct labor, materials, AFUDC (see description below) and indirect charges for such capitalized items as transportation, supervision, pension, medical, and other fringe benefits related to employees engaged in construction activities. When depreciable units of utility plant are retired, the historical costs of plant retired is charged to accumulated depreciation. Any cost associated with retirement, less any salvage value or proceeds received, is charged to the regulated retirement liability. Maintenance, repairs, and replacement of minor items of utility plant are charged to expense as incurred.

Allowance for Funds Used during Construction, or AFUDC, is a non-cash credit to income with a corresponding charge to utility plant that represents the cost of borrowed funds or a return on equity funds devoted to plant under construction.

Depreciation and Amortization

For financial reporting purposes, depreciation is recorded using the straight-line method at rates based on estimated economic useful lives, which range from 5 to 85 years. Composite depreciation rates for water utility plant were 1.91% and 1.91% for March 31, 2026 and December 31, 2025, respectively. Artesian Water offsets depreciation recorded on utility plant by depreciation on utility property funded by Contributions in Aid of Construction, or CIAC, and Advances for Construction, or Advances. This reduction in depreciation expense is also netted against outstanding CIAC and Advances on the Condensed Consolidated Balance Sheet. Regulatory assets are amortized using the straight-line method over future periods, which range from 5 to 80 years.

NOTE 3 – REVENUE RECOGNITION

Background

Artesian’s operating revenues are primarily derived from contract services based upon regulated tariff rates approved by the DEPSC, the MDPSC, and the PAPUC. Regulated tariff contract service revenues consist of water consumption, industrial wastewater services, fixed fees for water and wastewater services including customer and fire protection fees, service charges and Distribution System Improvement Charges, or DSIC, billed to customers at rates outlined in our tariffs that represent standalone selling prices. Our non-tariff contract revenues, which are primarily non-utility revenues, are derived from SLP Plan fees, water and wastewater contract operations, design and installation contract services, and wastewater inspection fees. Other regulated operating revenue is primarily derived from developer guarantee contributions for wastewater and rental income for antenna agreements, which are not considered in the scope of ASC 606, Revenue from Contracts with Customers.

Tariff Contract Revenues

Artesian generates revenue from the sale of water to customers in Delaware, Cecil County, Maryland, and Southern Chester County, Pennsylvania once a customer requests service in our territory. We recognize water consumption revenue at tariff rates on a cycle basis for the volume of water transferred to customers based upon meter readings for actual gallons of water consumed as well as unbilled amounts for estimated usage from the date of the last meter reading to the end of the accounting period. As actual usage amounts are known based on recurring meter readings, adjustments are made to the unbilled estimates in the next billing cycle based on the actual results. Estimates are made on an individual customer basis, based on one of three methods: the previous year’s consumption in the same period, the previous billing period’s consumption, or averaging. While actual usage for individual customers may differ from the estimate based on management judgments described above, we believe the overall total estimate of consumption and revenue for the fiscal period will not differ materially from actual billed consumption. The majority of our water customers are billed for water consumed on a monthly basis, while the remaining customers are billed on a quarterly basis. As a result, we record unbilled operating revenue (contract asset) for any estimated usage through the end of the accounting period that will be billed in the next monthly or quarterly billing cycle.

Artesian generates revenue from industrial wastewater services provided to a customer in Sussex County, Delaware. We recognize industrial wastewater service revenue at a contract rate on a monthly basis for the volume of wastewater transferred to Artesian’s wastewater facilities based upon meter readings for actual gallons of wastewater transferred. These services are invoiced at the end of every month based on the actual meter readings for that month, and therefore there is no contract asset or liability associated with this revenue. The contract also provides for a minimum required volume of wastewater flow to our facility. At each year end, any shortfall of the actual volume from the required minimum volume is billed to the industrial customer and recorded as revenue. Additionally, if during the course of the year it is probable that the actual volume will not meet the minimum required volume, estimated revenue amounts would be recorded for the pro rata minimum volume, constrained for potential flow capacity that could occur in the remainder of the year. Any estimated revenue amounts are recorded as unbilled operating revenue (contract asset) through the end of the accounting period and will be billed at each year end for any shortfall of the actual volume from the required minimal volume.

Artesian generates revenue from metered wastewater services provided to customers in Sussex County, Delaware. We recognize metered wastewater services at tariff rates on a cycle basis for the volume of wastewater transferred to Artesian’s wastewater facilities based upon meter readings for actual gallons of water transferred, as well as unbilled amounts for estimated volume from the date of the last meter reading to the end of the accounting period. As actual volume amounts are known based on recurring meter readings, adjustments are made to the unbilled estimates in the next billing cycle based on the actual results. Estimates are made on an individual customer basis, based on one of three methods: the previous year’s volume in the same period, the previous billing period’s volume, or averaging. We believe the overall total estimate of volume and revenue for the fiscal period will not differ materially from actual billed consumption. The majority of these wastewater customers are billed for the volume of wastewater transferred on a quarterly basis. As a result, we record unbilled operating revenue (contract asset) for any estimated volume through the end of the accounting period that will be billed in the next quarterly cycle.

Artesian generates fixed-fee revenue for water and wastewater services provided to customers once a customer requests service in our territory. We recognize revenue from these services on a ratable basis over time as the customer simultaneously receives and consumes all the benefits of the Company remaining ready to provide them water and wastewater service. These contract services are billed either in advance or arrears at tariff rates on a monthly, quarterly or semi-annual basis. For contract services billed in arrears, we record unbilled operating revenue (contract asset) for any services through the end of the accounting period that will be billed in the next monthly or quarterly cycle. For contract services billed in advance, we record deferred revenue (contract liability) and accounts receivable for any amounts for which we have a right to invoice but for which services have not been provided. This deferred revenue is netted against unbilled operating revenue on the Condensed Consolidated Balance Sheet.

Artesian generates service charges primarily from non-payment fees, such as water shut-off and reconnection fees and finance charges. These fees are billed and recognized as revenue at the point in time when our tariff indicates the Company has the right to payment such as days past due have been reached or shut-offs and reconnections have been performed. There is no contract asset or liability associated with these fees.

Artesian generates revenue from DSIC, which are surcharges applied to water customer tariff rates in Delaware related to specific types of water distribution system improvements. This rate is calculated on a semi-annual basis based on an approved projected revenue requirement over the following six-month period. This rate is adjusted up or down at the next DSIC filing to account for any differences between actual earned revenue and the projected revenue requirement. Since DSIC revenue is a surcharge applied to tariff rates, we recognize DSIC revenue based on the same guidelines as noted above depending on whether the surcharge was applied to consumption revenue or fixed-fee revenue.

Artesian generates revenue from interim temporary rates. In Delaware, utilities are permitted by law to place rates into effect, under bond, on a temporary basis, pending resolution of an application for a base rate increase by the DEPSC. Temporary rate revenue is calculated as a percentage increase on tariff rates. We recognize this revenue based on the same guidelines as noted above depending on whether the additional rate was applied to consumption revenue or fixed-fee revenue. Until final rates are determined by the DEPSC, if it is probable that a refund of revenue associated with temporary rates will occur, a reserve would be recorded reducing revenue from temporary rates. The DEPSC approved and Artesian Water implemented temporary rate increases effective June 3, 2025 and November 6, 2025. As of March 31, 2026, approximately $1.0 million of the revenue from the November 6, 2025 temporary rate increase was recorded as a reserve for refund and is included in other current liabilities in the Condensed Consolidated Balance Sheets. Temporary rates that were previously effective as of November 28, 2023 were replaced with final rates approved by the DEPSC effective June 12, 2024, with no reserve or reduction to previously recorded revenue.

Accounts receivable related to tariff contract revenues are typically due within 25 days of invoicing. A provision for expected credit loss is calculated as a percentage of total associated revenues based upon historical trends and adjusted for current conditions. We mitigate our exposure to credit losses by discontinuing services in the event of non-payment; accordingly, the related provision for expected credit loss and associated bad debt expense has not been significant.

Non-tariff Contract Revenues

Artesian generates SLP Plan revenue once a customer requests service to cover all parts, materials and labor required to repair or replace leaking water service lines, leaking or clogged sewer lines, or water and wastewater lines within the customer’s residence, up to an annual limit. We recognize revenue from these services on a ratable basis over time as the customer simultaneously receives and consumes all the benefits of having service line protection services. These contract services are billed in advance on a monthly or quarterly basis. As a result, we record deferred revenue (contract liability) and accounts receivable for any amounts for which we have a right to invoice but for which services have not been provided. Accounts receivable from SLP Plan customers are typically due within 25 days of invoicing. A provision for expected credit loss is calculated as a percentage of total SLP Plan contract revenue. We mitigate our exposure to credit losses by discontinuing services in the event of non-payment; accordingly, the related provision for expected credit loss and associated bad debt expense has not been significant.

Artesian generates contract operation revenue from water and wastewater operation services provided to customers. We recognize revenue from these operation contracts, which consist primarily of monthly operation and maintenance services, over time as customers receive and consume the benefits of such services performed. The majority of these services are invoiced in advance at the beginning of every month and are typically due within 30 days, and therefore there is no contract asset or liability associated with most of these revenues. We have one operation contract that was paid in advance resulting in a contract liability for services that have not yet been provided. A provision for expected credit loss is provided based on a periodic analysis of individual account balances, including an evaluation of days outstanding, payment history, recent payment trends, and our assessment of our customers’ creditworthiness. The related provision for expected credit loss and associated bad debt expense has not been significant.

