# EDGAR Filing Document

**Accession Number:** 0000863110
**File Stem:** 0000863110-26-000025
**Filing Date:** 2026-3
**Character Count:** 559990
**Document Hash:** 55e959026f20bc66ce2257eb998d50e6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000863110-26-000025.hdr.sgml**: 20260316

**ACCESSION NUMBER**: 0000863110-26-000025

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 109

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260316

**DATE AS OF CHANGE**: 20260316

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ARTESIAN RESOURCES CORP
- **CENTRAL INDEX KEY:** 0000863110
- **STANDARD INDUSTRIAL CLASSIFICATION:** WATER SUPPLY [4941]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 510002090
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-18516
- **FILM NUMBER:** 26757897

**BUSINESS ADDRESS:**
- **STREET 1:** 664 CHURCHMANS RD
- **CITY:** NEWARK
- **STATE:** DE
- **ZIP:** 19702
- **BUSINESS PHONE:** 3024536900

**MAIL ADDRESS:**
- **STREET 1:** 664 CHURCHMANS RD
- **CITY:** NEWARK
- **STATE:** DE
- **ZIP:** 19702

?xml version='1.0' encoding='ASCII'?

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-K**

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

For the fiscal year ended December 31, 2025

OR

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

For the transition period from _____ to _____

Commission file number 000-18516

![](image1.jpg)

**ARTESIAN RESOURCES CORPORATION**

**--------------------------------------------------------------**

(Exact name of registrant as specified in its charter)

---

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

---

**664 Churchmans Road, Newark, Delaware 19702**

------------------------------------------------------------------

Address of principal executive offices

**(302) 453 – 6900**

-----------------------------------------------------------

Registrant's telephone number, including area code

---

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

---

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

---

| | | | |
|:---|:---|:---|:---|
|  | Yes  | ☑ | No  |

---

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

---

| | | | |
|:---|:---|:---|:---|
|  | Yes  | ☑ | No  |

---

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  |  | No  |

---

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

---

| | | | |
|:---|:---|:---|:---|
| ☑ | Yes  |  | No  |

---

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

<br> Large Accelerated Filer ☐ Accelerated Filer ☑ Non-Accelerated Filer ☐ Smaller Reporting Company ☑ <br> Emerging Growth Company ☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial report under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b) 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  No

The aggregate market value of the Class A Non-Voting Common Stock and Class B Common Stock held by non-affiliates of the registrant at June 30, 2025 was $305,477,587 and $8,714,838, respectively. The aggregate market value of Class A Non-Voting Common Stock was computed by reference to the closing price of such class as reported on the Nasdaq Global Select Market on June 30, 2025, which trade date was June 30, 2025. The aggregate market value of Class B Common Stock was computed by reference to the last reported trade of such class as reported on the OTC Bulletin Board as of June 30, 2025, which trade date was June 25, 2025.

As of March 10, 2026, 9,436,930 shares of Class A Non-Voting Common Stock and 881,452 shares of Class B Common Stock were outstanding.

------

[**Table of Contents**](#tableOfContents0)

ARTESIAN RESOURCES CORPORATION

**TABLE OF CONTENTS**

---

| |
|:---|
| [FORWARD LOOKING STATEMENTS](#Looking_Forward)  |
| [PART I](#Part_1)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 1.](#Item_1_-_Business) [– Business](#Item_1_-_Business)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 1A](#Item_1A). [– Risk Factors](#Risk_Factors)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 1B.](#Item_1B) [– Unresolved Staff Comments](#Unresolved_Staff)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 1C.](#Item_1C) [– Cybersecurity](#Cybersecurity)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 2.](#Item_2) [– Properties](#Properties)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 3.](#Item_3) [– Legal Proceedings](#Legal_Proceedings) <br> [Item 4.](#Item_4) [– Mine Safety Disclosures](#Mine)  |
| [PART II](#Part_II)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 5.](#Item_5) [– Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Market_-_item_5)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 6.](#Item_6) [– \[Reserved\]](#Reserved)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 7.](#Item_7)[– Management's Discussion and Analysis of Financial Condition and Results of Operations](#MDA)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 7A.](#Item_7a)[– Quantitative and Qualitative Disclosure About Market Risk](#Quantitive_Mr)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 8.](#Item_8) [– Financial Statements and Supplementary Data](#FS_and_Supplement)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 9.](#Item_9) [– Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](#Item_9)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 9A.](#Item_9a) [– Controls and Procedures](#Item_9a)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 9B.](#Item_9B) [– Other Information](#Item_9B)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 9C](#Item_9C) [– Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#Item_9C)  |
| [PART III](#Part_III)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 10.](#Item_10) [– Directors, Executive Officers and Corporate Governance](#Item_10)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 11.](#Item_11) [– Executive Compensation](#Item_11)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 12.](#Item_12) [– Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#Item_12)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 13.](#Item_13)[– Certain Relationships and Related Transactions, and Director Independence](#Item_13)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 14.](#Item_14) [– Principal Accountant Fees and Services](#Item_14)  |
| [PART IV](#Part_IV)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 15.](#Item_15) [– Exhibits and Financial Statement Schedules](#Item_15)  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [Item 16.](#Item_16_Form_10-K) [– Form 10-K Summary](#Item_16_Form_10-K)  |
| [Signatures](#Signatures)  |

---

------

[**Table of Contents**](#tableOfContents0)

**FORWARD-LOOKING STATEMENTS**

Statements in this Annual Report on Form 10-K that express our "belief," "anticipation" or "expectation," as well as other statements that are not historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act and the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from those projected. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "projects", "forecasts", "may", "should", variations of such words and similar expressions are intended to identify such forward-looking statements. They include, but are not limited to, the statements below:

* 
 general economic, employment and business conditions, including with respect to the potential impact of inflation, tariffs, trade wars and/or recession;
 

* 
 material costs and availability;
 

* 
 consumer and producer price inflation;
 

* 
 the impact of recent acquisitions on our ability to expand and foster relationships;
 

* 
 strategic plans for goals, priorities, growth and expansion;
 

* 
 expectations for our water and wastewater subsidiaries and non-utility subsidiaries;
 

* 
 customer base growth opportunities in Delaware and Cecil County, Maryland;
 

* 
 our belief regarding the timing and results of our rate requests;
 

* 
 our belief regarding our capacity to provide water services for the foreseeable future to our customers;
 

* 
 our belief relating to our compliance and the cost to achieve compliance with relevant governmental regulations, including per- and polyfluoroalkyl substances ("PFAS") regulations and the Lead and Copper Rule Improvements;

* our belief concerning class action settlements designed to resolve claims for PFAS contamination and any related outcome; 

