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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                         
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
|           |  |                                                                                         
|           |  | For the quarterly period ended September 30, 2002                                       
|           |  |                                                                                         
|OR        
|           |  |                                                                                         
|[  ]       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|           |  |                                                                                         
|           |  | For the transaction period from ______________ to ______________                        

Commission File Number: 0-25248

CONSOLIDATED WATER CO. LTD.

(Exact name of Registrant as specified in its charter)


|                                                                      |  |                                     
|--------------------------------------------------------------------- |  | ------------------------------------
|CAYMAN ISLANDS                                                        |  | N/A                                 
|                                                                      |  |                                     
|(State or other jurisdiction of
incorporation or organization)        |  | (I.R.S. Employer
Identification No.)
|                                                                      |  |                                     
|Trafalgar Place, West Bay Road,
P.O. Box 1114 GT, Grand Cayman, B.W.I |  | N/A                                 
|                                                                      |  |                                     
|(Address of principal executive offices)                              |  | (Zip Code)                          

Registrants Telephone number, including area code: (345) 945-4277

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 [X] No [  ]

As at September 30, 2002,there were 3,987,363 of the registrants ordinary
shares of common stock, with CI$ 1.00 par value, outstanding.





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EXCHANGE RATES

Unless otherwise indicated, all dollar amounts are in United States Dollars and
references to $, U.S., or U.S. $ are to United States Dollars.

The official fixed exchange rate for conversion of CI$ into U.S.$, as
determined by the Cayman Islands Monetary Authority, has been fixed since April
1974 at U.S. $1.20 per CI$1.00.

The official fixed exchange rate for conversion of BZE$ into U.S.$, as
determined by the Central Bank of Belize, has been fixed since 1976 at U.S.$
0.50 per BZE$ 1.00.

The official fixed exchange rate for conversion of BAH$ into U.S.$, as
determined by the Central Bank of The Bahamas, has been fixed since 1973 at
U.S. $1.00 per BAH $1.00.





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TABLE OF CONTENTS



|                                                                                                                      |                                                                                                  |                                                          |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | -------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                                                                                       
|                                                                                                                      | Item  1.   Financial Statements                                                                 
|                                                                                                                      |                                                                                                  | CONDENSED CONSOLIDATED BALANCE SHEETS                   
|                                                                                                                      |                                                                                                  | CONDENSED CONSOLIDATED STATEMENTS OF INCOME             
|                                                                                                                      |                                                                                                  | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS         
|                                                                                                                      |                                                                                                  | NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                                                                                      | Item  2.   Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                                                                                      | Item 3.  Quantitative and Qualitative Disclosures about Market Risk                             
|                                                                                                                      | Item 4.  Controls and Procedures                                                                
|PART II  OTHER INFORMATION                                                                                          
|                                                                                                                      | Item 2.  Changes in Securities and Use of Proceeds                                              
|                                                                                                                      | Item 5.  Other Information                                                                      
|                                                                                                                      | Item 6  Exhibits and Reports on Form 8-K                                                        
|SIGNATURE                                                                                                            
|CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
|SHARE SALE AGREEMENT                                                                                                 
|SHARE SALE AGREEMENT                                                                                                 
|AGREEMENT DATED 10/08/02                                                                                             



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TABLE OF CONTENTS

|              |        |                                                                 |                                                              |      |    |    |    |  | 
|------------- | ------ | --------------------------------------------------------------- | ------------------------------------------------------------ | ---- | -- | -- | -- |  | 
|Section       |        | Description                                                     |                                                              | Page
|              |        |                                                                 |                                                              |     
|PART I        |        | FINANCIAL INFORMATION                                           |                                                              |      |    |   
|              | Item 1 |                                                                 | Financial Statements                                         |      |    |    |   
|              |        | Condensed Consolidated Balance Sheets as at September 30, 2002  |                                                              |      |    |   
|              |        | and December 31, 2001                                           |                                                              |      | 1  |   
|              |        | Condensed Consolidated Statements of Income for each of the     |                                                              |      |    |   
|              |        | Three and Nine months ended September 30, 2002 and 2001         |                                                              |      | 2  |   
|              |        | Condensed Consolidated Statements of Cash Flows for each of the |                                                              |      |    |   
|              |        | Nine months ended September 30, 2002 and 2001                   |                                                              |      | 3  |   
|              |        | Notes to Condensed Consolidated Financial Statements            |                                                              |      | 4  |   
|              | Item 2 |                                                                 | Management's Discussions and Analysis of Financial Condition |      |    |    |   
|              |        | and Results of Operations                                       |                                                              |      | 8  |   
|              | Item 3 |                                                                 | Quantitative and Qualitative Disclosures about Market Risk   |      |    | 14 |   
|              | Item 4 |                                                                 | Controls and Procedures                                      |      |    | 15 |   
|PART II       |        | OTHER INFORMATION                                               |                                                              |      |    |   
|              | Item 2 |                                                                 | Changes in Securities and Use of Proceeds                    |      |    | 15 |   
|              | Item 5 |                                                                 | Other Information                                            |      |    | 15 |   
|              | Item 6 |                                                                 | Exhibits and Reports on Form 8-K                             |      |    | 18 |   
|SIGNATURE     |        |                                                                 |                                                              |      |    |    | 19 | 
|CERTIFICATION |        | Section 302 Certifications                                      |                                                              |      | 20 |   

Forward-Looking Statements

This Form 10-Q for Consolidated Water Co. Ltd. (the Company) includes
statements that may constitute forward-looking statements, usually containing
the words believe, estimate, project, intend, expect or similar
expressions. These statements are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements inherently involve risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements. Factors that
would cause or contribute to such differences include, but are not limited to,
completion of the transactions described in this Form 10-Q as well as the
financing required therefore, the ability to secure replacement financing, the
terms of the financing, the ability of the Company to repay the debt incurred
to complete the transactions described in this Form 10-Q, continued acceptance
of the Companys products and services in the marketplace, changes in its
relationship with the governments of the jurisdictions in which it operates,
the ability to successfully secure contracts for water projects in other
countries, the ability to develop and operate such projects profitably, and
other risks detailed in the Companys other periodic report filings with the
Securities and Exchange Commission. By making these forward-looking statements,
the Company undertakes no obligation to update these statements for revisions
or changes after the date of this Form 10-Q.





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PART I  FINANCIAL INFORMATION




Item  1.   Financial Statements

CONSOLIDATED WATER CO.
LTD.




CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)