Artesian generates design and installation revenue for services related to the design and construction of wastewater infrastructure for a state agency under contract. We recognize revenue from these services over time as services are performed using the percentage-of-completion method based on an input method of incurred costs (cost-to-cost). These services are invoiced at the end of every month based on incurred costs to date. As of December 31, 2025, there is no associated contract asset or liability. There is no provision for expected credit loss or bad debt expense associated with this revenue.

Artesian generates inspection fee revenue for inspection services related to onsite wastewater collection systems installed by developers of new communities. These fees are paid by developers in advance when a service is requested for a new phase of a development. Inspection fee revenue is recognized on a per lot basis once the inspection of the infrastructure that serves each lot is completed. As a result, we record deferred revenue (contract liability) for any amounts related to infrastructure not yet inspected. There are no accounts receivable, provision for expected credit loss or bad debt expense associated with inspection fee contracts.

Sales Tax

The majority of Artesian’s revenues are earned within the State of Delaware, where there is no sales tax. Revenues earned in the State of Maryland and the Commonwealth of Pennsylvania are related primarily to the sale of water by a public water utility and are exempt from sales tax. Therefore, no sales tax is collected on revenues.

Disaggregated Revenues

The following table shows the Company’s revenues disaggregated by service type; all revenues are generated within a similar geographical location:

	For the Three Months
	Ended March 31,
(in thousands)		2026		2025
Tariff Revenue
Consumption charges	$	14,099	$	13,022
Fixed fees		10,178		9,266
Service charges		154		180
DSIC		-		299
Metered wastewater services		142		187
Industrial wastewater services		628		432
Total Tariff Revenue	$	25,201	$	23,386
Non-Tariff Revenue
Service line protection plans	$	1,798	$	1,632
Contract operations		248		253
Design and installation		-		4
Inspection fees		134		171
Total Non-Tariff Revenue	$	2,180	$	2,060

Other Operating Revenue	$	393	$	440

Total Operating Revenue	$	27,774	$	25,886

Contract Assets and Contract Liabilities

Our contract assets and liabilities consist of the following:

(in thousands)		March 31, 2026		December 31, 2025

Contract Assets – Tariff	$	3,044	$	3,265

Deferred Revenue
Deferred Revenue – Tariff	$	1,468	$	1,598
Deferred Revenue – Non-Tariff		700		573
Total Deferred Revenue	$	2,168	$	2,171

For the three months ended March 31, 2026, the Company recognized revenue of $1.6 million from amounts that were included in Deferred Revenue – Tariff at the beginning of the year and revenue of $0.4 million from amounts that were included in Deferred Revenue – Non-Tariff at the beginning of the year.

The changes in Contract Assets and Deferred Revenue are primarily due to normal timing differences between our performance and customer payments.

Remaining Performance Obligations

As of March 31, 2026 and December 31, 2025, Deferred Revenue – Tariff is recorded partially within Unbilled operating revenues net against contract assets representing our remaining performance obligations for our fixed fee water services and partially within Other current liabilities representing our remaining performance obligations for our fixed fee wastewater services, all of which are expected to be satisfied and associated revenue recognized in the next three months.

As of March 31, 2026 and December 31, 2025, Deferred Revenue – Non-Tariff is recorded within Other current liabilities and represents our remaining performance obligations for our SLP Plan services, contract water operation services and wastewater inspections, which are expected to be satisfied and associated revenue recognized within the next three months, approximately four years and one year, respectively.

NOTE 4 – ACCOUNTS RECEIVABLE

Accounts receivable are recorded at the invoiced amounts. As set forth in a settlement agreement, Artesian Water received reimbursements from the Delaware Sand and Gravel Remedial Trust, or Trust, for Artesian Water’s past capital and operating costs, totaling approximately $10.0 million, related to the treatment costs associated with the release of contaminants from the Delaware Sand & Gravel Landfill Superfund Site, or Site, in groundwater that Artesian Water uses for public potable water supply. The full amount of $10.0 million has been paid to us, in four installments of approximately $2.5 million each, in August 2022, July 2023, July 2024 and July 2025. In addition, from July 1, 2021 onward the Trust shall reimburse Artesian Water for documented reasonable and necessary capital and operating costs that Artesian Water incurs to treat contaminants of concern and of emerging concern. The settlement receivable as of March 31, 2026 includes the short-term portion of multi-district litigation, MDL, reimbursements as further discussed in Note 15 - Legal Proceedings.

A provision for expected credit loss is calculated as a percentage of total associated revenues based upon historical trends and adjusted for current and reasonable projections based upon expected economic conditions. We mitigate our exposure to credit losses by discontinuing services in the event of non-payment; accordingly, the related provision for expected credit loss and associated bad debt expense has not been significant. The following table summarizes the changes in the Company’s accounts receivable balance. The reduction in the water customer accounts receivable balance as of December 31, 2025 is the result of a one-time bill credit that was applied to Artesian Water’s customer bills in December 2025 related to MDL settlement funds received as further discussed in Note 15 – Legal Proceedings.

(in thousands)		March 31, 2026		December 31, 2025		December 31, 2024

Customer accounts receivable – water	$	7,010	$	4,366	$	6,824
Customer accounts receivable – wastewater		946		706		928
Customer accounts receivable – SLP Plan		517		371		470
Settlement receivable – short term		3,831		2,023		2,523
Developer receivable		562		2,249		837
Miscellaneous accounts receivable		394		114		100
		13,260		9,829		11,682
Less: provision for expected credit loss		349		340		343
Net accounts receivable	$	12,911	$	9,489	$	11,339

NOTE 5 – LEASES

The Company leases land and office equipment under operating leases from non-related parties. Our leases have remaining lease terms of 2 years to 71 years, one of which includes options to automatically extend the leases for up to 66 years and is included as part of the lease liability and right-of-use assets as we expect to exercise the options. Payments made under operating leases are recognized in the condensed consolidated statement of operations on a straight-line basis over the period of the lease. The annual lease payment for the land operating lease increases each year by the most recent increase in the Consumer Price Index and includes a provision to periodically adjust the annual lease payment based on the fair market value of the parcel of land. None of the operating leases contain contingent rent provisions. The commencement date of all the operating leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the land or equipment. The Company currently does not have any financing leases and does not have any lessor leases that require disclosure.

Management made certain assumptions related to the separation of lease and nonlease components and to the discount rate used when calculating the right-of-use asset and liability amounts for the operating leases. As our leases do not provide an implicit rate, we use our incremental borrowing rates for long-term and short-term agreements and apply the rates accordingly based on the term of the lease agreements to determine the present value of lease payments.

Rent expense for all operating leases, except those with terms of 12 months or less, comprises:

(in thousands)

		Three Months Ended		Three Months Ended
		March 31, 2026		March 31, 2025
Minimum rentals	$	2	$	2
Contingent rentals		-		-
	$	2	$	2

Supplemental cash flow information related to leases is as follows:

(in thousands)

		Three months ended		Three months ended
		March 31, 2026		March 31, 2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2	$	2
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	-	$	-

Supplemental balance sheet information related to leases is as follows:

(in thousands, except lease term and discount rate)

		March 31, 2026			December 31, 2025
Operating Leases:
Operating lease right-of-use assets	$	413		$	414

Other current liabilities	$	8		$	9
Operating lease liabilities		406			407
Total operating lease liabilities	$	414		$	416


Weighted Average Remaining Lease Term
Operating leases		68 years			68 years
Weighted Average Discount Rate
Operating leases		5.0	%		5.0	%

Maturities of operating lease liabilities that have initial or remaining non-cancelable lease terms in excess of one year as of March 31, 2026 are as follows:


		(in thousands)
		Operating Leases
Year
2026	$	29
2027		29
2028		21
2029		21
2030		21
Thereafter		1,337
Total undiscounted lease payments	$	1,458
Less effects of discounting		(1,044	)
Total lease liabilities recognized	$	414

As of March 31, 2026, we have not entered into operating or finance leases that will commence at a future date.

NOTE 6 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value.

Current Assets and Liabilities

For those current assets and liabilities that are considered financial instruments, the carrying amounts approximate fair value because of the short maturity of those instruments. Under the fair value hierarchy, the fair value of such financial instruments is classified as Level 1.

Other Deferred Assets

The other deferred assets associated with the MDL class action settlement reimbursements, as further discussed in Note 15 – Legal Proceedings, has a carrying amount of $2.6 million as of both March 31, 2026 and December 31, 2025, which approximates fair value, and was recorded at amortized cost using an estimated market discount rate. The fair value of this non-current receivable is classified as Level 3.

Long-term Financial Liabilities

As of March 31, 2026 and December 31, 2025, all of the Company’s outstanding long-term debt interest rates were a fixed rate. The fair value of the Company’s long-term debt is determined by discounting their future cash flows using current market interest rates on similar instruments with comparable maturities consistent with ASC 825, Financial Instruments. Under the fair value hierarchy, the fair value of the long-term debt in the table below is classified as Level 2 measurements. Level 2 is valued using observable inputs other than quoted prices. The fair values for long-term debt differ from the carrying values primarily due to interest rates that differ from the current market interest rates. The carrying amount and fair value of Artesian Resources' long-term debt (including current portion) are shown below:

(in thousands)

		March 31, 2026		December 31, 2025
Carrying amount	$	185,933	$	176,408
Estimated fair value		164,704		156,980

The fair value of Advances for Construction cannot be reasonably estimated due to the inability to estimate accurately the timing and amounts of future refunds expected to be paid over the life of the contracts. Refund payments are based on the water sales to new customers in the particular development constructed. The fair value of Advances for Construction would be less than the carrying amount because these financial instruments are non-interest bearing.