* 
 our expectation of the timing of decisions by regulatory authorities;
 

* 
 our belief regarding the success of any rate increase request;
 

* 
 the impact of weather and climate change on our operations;
 

* 
 the execution of our strategic initiatives;
 

* 
 regulatory delays or uncertainty;
 

* 
 our expectation of the timing for construction on new projects;
 

* 
 our expectation relating to the adoption of recent accounting pronouncements;
 

* 
 contract operations opportunities;
 

* 
 legal proceedings;
 

* 
 our properties;
 

* 
 deferred tax assets;
 

* 
 the adequacy of our available sources of financing;
 

* 
 the expected recovery of expenses related to our long-term debt;
 

* 
 our expectation to be in compliance with financial covenants in our debt instruments;
 

* 
 our ability to refinance our debt as it comes due;
 

* 
 our ability to adjust our debt level, interest rate, maturity schedule and structure;
 

* 
 the timing and terms of renewals of our lines of credit;
 

* 
 changes in interest rates;
 

* 
 plans to increase our wastewater treatment operations, engineering services and other revenue streams less affected by weather;
 

* 
 anticipated growth in our non-utility subsidiaries;

* the impact of recent acquisitions on our ability to expand and foster relationships;

* 
 anticipated investments in certain of our facilities and systems and the sources of funding for such investments;
 

* 
 sufficiency of internally generated funds and credit facilities to provide working capital and our liquidity needs; and
 

* 
 the specific and overall impacts of global pandemics on our financial condition and results of operations.
 

Certain factors, as discussed under Item 1A - Risk Factors, that could cause results to differ materially from those in the forward-looking statements include, but are not limited to:

* changes in weather and climate;

* changes in our contractual obligations;

* ability to sufficiently control certain operating expenses which are necessary to provide public utility services;

* changes in government policies;

* costs and timely availability of materials and supplies for essential infrastructure projects and operations;

* the timing and results of our rate requests;

* delays in or failure to receive regulatory approvals;

* government or regulatory shutdowns or defunding;

* cyber-attacks;

* changes in economic and market conditions generally; 

* effectiveness of internal control over financial reporting;

* unexpected events, restrictions and policies related to a public health crisis; and

* other matters discussed elsewhere in this Annual Report on Form 10-K.

While the Company may elect to update forward-looking statements, we specifically disclaim any obligation to do so, except as may be required under applicable securities laws, and you should not rely on any forward-looking statement as a representation of the Company's views as of any date subsequent to the date of the filing of this Annual Report on Form 10-K.

------

[**Table of Contents**](#tableOfContents0)

**PART I**

**ITEM 1. BUSINESS**

**General Information**

Artesian Resources Corporation, or Artesian Resources, is a Delaware corporation incorporated in 1927, that is the holding company of seven wholly-owned subsidiaries offering water, wastewater and other services in Delaware, Maryland and Pennsylvania. The Company's principal executive offices are located at 664 Churchmans Road, Newark, Delaware 19702. Our principal subsidiary, Artesian Water Company, Inc., is the oldest and largest investor-owned public water utility on the Delmarva Peninsula and has been providing superior water service since 1905. We distribute and sell water, including water for public and private fire protection, to residential, commercial, industrial, municipal and utility customers in the states of Delaware, Maryland and Pennsylvania. We provide wastewater services to customers in Delaware. In addition, we provide contract water and wastewater operations, and water, sewer and internal Service Line Protection Plans. Our Class A Non-Voting Common Stock is listed on the Nasdaq Global Select Market and trades under the symbol "ARTNA." Our Class B Common Stock trades on the Nasdaq's OTC Bulletin Board under the symbol "ARTNB."

Artesian Resources is the holding company of five regulated public utilities: Artesian Water Company, Inc., or Artesian Water, Artesian Water Pennsylvania, Inc., or Artesian Water Pennsylvania, Artesian Water Maryland, Inc., or Artesian Water Maryland, Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland, and Artesian Wastewater Management, Inc., or Artesian Wastewater, along with its wholly-owned subsidiary Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI; and two non-utility subsidiaries: Artesian Utility Development, Inc., or Artesian Utility, and Artesian Development Corporation, or Artesian Development. The terms "we," "our," "Artesian," and the "Company" as used herein refer to Artesian Resources and its subsidiaries. The business activity conducted by each of our subsidiaries is discussed below under separate headings.

**Our Market**

Our current market area is the Delmarva Peninsula. Our largest service area is in the State of Delaware. Substantial portions of Delaware, particularly outside of northern New Castle County, are not served by a public water or wastewater system and represent potential opportunities for Artesian Water and Artesian Wastewater to obtain new exclusive franchised service areas. We continue to focus resources on developing and serving existing service territories and obtaining new territories throughout Delaware.

We hold Certificates of Public Convenience and Necessity, or CPCNs, for approximately 312 square miles of exclusive water service territory, most of which is in Delaware with some territory being in Maryland and Pennsylvania. Our largest connected regional water system, consisting of approximately 145 square miles and 81,000 metered customers, is located in northern New Castle County and portions of southern New Castle County, Delaware. We hold CPCNs for approximately 61 square miles of wastewater service territory located in Sussex County, Delaware. A significant portion of our exclusive service territory is in Sussex County, Delaware and remains undeveloped, and if and when development occurs and there is population growth in these areas, we anticipate we will increase our customer base by providing water and/or wastewater service to the newly developed areas and new customers.

**Subsidiaries**

*<u>Artesian Water</u>*

Artesian Water, our principal subsidiary, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware. In addition, Artesian Water provides services to other water utilities, including operations, and has contract operation agreements with private, municipal and state water providers. Artesian Water also provides water for public and private fire protection to customers in our service territories. Artesian Water produced approximately 80.5% of our 2025 consolidated operating revenues.

We derive about 93% of our self-supplied groundwater from wells that pump groundwater from aquifers and other formations located in the Atlantic Coastal Plain. The remaining 7% of our groundwater supply comes from wells in the Piedmont Province. We use a variety of treatment methods, including aeration, pH adjustment, chlorination, fluoridation, ultra violet oxidation, arsenic removal, nitrate removal, radium removal, iron removal, and carbon adsorption to meet federal, state and local water quality standards. Additionally, a corrosion inhibitor is added to our self-supplied groundwater and to supply from interconnections. We have 64 different water treatment facilities in our Delaware systems. All water supplies that we purchase from neighboring utilities are potable.