|                                           |                                        |   |               |           |              |   |            |           | 
|------------------------------------------ | -------------------------------------- | - | ------------- | --------- | ------------ | - | ---------- | --------- | 
|                                           |                                        |   | September 30, |           | December 31,
|                                           |                                        |   |               |           |             
|                                           |                                        |   | 2002          |           | 2001        
|                                           |                                        |   |               |           |             
|                                           |                                        |   | (Unaudited)   |           |              |   |           
|ASSETS                                     |                                        |   |               |           |              |   |            |          
|Current assets                             |                                        |   |               |           |              |   |            |          
|                                           | Cash and cash equivalents              |   |               | 1,883,113 |              |   |            | 516,446   | 
|                                           | Accounts receivable                    |   |               | 1,161,080 |              |   |            | 1,323,156 | 
|                                           | Spares inventory                       |   |               | 386,612   |              |   |            | 271,134   | 
|                                           | Inventory of water                     |   |               | 56,422    |              |   |            | 48,377    | 
|                                           | Prepaid expenses and other assets      |   |               | 285,993   |              |   |            | 319,900   | 
|                                           | Deferred expenditures                  |   |               | 595,815   |              |   |            |          | 
|                                           |                                        |   |               |           |              |   |            |          
|Total current assets                       |                                        |   | 4,369,035     |           |              |   | 2,479,013  |          
|Property, plant and equipment              |                                        |   | 19,505,106    |           |              |   | 18,414,935 |          
|Intangible asset                           |                                        |   | 1,668,599     |           |              |   | 1,814,780  |          
|Investments                                |                                        |   | 12,450        |           |              |   | 12,450     |          
|                                           |                                        |   |               |           |              |   |            |          
|Total assets                               |                                        | $ | 25,555,190    |           |              | $ | 22,721,178 |          
|                                           |                                        |   |               |           |              |   |            |          
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                        |   |               |           |              |   |            |          
|Current liabilities                        |                                        |   |               |           |              |   |            |          
|                                           | Dividends payable                      |   |               | 490,337   |              |   |            | 499,383   | 
|                                           | Accounts payable and other liabilities |   |               | 1,157,575 |              |   |            | 1,087,470 | 
|                                           | Stock compensation liability           |   |               | 139,380   |              |   |            | 210,324   | 
|                                           | Current portion of long term debt      |   |               | 511,670   |              |   |            | 355,840   | 
|                                           |                                        |   |               |           |              |   |            |          
|Total current liabilities                  |                                        |   | 2,298,962     |           |              |   | 2,153,017  |          
|Long term debt                             |                                        |   | 2,294,004     |           |              |   | 1,213,804  |          
|Security deposit                           |                                        |   | 102,763       |           |              |   | 52,763     |          
|Advances in aid of construction            |                                        |   | 35,275        |           |              |   | 37,494     |          
|                                           |                                        |   |               |           |              |   |            |          
|Total liabilities                          |                                        |   | 4,731,004     |           |              |   | 3,457,078  |          
|                                           |                                        |   |               |           |              |   |            |          
|Stockholders equity                       |                                        |   |               |           |              |   |            |          
|                                           | Common stock                           |   |               | 4,784,836 |              |   |            | 4,704,077 | 
|                                           | Additional paid-in capital             |   |               | 7,296,865 |              |   |            | 6,896,753 | 
|                                           | Vested redeemable preferred stock      |   |               | 3,351     |              |   |            | 2,841     | 
|                                           | Non-vested redeemable preferred stock  |   |               | 20,337    |              |   |            | 27,393    | 
|                                           | Retained earnings                      |   |               | 8,718,797 |              |   |            | 7,633,036 | 
|                                           |                                        |   |               |           |              |   |            |          
|Total stockholders equity                 |                                        |   | 20,824,186    |           |              |   | 19,264,100 |          
|                                           |                                        |   |               |           |              |   |            |          
|Total liabilities and stockholders equity |                                        | $ | 25,555,190    |           |              | $ | 22,721,178 |          
|                                           |                                        |   |               |           |              |   |            |          

The accompanying information and notes are an
integral part of these condensed consolidated financial statements.

1



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CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

(Expressed in United States Dollars)

|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |         | 
|---------------------------------------------------------------------- | --------------- | - | ------------------ | ------ | ----------------- | - | ---------- | ------- | ---- | - | ---------- | ------- |  | - | ---------- | ------- | 
|                                                                       |                 |   | Three Months Ended |        | Nine Months Ended
|                                                                       |                 |   |                    |        |                  
|                                                                       |                 |   | September 30,      |        | September 30,    
|                                                                       |                 |   |                    |        |                  
|                                                                       |                 |   | 2002               |        | 2001              |   | 2002       |         | 2001
|                                                                       |                 |   |                    |        |                   |   |            |         |     
|Water sales                                                            |                 |   | 2,854,206          |        |                   |   | 2,648,336  |         |      |   | 9,195,725  |         |  |   | 8,506,406  |        
|Cost of water sales                                                    |                 |   | (1,713,947         | )      |                   |   | (1,524,293 | )       |      |   | (5,177,533 | )       |  |   | (4,622,651 | )      
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Gross profit                                                           |                 |   | 1,140,259          |        |                   |   | 1,124,043  |         |      |   | 4,018,192  |         |  |   | 3,883,755  |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Indirect expenses                                                      |                 |   | (600,465           | )      |                   |   | (611,996   | )       |      |   | (1,889,722 | )       |  |   | (1,873,824 | )      
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Income from operations                                                 |                 |   | 539,794            |        |                   |   | 512,047    |         |      |   | 2,128,470  |         |  |   | 2,009,931  |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Other income:                                                          |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|                                                                       | Interest income |   |                    |       |                   |   |            | 25,376  |      |   |            | 6,040   |  |   |            | 26,188  | 
|                                                                       | Other income    |   |                    | 64,975 |                   |   |            | 108,830 |      |   |            | 208,018 |  |   |            | 316,355 | 
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|                                                                       |                 |   | 64,975             |        |                   |   | 134,206    |         |      |   | 214,058    |         |  |   | 342,543    |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Net income                                                             |                 | $ | 604,769            |        |                   | $ | 646,253    |         |      | $ | 2,342,528  |         |  | $ | 2,352,474  |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Basic earnings per share (Note 6)                                      |                 | $ | 0.15               |        |                   | $ | 0.17       |         |      | $ | 0.59       |         |  | $ | 0.60       |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Diluted earnings per common share
(Note 6)                             |                 | $ | 0.15               |        |                   | $ | 0.16       |         |      | $ | 0.57       |         |  | $ | 0.59       |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Dividends declared per share                                           |                 | $ | 0.105              |        |                   | $ | 0.10       |         |      | $ | 0.315      |         |  | $ | 0.30       |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Weighted average number of common
shares used in the determination
of: |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Basic earnings per share (Note 6)                                      |                 |   | 3,983,072          |        |                   |   | 3,899,858  |         |      |   | 3,961,922  |         |  |   | 3,880,952  |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        
|Diluted earnings per share (Note 6)                                    |                 |   | 4,095,369          |        |                   |   | 4,019,269  |         |      |   | 4,081,489  |         |  |   | 4,000,804  |        
|                                                                       |                 |   |                    |        |                   |   |            |         |      |   |            |         |  |   |            |        

The accompanying information and notes are an
integral part of these condensed consolidated financial statements.

2



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CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(Expressed in United States Dollars)

|                                                      |                                             |   |               |            |               |   |            |            |  
|----------------------------------------------------- | ------------------------------------------- | - | ------------- | ---------- | ------------- | - | ---------- | ---------- | -
|                                                      |                                             |   | Nine Months   |            | Nine Months  
|                                                      |                                             |   | Ended         |            | Ended        
|                                                      |                                             |   |               |            |              
|                                                      |                                             |   | September 30, |            | September 30,
|                                                      |                                             |   |               |            |              
|                                                      |                                             |   | 2002          |            | 2001         
|                                                      |                                             |   |               |            |              
|Net cash flows provided by operating activities       |                                             |   | 3,685,757     |            |               |   | 3,408,328  |           
|                                                      |                                             |   |               |            |               |   |            |           
|Cash flows provided by (used in) investing
activities |                                             |   |               |            |               |   |            |           
|                                                      | Deferred expenditures  pending acquisition |   |               | (306,694   | )             |   |            |           |  
|                                                      | Purchase of property, plant and equipment   |   |               | (2,036,900 | )             |   |            | (1,598,388 | )
|                                                      | Purchase of investments                     |   |               |           |               |   |            | (12,450    | )
|                                                      | Proceeds from sale of equipment             |   |               |           |               |   |            | 4,200      |  
|                                                      |                                             |   |               |            |               |   |            |           
|Net cash used in investing activities                 |                                             |   | (2,343,594    | )          |               |   | (1,606,638 | )         
|                                                      |                                             |   |               |            |               |   |            |           
|Cash flows provided by (used in) financing
activities |                                             |   |               |            |               |   |            |           
|                                                      | Deferred expenditures  pending share issue |   |               | (289,121   | )             |   |            |           |  
|                                                      | Dividends paid                              |   |               | (1,233,550 | )             |   |            | (1,177,717 | )
|                                                      | Drawdown of new credit facility             |   |               | 1,500,000  |               |   |            | 500,000    |  
|                                                      | Principal payments of long term debt        |   |               | (263,970   | )             |   |            | (108,213   | )
|                                                      | Net proceeds from issuance of common stock  |   |               | 347,855    |               |   |            | 150,000    |  
|                                                      | Repurchase of common stock                  |   |               | (32,869    | )             |   |            |           |  
|                                                      | Repurchase of redeemable preferred stock    |   |               | (3,841     | )             |   |            |           |  
|                                                      | Drawdown (repayment) of bank indebtedness   |   |               |           |               |   |            | (401,766   | )
|                                                      |                                             |   |               |            |               |   |            |           
|Net cash provided by (used in) financing activities   |                                             |   | 24,504        |            |               |   | (1,037,696 | )         
|                                                      |                                             |   |               |            |               |   |            |           
|Net increase in cash and cash equivalents             |                                             |   | 1,366,667     |            |               |   | 763,994    |           
|Cash and cash equivalents at beginning of period      |                                             |   | 516,446       |            |               |   | 250,837    |           
|                                                      |                                             |   |               |            |               |   |            |           
|Cash and cash equivalents at end of period            |                                             | $ | 1,883,113     |            |               | $ | 1,014,831  |           
|                                                      |                                             |   |               |            |               |   |            |           