NOTE 7 – INCOME TAXES

Deferred income taxes are provided in accordance with ASC 740, Income Taxes, on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the unaudited condensed consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse. The Company’s rate regulated subsidiaries recognize regulatory liabilities, to the extent considered in ratemaking, for deferred taxes provided in excess of the current statutory tax rate and regulatory assets for deferred taxes provided at rates less than the current statutory rate. Such tax-related regulatory assets and liabilities are reported at the revenue requirement level and amortized to income as the related temporary differences reverse, generally over the lives of the related properties.

Under ASC 740, Income Taxes, an uncertain tax position represents our expected treatment of a tax position taken, or planned to be taken in the future, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company establishes reserves for uncertain tax positions based upon management's judgment as to the sustainability of these positions. These accounting estimates related to the uncertain tax position reserve require judgments to be made as to the sustainability of each uncertain tax position based on its technical merits. The Company believes its tax positions comply with applicable law and that it has adequately recorded reserves as required. However, to the extent the final tax outcome of these matters is different than the estimates recorded, the Company would then adjust its tax reserves or unrecognized tax benefits in the period that this information becomes known. The Company has elected to recognize accrued interest (net of related tax benefits) and penalties related to uncertain tax positions as a component of its income tax expense. For the full year 2025, the Company accrued approximately $22 thousand in penalties and interest related to positions taken on the 2022 and 2024 corporate income tax return. For the three months ended March 31, 2026, the Company has accrued approximately $6 thousand in penalties and interest related to positions taken on the 2022 and 2024 corporate income tax return. The Company remains subject to examination by federal and state authorities for the tax years 2022 through 2025.

Investment tax credits were deferred through 1986 and are recognized as a reduction of deferred income tax expense over the estimated economic useful lives of the related assets.

On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law, which includes several changes to U.S. tax and related laws, including the temporary and permanent extension of expiring provisions of the Tax Cuts and Jobs Act of 2017, or TCJA. The Company has evaluated the impact that the OBBBA may have on its consolidated financial condition and results of operations and determined there is no material impact on our business, financial position or results of operations.

NOTE 8 – STOCK COMPENSATION PLANS

On October 30, 2025, the Company’s stockholders approved the 2025 Equity Compensation Plan, or the 2025 Plan, that replaced the 2015 Equity Compensation Plan, or the 2015 Plan. The 2025 Plan provides for the issuance of 263,932 shares of Class A Non-Voting Stock. Outstanding grants under the 2015 Plan shall continue in effect according to their terms, consistent with the 2015 Plan. No further grants will be made under the 2015 Plan after the approval date of the 2025 Plan. The 2025 Plan provides that grants may be in any of the following forms: incentive stock options, nonqualified stock options, stock units, stock awards, dividend equivalents and other stock-based awards. The 2025 Plan is administered and interpreted by the Compensation Committee of the Board of Directors, or the Committee. The Committee has the authority to determine the individuals to whom grants will be made under the 2025 Plan, determine the type, size and terms of the grants, determine the time when grants will be made and the duration of any applicable exercise or restriction period (subject to the limitations of the 2025 Plan) and deal with any other matters arising under the 2025 Plan. All of the employees of the Company and its subsidiaries are eligible for grants under the 2025 Plan. Non-employee directors of the Company are also eligible to receive grants under the 2025 Plan.

On September 16, 2025, 5,000 shares of Class A Non-Voting Stock were granted as restricted stock awards. The fair value per share was $32.08, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on September 16, 2025. These restricted stock awards will be fully vested and released one year after the grant date and, prior to their vesting date, are subject to forfeiture in the event of the recipient’s termination of service.

On July 1, 2025, 1,000 shares of Class A Non-Voting Stock were granted as a restricted stock award. The fair value per share was $33.96, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on July 1, 2025. This restricted stock award will be fully vested and released May 6, 2026 and, prior to its vesting date, is subject to forfeiture in the event of the recipient’s termination of service.

On May 5, 2025, 4,000 shares of Class A Non-Voting Stock were granted as restricted stock awards. The fair value per share was $34.27, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on May 5, 2025. These restricted stock awards will be fully vested and released one year after the grant date and, prior to their vesting date, are subject to forfeiture in the event of the recipient’s termination of service.

On April 11, 2025, 1,000 shares of Class A Non-Voting Stock were granted as a restricted stock award. The fair value per share was $33.51, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on April 11, 2025. This restricted stock award will be fully vested and released one year after the grant date and, prior to its vesting date, is subject to forfeiture in the event of the recipient’s termination of service.

Compensation expense of approximately $92 thousand, related to the April, May, July and September 2025 issue of restricted stock awards, was recorded for the three months ended March 31, 2026. Compensation expense of approximately $46 thousand, related to the May 2024 issue of restricted stock awards, was recorded for the three months ended March 31, 2025. Costs were determined based on the fair value on the dates of the awards and those costs were charged to income over the service periods associated with the awards.

There was no stock compensation cost capitalized as part of an asset.

There were no options exercised during the three months ended March 31, 2026.

There were no unvested option shares outstanding under the 2025 Plan during the three months ended March 31, 2026.

As of March 31, 2026, there were no unrecognized expenses related to non-vested option shares granted under the 2025 Plan.

As of March 31, 2026, there was approximately $91 thousand total unrecognized expenses related to non-vested awards of restricted shares awarded under the 2025 Plan. The cost will be recognized over 0.26 years, the remaining vesting period for the restricted stock awards.

NOTE 9 - GEOGRAPHIC CONCENTRATION OF CUSTOMERS

Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide regulated water utility service to customers within their established service territory in all three counties of Delaware and in portions of Maryland and Pennsylvania, pursuant to rates filed with and approved by the DEPSC, the MDPSC and the PAPUC. As of March 31, 2026, Artesian Water was serving approximately 99,500 customers, Artesian Water Maryland was serving approximately 2,700 customers and Artesian Water Pennsylvania was serving approximately 40 customers.

Artesian Wastewater and TESI provide regulated wastewater utility service to customers within their established service territory in Sussex County, Delaware pursuant to rates filed with and approved by the DEPSC. As of March 31, 2026, Artesian Wastewater and TESI were serving approximately 9,300 customers combined, including one large industrial customer.

NOTE 10 – OTHER DEFERRED ASSETS

The investment in CoBank, ACB, or CoBank, which is a cooperative bank, is related to certain outstanding First Mortgage Bonds and is a required investment in the bank based on the underlying long-term debt agreements. The settlement agreement receivable is related to the long-term portion of MDL class action settlement reimbursements, as further discussed in Note 15 - Legal Proceedings, and is recorded at amortized cost, with the difference between the carrying amount and the amortized cost recognized as CIAC.

(in thousands)		March 31, 2026		December 31, 2025

Investment in CoBank	$	7,351	$	6,889
Settlement receivable-long term		2,596		2,596
Other deferred assets		77		86
	$	10,024	$	9,571

NOTE 11 - REGULATORY ASSETS

ASC 980, Regulated Operations, stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency. Certain expenses are recoverable through rates charged to our customers, without a return on investment, and are deferred and amortized during future periods using various methods as permitted by the DEPSC, MDPSC, and PAPUC.

The deferred income taxes will be amortized over future years as the tax effects of temporary differences that previously flowed through to our customers are reversed.

Debt related costs include debt issuance costs and other debt related expense. The DEPSC has approved deferred regulatory accounting treatment for issuance costs associated with Artesian Water’s First Mortgage bonds. Debt issuance costs and other debt related expenses are reviewed during Artesian Water’s rate applications as part of its cost of capital calculations.

Affiliated interest agreement deferred costs relate to the regulatory and administrative costs resulting from efforts necessary to secure water allocations in Artesian Water Pennsylvania’s territory for the provision of service to the surrounding area and interconnection to Artesian Water Pennsylvania’s affiliate regulated water utility Artesian Water. These costs were specifically included for cost recovery pursuant to an Affiliated Interest Agreement between Artesian Water and Artesian Water Pennsylvania and were approved for recovery by the PAPUC. Amortization of these deferred costs began in the fourth quarter of 2023.

Deferred acquisition adjustments represent the excess payment for purchases of utility plant from Delaware municipalities over the determined original cost net of depreciation. Deferred acquisition costs represent the closing cost associated with the acquisitions. Costs are being amortized over the periods noted in the table below and recovered in customer rates as approved by the DEPSC. Amortization of these deferred costs began in the third quarter of 2024.

Unrecovered reserve for depreciation is the result of the implementation of a change in depreciation methods for certain general plant assets that are being amortized over five years and recovered in customer rates as approved by the DEPSC. Amortization of these deferred costs began in the third quarter of 2024.

Regulatory expenses amortized on a straight-line basis are noted below:

Expense	Years Amortized
Deferred contract costs and other	5
Rate case studies	5
Delaware rate proceedings	3
Debt related costs	15 to 30 (based on term of related debt)
Deferred costs affiliated interest agreement	20
Goodwill (Mountain Hill Water Company acquisition in 2008)	50
Deferred acquisition and franchise costs - Maryland	20 – 80
Deferred acquisition costs – Delaware	20
Deferred acquisition adjustments - Delaware	36 – 62
Unrecovered reserve for depreciation (general plant assets)	5

Regulatory assets, net of amortization, comprise:

	(in thousands)
		March 31, 2026		December 31, 2025

Deferred contract costs and other	$	86	$	109
Rate case studies		106		105
Delaware rate proceedings		302		312
Deferred income taxes		397		403
Debt related costs		3,550		3,617
Deferred costs affiliated interest agreement		984		998
Goodwill		241		243
Deferred acquisition and franchise costs - Maryland		343		352
Deferred acquisition costs – Delaware		216		219
Deferred acquisition adjustments – Delaware		3,270		3,288
Unrecovered reserve for depreciation		2,792		3,007
	$	12,287	$	12,653

NOTE 12 – REGULATORY LIABILITIES

ASC 980, Regulated Operations, stipulates generally accepted accounting principles for companies whose rates are established or subject to approvals by a third-party regulatory agency. Certain obligations are deferred and/or amortized as determined by the DEPSC, MDPSC, and PAPUC. Regulatory liabilities represent excess recovery of cost or other items that have been deferred because it is probable such amounts will be returned to customers through future regulated rates.