To supplement our groundwater supply, we purchase treated surface water through interconnections only in the northern service area of our New Castle County, Delaware system. The treated surface water is blended with our groundwater supply for distribution to our customers. Nearly 97% of the overall 9.2 billion gallons of water we distributed in all of our Delaware systems during 2025 came from our groundwater wells, while the remaining 3% came from interconnections with other utilities and municipalities. In Delaware in 2025, we pumped an average of 24.3 million gallons per day, or mgd, from our groundwater wells and obtained an average of approximately 0.9 mgd from interconnections. Our peak water supply capacity currently is approximately 57.7 mgd. We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.

------

[**Table of Contents**](#tableOfContents0)

Most of our New Castle County, Delaware water system is interconnected. In the remainder of the State of Delaware, we have several satellite systems that have not yet been connected by transmission and distribution facilities. We intend to join these systems into larger integrated regional systems through the construction of a transmission and distribution network as development continues and our expansion efforts provide us with contiguous exclusive service territories.

In Delaware, we have 25 interconnections with three neighboring water utilities and seven municipalities that provide us with the ability to purchase or sell water. An interconnection agreement with Chester Water Authority, which is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a "take or pay" clause which currently requires us to purchase a minimum of 0.5 million gallons of water per day. Artesian's capital investments in self-sufficiency of water supply facilitated a reduction in the minimum amount of water required to be purchased under the current contract compared to previous contracted requirements.

As of December 31, 2025, we were serving customers through approximately 1,515 miles of transmission and distribution mains. Mains range in diameter from two inches to twenty-four inches, and most of the mains are made of ductile iron or cast iron.

We have 36 storage tanks in Delaware, most of which are elevated, providing total system storage of approximately 45.0 million gallons. We have developed and are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware. Our ASR system provides approximately 130.0 million gallons of storage capacity, which can be withdrawn at an average rate of approximately 1.0 mgd. At some locations, we rely on hydro-pneumatic tanks to maintain adequate system pressures. Where possible, we combine our smaller satellite systems with systems having elevated storage facilities.

*<u>Artesian Water Maryland</u>*

Artesian Water Maryland began operations in August 2007. Artesian Water Maryland distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland. Artesian Water Maryland owns and operates 9 public water systems.

The majority of the 0.5 billion gallons of water we distributed in all of our Maryland systems during 2025 came from our groundwater wells, while a portion came from treated surface water. We have ten separate water treatment facilities in our Maryland systems. We have one surface water treatment facility located in Cecil County, Maryland, with the current ability to treat up to 1.0 mgd from an intake in the Susquehanna River that is permitted a withdrawal of a maximum of 5.0 mgd and a daily average of 3.5 mgd. Our total peak water supply capacity in Cecil County, Maryland currently is approximately 2.0 mgd. We have 9 storage tanks capable of storing approximately 2.5 million gallons. We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.

In Maryland, we have one interconnection with the Artesian Water system in Delaware, one interconnection with a neighboring utility, and four interconnections with municipalities. These interconnections are capable of providing over 3.0 mgd of water to our Maryland systems.

*<u>Artesian Water Pennsylvania</u>*

Artesian Water Pennsylvania began operations in 2002. It provides water service to a residential community in Chester County, Pennsylvania.

*<u>Artesian Wastewater</u>*

Artesian Wastewater began providing wastewater services in Sussex County, Delaware in July 2005. Artesian Wastewater is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Delaware as a regulated public wastewater service company.

Artesian Wastewater owns and operates four wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 2.3 mgd. Artesian Wastewater and Sussex County, a political subdivision of Delaware, provide reciprocal services to address the need of each for additional wastewater treatment and disposal capacity in certain service areas within Sussex County. Artesian Wastewater also owns and operates a disposal facility that includes a 90-million-gallon storage lagoon and spray irrigation to agricultural land. This facility provides treated process wastewater disposal services for an industrial customer at a rate up to 1.5 mgd. In early 2026, a new treatment facility was completed that provides 625,000 gallon per day treated process wastewater disposal services for residential and small commercial customers.

------

[**Table of Contents**](#tableOfContents0)

*<u>TESI</u>*

Artesian Wastewater operates as the parent holding company of TESI. TESI was incorporated in 2004 and is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Sussex County, Delaware, including all residents within the Town of Milton, as a regulated public wastewater service company.

TESI owns and operates four wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 525 ,000 gallons per day.

*<u>Artesian Wastewater Maryland</u>*

Artesian Wastewater Maryland was incorporated on June 3, 2008 and is authorized and able to provide regulated wastewater services to customers in the State of Maryland. It is currently not providing these services.

*<u>Artesian Utility</u>*

Artesian Utility was formed in 1996 and designs and builds water and wastewater infrastructure and provides contract water and wastewater operation services on the Delmarva Peninsula to private, municipal and governmental institutions. Artesian Utility also evaluates land parcels, provides recommendations to developers on the size of water or wastewater facilities and the type of technology that should be used for treatment at such facilities and operates water and wastewater facilities in Delaware for municipal and governmental agencies. Artesian Utility also contracts with developers and government agencies for design and construction of wastewater infrastructure throughout the Delmarva Peninsula.

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

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

*<u>Artesian Development</u>*

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

**Government Regulations**

*<u>Overview</u>*

The Company is subject to federal, state and local laws and regulations in all of the jurisdictions in which it operates.

These regulations include state commission orders, environmental protection, securities and exchange activities, including financial reporting and internal controls processes, data protection and privacy, tax compliance, health and safety, labor and employment practices, and other general business activities.

*<u>State Regulatory Commission Matters</u>*

Our water and wastewater utility operations are subject to regulation by their respective state regulatory commissions, which have broad administrative power and authority to regulate rates charged for service, determine franchise areas and conditions of service, approve acquisitions, authorize the issuance of securities and the incurrence of indebtedness, and other matters. The profitability of our utility operations is influenced, to a great extent, by the timeliness and adequacy of regulatory relief we are granted by the respective regulatory commissions or authorities in the states in which we operate. See Notes to Consolidated Financial Statements – Note 13 – Regulatory Proceedings for a full description of recent regulatory proceedings.

------

[**Table of Contents**](#tableOfContents0)

*<u>Service Territory Expansion</u>*

In Delaware, a CPCN grants a water or wastewater company the exclusive right to serve all existing and new customers within a designated area. The Delaware Public Service Commission, or DEPSC, has the authority to issue and revoke these CPCNs. In this Form 10-K, we may refer to CPCNs as "franchises" or "service territories."