The accompanying information and notes are an
integral part of these condensed consolidated financial statements.

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CONSOLIDATED WATER CO. LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The accompanying financial statements should be read in conjunction with the
2001 Annual Report for the Company on Form 10-K. The interim condensed
consolidated financial statements are unaudited, but in the opinion of
management, reflect all adjustments necessary for a fair presentation of
results for such periods. All adjustments are of a normal recurring nature.

1.   Principal Activity and Status

Consolidated Water Co. Ltd. (the Company) and its wholly-owned subsidiaries
(together the Group) use reverse osmosis technology to produce fresh water
from seawater. The Group processes and supplies water to its customers in
Grand Cayman, Cayman Islands; Ambergris Caye, Belize; and South Bimini,
Bahamas. The Companys exclusive license in Grand Cayman allows it to process
and supply water in certain areas of Grand Cayman for a period of twenty years
from July 11, 1990 in addition to having a right of first refusal on the
extension or renewal thereof. The Group also has a contract with Belize Water
Services Ltd. (BWSL) of Belize, formally known as Water and Sewerage
Authority of Belize, to supply water to BWSL in Ambergris Caye expiring in
2011. At the expiry of the contract, BWSL may at its option extend the term of
the agreement or purchase the plant outright. In addition, on July 11, 2001
the Company commenced supplying water under a ten year agreement to South
Bimini International Ltd., a Bahamian company that owns and operates resort
properties on South Bimini Island, Bahamas. The base price of water supplied
by the Group, and adjustments thereto, are determined by the terms of the
license and contracts, which provide for adjustments based upon the movement in
the government price indices specified in the license and contracts
respectively, as well as monthly adjustments for changes in the cost of energy.

2.   Purchase of Assets

On February 1, 2002, the Company acquired the reverse osmosis plant that was
previously owned and operated by Cayman Hotel and Golf Inc., a company which
owns and operates the Hyatt Hotel and Britannia Golf Course and developed the
Britannia condominiums and villas. The acquisition has been accounted for by
the purchase method. The total purchase price of $1,500,000 was paid in cash.
The fair value of assets acquired was $1,500,000 which comprised solely of
property, plant and equipment representing the reverse osmosis plant.

3.   Segment Information

Under FAS 131 Disclosure about Segments of an Enterprise and Related
Information, the operations to supply water to the Cayman Islands, Belize and
the Bahamas are considered by management as separate business segments. The
basis of measurement of segment information is the same as that adopted for the
condensed financial statements.

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CONSOLIDATED WATER CO. LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

3.   Segment Information (Continued)

As at September 30 and for the three months then ended

|                              |  |                |            |        |  |             |            |       |  |      |           |      |  |      |           |      |  |  |           |  |  |  |           |   |  |  |            |  |  |  |            | 
|----------------------------- |  | -------------- | ---------- | ------ |  | ----------- | ---------- | ----- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  |  | --------- |  |  |  | --------- | - |  |  | ---------- |  |  |  | ---------- | 
|                              |  | Cayman Islands |            | Belize |  | Bahamas (*) |            | Total
|                              |  |                |            |        |  |             |            |      
|                              |  | 2002           |            | 2001   |  | 2002        |            | 2001  |  | 2002 |           | 2001 |  | 2002 |           | 2001
|                              |  |                |            |        |  |             |            |       |  |      |           |      |  |      |           |     
|Water sales                   |  |                | 2,423,247  |        |  |             | 2,351,105  |       |  |      | 391,109   |      |  |      | 285,809   |      |  |  | 39,850    |  |  |  | 11,422    |   |  |  | 2,854,206  |  |  |  | 2,648,336  | 
|Other income                  |  |                | 64,975     |        |  |             | 108,387    |       |  |      |          |      |  |      | 25,376    |      |  |  |          |  |  |  | 443       |   |  |  | 64,975     |  |  |  | 134,206    | 
|Cost of water sales           |  |                | 1,430,031  |        |  |             | 1,295,935  |       |  |      | 246,395   |      |  |      | 206,994   |      |  |  | 37,521    |  |  |  | 21,364    |   |  |  | 1,713,947  |  |  |  | 1,524,293  | 
|Indirect expenses             |  |                | 550,766    |        |  |             | 566,398    |       |  |      | 48,182    |      |  |      | 43,101    |      |  |  | 1,517     |  |  |  | 2,497     |   |  |  | 600,465    |  |  |  | 611,996    | 
|Net income (loss)             |  |                | 507,425    |        |  |             | 597,160    |       |  |      | 96,532    |      |  |      | 61,090    |      |  |  | 812       |  |  |  | (11,997   | ) |  |  | 604,769    |  |  |  | 646,253    | 
|Property, plant and
equipment |  |                | 16,963,769 |        |  |             | 15,784,807 |       |  |      | 1,435,774 |      |  |      | 1,564,025 |      |  |  | 1,105,563 |  |  |  | 1,085,759 |   |  |  | 19,505,106 |  |  |  | 18,434,591 | 