Utility plant retirement cost obligation consists of estimated costs related to the potential removal and replacement of facilities and equipment on the Company’s water and wastewater properties. As authorized by the DEPSC, when depreciable units of utility plant are retired, any cost associated with retirement, less any salvage value or proceeds received, is charged to a regulated retirement liability. The annual amortization currently authorized by the DEPSC could be adjusted in future rate applications.

Deferred income taxes primarily represent tax benefits that will be returned to regulated utility customers through an approved rate making process, as described below. These tax benefits resulted from the TCJA. The TCJA required the Company to remeasure its deferred income tax balances to reflect the reduction in the corporate income tax rate from 34% to 21%. This remeasurement adjustment made to deferred income taxes was substantially offset by the recognition of a regulatory liability for excess accumulated deferred income taxes, or EADIT, and reflects the benefits customers will receive in future approved rates. Pursuant to a DEPSC rate order, Artesian Water is amortizing $24.7 million of the EADIT balance. The DEPSC has not issued a final order on the TCJA regulatory liability amount of $0.6 million for wastewater customers, and the MDPSC has not issued a final order on the TCJA regulatory liability amount of $0.6 million for Maryland customers.

Regulatory liabilities comprise:

		(in thousands)
		March 31, 2026		December 31, 2025

Utility plant retirement cost obligation	$	97	$	107
Deferred income taxes (related to TCJA)		25,869		26,194
	$	25,966	$	26,301

NOTE 13 - REGULATORY PROCEEDINGS

Our water and wastewater utilities generate operating revenue from customers based on rates that are established by state public service commissions through a rate-setting process that may include public hearings, evidentiary hearings and the submission of evidence and testimony in support of the Company’s requested level of rates.

We are subject to regulation by the following state regulatory commissions:

· The DEPSC, regulates Artesian Water, Artesian Wastewater, and TESI.

· The MDPSC, regulates Artesian Water Maryland and Artesian Wastewater Maryland.

· The PAPUC, regulates Artesian Water Pennsylvania.

Our water and wastewater utility operations are also subject to regulation under the federal Safe Drinking Water Act of 1974, or Safe Drinking Water Act, the Clean Water Act of 1972, or the Clean Water Act, and related state laws, and under federal and state regulations issued under these laws. These laws and regulations establish criteria and standards for drinking water and for wastewater discharges. Capital expenditures and operating costs required as a result of water quality standards and environmental requirements have been traditionally recognized by state regulatory commissions as appropriate for inclusion in establishing rates.

Water and Wastewater Rates

Our regulated subsidiaries periodically seek rate increases to cover the cost of increased operating expenses, increased financing expenses due to additional investments in utility plant and other costs of doing business. In Delaware, utilities are permitted by law to place rates into effect, under bond, on a temporary basis pending completion of a rate increase proceeding. Any DSIC rate in effect will be reset to zero upon implementation of a temporary increase in base rates charged to customers. The first temporary increase may be up to the lesser of $2.5 million on an annual basis or 15% of gross water sales. Should the rate case not be completed within seven months, by law, the utility may put the entire requested rate relief, up to 15% of gross water sales, in effect under bond until a final resolution is ordered and placed into effect. If any such rates are found to be in excess of rates the DEPSC finds to be appropriate, the utility must refund customers the portion found to be in excess with interest. The timing of our rate increase requests is therefore dependent upon the estimated cost of the administrative process in relation to the investments and expenses that we hope to recover through the rate increase. We can provide no assurances that rate increase requests will be approved by applicable regulatory agencies and, if approved, we cannot guarantee that these rate increases will be granted in a timely or sufficient manner to cover the investments and expenses for which we initially sought the rate increase.

On April 4, 2025, Artesian Water filed a request with the DEPSC to implement new rates to meet a requested increase in revenue of 12.41%, or approximately $10.8 million, on an annualized basis. Supplemental and rebuttal filings were subsequently filed, reducing the requested increase to 10.2%, or approximately $9.0 million, on an annualized basis. The actual effective increase would be less than 10.2% if the requested increase is granted in full by the DEPSC since Artesian Water has been permitted to recover specific investments made in infrastructure through the assessment of a 1.66% DSIC rate, which rate is set to zero once temporary rates are placed into effect. Temporary rates were placed into effect as noted below. The new proposed rates are designed to support Artesian Water’s ongoing capital improvement program and to cover increased costs of operations, including chemicals and electricity for water treatment, water quality regulation compliance, taxes, labor and benefits. In accordance with applicable Delaware law, the DEPSC approved and Artesian Water implemented the first temporary rate increase effective June 3, 2025 of approximately $2.5 million in additional annual revenue, or 2.88%, subject to refund, and reduced the DSIC previously in effect from approximately 1.66% to zero, for a temporary rate increase of net 1.22%. Also, as permitted by law, on November 6, 2025 Artesian Water placed into effect a second step of temporary rates designed to generate an increase in annual operating revenue of approximately 6.82%, or $5.8 million, on an annualized basis, until permanent rates are determined by the DEPSC. As of March 31, 2026, approximately $1.0 million of the revenue from the second step of temporary rates was recorded as a reserve for refund and is included in Other current liabilities in the Condensed Consolidated Balance Sheets.

Other Proceedings

Delaware law permits water utilities to put into effect, on a semi-annual basis, increases related to specific types of distribution system improvements through a DSIC. This charge may be implemented by water utilities between general rate increase applications that normally recognize changes in a water utility's overall financial position. The DSIC approval process is less costly when compared to the approval process for general rate increase requests. The DSIC rate applied between base rate filings is capped at 7.50% of the amount billed to customers under otherwise applicable rates and charges, and the DSIC rate increase applied cannot exceed 5.0% within any 12-month period.

The following table summarizes (1) Artesian Water’s applications with the DEPSC to collect DSIC rates and (2) rate upon which each eligible plant improvement was based:

Application Date		11/22/2024
DEPSC Approval Date		12/18/2024
Effective Date		01/01/2025
Cumulative DSIC Rate		1.66%
Net Eligible Plant Improvements – Cumulative Dollars (in millions)	$	11.7
Eligible Plant Improvements – Installed Beginning Date		11/01/2023
Eligible Plant Improvements – Installed Ending Date		10/31/2024

Effective January 1, 2025, Artesian Water was permitted to recover specific investments made in infrastructure through the assessment of a 1.66% DSIC. The January 1, 2025 DSIC rate is still subject to audit by the DEPSC. The January 1, 2025 DSIC rate was reset to zero when the temporary base rate increase was placed into effect on June 3, 2025. For the three months ended March 31, 2026, we did not report any earnings in DSIC revenue. For the three months ended March 31, 2025, we earned approximately $0.3 million in DSIC revenue.

NOTE 14 - NET INCOME PER COMMON SHARE AND EQUITY PER COMMON SHARE

Basic net income per share is based on the weighted average number of common shares outstanding. Diluted net income per share is based on the weighted average number of common shares outstanding, the potentially dilutive effect of employee stock options and restricted stock awards.

The following table summarizes the shares used in computing basic and diluted net income per share:

	For the Three Months Ended
	March 31,
		2026	2025
	(in thousands)

Weighted average common shares outstanding during the period for basic computation		10,318	10,302
Dilutive effect of employee stock options and awards		6	4
Weighted average common shares outstanding during the period for diluted computation		10,324	10,306

For the three months ended March 31, 2026, no shares of restricted stock awards were excluded from the calculations of diluted net income per share. For the three months ended March 31, 2025, no stock options were excluded from the calculations of diluted net income per share.

The Company has 15,000,000 authorized shares of Class A Non-Voting Stock and 1,040,000 authorized shares of Class B Voting Stock. As of March 31, 2026, 9,436,952 shares of Class A Non-Voting Stock and 881,452 shares of Class B Voting Stock were issued and outstanding. As of March 31, 2025, 9,421,542 shares of Class A Non-Voting Stock and 881,452 shares of Class B Voting Stock were issued and outstanding. The par value for both classes is $1.00 per share.

Equity per common share was $24.50 and $24.24 at March 31, 2026 and December 31, 2025, respectively. These amounts were computed by dividing common stockholders' equity by the number of weighted average shares of common stock outstanding on March 31, 2026 and December 31, 2025, respectively.

NOTE 15 - LEGAL PROCEEDINGS

Periodically, we are involved in other proceedings or litigation arising in the ordinary course of business. We do not believe that the ultimate resolution of these matters will materially affect our business, financial position or results of operations. However, we cannot ensure that we will prevail in any litigation and, regardless of the outcome, may incur significant litigation expense and may have significant diversion of management attention.