For a water company, the DEPSC may grant a CPCN under circumstances where there has been a determination that the water in the proposed service area does not meet the regulations governing drinking water standards of the Delaware Division of Public Health, or DPH, for human consumption or where the supply is insufficient to meet the projected demand. For a wastewater company, the DEPSC has jurisdiction over non-governmental wastewater utilities having fifty or more customers in the aggregate. A CPCN for water and wastewater utilities shall be granted by the DEPSC to applicants in possession of one of the following:

* a signed service agreement with the developer of a proposed subdivision or development, which subdivision or development has been duly approved by the respective county government;

* a petition requesting such service signed by a majority of the landowners of the proposed territory to be served; or

* a duly certified copy of a resolution from the governing body of a county or municipality requesting the applicant to provide service to the proposed territory to be served.

A water or wastewater utility that has a CPCN must obtain the approval of the DEPSC to abandon a service territory. Once a CPCN is granted to a water or wastewater utility, it may not be suspended or terminated unless the DEPSC determines in accordance with its rules and regulations that good cause exists for any such suspension or termination. Although we have been granted an exclusive franchise for each of our existing water and wastewater systems in Delaware, our ability to expand service areas can be affected by the DEPSC awarding franchises to other regulated water or wastewater utilities with whom we compete for such franchises.

In Maryland, the Company must obtain approval from the appropriate local government authority for the ability to serve a particular area and also ensure that the acquired area is in the county's master water and sewer plan. The authority to exercise a franchise must then be obtained from the Maryland Public Service Commission, or MDPSC. Utilities that seek to develop a franchise by constructing new facilities must obtain appropriate approvals from the Maryland Department of the Environment, or MDE, the local government and the MDPSC. The utility must also obtain approval for soil and erosion plans and easement agreements from appropriate parties.

*<u>Environmental Regulation</u>*

The United States Environmental Protection Agency, or the EPA, the Delaware Department of Natural Resources and Environmental Control, or DNREC, and DPH, regulate the water quality of our treatment and distribution systems in Delaware, as do the EPA and the MDE, with respect to our operations in Maryland. The Chester Water Authority, which supplies water to Artesian Water through an interconnection in northern New Castle County, and Artesian Water Pennsylvania, which also supplies water to Artesian Water, are regulated by the Pennsylvania Department of Environmental Protection, or PADEP, as well as the EPA. We believe that we are in material compliance with all current federal, state and local water quality standards, including regulations under the federal Safe Drinking Water Act. However, if new water quality regulations are too costly, or if we fail to comply with such regulations, it could have a material adverse effect on our financial condition, results of operations and planned capital investments.

The water industry is capital intensive, with one of the highest levels of capital investment in plant and equipment per dollar of revenue among all utilities. Increasingly stringent drinking water regulations adopted to meet the requirements of the Safe Drinking Water Act have required the water industry to invest in more advanced treatment systems and processes, which require a heightened level of expertise. We have made significant enhancements to existing facilities to effectively treat and remove compounds as required by government agencies, such as ultraviolet oxidation treatment, ceramic membrane filtration and carbon filtration. We are currently in full compliance with the requirements of the Safe Drinking Water Act. Even though our water utility was founded in 1905, the majority of our investment in infrastructure occurred in the last 40 years.

------

[**Table of Contents**](#tableOfContents0)

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

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

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

The DPH has set maximum contaminant levels for certain substances that are more restrictive than the maximum contaminant levels set by the EPA. The DPH is the EPA's agent for enforcing the Safe Drinking Water Act in Delaware and, in that capacity, monitors the activities of Artesian Water and reviews the results of water quality tests performed by Artesian Water for adherence to applicable regulations. Artesian Water is also subject to other laws regulating substances and contaminants in water, including rules for volatile organic compounds and the Total Coliform Rule.

A normal by-product of our iron removal treatment facilities is a solid consisting of the iron removed from untreated groundwater plus residue from chemicals used in the treatment process. The solids produced at our facilities are either disposed directly into approved wastewater facilities or removed from our facilities by a licensed third-party vendor. A normal by-product of our carbon adsorption filtration process is exhausted carbon media, which is disposed of by the contractor providing the media replacement. Management believes that the costs of compliance with existing federal, state and local laws and regulations regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has had no material adverse effect upon the business and affairs of the Company, but there is no assurance that such compliance costs will continue to not have a material effect in the future.

Under Delaware state laws and regulations, we are required to file applications with DNREC for water allocation permits for each of our operating wells pumping greater than 50,000 gallons per day. For any wells in the Delaware River Basin, we must also file allocation permits with the Delaware River Basin Commission, or DRBC. We have 154 operating and 63 observation and monitoring wells in our Delaware systems. At December 31, 2025, we had allocation permits for 124 wells, permits pending for 14 wells and 16 wells that did not require a permit.

Our access to aquifers within our service territory is not exclusive. Water allocation permits control the amount of water that can be drawn from water resources and are granted with specific restrictions on water level draw down limits, annual, monthly and daily pumpage limits, and well field allocation pumpage limits. We are also subject to water allocation regulations that control the amount of water that we can draw from water sources. As a result, if new or more restrictive water allocation regulations are imposed, they could have an adverse effect on our ability to supply the demands of our customers, and in turn, our water supply revenues and results of operations. Our ability to supply the demands of our customers historically has not been affected by private usage of the aquifers by landowners or the limits imposed by the State of Delaware. Because of the extensive regulatory requirements relating to the withdrawal of any significant amounts of water from the aquifers, we believe that third-party usage of the aquifers within our service territory will not interfere with our ability to meet the present and future demands of our customers.

------

[**Table of Contents**](#tableOfContents0)

The MDE ensures that water quality and quantity at all public water systems in Maryland meet the needs of the public and are in compliance with federal and state regulations. The MDE also ensures that public drinking water systems provide safe and adequate water to all current and future users in Maryland and that appropriate usage, planning, and conservation policies are implemented for Maryland's water resources. The MDE oversees the development of Source Water Assessments for water supplies and issues water appropriation permits for public drinking water systems. In order to appropriate water for municipal, commercial, industrial or other non-domestic uses, a Water Appropriation Permit must be obtained. Issuance of the permit involves evaluating the needs of the user and the potential impact of the withdrawal on neighboring users and the water source in order to maximize beneficial use of the water. Permits for large appropriations often involve conducting pump tests to measure adequacy of an aquifer and safe yield of a well, or reviewing stream flow records to determine the adequacy of a surface water source. Regulations require all new community water systems to have sufficient technical, managerial and financial capacity to provide safe drinking water to their consumers prior to being issued a construction permit. Also, capacity management guidance contains capacity limiting factors that can include source capacity, treatment capacity and appropriation permit quantity. The quantity of water withdrawn from the Port Deposit surface water intake is allocated by the Susquehanna River Basin Commission, or SRBC, and the MDE. We have 15 operating wells and one surface water in-take in our Maryland systems.