As at September 30 and for the nine months then ended

|                              |  |                |            |        |  |             |            |       |  |      |           |      |  |      |           |      |  |  |           |   |  |  |           |   |  |  |            |  |  |  |            | 
|----------------------------- |  | -------------- | ---------- | ------ |  | ----------- | ---------- | ----- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  |  | --------- | - |  |  | --------- | - |  |  | ---------- |  |  |  | ---------- | 
|                              |  | Cayman Islands |            | Belize |  | Bahamas (*) |            | Total
|                              |  |                |            |        |  |             |            |      
|                              |  | 2002           |            | 2001   |  | 2002        |            | 2001  |  | 2002 |           | 2001 |  | 2002 |           | 2001
|                              |  |                |            |        |  |             |            |       |  |      |           |      |  |      |           |     
|Water sales                   |  |                | 7,995,436  |        |  |             | 7,541,546  |       |  |      | 1,111,817 |      |  |      | 953,438   |      |  |  | 88,472    |   |  |  | 11,422    |   |  |  | 9,195,725  |  |  |  | 8,506,406  | 
|Other income                  |  |                | 210,639    |        |  |             | 315,942    |       |  |      | 3,415     |      |  |      | 26,158    |      |  |  | 4         |   |  |  | 443       |   |  |  | 214,058    |  |  |  | 342,543    | 
|Cost of water sales           |  |                | 4,420,233  |        |  |             | 4,036,965  |       |  |      | 647,711   |      |  |      | 564,322   |      |  |  | 109,589   |   |  |  | 21,364    |   |  |  | 5,177,533  |  |  |  | 4,622,651  | 
|Indirect expenses             |  |                | 1,742,261  |        |  |             | 1,749,142  |       |  |      | 140,021   |      |  |      | 122,185   |      |  |  | 7,440     |   |  |  | 2,497     |   |  |  | 1,889,722  |  |  |  | 1,873,824  | 
|Net income (loss)             |  |                | 2,043,581  |        |  |             | 2,071,382  |       |  |      | 327,500   |      |  |      | 293,089   |      |  |  | (28,553   | ) |  |  | (11,997   | ) |  |  | 2,342,528  |  |  |  | 2,352,474  | 
|Property, plant and
equipment |  |                | 16,963,769 |        |  |             | 15,784,807 |       |  |      | 1,435,774 |      |  |      | 1,564,025 |      |  |  | 1,105,563 |   |  |  | 1,085,759 |   |  |  | 19,505,106 |  |  |  | 18,434,591 | 



---

|(*) |  | On December 18, 2000, the Company entered into the agreement with South Bimini
International Ltd., and began operations in the Bahamas on July 11, 2001.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

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CONSOLIDATED WATER CO. LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

4.   Contingencies

The license that the Company has with the government of the Cayman Islands (the
Government) requires it to obtain approval from the Government for an
issuance or transfer of shares which (a) exceeds 5% of the issued shares of our
company, or (b) would, upon registration, result in any shareholder owning more
than 5% of the issued share capital of the Company.

By letter dated May 3, 2002, the Government advised the Company that the 5%
ownership and transfer restrictions imposed in the licence will be removed.

Under the provisions of the Land Holding Companies Share Transfer Tax Law of
the Cayman Islands, tax is payable on the transfer of shares in the Company.
Prior to becoming quoted on NASDAQ, the Company paid this tax on private share
transfers. The Company has never paid tax on transfers of its publicly traded
shares. Management believes that the likelihood that Government will seek to
collect this tax on transfers of the Companys publicly traded shares is
remote. Management, therefore, has not provided for a share transfer tax
liability in these financial statements.

5.   Impact of Recent Accounting Pronouncements

During the three months ended September 30, 2002, the Financial Accounting
Standards Board issued one standard. A summary of this standard is given below:

Statement of Financial Accounting Standard No. 147, Acquisitions of Certain
Financial Institutions  an amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9 (FAS 147) removes acquisitions of financial
institution from the scope of both Statement 72 and interpretation 9 and
requires that those transactions be accounted for in accordance with FASB
statements No. 141, Business Combinations, and No. 142, Goodwill and Other
Intangible Assets. In addition, this Statement amends FASB Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, to include in
its scope long-term customer-relationships intangible assets of financial
institutions such as depositor- and borrower-relationship intangible assets and
credit cardholder intangible assets. FAS 147 is effective from October 1,
2002. The Company does not believe the adoption of the Standard will have an
impact on its financial position or results of operations.

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##### Table of Contents



CONSOLIDATED WATER CO. LTD.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

6.   Earnings Per Share

Basic earnings per share is calculated by dividing the net profit attributable
to stockholders by the weighted average number of ordinary shares of common
stock in issue during the relevant period.

The net income and weighted average number of ordinary shares of common stock
and potential ordinary shares figures used in the determination of the basic
and diluted earnings per ordinary share of common stock are summarized as
follows:

|                                                                                                                                             |  |                    |           |                   |  |      |           |      |  |   |           |   |  |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | ----------------- |  | ---- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                                                                                             |  | Three Months Ended |           | Nine Months Ended
|                                                                                                                                             |  |                    |           |                  
|                                                                                                                                             |  | September 30,      |           | September 30,    
|                                                                                                                                             |  |                    |           |                  
|                                                                                                                                             |  | 2002               |           | 2001              |  | 2002 |           | 2001
|                                                                                                                                             |  |                    |           |                   |  |      |           |     
|Net income used in determination of
diluted earnings per ordinary share
of common stock                                                      |  | $                  | 604,769   |                   |  | $    | 646,253   |      |  | $ | 2,342,528 |   |  | $ | 2,352,474 |  
|Less:                                                                                                                                        |  |                    |           |                   |  |      |           |      |  |   |           |   |  |   |           |  
|Dividends paid on non-vested
redeemable preferred stock                                                                                      |  |                    | (1,780    | )                 |  |      | (2,283    | )    |  |   | (5,339    | ) |  |   | (6,848    | )
|Earnings attributable to vested
redeemable preferred stock                                                                                   |  |                    | (422      | )                 |  |      | (387      | )    |  |   | (1,636    | ) |  |   | (1,409    | )
|                                                                                                                                             |  |                    |           |                   |  |      |           |      |  |   |           |   |  |   |           |  
|Net income available to holders of
ordinary shares of common stock in
the determination of basic earnings
per ordinary share of common stock |  | $                  | 602,567   |                   |  | $    | 643,583   |      |  | $ | 2,335,553 |   |  | $ | 2,344,217 |  
|                                                                                                                                             |  |                    |           |                   |  |      |           |      |  |   |           |   |  |   |           |  
|Weighted average number of ordinary
shares of common stock in the determination of basic earnings per
ordinary share of common stock         |  |                    | 3,983,072 |                   |  |      | 3,899,858 |      |  |   | 3,961,922 |   |  |   | 3,880,952 |  
|Plus:                                                                                                                                        |  |                    |           |                   |  |      |           |      |  |   |           |   |  |   |           |  
|Weighted average number of
redeemable preferred stock
outstanding during the year                                                            |  |                    | 24,221    |                   |  |      | 33,634    |      |  |   | 25,169    |   |  |   | 33,634    |  
|Potential dilutive effect of
unexercised options                                                                                             |  |                    | 88,076    |                   |  |      | 85,777    |      |  |   | 94,398    |   |  |   | 86,218    |  
|                                                                                                                                             |  |                    |           |                   |  |      |           |      |  |   |           |   |  |   |           |  
|Weighted average number of shares
used for determining diluted earnings
per ordinary share of common stock                                   |  |                    | 4,095,369 |                   |  |      | 4,019,269 |      |  |   | 4,081,489 |   |  |   | 4,000,804 |  
|                                                                                                                                             |  |                    |           |                   |  |      |           |      |  |   |           |   |  |   |           |  

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Item  2.   Managements Discussion and Analysis of Financial Condition and
Results of Operations

Pending Acquisitions

On October 4 and October 8, 2002, we entered into definitive agreements to
acquire interests in several companies that would expand our water operations
into the British Virgin Islands and Barbados and increase our presence in the
Cayman Islands. We are also in negotiations to acquire another
company which operates a desalination plant in Nassau, the
Commonwealth of the Bahamas. The aggregate purchase
price for the proposed acquisitions approximates $34 million
(subject to certain adjustments) and 185,714 of our ordinary shares.

We have obtained a commitment from a bank to provide the financing required to
complete the acquisitions. Management intends to replace a portion of the bank
financing in the future with debt, equity or hybrid financing. We presently do
not have any agreements for such financing. The completion of the proposed
acquisitions is subject to the satisfaction of certain conditions, including
the receipt of certain governmental approvals. As a result, we can provide no
assurances that the proposed acquisitions will be completed.