Several of the water systems of Artesian Resources’ subsidiaries are claimants in four MDL class action settlements designed to resolve claims for per- and polyfluoroalkyl substances, or PFAS, contamination in Public Water Systems’ Drinking Water, as those terms are defined in the respective Agreements (the “Settlements”), which are with four groups of settling defendants on behalf of: (1) the 3M Company (“3M”); (2) E.I. Du Pont de Nemours and Company (n/k/a Eidp, Inc.), DuPont de Nemours Inc., The Chemours Company, The Chemours Company FC, LLC, and Corteva, Inc. (collectively, “DuPont”); (3) Tyco Fire Products LP and Chemguard, Inc. (collectively, “the Tyco Defendants”); and (4) BASF Corporation (“BASF”). Claims Forms have been submitted on behalf of Artesian Resources’ eligible systems in each of the Settlements. In October 2025, the Company received its first payment from 3M in the amount of $2.3 million, and its second payment of $5.2 million in November 2025, with an anticipated additional net settlement of approximately $5.1 million to be paid over eight years. In December 2025, the Company received the full DuPont settlement award payment of approximately $1.3 million. In April 2026, the Company received approximately $1.3 million in settlement payments from the Tyco defendants and approximately $0.5 million in settlement payments from BASF. The settlement proceeds are intended to reimburse the Company for past and future capital investments or operations and maintenance expenses related to PFAS water contamination to its water systems. The DEPSC approved the return of $7.2 million received from 3M to Artesian Water’s customers through a one-time bill credit, which was applied to customers’ bills in December 2025. The DEPSC also approved the regulatory treatment of the settlement amounts for DuPont, the Tyco Defendants and BASF and the remaining settlement amounts for 3M to be recorded as CIAC.

On September 15, 2025, Artesian Water was served as a third-party defendant in a third-party complaint filed by Metra Industries, Inc., in the Superior Court of the State of Delaware. The litigation arises from a contractual dispute related to a water main renewal project and asserts a claim against us in the total amount of $3.4 million consisting mainly of $2.7 million in unabsorbed office overhead, $0.1 million in end-of-job direct costs and $0.6 million in change orders. While we plan to defend the claim vigorously, it is possible that we could incur a loss; however, any loss is not estimable at this time.

NOTE 16 - BUSINESS SEGMENT INFORMATION

The Company’s operating segments are comprised of its businesses which generate revenues and incur expenses, for which separate operational financial information is available and is regularly evaluated by management for the purpose of making operating decisions, assessing performance, and allocating resources. The Company operates its businesses primarily through one reportable segment, the Regulated Utility segment. The Regulated Utility segment is the largest component of the Company’s business and includes an aggregation of our five regulated utility subsidiaries that are in the business of providing regulated water and wastewater services on the Delmarva Peninsula. Our regulated water utility services include treating, distributing, and selling water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware and in Cecil County, Maryland and to a residential community in Chester County, Pennsylvania. Our regulated wastewater utility services include the treatment and disposal of wastewater for customers in Sussex County, Delaware. The Company is subject to regulations as to its rates, services, and other matters by the states of Delaware, Maryland and Pennsylvania with respect to utility service within these states.

The Chief Operating Decision Maker, or CODM, is the Executive Committee led by the Chief Executive Officer and includes the Chief Financial Officer. The CODM uses operating income as its measure of profit to assess the performance of each segment. This profit measure excludes the financing component and allows management to focus on controllable expenses, to allocate resources during the annual budgeting process and to monitor budget versus actual results on a monthly basis.

The accounting policies of the operating segments are the same as those described in Note 3 – Revenue Recognition. The measurement of depreciation, interest, and capital expenditures are predominately related to our Regulated Utility segment. These amounts in our non-utility business are negligible and account for approximately less than 1% of consolidated amounts as of March 31, 2026 and March 31, 2025.

In thousands


	Three Months Ended March 31,
	2026						2025
		Regulated Utility		Total				Regulated Utility		Total
Regulated Utility Revenues	$	25,759	$	25,759			$	24,045	$	24,045

Reconciliation of revenue
Other revenues				2,077		(a)				1,905		(a)
Inter-segment elimination				(62	)					(64	)
Consolidated revenues			$	27,774					$	25,886

Less: (b)
Payroll and Benefits (c)		6,780						6,210
Supply and Delivery (d)		3,822						3,452
Administrative (e)		2,613						2,725
Depreciation and Amortization		3,439						3,344
Income Taxes		1,779						1,584
Property and other taxes		1,596						1,668
Regulated Utility Operating Income	$	5,730	$	5,730			$	5,062	$	5,062

Reconciliation of operating income
Other profit				546		(a)				484		(a)
Consolidated operating income			$	6,276					$	5,546

In thousands


		Regulated Utility		Total		Regulated Utility		Total
Assets
Regulated Utility Assets	$	858,965	$	858,965	$	846,820	$	846,820

Reconciliation of assets
Other assets				7,973				4,409
Consolidated assets			$	866,938			$	851,229

(a) Other revenues and other profit:

– Revenue and profit from segments below the quantitative thresholds are attributable to four non-utility businesses of the Company

– These businesses are primarily comprised of: Service Line Protection Plan services for water, sewer and internal plumbing; design, construction and engineering services; contract services for the operation and maintenance of water and wastewater systems in Delaware and Maryland; and leased space to the Regulated Utility Segment

– These non-utility businesses do not individually or in the aggregate meet the quantitative thresholds for determining reportable segments

– Certain corporate costs have been allocated from the regulated utility segment to the non-utility businesses and are included in the other profit amounts shown

(b) Significant expense categories:

– The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM

– Inter-segment expenses related to leased space provided by one non-utility business, calculated on the lower of cost or market method, are included in the amounts shown

– This category does not include amounts capitalized on the Condensed Consolidated Balance Sheet

(d) Supply and Delivery:

– This category includes purchased power, purchased water, chemicals, infrastructure maintenance and repair costs, and wastewater disposal fees

(e) Administration expense:

– This category includes computer systems maintenance and subscription fees, audit and legal fees, insurance, customer billing, and other general and administrative expenses

NOTE 17 - IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

In November 2024, FASB issued amended guidance which requires disaggregated disclosure of income statement expenses for public business entities. The guidance does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted.

In September 2025, the FASB issued guidance that amends the existing standard to remove all references to prescriptive and sequential software development project stages. Under this guidance, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, management is required to consider whether there is significant uncertainty associated with the development activities of the software. This guidance is effective for all annual periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The guidance may be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis. We are currently evaluating the impact of this guidance to determine the impact on the consolidated financial statements and related disclosures.

In December 2025, the FASB issued guidance to enhance, clarify, and streamline interim disclosure requirements, emphasizing events and material changes that have occurred since the most recent annual reporting period. The amendments are effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is required to apply the amendments in its interim reporting starting with the first quarter of fiscal year 2028. The guidance may be adopted prospectively or retrospectively. The Company is currently evaluating the impact of this new guidance, which may alter the structure of our interim financial statement disclosures.

ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Statements in this Quarterly Report on Form 10-Q that express our "belief," "anticipation" or "expectation," as well as other statements that are not historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act and the Private Securities Litigation Reform Act of 1995. Statements regarding our goals, priorities, growth and expansion plans and expectation for our water and wastewater subsidiaries and non-regulated subsidiaries, customer base growth opportunities in Delaware and Cecil County, Maryland, our belief regarding the timing and results of our rate requests, our belief regarding our capacity to provide water services for the foreseeable future to our customers, our belief relating to our compliance and the cost to achieve compliance with relevant governmental regulations, including per- and polyfluoroalkyl substances (“PFAS”) regulations, our belief concerning class action settlements designed to resolve claims for PFAS contamination and any related outcome, and the Lead and Copper Rule Improvements, our expectation of the timing of decisions by regulatory authorities, our belief regarding the success of any rate increase request, the impact of weather on our operations and the execution of our strategic initiatives, our expectation of the timing for construction on new projects, our expectation relating to the adoption of recent accounting pronouncements, contract operations opportunities, legal proceedings, our properties, deferred tax assets, adequacy of our available sources of financing, the expected recovery of expenses related to our long-term debt, our expectation to be in compliance with financial covenants in our debt instruments, our ability to refinance our debt as it comes due, our ability to adjust our debt level, interest rate, maturity schedule and structure, the timing and terms of renewals of our lines of credit, plans to increase our wastewater treatment operations, engineering services and other revenue streams less affected by weather, expected future contributions to our postretirement benefit plan, anticipated growth in our non-regulated division, the impact of recent acquisitions on our ability to expand and foster relationships, anticipated investments in certain of our facilities and systems and the sources of funding for such investments, and the sufficiency of internally generated funds and credit facilities to provide working capital and our liquidity needs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from those projected. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "projects", "forecasts", "may", "should", variations of such words and similar expressions are intended to identify such forward-looking statements. Certain factors as discussed under Item 1A - Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025, and this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, such as changes in weather, changes in our contractual obligations, changes in government policies, changes in tax laws, including, without limitation, the One Big Beautiful Bill Act, the timing and results of our rate requests, failure to receive regulatory approvals, changes in economic and market conditions generally, and other matters could cause results to differ materially from those in the forward-looking statements. While the Company may elect to update forward-looking statements, we specifically disclaim any obligation to do so and you should not rely on any forward-looking statement as a representation of the Company's views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2026

OVERVIEW

Our profitability is primarily attributable to the sale of water and wastewater services in our regulated utility business. Our regulated utility segment comprised 92.5% of total operating revenues for the three months ended March 31, 2026 and 92.7% for the three months ended March 31, 2025. Water sales are subject to seasonal fluctuations, particularly during summer when water demand may vary with rainfall and temperature. In the event temperatures during the typically warmer months are cooler than expected or rainfall is greater than expected, the demand for water may decrease and our revenues may be adversely affected. We believe these effects of weather are short term and do not materially affect the execution of our strategic initiatives. Our wastewater services provide a revenue stream that is not affected by these changes in weather patterns. We continue to seek growth opportunities to provide wastewater services in Delaware and the surrounding areas.