The PADEP administers and oversees departmental programs involving surface and groundwater quantity and quality planning and water conservation in Pennsylvania. The office also coordinates policies, procedures, and regulations which influence public water supply withdrawals and quality. The DRBC administers and oversees programs involving water quality protection, water supply allocation, water conservation initiatives and watershed planning, regulatory review and permitting, and drought management in Pennsylvania. We have one operating well in Pennsylvania within the DRBC's jurisdiction. This well is treated by a water treatment plant located in Delaware.

The Clean Water Act has established the foundation for wastewater discharge control in the United States. The Clean Water Act established a control program for ensuring that communities have clean water by regulating the release of contaminants into waterways. Permits that limit the amounts of pollutants discharged are required for all wastewater dischargers under the National Pollutant Discharge Elimination System, or the NPDES, permit program. In accordance with the NPDES permit program, the implementing states set maximum discharge limits for wastewater effluents and overflows from wastewater collection systems. Discharges that exceed the limits specified under the NPDES permit program can lead to the imposition of penalties. The Clean Water Act also requires that wastewater treatment plant discharges meet a minimum of secondary treatment. The secondary treatment process can remove 90% to 99% of the organic matter in wastewater. Our removal efficiency is generally 96% to 98%.

Under Delaware state laws and regulations, we are required to hold a permit from DNREC for the construction, operation, maintenance or repair of any on-site wastewater treatment and disposal systems with daily design flow rates of 2,500 gallons or greater. A classification on the facility is performed in accordance with Regulations Licensing Operators of Wastewater Facilities. The class of operator required for the facility is determined by the Board of Certification for Licensed Wastewater Operations in accordance with Regulations Licensing Operators of Wastewater Facilities. We work to ensure that we operate environmentally friendly wastewater systems that meet federal, state and local laws.

**In March 2024, the SEC passed rule changes that would have required registrants to include extensive climate-related information in their registration statements and periodic reports. Later in March 2024, the U.S. Fifth Circuit Court of Appeals granted a temporary stay of the rules pending judicial review, in response to a petition arguing, among other things, that the rules would cause irreparable harm and exceed the SEC's authority. In March 2025, the SEC announced that it had voted to end its defense of the final rules on the enhancement and standardization of climate-related disclosures. While climate-related risk and emissions disclosure requirements continue to evolve at the state level, the future of the SEC's climate-related disclosure rules remains uncertain, and it is unlikely that public companies will need to make disclosures under the SEC's climate rules.**

**Additional General Information**

*<u>Seasonality</u>*

Substantially all of our water customers are metered, which allows us to measure and bill for our customers' water consumption. Demand for water during the warmer months is generally greater than during cooler months primarily due to additional customer requirements for water in connection with cooling systems, swimming pools, irrigation systems and other outside water use. Throughout the year, and particularly during typically warmer months, demand for water will vary with temperature and rainfall. In the event that temperatures during the typically warmer months are cooler than expected, or there is more rainfall than expected, the demand for water may decrease and our revenues may be adversely affected.

*<u>Competition</u>*

Our business in our franchised service areas is substantially free from direct competition with other public utilities, municipalities and other entities. However, our ability to provide additional water and wastewater services is subject to competition from other public utilities, municipalities and other entities. Even though our regulated subsidiaries have been granted an exclusive franchise for each of our existing community water and wastewater systems, our ability to expand service areas can be affected by the DEPSC, the MDPSC or the Pennsylvania Public Utility Commission, or PAPUC, awarding franchises to other regulated water or wastewater utilities with whom we compete for such franchises. As the sole regional regulated wastewater utility in Sussex County, Delaware, our operational initiatives are not impacted by competing franchise applications, which ensures uninterrupted service and protection against service area encroachment.

------

[**Table of Contents**](#tableOfContents0)

*<u>Suppliers and Independent Contractors</u>*

We are dependent upon the ability of our suppliers and independent contractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs. While we maintain an extensive qualification and performance review system to control risk associated with such reliance on third parties, failure of suppliers or independent contractors to meet commitments could adversely affect construction and maintenance schedules. We are also dependent on the availability of electricity and purchased water at affordable prices. Our electric costs and purchased water costs are at a fixed price under contract.

*<u>Employees and Human Capital Resources</u>*

As of December 31, 2025, we operated with 272 full-time and 2 part-time employees. Of these employees, 58 were officers and managers; 142 were employed as operations personnel, including engineers, technicians, draftsman, maintenance and repair persons, meter readers and utility personnel; and 38 were employed in accounting, budgeting, information systems, human resources, customer relations and public relations. The remaining 36 employees were administrative personnel.

The Company has no collective bargaining agreements with any of its employees, and its work force is not union organized or union represented. We believe that our relations with our employees are good. Through ongoing employee development, competitive compensation and benefits, and a focus on health, safety and employee wellbeing, we strive to help our employees in all aspects of their lives.

We believe the Company's success depends on its ability to attract, develop and retain key personnel. We provide our employees with resources that contribute to their professional development, including technical training and performance reviews. A core principle of our company is to promote from within and offer advancement opportunities at all levels of employment, which helps us retain talented employees. We believe our management team has the experience, talent and dedication necessary to effectively execute our business goals and growth strategy. We recognize that the skills, experience, diversity, industry knowledge and dedication of our employees significantly benefit our operations and performance.

We set pay ranges based on market data. When considering compensation, we consider factors such as an employee's role, experience, and his or her performance. We regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our compensation is fair and equitable.

Health and safety in the workplace for our employees is one of the Company's core values. Hazards in the workplace are proactively identified and actions are taken to maintain workplace safety. We sponsor a wellness program designed to enhance physical, financial, and mental wellbeing for all our employees. Throughout the year, we encourage healthy behaviors through regular communications, educational sessions and other incentives.

We use outside consultants and independent contractors on an as needed basis for various services. We rely on our independent contractors to manage their respective employee relations so that the services they are contractually obligated to perform for us satisfy our requirements. Management believes that through our own employees, coupled with the services provided by our independent contractors and outside consultants, we have sufficient human capital to continue to operate our business successfully.

*<u>Available Information</u>*

We are a Delaware corporation with our principal executive offices located at 664 Churchmans Road, Newark, Delaware, 19702. Our telephone number is (302) 453-6900 and our website address is www.artesianwater.com. We make available free of charge through our website our Code of Ethics, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, our Corporate Governance Guidelines, and our Board Committee Charters as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission, or the SEC. We include our website address in this Annual Report on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our website. Information contained on our website shall not be deemed incorporated into, or to be a part of, this report.