The total production capacity of the water plants being acquired approximates
8.0 million U.S. gallons per day (USGPD), which would bring our total
production capacity to 10.9 million USGPD. Combined revenues of the five
companies being acquired, after elimination of inter-company sales, totaled
$9.4 million for the year ended December 31, 2001 and $4.1 million for the six
months ended June 30, 2002. Based on the historical operating results of the
companies we will be acquiring, we expect these acquisitions to increase our
earnings per share immediately after the transactions are completed.

On a pro-forma basis, our combined revenues, including the revenues of the
companies being acquired, would have approximated $20.4 million for the year
ended December 31, 2001 and $10.5 million for the six months ended June 30,
2002. The combined revenues would represent an 85.4% increase over our
consolidated revenues for the year ended December 31, 2001 and a 64.8% increase
over our consolidated revenues for the six months ended June 30, 2002, while
increasing our water production capacity by approximately 275.8%.

For a more detailed discussion of these acquisitions, see Part II, Item 5 of
this Report.

Results of Operations

Three and Nine Months Ended September 30, 2002 Compared to Three and Nine
Months Ended September 30, 2001

Total Income

Total income increased by 4.9% from $2,782,542 to $2,919,181 for the three
months ended September 30, 2001 and 2002, respectively, and by 6.3% from
$8,848,949 to $9,409,783 for the nine months ended September 30, 2001 and 2002,
respectively. Total income is comprised of water sales and other income.

The Cayman operations increased total income by $28,730 for the three months
ended September 30, 2002 and by $348,587 for the nine months ended September
30, 2002, which is an increase of 1.2% and 4.4%, respectively, over the same
periods in the prior year and represents 21.0% and 62.1%, respectively, of the
total increase of total income.

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The Belize operations increased total income by $79,924 for the three months
ended September 30, 2002 and by $135,636 for the nine months ended September
30, 2002, which is an increase of 25.7% and 13.8%, respectively, over the same
periods in the prior year and represents 58.5% and 24.2%, respectively, of the
total increase of total income.

Finally, the addition of the Bahamas operations as of July 11, 2001 increased
total income by $27,985 for the three months ended September 30, 2002
representing 20.5% of the increase, and by $76,611 for the nine months ended
September 30, 2002, which is an increase of 236% and 646%, respectively, over
the same periods in the prior year and represents 20.5% and 13.7% of the total
increase of total income.

Sales in Cayman are made within our license area to approximately 3,100
customers. All sales in Belize are to one customer, Belize Water Services
Ltd., a private company that acquired the assets of Belize Water and Sewerage
Authority, which was previously a government statutory corporation. The terms
of our contract have not changed as a result of the privatization of Belize
Water and Sewerage Authority. Currently in the Bahamas, all sales are to one
customer, South Bimini International Ltd. known as Bimini Sands Resort and
Marina, which uses water at their hotel, condominiums and full service marina.

The largest change to operations during the nine months ended September 30,
2002 occurred in Cayman and resulted from the purchase of the Britannia reverse
osmosis seawater conversion plant on February 1, 2002. This plant was
previously owned and operated by Cayman Hotel and Golf Inc. In conjunction
with our purchase of the Britannia plant, the Hyatt Hotel and Britannia Golf
Course entered into a 25-year water supply agreement, and we now supply water
to the Britannia condominiums and villas under our standard customer contracts.
At the same time, the existing dispute settlement agreement with Cayman Hotel
and Golf Inc. was terminated.

Water Sales

Total water sales increased by 7.8% from $2,648,336 to $2,854,206 for the three
months ended September 30, 2001 and 2002, respectively, and by 8.1% from
$8,506,406 to $9,195,725 for the nine months ended September 30, 2001 and 2002,
respectively. Total water sales increased as a result of several factors
detailed below.

Our Cayman operation added $72,142 to water sales for the three months ended
September 30, 2002 and $453,890 for the nine months ended September 30, 2002,
which is an increase of 3.1% and 6.0%, respectively, over the same periods in
the prior year, and represents 35.0% and 65.8%, respectively, of the total
increase of water sales. While the number of US gallons we sold during the
three months ended September 30, 2002 was approximately equal to that sold
during the same period in the prior year, we sold a greater percentage to our
higher rate customers. The number of US gallons we sold during the nine months
ended September 30, 2002 increased by 10.3% over the same period in the prior
year. This is the result of supplying water to the Hyatt Hotel and the
Britannia golf course. Our water sales to customers other than the Hyatt Hotel
and Britannia Golf Course were essentially flat, in spite of a 12.5% reduction
in tourist air arrivals to the Cayman Islands during the nine month period
ended September 30, 2002 when compared to the same period in 2001 because of
continued air travel concerns and the downturn of the US economy.

Our Belize operation added $105,300 to water sales for the three months ended
September 30, 2002 and $158,379 for the nine months ended September 30, 2002,
which is an increase of 36.8% and 16.6%, respectively, over the same periods in
the prior year, and represents 51.2% and 23.0%, respectively, of the total
increase of water sales. In June 2002, the automatic inflation adjustment
decreased our Belize water rates by an average of 0.08%. This was more than
offset by a 40.3% and 17.2% increase in the number of US gallons sold for the
three months ended September 30, 2002 and the nine months ended September 30,
2002, respectively, over the same periods in the prior year. These increases
occurred because (i) during the three months ended September 30, 2001, we
experienced equipment malfunctions which temporarily reduced the production
capacity of our plant by 50%, and (ii) the number of US gallons we sold during
the nine months ended September 30, 2002, excluding sales in months during
which we experienced these equipment malfunctions, increased by 7.8% when
compared to the same period in 2001.

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Finally, the addition of the Bahamas operations as of July 11, 2001 increased
water sales by $28,428 for the three months ended September 30, 2002 and
$77,050 for the nine months ended September 30, 2002, which is an increase of
248.9% and 674.6%, respectively, over the same periods in the prior year, and
represents 13.8% and 11.2%, respectively, of the total increase of water sales.
This was the result of a 237.3% and 648.9% increase in the number of US
gallons sold for the three months ended September 30, 2002 and the nine months
ended September 30, 2002, respectively, over the same periods in the prior
year. Currently, we provide water to 54 condominiums, half of a developing
150-slip marina and a 40-room hotel. By the end of 2002, we anticipate that we
will be providing water to 18 additional condominiums.

Other Income

Other income consists of dispute settlement fees, meter rental fees, equipment
rental fees, connection fees, reconnection fees, and interest income. Other
income decreased by 51.6% from $134,206 to $64,975 for the three months ended
September 30, 2001 and 2002, respectively, and decreased 37.5% from $342,543 to
$214,058 for the nine months ended September 30, 2001 and 2002, respectively.
These decreases were a result of the February 1, 2002 termination of the
dispute settlement agreement with Cayman Hotel and Golf Inc. as discussed
above. Dispute settlement fees were included as other income in the prior year
and in the first month of the current year. No interest income was earned
during the three months ended September 30, 2002. During the same period in
the prior year the interest was earned on delayed payment by our Belize
Customer.

Cost of Water Sales

Cost of water sales increased by 12.4% from $1,524,293 to $1,713,947 for the
three months ended September 30, 2001 and 2002, respectively, and by 12.0% from
$4,622,651 to $5,177,533 for the nine months ended September 30, 2001 and 2002,
respectively.

Our Cayman operations increased cost of water sales by $134,096 for the three
months ended September 30, 2002 and by $383,268 for the nine months ended
September 30, 2002, which is an increase of 10.3% and 9.5%, respectively, over
the same periods in the prior year, and represents 70.7% and 69.1%,
respectively, of the total increase of cost of water sales. The cost of water
sales increased as a result of direct costs incurred to operate the Britannia
plant, which was acquired on February 1, 2002. These costs included salaries
and benefits for additional staff, equipment maintenance costs, electricity,
chemicals and insurance, which will continue forward now that we operate the
Britannia plant. Some of this increase was offset by a decrease in water
purchase costs, which decreased because we took less water from Ocean
Conversion (Cayman) Ltd. after the Britannia plant was purchased.