Our profitability is also attributed to other non-utility business, such as various contract operations, water, sewer and internal SLP Plans and other services we provide. Our contract operations, SLP Plans and other services also provide a revenue stream that is not affected by changes in weather patterns. We also continue to explore and develop relationships with developers and municipalities in order to increase revenues from contract water and wastewater operations, wastewater management services, and design, construction and engineering services. We plan to continue developing and expanding our contract operations and other services in a manner that complements our growth in water service to new customers. Our anticipated growth in these areas is subject to changes in residential and commercial construction, which may be affected by interest rates, inflation and general housing and economic market conditions. We anticipate continued growth in our non-utility subsidiaries due to our water and sewer SLP Plans.

Inflation

We are affected by inflation, most notably by the continually increasing costs required to maintain, improve and expand our service capability. The cumulative effect of inflation results in significantly higher facility replacement costs as well as increased operating costs, which must be recovered from future cash flows. Our ability to recover increases in investments in facilities and operating costs is dependent upon future rate increases, which are subject to approval by the applicable regulatory authority. We can provide no assurances that any future rate increase request will be approved, and if approved, we cannot guarantee that any rate increase will be granted in a timely manner and/or will be sufficient in amount to cover costs for which we initially sought the rate increase. The impact of inflation could adversely affect our results of operations, financial position or cash flows.

Regulated Water Subsidiaries

Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide water service to residential, commercial, industrial, governmental, municipal and utility customers. Increases in the number of customers contribute to increases, or help to offset any intermittent decreases, in our operating revenue. As of March 31, 2026, the number of metered water customers in Delaware increased approximately 1.8% compared to March 31, 2025. The number of metered water customers in Maryland increased approximately 1.5% compared to March 31, 2025. The number of metered water customers in Pennsylvania remained consistent compared to March 31, 2025. For the three months ended March 31, 2026, approximately 2.0 billion gallons of water were distributed in our Delaware systems and approximately 109.6 million gallons of water were distributed in our Maryland systems.

Regulated Wastewater Subsidiaries

Artesian Wastewater and TESI own wastewater collection and treatment infrastructure and provide regulated wastewater services to customers in Sussex County, Delaware. Artesian Wastewater Maryland is able to provide regulated wastewater services to customers in Maryland. It is not currently providing these services in Maryland. The majority of our residential and commercial wastewater customers are billed a flat monthly fee, and our large industrial wastewater customer is billed monthly based on wastewater flow, which contributes to providing a revenue stream unaffected by weather. As of March 31, 2026, the number of Delaware wastewater customers increased approximately 6.4% compared to March 31, 2025.

Non-Utility Subsidiaries

Artesian Utility provides contract water and wastewater operation services to private, municipal, and governmental institutions. Artesian Utility also offers protection plans to customers: the WSLP Plan and the SSLP Plan. SLP Plan customers are billed a flat monthly or quarterly rate, which contributes to providing a revenue stream unaffected by weather. There has been consistent customer growth over the years. As of March 31, 2026, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 5.4%, 7.3% and 0.7%, respectively, compared to March 31, 2025. The Company also maintains the ISLP Plan, in which the Company discontinued enrolling new customers effective January 2026.

Strategic Direction and Recent Developments

Our strategy is to increase customer growth, revenues, earnings and dividends by expanding our water, wastewater and SLP Plan services across the Delmarva Peninsula. We remain focused on providing superior service to our customers and continuously seek ways to improve our efficiency and performance. Our strategy has included a focus on building strategic partnerships with county governments, municipalities and developers. By providing water and wastewater services, we believe we are positioned as the primary resource for developers and communities throughout the Delmarva Peninsula seeking to fill both needs simultaneously. We believe we have a proven ability to acquire and integrate high growth, reputable entities, through which we have captured additional service territories that will serve as a base for future revenue. We believe this experience presents a strong platform for further expansion and that our success to date also produces positive relationships and credibility with regulators, municipalities, developers and customers in both existing and prospective service areas.

In our regulated water subsidiaries, our strategy is to focus on a wide spectrum of activities, which include strategic acquisitions of existing systems, expanding certificated service area, identifying new and dependable sources of supply, developing the wells, treatment plants and delivery systems to supply water to customers and educating customers on the wise use of water. Our strategy includes focused efforts to expand through strategic acquisitions and in new regions added to our Delaware service territory over the last 10 years. We plan to expand our regulated water service area in the Cecil County designated growth corridor and to expand our business through the design, construction, operation, management and acquisition of additional water systems. The expansion of our exclusive franchise areas elsewhere in Maryland and the award of contracts will similarly enhance our operations within the state.

Our ability to develop partnerships with various county governments, municipalities and developers has provided a number of opportunities. In recent years, we have completed several acquisitions including asset purchase agreements with municipal and developer/homeowner association operated systems.

We believe that Delaware's generally lower cost of living in the region and availability of development sites in relatively close proximity to the Atlantic Ocean in Sussex County have resulted, and will continue to result, in increases to our customer base. Delaware’s lower property and income tax rate make it an attractive region for new home development and retirement communities. Substantial portions of Delaware currently are not served by a public water system, which could also assist in an increase to our customer base as systems are added.

In our regulated wastewater subsidiaries, we foresee significant growth opportunities and will continue to seek strategic partnerships and relationships with developers and governmental agencies to complement existing agreements for the provision of wastewater service on the Delmarva Peninsula. There are numerous locations in Sussex County where Artesian Wastewater’s and Sussex County’s facilities are connected or integrated to allow for the movement and disposal of wastewater generated by one or the other’s system in a manner that most efficiently and cost effectively manages wastewater transmission, treatment and disposal. In addition, Artesian Wastewater plans to utilize our larger regional wastewater facilities to expand service areas to new customers while transitioning our smaller treatment facilities into regional pump stations in order to gain additional efficiencies in the treatment and disposal of wastewater. We believe this will reduce operational costs at the smaller treatment facilities in the future because they will be converted from treatment and disposal plants to pump stations to assist with transitioning the flow of wastewater from one regional facility to another. In addition, Artesian’s Delaware wastewater subsidiaries are the sole regional regulated wastewater utilities in Delaware, which we believe will enable us to continue to increase efficiencies in the treatment and disposal of wastewater and expand our wastewater operations.

In April 2024, Artesian Wastewater received a permit from the Delaware Department of Natural Resources and Environmental Control, or DNREC, for construction of a 625,000 gallon per day regional wastewater treatment facility, including a primary receiving headworks at its Sussex Regional Recharge Facility, or SRRF. Under its previous permit, SRRF provided solely land disposal services for a single commercial processing and treatment plant. Under its new permit, SRRF will continue providing those disposal services alongside the new treatment plant. The new treatment facility will provide service for Artesian Wastewater’s regional system comprised primarily of residential and small commercial customers. The construction will also include the primary receiving facility for untreated effluent, sized to allow for the expansion of the regional treatment system planned for the site. The new treatment facility will utilize the existing disposal infrastructure and was completed in the first quarter of 2026. In February 2026, Artesian Wastewater received a permit from DNREC for construction of an additional 1,250,000 gallon per day regional wastewater treatment facility.

The general need for increased capital investment in our water and wastewater systems is due to a combination of population growth, more protective water quality standards, aging infrastructure and acquisitions. Our planned and budgeted capital improvements over the next three years include projects for water infrastructure improvements and expansion in both Delaware and Maryland and wastewater infrastructure improvements and expansion in Delaware. The DEPSC and MDPSC have generally recognized the operating and capital costs associated with these improvements in setting water and wastewater rates for current customers and capacity charges for new customers.

In our non-utility subsidiaries, we continue pursuing opportunities to expand our contract operations. Through Artesian Utility, we will seek to expand our contract design, engineering and construction services of water and wastewater facilities for developers, municipalities and other utilities. We also anticipate continued growth due to our water and sewer SLP Plans. Artesian Development owns two nine-acre parcels of land, located in Sussex County, Delaware, which allows for construction of a water treatment facility and wastewater treatment facility.

Other Matters

Environmental, Health and Safety, and Water Quality Regulation

As required by the Safe Drinking Water Act, the U.S. Environmental Protection Agency, or EPA, establishes maximum contaminant levels, or MCLs, for various substances found in drinking water to ensure that the water is safe for human consumption. On April 10, 2024, the EPA established MCLs for certain per- and polyfluoroalkyl substances, or PFAS, in drinking water. Under these regulations, water utilities will be required to complete initial monitoring for PFAS by 2027 and to conduct ongoing compliance monitoring. At the national level, water utilities also will be required to meet the new MCLs by April 2029 and to notify the public of any violations of the MCLs as of and after that date. Delaware water utilities are required to notify the public of any violations of the MCLs beginning January 15, 2026. To allow drinking water systems more time to develop plans for addressing PFAS where they are found and implement solutions, the EPA plans to develop a rulemaking to provide additional time for compliance, including a proposal to extend the compliance date to 2031. The EPA plans to finalize this rule in the Spring of 2026. The Company has installed treatment for PFAS at several wellfields to date and plans to continue to install treatment at additional locations as necessary in future years. The capital investment and operating costs for treatment of PFAS are anticipated to be recoverable in water rates charged to customers as approved by the applicable public service commission. The Company is participating in the multi-district litigation class action settlements with certain manufacturers of PFAS seeking reimbursement of costs incurred and that will continue to be incurred. See Note 15 – Legal Proceedings.