------

[**Table of Contents**](#tableOfContents0)

**ITEM 1A.**

**RISK FACTORS**

We are exposed to a variety of risks and uncertainties. Most are general risks and uncertainties applicable to all water and wastewater utility companies. We describe below some of the specific known risk factors that could negatively affect our business, financial condition or results of operations. If one or more of these risks or uncertainties occur, actual results may vary materially from our projections.

***Risks Related to Our Operations***

<u>We are dependent upon the ability of our suppliers and independent contractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs.</u> 

While we maintain an extensive qualification and performance review system to control risk associated with such reliance on third parties, failure of suppliers or independent contractors to meet commitments could adversely affect construction and maintenance schedules and our results of operations and financial condition. We have been affected and could continue to be further affected, by supplier delays and increased costs, due to the impacts of inflation, tariffs, recession, wars and international conflicts, and/or other macroeconomic factors, which are outside of our control and could affect our results of operations. We are also dependent on the availability of electricity and purchased water at affordable prices. While our electricity costs and purchased water costs are at fixed prices under contracts, after the expiration of these contracts, we may be required to pay higher electricity costs and purchased water costs.

<u>We are subject to risks associated with the collection, treatment and disposal of wastewater.</u>

Wastewater collection, treatment and disposal involve various unique risks. If collection or treatment systems fail, overflow, or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages, which may not be recoverable in fees. This risk is most acute during periods of substantial rainfall or flooding, which are common causes of sewer overflow and system failure. Liabilities resulting from such damages and injuries could materially and adversely affect our business, results of operations and financial condition. We also require pre-treatment by various industrial customers prior to receiving their wastewater for further treatment and disposal. If those pre-treatment systems operated by others fail, or do not operate properly, they can impact our downstream facilities' ability to meet their permit limitations. If we fail to meet our permit limitations, we could be fined or otherwise sanctioned by regulators and our operations could be curtailed or shut down.

<u>Aging infrastructure may lead to service disruptions, property damage and increased capital expenditures and operation and management costs, all of which could negatively impact our financial results.</u>

We have risks associated with aging infrastructure, including water and sewer mains, pumping stations and water and wastewater treatment facilities. Additionally, the nature of information available on buried and newly acquired assets may be limited, which may challenge our ability to conduct efficient asset management and maintenance practices. Assets that have aged beyond their expected useful lives may experience a higher rate of failure. Failure of aging infrastructure could result in increased capital expenditures and operation and management costs. In addition, failure of aging infrastructure may result in property damage, and in safety, environmental and public health impacts. To the extent that any increased costs or expenditures are not fully recovered in rates, our results of operations, liquidity and cash flows could be negatively impacted.

<u>Potential terrorist attacks, sabotage, or accidental damage by outside parties may disrupt our operations and adversely affect our business, operating results and financial condition.</u>

We are subject to disruption of our water and wastewater systems, including as a result of vandalism, terrorism, sabotage and/or accidental damage by outside parties, any of which could cause an interruption in or contamination of water supply, and a reduction in water quality. We have security measures in place at our facilities to reduce the possibility of occurrences of sabotage, vandalism, or terrorism and to secure our water and wastewater systems. These security measures address water collection, pre-treatment, treatment, distribution, storage, wastewater disposal, electronic or automated systems, and the use, handling, delivery, and storage of all chemicals. We also have programs in place to ensure employee awareness of potential threats. We have and will continue to bear any increase in costs, most of which have been recoverable under state regulatory policies, for security precautions to protect our facilities, operations and supplies. While the costs of increases in security, including capital expenditures, may be significant, we expect these costs to continue to be recoverable in water and wastewater rates. Despite our security measures, we may not be in a position to control the outcome of terrorist events, sabotage or other attacks on our water systems, should they occur.

Our water and wastewater systems are also subject to accidental damage from work being completed by outside parties not under the supervision or control of the Company. Construction activities in the vicinities of our pipelines and other infrastructure can lead to damage which results in inadvertent discharge onto nearby properties, or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages. We could also incur repair and remediation costs, which may not be reimbursed or recoverable in water and wastewater rates.

------

[**Table of Contents**](#tableOfContents0)

<u>We depend on the availability of capital for expansion, construction and maintenance. Weaknesses in capital and credit markets or increased interest rates may limit our access to capital.</u>

Our ability to continue our expansion efforts and fund our utility construction and maintenance program depends on the availability of adequate capital. There is no guarantee that we will be able to obtain sufficient capital in the future on favorable terms and conditions for expansion, construction and maintenance, as general macroeconomic conditions impacting the capital markets, including interest rates, are beyond our control. In the event our lines of credit are not extended or we are unable to refinance our first mortgage bonds when due and the borrowings are called for payment, we will have to seek alternative financing sources, although there can be no assurance that these alternative financing sources will be available on terms acceptable to us. In the event we are unable to obtain sufficient capital, our expansion efforts could be curtailed, which may affect our growth and may affect our future results of operations.

<u>We may be adversely affected by the implementation of new regulations, the reinterpretation or recission of existing regulations, or regulatory uncertainty. Changes in local, state or federal policy or administrative priorities could adversely affect our business.</u>

As a regulated utility, we are subject to regulation at the federal, state and local level. We have made significant capital expenditures to adhere to regulations imposed by such authorities and expect to continue to make capital expenditures in the future to adhere to such regulations. Changes in local, state or federal administrative policy or priorities could affect the possible interpretation of existing regulations or such authorities may impose new rules and regulatory requirements. New administrations could also eliminate proposed rules and reverse final policies of prior administrations, which could lead to conflict between federal and state regulations and regulatory uncertainty, which could cause us to reevaluate our strategic priorities and capital expenditures or otherwise impact our business operations. The impact of any regulatory requirement changes is unpredictable, and could materially and adversely affect our business, financial position and results of operations.

<u>We may be adversely affected by climate variability or by regulatory, legal or market responses to such change.</u> 

Climate variability may cause negative impacts to our business if an unexpectedly severe weather event or natural disaster damages our facilities and/or operations or those of our suppliers or independent contractors in our service areas, or from the unintended consequences of regulatory changes that directly or indirectly impose substantial restrictions on our activities or adaptation requirements. Potential climate variability challenges include the following: increased frequency and duration of droughts, increased precipitation and flooding, increased frequency and severity of storms and other weather events, potential degradation of water quality, unexpected changes in temperature, possible increases in ocean levels, disruptions in water or wastewater services to our customers, decreases in available water supply, extreme changes in water usage patterns and related revenue, increases in expenditures to repair any damages, increases in costs to reduce risks associated with significant weather events or natural disasters, and increases in costs to improve the reliability of our water and wastewater systems and facilities. Due to the uncertainty of weather volatility related to climate variability, we cannot predict its potential impact on our financial condition, results of operations, cash flows and liquidity. Although some or all potential expenditures and costs with respect to our regulated businesses could be recovered through rates we charge to our customers, there can be no assurance that the applicable regulatory authority would authorize recovery of such costs, in whole or in part, for any of these impacts.