Our Belize operation increased cost of water sales by $39,401 for the three
months ended September 30, 2002 and by $83,389 for the nine months ended
September 30, 2002, which is an increase of 19.0% and 14.8%, respectively, over
the same periods in the prior year, and represents 20.8% and 15.0%,
respectively, of the total increase of cost of water sales. For the three
months ended September 30, 2002, our Belize operation was more efficient than
during the same period in 2001 in respect of our cost of sales per unit of
water produced. This resulted because during the third quarter of 2002 (i) we
produced more water than during the same period in the prior year when we
experienced equipment malfunctions, and (ii) we were able to utilize our more
cost efficient diesel engines to power the plant. During the three months
ended September 30, 2002 we completed rebuilding the second diesel engine, in
accordance with the engine manufacturers preventative maintenance
recommendations, which increased our cost of water sales. During the nine
months ended September 30, 2002, we also settled various claims for
compensation made by our customer in Belize in March 2002. These claims were
the result of our equipment failures that
occurred in August and September 2001 and a minor miscalculation in the annual
inflation adjustment formula in our contract. The miscalculation dated back to
November 1995, which was prior to our acquisition of Belize Water Limited, and
upon correction, reduced our unit rate for water to our customer by $0.09 per
1,000 US gallons.

Finally, the addition of the Bahamas operations as of July 11, 2001 increased
cost of water sales by $16,157 for the three month period ended September 30,
2002 and by $88,225 for the nine month period ended September 30, 2002, which
is an increase of 75.6% and

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413.0%, respectively, over the same periods in the
prior year, and represents 8.5% and 15.9%, respectively, of the total increase
of cost of water sales.

Gross Profit

Gross profit margins decreased from 42.4% to 40.0% for the three months ended
September 30, 2001 and 2002, respectively, and decreased from 45.7% to 43.7%
for the nine months ended September 30, 2001 and 2002, respectively.

Gross profit margins for our Cayman operations decreased from 44.9% to 41.0%
for the three months ended September 30, 2001 and 2002, respectively, and
decreased from 46.5% to 44.7% for the nine months ended September 30, 2001 and
2002, respectively. The primary reasons for these decreases are (i)
approximately two thirds of the water produced by our Britannia plant was sold
to the Hyatt Hotel and Britannia Golf Course at a lower rate than our standard
commercial water rate and (ii) due to flat water sales we were only able to
utilize approximately 66% of the production capacity of the Britannia plant and
were not able to produce higher volumes of water for sale at higher gross
margins to customers other than the Hyatt hotel and Britannia Golf Course as a
result of the minimum water quantities required to be purchased from Ocean
Conversion (Cayman) Ltd.

Gross profit margins for our Belize operations increased from 27.6% to 37.0%
for the three months ended September 30, 2001 and 2002, respectively, and
increased from 40.8% to 41.7% for the nine months ended September 30, 2001 and
2002, respectively. The reason for the increases in the gross profit margins
is increased sales over prior year periods when production was restricted by
equipment malfunctions.

Gross profit margin for our Bahamas operations increased from a negative 87.0%
to a positive 5.8% for the three months ended September 30, 2002 and increased
from a negative 87.0% compared to a negative 23.9% for the nine months ended
September 30, 2002. This was our first quarter with a positive gross profit
margin. We anticipated that the Bahamas operation would generate net income
during the first quarter of 2003 and we are ahead of estimates by achieving it
this quarter. The low gross profit margins were due to low water sales and a
relatively higher proportion of fixed costs such as depreciation, which we
expected in the early phases of the Bimini Sands Resort development project.
Both of these are temporary factors and are not expected to continue in the
future.

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Indirect Expenses

Indirect expenses decreased by 1.9% from $611,996 to $600,465 for the three
months ended September 30, 2001 and 2002, respectively, and increased by 0.8%
from $1,873,824 to $1,889,722 for the nine months ended September 30, 2001 and
2002, respectively.

Our Cayman operations decreased indirect expenses by $15,632 for the three
months ended September 30, 2002 and by $6,881 for the nine months ended
September 30, 2002, which is an decrease of 2.8% and 0.4%, respectively, over
the same periods in the prior year. We had a decrease in expenses related to
our banking and loan facilities, which was partially offset by increased
insurance premiums on our commercial and directors and officers insurance.

Our Belize operations increased indirect expenses by $5,081 for the three
months ended September 30, 2002 and by $17,836 for the nine months ended
September 30, 2002, which is an increase of 11.8% and 14.6%, respectively, over
the same periods in the prior year. During the three months ended September
30, 2002, we had additional travel costs relating to two additional trips made
by Cayman management to Belize. The nine months ended September 30, 2002
increase was due to the additional travel, fees and exchange on repatriation of
US dollars to the Cayman Islands, and insurance premiums.

Finally, the addition of the Bahamas operations as of July 11, 2001 decreased
indirect expenses by $980 for the three months ended September 30, 2002 which
represents a decrease of 39.2% over the same period in the prior year and
increased indirect expenses by $4,943 for the nine month ended September 30,
2002 which represents an increase of 198.0% over the same period in the prior
year. These costs relate to the administration of the Bahamas operations.

As a percentage of the total income, indirect expenses were at 22.0% and 20.6%
for the three months ended September 30, 2001 and 2002, respectively, and at
21.2% and 20.1% for the nine months ended September 30, 2001 and 2002,
respectively.

Net Income

Net income decreased by 6.4% from $646,253 to $604,769 for the three months
ended September 30, 2001 and 2002, respectively, and decreased by 0.4% from
$2,352,474 to $2,342,528 for the nine months ended September 30, 2001 and 2002,
respectively. These decreases were due to flat water sales in our Cayman
operations to customers other than the Hyatt Hotel and the Britannia golf
course, losses incurred by our Bimini operations during the first two quarters
of the year, lower interest income and lower other income from elimination of
the dispute settlement fees.

Dividends

In December 2001, we increased our per share interim dividend from $0.10 to
$0.105, payable on a quarterly basis. On April 30, 2002, we paid a dividend of
$0.105 to shareholders of record on March 31, 2002, on July 31, 2002, we paid a
dividend of $0.105 to shareholders of record on June 30, 2002, and on October
31, 2002 we paid a dividend of $0.105 to shareholders of record on September
30, 2002. We have consistently paid dividends to record owners of our ordinary
shares of common stock and redeemable preferred stock since we began declaring
dividends in 1985. Our payment of any future cash dividends is dependant upon
our earnings, financial condition, capital demand and other factors. However,
we expect to continue increasing our dividend as our earnings grow.

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Liquidity and Capital Resources

Overview

We generate cash primarily from our operations in the Cayman Islands, Belize
and Bahamas, and to a lesser extent from the sale of our shares, and through
our loans and facilities obtained from two banks. Cash flow is impacted by
operating and maintenance expenses, the timeliness and adequacy of rate
increases (excluding automatic adjustments to our rates for inflation and
electricity costs), and various factors affecting tourism in the Cayman
Islands, Belize and Bahamas, such as weather conditions and the economy. Cash
is used to fund our operations in the Cayman Islands, Belize and Bahamas,
capital projects, payments under our operating agreement with Ocean Conversion
(Cayman) Ltd. (a Cayman Islands company which operates our Governors Harbour
plant), expansions in our infrastructure, dividends, principal payments on our
loans, share repurchases and new investment opportunities which expand our
operations. Currently, 35.6% of our cash is denominated in Belize dollars. We
exchange a percentage of our Belize dollars earnings to United States dollars
and repatriate them to the Cayman Islands. In June and October, we repatriated
$300,000 and $150,000, respectively, from Belize.