The Lead and Copper Rule, or LCR, is a federal regulation that limits the concentration of lead and copper allowed in public drinking water at the consumer's tap, in addition to limiting the permissible amount of pipe corrosion occurring due to the water itself. The LCR limits the levels of lead and copper in water by improving water treatment, testing for lead and copper at customer taps, and eliminating the water supply as a significant source of lead and copper. The EPA published a revised LCR in 2021, or LCR Revisions, to provide greater and more effective protection of public health by reducing exposure to lead and copper in drinking water. Implementation of the revised rule is intended to better identify high levels of lead, improve the reliability of lead tap sampling results, strengthen corrosion control treatment requirements, expand consumer awareness and improve risk communication. In addition, implementation of the revised rule is anticipated to accelerate lead service line replacements by closing existing regulatory loopholes, propelling early action, and strengthening replacement requirements. We filed all required Lead Service Line Inventories by the October 16, 2024 deadline and are fully compliant with the LCR Revisions.

On October 8, 2024, the EPA announced the new final regulations requiring the removal of lead water lines. The EPA’s rule, known as the Lead and Copper Rule Improvements, or LCRI, requires all public water systems to remove lead service lines within 10 years, among other changes to regulations in the EPA’s LCR. The service lines connect a home’s plumbing system to a public water system’s main water line. The LCRI specifies that the water provider will cover the cost for replacements of the customer’s service line up to the first fitting inside the structure being served. Capital investment and operating costs incurred by water utilities for customer-side pipe replacements are typically recoverable in water rates charged to customers as approved by the applicable public service commission.

Results of Operations – Analysis of the Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025.

Operating Revenues

Revenues totaled $27.8 million for the three months ended March 31, 2026, $1.9 million, or 7.3%, more than revenues for the three months ended March 31, 2025.

Water sales revenue increased $1.5 million, or 7.3%, for the three months ended March 31, 2026 from the corresponding period in 2025, primarily the result of two temporary rate increases as permitted under Delaware law, until permanent rates are determined by the DEPSC, as well as an increase in the number of customers served. The first temporary rate increase of 2.88% was placed into effect on June 3, 2025 at which time the DSIC rate of 1.66% was set to zero. The second temporary rate increase of 6.82% was placed into effect on November 6, 2025, of which a portion has been reserved for refund and is not reflected in income. We realized 79.9% and 79.9% of our total operating revenue for the three months ended March 31, 2026 and March 31, 2025, respectively, from the sale of water.

Other utility operating revenue increased approximately $0.2 million, or 6.2%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase is primarily due to an increase in revenue related to industrial wastewater services and an increase in wastewater revenue associated with additional residential and commercial customers.

Non-utility operating revenue increased approximately $0.2 million, or 9.5%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase is primarily due to an increase in SLP Plan revenue, primarily the result of an increase in the number of customers participating in the SLP Plans and an increase in fees that were placed into effect on January 1, 2026.

Operating Expenses

Operating expenses, excluding depreciation and income taxes, increased $0.9 million, or 5.7%, for the three months ended March 31, 2026, compared to the same period in 2025.

Utility operating expenses increased $0.8 million, or 6.7%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase in utility operating expenses consists of a $0.6 million increase in payroll and employee benefit costs, a $0.2 million increase in supply and treatment costs, and a $0.1 million increase in transmission, distribution and collection system costs. The increase in utility operating expenses is partially offset by a $0.1 million decrease in administrative costs.

The ratio of operating expenses, excluding depreciation and income taxes, to total revenue was 57.6% for the three months ended March 31, 2026, compared to 58.5% for the three months ended March 31, 2025.

Federal and state income tax expense increased $0.2 million, or 11.2%, primarily due to higher pre-tax book income.

Other Income

Other income decreased $0.2 million, primarily due to a decrease in patronage refunds on the Company’s lines of credit and loan volume and a decrease in allowance for funds used during construction, or AFUDC, as a result of lower long-term construction activity subject to AFUDC.

Net Income

Our net income applicable to common stock increased $0.5 million, or 9.2%. Total operating revenues increased $1.9 million, offset by a $1.2 million increase in total operating expenses, and a decrease of $0.2 million in other income.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary sources of liquidity for the three months ended March 31, 2026 were $8.6 million of cash provided by operating activities, $10.0 million from the issuance of long-term debt, and $8.1 million in net contributions and advances from developers. We depend on the availability of capital for expansion, construction and maintenance. We rely on our sources of liquidity for investments in our utility plant and to meet our various payment obligations.

Operating Activities

One of our primary sources of liquidity for the three months ended March 31, 2026 was $8.6 million provided by cash flow from operating activities, compared to $11.0 million for the three months ended March 31, 2025. The decrease in cash flows from operating activities is primarily from lower accounts receivable and accounts payable, partially offset by higher materials and supplies, customer deposits and other, net income, deferred income taxes, and accrued expenses. Cash flow from operating activities is primarily provided by our utility operations and is impacted by the timeliness and adequacy of rate increases and changes in water consumption as a result of year-to-year variations in weather conditions, particularly during the summer. A significant part of our ability to maintain and meet our financial objectives is to ensure that our investments in utility plant and equipment are recovered in the rates charged to customers. As such, from time to time, we file rate increase requests to recover increases in operating expenses and investments in utility plant and equipment. See Note 13 – Regulatory Proceedings. We will continue to borrow on available lines of credit in order to satisfy current liquidity needs. In addition, the Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities.

Investment Activities

The primary focus of our investments is to continue to provide high quality reliable service to our growing service territory. Capital expenditures during the first three months of 2026 were $13.1 million compared to $10.4 million during the same period in 2025. During the first three months of 2026, these investments include installation of new mains, services and hydrants, renewals associated with the rehabilitation of aging infrastructure, upgrading and replacing our meter reading equipment, installation of wastewater force mains, upgrading existing pumping and treatment stations, including PFAS treatment upgrades, and construction of new wastewater treatment plants, to better serve our customers.

Financing Activities

For the three months ended March 31, 2026, cash flows provided by financing activities were $8.7 million, compared to $2.0 million for the three months ended March 31, 2025. Our primary sources of liquidity from financing activities for the three months ended March 31, 2026 were $10.0 million from the issuance of long-term debt and $8.1 million in net contributions and advances from developers. The cash flows provided by financing activities increased due to higher issuance of long-term debt and an increase in net contributions and advances from developers, partially offset by an increase in repayments of lines of credit and a decrease in overdraft payables. We have several sources of liquidity to finance our investment in utility plant and other fixed assets. We estimate that future investments will be financed by our operations and external sources. We expect to fund our activities for the next twelve months using our projected cash generated from operations, bank credit lines, contributions from developers and settlement funds, government grants and capital market financing as needed to provide sufficient working capital to maintain normal operations, to meet our financing requirements and to expand through strategic acquisitions. We believe that our cash on hand and future cash generated from the foregoing activities will provide adequate resources to fund our short-term and long-term capital, operating and financing needs. However, there is no assurance that we will be able to secure funding on terms acceptable to us, or at all. Our cash flows from operations are primarily derived from water sales revenues and may be materially affected by changes in water sales due to weather and the timing and extent of increases in rates approved by state public service commissions.

Material Cash Requirements

Lines of Credit and Long-Term Debt

At March 31, 2026, Artesian Resources had a $40 million line of credit with Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources. As of March 31, 2026, there was $40 million of available funds under this line of credit. The interest rate is a one-month Daily Secured Overnight Financing Rate, or SOFR, plus 10 basis points, or Term SOFR, plus an applicable margin of 1.10%. Term SOFR cannot be less than 0.00%. This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time. The term of this line of credit expires on the earlier of May 17, 2027, or any date on which Citizens demands payment. The Company expects to renew this line of credit.

At March 31, 2026, Artesian Water had a $20 million line of credit with CoBank, ACB, or CoBank, that allowed for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland. As of March 31, 2026, there was $20 million of available funds under this line of credit. In April 2026, the agreement for this line of credit was amended to allow for the financing of operations by Artesian Water, Artesian Water Maryland, and Artesian Wastewater Management, Inc., individually or collectively, subject to the $20-million limit. The interest rate for borrowings under this line is either a daily SOFR rate plus 1.45% option or a term SOFR rate plus 1.45% option that is locked in for either one or three months. The term of this line of credit expires on October 31, 2026. Artesian Water expects to renew this line of credit.

The Company’s material cash requirements include the following lines of credit commitments and contractual obligations:


Material Cash Requirements	Payments Due by Period
In thousands	Less than 1 Year		1-3 Years		4-5 Years		After 5 Years		Total
First mortgage bonds (principal and interest)	$	7,816	$	39,045	$	12,422	$	185,891	$	245,174
State revolving fund loans (principal and interest)		1,065		2,130		2,130		8,200		13,525
Promissory notes (principal and interest)		1,871		3,685		3,685		20,626		29,867
Asset purchase contractual obligation (principal and interest)		326		320		-		-		646
Lines of credit		-		-		-		-		-
Operating leases		29		50		42		1,337		1,458
Operating agreements		38		15		-		-		53
Unconditional purchase obligations		812		114		114		184		1,224
Tank painting contractual obligation		849		1,061		-		-		1,910
Total contractual cash obligations	$	12,806	$	46,420	$	18,393	$	216,238	$	293,857

Artesian’s long-term debt agreements and revolving lines of credit contain customary affirmative and negative covenants that are binding on us (which are in some cases subject to certain exceptions), including, but not limited to, restrictions on our ability to make certain loans and investments, guarantee certain obligations, enter into, or undertake, certain mergers, consolidations or acquisitions, transfer certain assets or change our business. As of March 31, 2026, we were in compliance with these covenants.