Furthermore, federal, state and local authorities and legislative bodies have issued, implemented or proposed regulations, penalties, standards and/or guidance intended to restrict, moderate or promote activities consistent with resource conservation, Greenhouse Gas, or GHG, emission reduction, environmental protection or other climate-related objectives. Compliance with those directed at or otherwise affecting our business or our suppliers' (or their suppliers') operations, or services, could lead to increased environmental compliance expenditures, increased energy and raw materials costs and new and/or additional investment in designs and technologies. We continually assess our compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations. It is reasonably possible that costs incurred related to the various physical and regulatory risks from climate change may affect our future results of operations, financial condition, cash flows or liquidity. While we have health and safety protocols in place, we can provide no assurance that we or our suppliers or independent contractors can successfully operate in areas experiencing a significant weather event or natural disaster, and we or they may be more significantly impacted and take longer, and incur higher costs, to resume operations in an affected location, depending on the nature of the event or other circumstances. Although some or all potential expenditures and costs with respect to our regulated businesses could be recovered through rates we charge to our customers, there can be no assurance that the applicable regulatory authority would authorize recovery of such costs, in whole or in part, for any of these impacts.

Though we have not as of the date of this report identified or experienced any particular material impact, whether singular or in combination, to our consolidated financial statements from climate change or the associated regulatory, physical, and other risks discussed above, we cannot provide any assurance that we have or can successfully prepare for, or are or will be able to reduce or manage any of them to the extent they may arise. In addition, the SEC has previously issued extensive climate-related disclosure rules. Although these rules are currently stayed, if adopted in the future, such rules would likely result in increased compliance costs and capital expenditures.

------

[**Table of Contents**](#tableOfContents0)

***Risks Related to Governmental Laws and Regulations***

<u>We rely on governmental approvals in the States of Delaware and Maryland and the Commonwealth of Pennsylvania, such as approvals from the Delaware River Basin Commission and Susquehanna River Basin Commission for applicable water allocation, water appropriation and water capacity permits. In addition, we rely on governmental approvals in the State of Delaware for applicable wastewater collection, treatment and disposal permits for the operation of our wastewater facilities.</u> 

Our water and wastewater services are governed by various federal and state governmental agencies. Pursuant to these regulations, we are required to obtain various permits for any additional systems and current systems to assist in our operations. If any of those permit approvals are not received timely or at all, we may risk the loss of economic opportunity and our ability to create additional systems for the effective operation of our water business in Delaware, Maryland and Pennsylvania or our wastewater business in Delaware. We can provide no assurances that we will receive all necessary permits to add systems or continue to operate facilities of our water or wastewater business.

<u>Our operating revenue is primarily from water sales. The rates that we charge our customers are subject to the regulations of the public service commissions in the states in which we operate. If a public service commission disapproves or is unable to timely approve our requests for rate increases or approves rate increases that are inadequate to cover our investments, deferred regulatory assets or increased costs, our profitability may suffer.</u>

We file rate increase requests, from time to time, to recover our investments in utility plant, deferred regulatory assets and expenses, see Notes to Consolidated Financial Statements - Note 13 – Regulatory Proceedings. Once a rate increase petition is filed with a public service commission, the ensuing administrative and hearing process may be lengthy and costly. We can provide no assurances that any future rate increase request will be approved by the DEPSC, MDPSC or PAPUC, and if approved, we cannot guarantee that these rate increases will be granted in a timely manner and/or will be sufficient in amount to cover the investments, deferred regulatory assets and expenses for which we initially sought the rate increase. To the extent we are able to pass through such costs to customers and a state public service commission subsequently determines that such costs should not have been paid by customers, we may be required to refund such costs, with interest, to customers. Any such costs not recovered through rates, or any such refund, could adversely affect our results of operations, financial position or cash flows.

<u>Our water and wastewater operations are subject to extensive federal and state laws and regulations. In addition, our operating costs and capital expenditures could be significantly increased if new or stricter regulatory standards are imposed by federal or state environmental agencies.</u>

We are subject to various federal, state, and local laws and regulations relating to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. Our water and wastewater services are governed by various federal and state environmental protection and health and safety laws and regulations, including, among others, the federal Safe Drinking Water Act, the Clean Water Act, the Lead and Copper Rule and other federal and state laws. These federal and state regulations are issued by the EPA and state environmental regulatory agencies. Pursuant to these laws and regulations, we are required to obtain various water allocation permits and environmental permits for our operations. The water allocation permits control the amount of water that can be drawn from water resources. New or stricter water allocation regulations can adversely affect our ability to meet the demands of our customers. While we have budgeted for future capital and operating expenditures to maintain compliance with these laws and our permits, it is possible that new or stricter standards would be imposed that will raise our operating costs and capital expenditures. Thus, we can provide no assurances that our costs of complying with, or discharging liability under, current and future environmental and health and safety laws will not adversely affect our business, results of operations or financial condition.

***Risks Related to Our Financial Statements and Operating Results***

<u>Our business is subject to seasonal fluctuations, which could affect demand for our water service and our revenues.</u>

Demand for water during warmer months is generally greater than during cooler months primarily due to additional customer requirements in irrigation systems, swimming pools, cooling systems and other outside water use. In the event that temperatures during typically warmer months are cooler than normal, or rainfall is more than normal, the demand for our water may decrease and adversely affect our revenues.

<u>Drought conditions and government-imposed water use restrictions may impact our ability to serve our current and future customers, and may impact our customers' use of our water, which may adversely affect our financial condition and results of operations.</u>

------

[**Table of Contents**](#tableOfContents0)

We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories. However, severe drought conditions could interfere with our sources of water supply and could adversely affect our ability to supply water in sufficient quantities to our existing and future customers. This may adversely affect our revenues and earnings. Moreover, governmental restrictions on water usage during drought conditions may result in a decreased demand for water, which may adversely affect our revenue and earnings.

<u>General economic conditions may materially and adversely affect our financial condition and results of operations.</u>

The effects of adverse U.S. economic conditions may lead to a number of impacts on our business that may materially and adversely affect our financial condition and results of operations. Such impacts may include a reduction in discretionary and recreational water use by our residential water customers, particularly during the summer months; a decline in usage by industrial and commercial customers as a result of decreased business activity and commerce in our customers' businesses; an increased incidence of customers' inability to pay their bills, bankruptcy or delay in paying their bills which may lead to higher bad debt expense and reduced cash flow; and a lower natural customer growth rate may result as compared to what had been experienced before due to a decline in new housing starts or a decline in the number of active customers due to housing vacancies or abandonments.