Operating Activities

Cash from operating activities for the nine months ended September 30, 2001 and
2002 was $3,408,328 and $3,685,757, respectively. We generated cash through
the utilization of our existing plants, equipment and resources in all three
segments of the business, minimization of water losses and efficiencies created
by a strong management team. In addition, during the three months ended
September 30, 2002, our Bahamas operation generated positive cash flow of
$12,403. This investment is long-term, and we expect to consistently produce
positive cash flows starting from this quarter.

Investing Activities

Cash used in investing activities during the nine months ended September 30,
2001 and 2002 was $1,606,638 and $2,343,594, respectively. During 2002, cash
was used in investing activities for expenditures for new property, plant and
equipment with the majority associated with the purchase of the Britannia RO
seawater desalination plant on February 1, 2002. We also continued to expand
our water distribution system in the Cayman Islands by constructing pipelines
to service new developments within our franchise area. Also during the nine
months ended September 30, 2002, we accumulated deferred expenditures for costs
relating to the pending acquisitions, which will be applied against goodwill on
completion of the acquisitions. During 2001, our investing activities
consisted primarily of construction costs relating to our new water production
and distribution system in Bimini, Bahamas and costs of constructing pipelines
to service several new developments within our Cayman Islands franchise area.

Financing Activities

Cash used in financing activities for the nine months ended September 30, 2001
was $1,037,696, compared to cash provided by financing activities of $24,504
for the nine months ended September 30, 2002. During the nine months ended
September 30, 2002, our primary financing activity was a draw down of our
credit facility for an additional $1,500,000 in order to finance the investment
in the Britannia RO seawater desalination plant. We also had proceeds from the
exercise of stock options by certain directors and officers. These amounts
were offset by accumulated deferred expenditures for costs relating to an
anticipated share issuance, which will be applied against shareholders equity
on issuance, the payment of our December 31, 2001 interim quarterly dividend
totaling $0.10 per share, our March 31, 2002 interim
quarterly dividend totaling $0.105 per share, our June 30, 2002 interim
quarterly dividend totaling $0.105 per share, and principal payments on our
term loans. During the same period in 2001, the primary financing activity was
the payment of our December 31, 2000 interim quarterly dividend totaling $0.10
per share, our March 31, 2001 interim quarterly dividend totaling $0.10 per
share and our June 30, 2001 interim quarterly dividend totaling $0.10 per
share. These amounts were offset by proceeds from the exercise of stock
options by a director and a net increase in our short-term bank overdraft to
cover a portion of the construction costs of our new water production
facilities in Bimini, Bahamas.

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On September 21, 2001, the Company reactivated its stock repurchase program,
which was originally approved by the board of directors in October 1998, and
may repurchase up to 10% of the outstanding ordinary shares of common stock in
the open market and private negotiated transactions. Depending upon market
conditions and other factors, purchases under this program may be commenced or
suspended at any time. No shares were repurchased during the three months
ended September 30, 2001 and 2,184 were repurchased at that average price of
$15.05 during the three months ended September 30, 2002.

Material Commitments for Capital Expenditures and Contingencies

As at September 30, 2002, we had approximately $1.3 million committed for
capital expenditures for the replacement of our potable water storage tanks at
our Governors Harbour site in Grand Cayman. We intend to finance this project
using cash from operations.

Impact of Inflation

Under the terms of our Cayman Islands license, Belize Water Sales Agreement and
Bimini Water Sales Agreement, there is an automatic price adjustment for
inflation on an annual basis, subject to temporary exceptions. We, therefore,
believe that the impact of inflation on our net income, measured in consistent
dollars, will not be material.




Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Credit Risk:

Our main exposure to credit risk is from our Belize customer, which is billed
approximately $120,000 per month. As at September 30, 2002, we had a
receivable balance of $128,473, which has been subsequently paid.

Interest Rate Risk:

As of September 30, 2002, we had loans outstanding of $1,018,174 from the
European Investment Bank at fixed interest rates ranging from 3.0% to 4.25% and
$1,787,500 from the Royal Bank of Canada, bearing interest at LIBOR plus 1.5%.
We are subject to interest rate risk to the extent that LIBOR changes.

Foreign Exchange Risk:

All of our foreign currencies have fixed exchanged rates to the U.S. dollar as
detailed under the exchange rate section described earlier. If any of these
fixed exchange rates become a floating exchange rate, however, our results of
operations could be adversely affected.

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Item 4.  Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer (collectively, the
Certifying Officers) are responsible for establishing and maintaining
disclosure controls and procedures for us. Such officers have concluded (based
upon their evaluation of these controls and procedures as of a date within 90
days of the filing of this report) that our disclosure controls and procedures
are effective to ensure that information required to be disclosed by us in this
report is accumulated and communicated to management, including our principal
executive officers as appropriate, to allow timely decisions regarding required
disclosure.

The Certifying Officers also have indicated that there were no significant
changes in our internal controls or other factors that could significantly
affect such controls subsequent to the date of their evaluation, and there were
no corrective actions with regard to significant deficiencies and material
weaknesses.




PART II  OTHER INFORMATION




Item 2.  Changes in Securities and Use of Proceeds

In August 2002, we converted 8,083 shares of vested redeemable preferred stock
for an equal number of ordinary shares of common stock under our Employee Share
Incentive Plan. The issuance of the ordinary shares of common stock was exempt
from registration under Regulation S promulgated under the Securities Act of
1933 (the 1933 Act) because the ordinary shares of common stock were issued
outside of the United States to non-U.S. persons (as defined in Regulation S)
upon conversion of the redeemable preferred stock.

In October 2002, we issued 6,056 ordinary shares of common stock to seven of
our directors as compensation under the directors share grant plan. The
issuance of a portion of these shares was exempt from registration under
Regulation S promulgated under the 1933 Act because the shares were offered and
sold outside of the United States to non-US persons (as defined in Regulation
S) and the issuance of the balance of the shares was exempt under Section 4(2)
of the 1933 Act because the individuals receiving the shares are sophisticated
investors who have knowledge of all material information about our company.




Item 5.  Other Information

Pending Acquisitions

On October 4 and October 8, 2002, we entered into several agreements that
will enable us to expand our operations to the British Virgin Islands and
Barbados, and increase our presence in the Cayman Islands. Pursuant to these agreements, we have agreed to acquire equity
and other interests in three companies providing potable water services in Tortola, British Virgin Islands; Barbados and the Cayman
Islands and a fourth company providing management and engineering services to
these companies. We are also in negotiations to acquire another
company which operates a desalination plant in Nassau, the
Commonwealth of the Bahamas. The aggregate purchase price for the
pending acquisitions approximates $34 million
(subject to certain adjustments) and 185,714 of our ordinary shares, which we
are required to register for resale.
Although we expect to complete these acquisitions before the end of
the year, there is no
assurance that the pending acquisitions will be consummated because the
closings of several of these acquisitions are contingent upon one another and
are contingent upon the receipt of certain governmental approvals and
satisfaction of certain closing conditions. We have obtained a

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commitment
from a bank to provide the financing required to complete the pending
acquisitions. We intend to replace a portion of the bank financing in the
future with debt, equity or hybrid financing. We do not have any agreements
for such financing at the present time.

The following is a summary of the terms of each of
the transactions underlying the agreements that we have executed.
This summary is qualified in its entirety by reference to each of the
agreements attached hereto as Exhibits 2.1, 2.2 and 2.3, which are
incorporated herein by reference.