Long-term debt obligations reflect the maturities of certain series of our first mortgage bonds, which we intend to refinance when due if not refinanced earlier. One first mortgage bond is subject to redemption in a principal amount equal to $150,000 plus interest per calendar quarter. The state revolving fund loan obligation and promissory note obligation have an amortizing mortgage payment payable over a 20-year period. The first mortgage bonds, the state revolving fund loan and the promissory notes have certain financial covenant provisions, the violation of which could result in default and require the obligation to be immediately repaid, including all interest. We have not experienced conditions that would result in our default under these agreements.

On March 13, 2026, Artesian Water Maryland and CoBank entered into a Master Loan Agreement, or the MLA, and supplement to the MLA, in which CoBank will make a single loan to Artesian Water Maryland in a principal amount not to exceed $10 million. Artesian Water Maryland agrees to pay interest on the unpaid principal balance of the loans at 6.14% per annum. Interest shall be calculated and paid quarterly in arrears on the thirtieth (30th) day of each of March, June, September and December. Artesian Water Maryland agrees to repay the loan in eighty consecutive quarterly installments, each due on the thirtieth (30th) day of each March, June, September, and December, with the first installment due on June 30, 2026, and the last installment due on March 13, 2046. The amount of each installment shall be the same principal amount that would be required to be repaid if the loan was scheduled to be repaid in level installments of principal and interest and such schedule was calculated utilizing 6.14% as the rate accruing on the loan; provided, however, that the last installment of the loan shall be in an amount equal to the then unpaid principal balance of the loan. Closing on the debt financing was approved by the Maryland Public Service Commission on March 2, 2026.

The asset purchase contractual obligation is related to the purchase of substantially all of the water operating assets from the Town of Clayton in May 2022, by Artesian Water. The total purchase price was $5.0 million. At closing, Artesian Water paid approximately $3.4 million. The balance is payable in five equal annual installments on the anniversary date of the closing date. Each annual installment is payable with interest at an annual rate of 2.0%.

Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under an interconnection agreement with the Chester Water Authority. The agreement is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which currently requires us to purchase a minimum of 0.5 million gallons of water per day. In addition, payments for unconditional purchase obligations reflect minimum water purchase obligations based on a contract rate under our interconnection agreement with the Town of North East, which expires June 26, 2029. The agreement includes a remaining automatic five-year renewal term, unless terminated by either party.

In August 2025, Artesian Water entered into a new, three-year agreement with Worldwide Industries Corporation, effective September 1, 2025, to paint elevated water storage tanks. Pursuant to the agreement, the expected total expenditure for the three years is $2.5 million.

In order to control purchased power costs and avoid fluctuations in electricity rates that happen due to the change of seasons, energy supply changes, or other outside factors, we utilize contracts with electric suppliers that provide a fixed rate. In April 2025, Artesian entered into an electric supply contract with Constellation NewEnergy, Inc. that is effective from May 2025 to May 2029 for Delaware operations. The supply rate was increased approximately 25% starting in May 2025. In April 2025, Artesian Water Maryland entered into an electric supply agreement with WGL Energy that is effective from November 2025 through November 2029 for Maryland operations. The fixed rate was increased 5.5% starting in November 2025. These fixed rate electric supply contracts are for normal purchases and are not derivative instruments.

Critical Accounting Estimates; Recent Accounting Pronouncements

This discussion and analysis of our financial condition and results of operations is based on the accounting policies used and disclosed in our 2025 consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of our annual report on Form 10-K for the year ended December 31, 2025. The preparation of those financial statements required management to make assumptions and estimates that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Actual amounts or results could differ from those based on such assumptions and estimates.

Management has reviewed our financial policies and determined that there are no critical accounting estimates requiring disclosure, as further described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the year ended December 31, 2025. There have been no changes in our critical accounting estimates. Our significant accounting policies are described in our notes to the 2025 consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2025.

Information concerning our implementation and the impact of recent accounting pronouncements issued by the FASB is included in the notes to our 2025 consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2025 and also in the notes to our unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q. We did not adopt any accounting policy in the first three months of 2026 that had a material impact on our financial condition, liquidity or results of operations.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to the risk of fluctuating interest rates in the normal course of business. Our policy is to manage interest rates through the use of fixed rate long-term debt and, to a lesser extent, short-term debt. The Company's exposure to interest rate risk related to existing fixed rate, long-term debt is due to the term of the majority of our First Mortgage Bonds and the term of the promissory note, which have final maturity dates ranging from 2028 to 2049, and interest rates ranging from 4.24% to 6.14%, which exposes the Company to interest rate risk as interest rates may drop below the existing fixed rate of the long-term debt prior to such debt’s maturity. In addition, the Company has interest rate exposure on $60 million of variable rate lines of credit with two banks. As of March 31, 2026, there were no outstanding amounts on the lines of credit. Increases in variable interest rates result in an increase in the cost of borrowing on these variable rate lines of credit. We are also exposed to market risk associated with changes in commodity prices. Our risks associated with price increases in chemicals, electricity and other commodities are mitigated by our ability to recover our costs through rate increases to our customers. We have also sought to mitigate future significant electric price increases by signing multi-year supply contracts at fixed prices.

ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective in providing reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In addition, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective to achieve the foregoing objectives. A control system cannot provide absolute assurance, however, that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

ITEM 1A – RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition or future results. There have been no material changes to the risk factors described in such Annual Report on Form 10-K.

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

None.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

(a) None.

(b) None.

(c) None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended March 31, 2026.

ITEM 6 - EXHIBITS

Exhibit No.	Description

4.1	Master Loan Agreement, dated as of March 13, 2026, by and between Artesian Water Maryland, Inc. and CoBank, ACB. Incorporated by reference to Exhibit 4.26 filed with the Company’s Form 10-K filed on March 16, 2026.

4.2	Guarantee of Payment, dated as of March 13, 2026, by and between Artesian Resources Corporation and CoBank, ACB. Incorporated by reference to Exhibit 4.27 filed with the Company’s Form 10-K filed on March 16, 2026.

31.1	Certification of Chief Executive Officer of the Registrant required by Rule 13a–14(a) under the Securities Exchange Act of 1934, as amended. *

31.2	Certification of Chief Financial Officer of the Registrant required by Rule 13a–14(a) under the Securities Exchange Act of 1934, as amended. *

32	Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. Section 1350). **

101.BAL	Inline XBRL Condensed Consolidated Balance Sheets (unaudited)*
101.OPS	Inline XBRL Condensed Consolidated Statements of Operations (unaudited)*

101.CSH	Inline XBRL Condensed Consolidated Statements of Cash Flows (unaudited)*

101.NTS	Inline XBRL Notes to the Condensed Consolidated Financial Statements (unaudited)*

104	The cover page from Artesian Resources Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, formatted in Inline XBRL (contained in exhibit 101). *

* Filed herewith

** Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ARTESIAN RESOURCES CORPORATION

Date: May 8, 2026	By:	/s/ NICHOLLE R. TAYLOR
		Nicholle R. Taylor Chair of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer)

Date: May 8, 2026	By:	/s/ DAVID B. SPACHT
		David B. Spacht Chief Financial Officer (Principal Financial Officer)

2022 2023 2024 2025 2022 2023 2024 2025 Other revenues and other profit: – Revenue and profit from segments below the quantitative thresholds are attributable to four non-utility businesses of the Company – These businesses are primarily comprised of: Service Line Protection Plan services for water, sewer and internal plumbing; design, construction and engineering services; contract services for the operation and maintenance of water and wastewater systems in Delaware and Maryland; and leased space to the Regulated Utility Segment – These non-utility businesses do not individually or in the aggregate meet the quantitative thresholds for determining reportable segments – Certain corporate costs have been allocated from the regulated utility segment to the non-utility businesses and are included in the other profit amounts shown Significant expense categories: – The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM – Inter-segment expenses related to leased space provided by one non-utility business, calculated on the lower of cost or market method, are included in the amounts shown Payroll and benefits: – This category does not include amounts capitalized on the Condensed Consolidated Balance Sheet Supply and Delivery: – This category includes purchased power, purchased water, chemicals, infrastructure maintenance and repair costs, and wastewater disposal fees Administration expense: – This category includes computer systems maintenance and subscription fees, audit and legal fees, insurance, customer billing, and other general and administrative expenses 0000863110 false Q1 --12-31 0000863110 2026-01-01 2026-03-31 0000863110 us-gaap:CommonClassAMember 2026-05-06 0000863110 us-gaap:CommonClassBMember 2026-05-06 0000863110 2026-03-31 0000863110 2025-12-31 0000863110 artna:WaterSalesMember 2026-01-01 2026-03-31 0000863110 artna:WaterSalesMember 2025-01-01 2025-03-31 0000863110 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Date: May 8, 2026	/s/ NICHOLLE R. TAYLOR
	Nicholle R. Taylor
	Chief Executive Officer (Principal Executive Officer)

Date: May 8, 2026	/s/ DAVID B. SPACHT
	David B. Spacht
	Chief Financial Officer (Principal Financial Officer)

CHIEF EXECUTIVE OFFICER:		CHIEF FINANCIAL OFFICER:


/s/ NICHOLLE R. TAYLOR		/s/ DAVID B. SPACHT
Nicholle R. Taylor		David B. Spacht