DesalCo Limited  Bermuda

We have entered into an agreement with William and Margaret Andrews to acquire
all of the issued and outstanding stock of DesalCo Limited, a Cayman Islands
company, operating in Bermuda. DesalCo Limited provides management and
engineering services to Ocean Conversion (Cayman) Limited, Ocean Conversion
(BVI) Ltd. and engineering services to Waterfields Company Limited. Such
services include all management support, including accounting, financial
reporting, audit coordination, personnel management, plant management and
maintenance. In addition to these management and engineering services, DesalCo
Limited also owns 100% of the non-voting stock of Ocean Conversion (Cayman)
Limited and Ocean Conversion (BVI) Ltd. as well as 12.7% of the voting stock of
Waterfields Company Limited. DesalCo Limited also owns all of the issued and
outstanding stock of DesalCo (Barbados) Ltd., a Barbados company, which
operates a desalination plant for and sells desalinated water to Sandy Lane
Properties Ltd. in St. James, Barbados. Under the terms of the operating
agreement between Sandy Lane Properties Ltd. and DesalCo Limited, DesalCo
Limited provides management, engineering, purchasing and other services for a
fixed monthly fee and receives a share of the revenues generated by the
desalination plant. DesalCo Limited has assigned its rights under this
agreement to its wholly-owned subsidiary, DesalCo (Barbados) Ltd.

In addition, DesalCo Limited has an exclusive seven-year distributorship
agreement for the Caribbean basin to provide the DWEER system produced by
DWEER Technology Limited for use in reverse osmosis seawater desalination
plants. Upon completion of the DesalCo acquisition, we will own 100% of
DesalCo.

Ocean Conversion (Cayman) Limited  Cayman Islands
Ocean Conversion (BVI) Ltd.  British Virgin Islands

We have entered into an agreement with Transcontinental Finance Corporation
Ltd. and North American Mortgage & Finance Corporation to purchase all of the
voting stock and certain profit sharing rights relating to Ocean Conversion
(Cayman) Limited, a Cayman Islands company, and 50% of the issued and
outstanding voting stock and certain profit sharing rights relating to Ocean
Conversion (BVI) Ltd., a British Virgin Islands company.

Ocean Conversion (Cayman) Limited sells desalinated water under various
licenses and agreements to both us and the Water Authority-Cayman. The Water
Authority-Cayman in turn distributes the water to customers outside our
exclusive licensed area. All of the non-voting stock of Ocean Conversion
(Cayman) Limited is owned by DesalCo Limited and will be acquired by
us in the planned DesalCo transaction as previously discussed. Upon consummation of
these two transactions, we will own 100% of the voting and non-voting stock of
Ocean Conversion (Cayman) Limited.

Ocean Conversion (BVI) Ltd. sells desalinated seawater on the island of Tortola
to the Water and Sewage Department of the British Virgin Islands, which in turn
distributes the water to customers via pipeline. All of the non-voting stock
of Ocean Conversion (BVI) Limited is owned by DesalCo Limited. As a condition to completion of the Ocean Conversion (BVI) Ltd.
acquisition, we have agreed to surrender to Ocean Conversion (BVI) Ltd. 18.2%
of the profit sharing rights that we will acquire from Transcontinental Finance
Corporation Ltd. and North American Mortgage & Finance Corporation in return
for the issuance to DesalCo Limited of an additional 45,000 non-voting shares
by Ocean Conversion (BVI) Ltd. DesalCo Limited will sell the 45,000 shares of
non-voting stock, in addition to, all of the shares of non-voting stock that it
currently holds to the remaining shareholder, Sage Water Holdings (BVI) Ltd.

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Upon completion of these two transactions, we will share equal control of the
voting stock and the profit
sharing rights of Ocean Conversion (BVI) Ltd. with
Sage Water Holdings (BVI) Ltd., which will own all of the shares of non-voting
stock of Ocean Conversion (BVI) Ltd.

Section 906 Certifications Under Sarbanes-Oxley Act

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, our chief executive
officer and our chief financial officer have provided certain certifications
without any qualifications to the Securities and Exchange Commission. These
certifications accompanied this report when filed with the Securities
and Exchange Commission.

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Item 6.  Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|Number  |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.1     |  | Share Sale Agreement dated October 4, 2002 between the
Company and William T. Andrews and Margaret D. Andrews. (The
schedules to this agreement have been omitted pursuant to Item
601(b)(2) of Regulation S-K promulgated under the 1933 Act. Upon
the request of the Securities and Exchange Commission (the SEC),
the Company shall furnish supplementally to the SEC a copy of any of
such omitted schedules.)    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.2     |  | Share Sale Agreement dated October 4, 2002 among the Company,
North-American Mortgage & Finance Corporation and Transcontinental
Finance Corporation Limited. (The schedules to this agreement have
been omitted pursuant to Item 601(b)(2) of Regulation S-K
promulgated under the 1933 Act. Upon the request of the SEC, the
Company shall furnish supplementally to the SEC a copy of any of
such omitted schedules.)
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|2.3     |  | Agreement dated October 8, 2002 between the Company and Sage
Water Holdings (BVI Ltd.). (The schedules to this agreement have
been omitted pursuant to Item 601(b)(2) of Regulation S-K
promulgated under the 1933 Act. Upon the request of the SEC, the
Company shall furnish supplementally to the SEC a copy of any of
such omitted schedules.)                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                         



| | * | Portions of the Exhibits have been omitted pursuant to a request for confidential treatment.
| | - | --------------------------------------------------------------------------------------------



|(b) |  | Reports on Form 8-K                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On July 5, 2002, the Company filed a Form 8-K with respect to Item 4
thereof, Changes in Registrants Certifying Accountant, concerning the
dismissal of PricewaterhouseCoopers effective June 27, 2002.          
|   
|    |  | On July 10, 2002, the Company filed a Form 8-K with respect to Item 4
thereof, Changes in Registrants Certifying Accountant, concerning the
appointment of KPMG as the Companys auditors effective July 9, 2002.

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SIGNATURE

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.

| |  |                             |  |                                                                                 
| |  | --------------------------- |  | --------------------------------------------------------------------------------
| |  | CONSOLIDATED WATER CO. LTD.
| |  |                             |  |                                                                                 
| |  | By:                         |  | /s/ Jeffrey M. Parker                                                           
| |  |                             |  |                                                                                 
| |  |                             |  | Jeffrey M. Parker
Chairman of the Board of Directors and
Chief Executive Officer

Dated:  November 13, 2002

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Consolidated Water Co. Ltd. on
Form 10-Q for the quarter ended September 30, 2002, as filed with the
Securities and Exchange Commission on the date hereof, I, Jeffrey M. Parker,
the Chief Executive Officer of the Company, certify, pursuant to and for
purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, that:

1.     I have reviewed this quarterly report on Form 10-Q of Consolidated
Water Co. Ltd.;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;

3.     Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weakness in
internal controls; and
|
| | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                      

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  November 13, 2002

| |  |     |  |                                                                               
| |  | --- |  | ------------------------------------------------------------------------------
| |  | By: |  | /s/ Jeffrey M. Parker
Name:  Jeffrey M. Parker
Title:  Chief Executive Officer

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Consolidated Water Co. Ltd. on
Form 10-Q for the quarter ended September 30, 2002, as filed with the
Securities and Exchange Commission on the date hereof, I, Frederick McTaggart,
the Chief Financial Officer of the Company, certify, pursuant to and for
purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, that:

1.     I have reviewed this quarterly report on Form 10-Q of Consolidated
Water Co. Ltd.;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;

3.     Based on my knowledge, the financial statements and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weakness in
internal controls; and
|
| | b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and                                                                                                                                      

6.     The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  November 13, 2002

| |  |     |  |                                                                                   
| |  | --- |  | ----------------------------------------------------------------------------------
| |  | By: |  | /s/ Frederick McTaggart
Name:  Frederick McTaggart
Title:  Chief Financial Officer

21