<u>We could be adversely impacted by macroeconomic factors outside of our control, including but not limited to inflation, interest rates, tariffs, trade wars, wars and international conflicts, and/or recession.</u> 

We have been affected and could continue to be affected by increased costs for items such as, among others, materials for capital expenditures, fuel, and treatment chemicals, due to the impacts of inflation. If inflation increases significantly, as a result of increased interest rates, tariffs, trade wars, wars and international conflicts, or otherwise, we may seek to increase our rates charged to customers. We can provide no assurances that any future rate increase request will be approved by the applicable regulatory authority, and if approved, we cannot guarantee that any rate increase will be granted in a timely manner and/or will be sufficient in amount to cover costs for which we initially sought the rate increase. The impact of such inflationary pressure could adversely affect our results of operations, financial position or cash flows.

<u>We may be required to record impairments of goodwill, or otherwise change the fair value of certain assets, in the future that could have a material adverse effect on our financial condition and results of operations.</u>

The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired as of the date of an acquisition. The Company's goodwill is associated with the January 2022 acquisition of Tidewater Environmental Services, Inc. Goodwill is not amortized, but is evaluated for impairment at least annually, or more frequently, if impairment indicators are present that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We may be required to recognize in the future an impairment of goodwill due to market conditions, or other factors related to our performance or the performance of an acquired business, or other circumstances that may impact the fair value of assets acquired. Recognition of impairments of goodwill and changes in fair value of certain of our assets would result in a charge to income in the period in which the impairment or change occurred, which may negatively affect our financial condition, results of operations and total capitalization.

***Risks Related to Our Business Strategy***

<u>We face competition from other water and wastewater utilities for the acquisition of new exclusive service territories.</u>

We face competition from other water and wastewater utilities as we pursue the right to exclusively serve new territories in Delaware and Maryland. We address this competition by entering into agreements with landowners, developers or municipalities and, under current law, then applying to the DEPSC or the MDPSC for a CPCN. If we are unable to enter into agreements with landowners, developers or municipalities and secure CPCNs for the right to exclusively serve new territories in Delaware or Maryland, our ability to expand may be significantly impeded.

<u>Any future acquisitions we undertake or other actions to further grow our water and wastewater business may involve risks.</u>

An element of our growth strategy is the acquisition and integration of water and wastewater systems in order to broaden our current service areas and move into new ones. It is our intent, when practical, to integrate any organizations we acquire with our existing operations. The negotiation of potential acquisitions as well as the integration of acquired organizations could require us to incur significant costs and cause diversion of our management's time and resources. We may not be successful in the future in identifying organizations that meet our acquisition criteria. The failure to identify such organizations may limit the rate of our growth. In addition, future acquisitions or expansion of our service areas by us could result in:

------

[**Table of Contents**](#tableOfContents0)

* Dilutive issuance of our equity securities;

* Incurrence of debt and contingent liabilities;

* Difficulties in integrating the operations and personnel of the acquired organization;

* Diversion of our management's attention from ongoing business concerns;

* Failure to have effective internal control over financial reporting;

* Overload of human capital resources; and

* Other acquisition-related expense.

Some or all of these items could have a material adverse effect on our business and our ability to finance our business and comply with regulatory requirements. The organizations we acquire in the future may not achieve sales and profitability that would justify our investment.

We also may experience risks relating to the challenges and costs of closing a transaction and the risk that an announced transaction may not close. Completion of certain acquisition transactions are conditioned upon, among other things, the receipt of approvals, including from certain state public utilities commissions. The timeliness and outcome of those state public utilities commissions' decisions could hinder future acquisitions and any failure to complete a pending transaction would prevent us from realizing the anticipated benefits. We would also remain liable for significant transaction costs, including legal and accounting fees, whether or not the transaction is completed.

***Risks Related to Legal Uncertainty***

<u>Contamination of our water supply or wastewater operational malfunctions may result in disruption in our services and could lead to litigation that may adversely affect our business, operating results and financial condition.</u>

Our water supplies are subject to contamination from naturally-occurring compounds as well as pollution resulting from man-made sources. Even though we monitor the quality of our water on an ongoing basis, any possible contamination could interrupt the use of our water supply until we are able to substitute it from an uncontaminated water source. Additionally, treating the contaminated water source could involve significant costs and could adversely affect our business. We could also be held liable for consequences arising out of human or environmental exposure to hazardous substances, if found, in our water supply. If wastewater collection or treatment systems fail, overflow, or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages for which we could be held liable. Any such occurrence could adversely affect our business, results of operations and financial condition.

<u>We are subject to various laws and regulations that could expose us to governmental investigations or actions by other third parties.</u>

We are subject to various federal and state laws and regulations, including environmental laws and regulations, violations of which can involve civil or criminal sanctions.

Our Company from time to time could be party to or our operations targets of, lawsuits, claims, investigations and proceedings, including system failure, injury, contract, environmental, health and safety and employment matters, which are handled and defended in the ordinary course of business. The results of any future litigation or settlement of such lawsuits and claims are inherently unpredictable, but such outcomes could also materially and adversely affect our business, financial position and results of operations.

***Risk Related to Cybersecurity and Technology***

<u>We are dependent on the continuous and reliable operation of our information technology systems that require potentially costly maintenance, and could become subject to cyberattacks disrupting our operations.</u>

We rely on our information technology systems to manage operation of our business. Specifically, our business relies on various technology systems, including but not limited to those associated with customer information, financial reporting, asset and inventory management, facility operations and monitoring, human resources and accounts receivable. Such systems require periodic modifications, upgrades or replacement that subject us to inherent costs and risks, including substantial capital expenditures, additional administration and operating expenses, and other risks and costs of delays in transitioning to new systems or of integrating new systems into our current systems. Our computer and communications systems and operations could be damaged or interrupted by natural disasters, power loss, telecommunications failures, human error, acts of war, terrorism, international conflict, sabotage, theft or similar events or disruptions. A loss of these systems or major problems with the operation of these systems could affect our operations and have a material adverse effect on our business and results of operations.

------

[**Table of Contents**](#tableOfContents0)

Cyberattacks on utility companies have been increasing in recent years. To date, there have been no risks identified from cybersecurity threats or previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the company. Despite our efforts, a cyberattack, if it occurred, could cause water or wastewater system operational complications, disrupt service to our customers, compromise important data or systems or result in an unintended release of customer or other confidential information. Possible impacts associated with a cyberattack could also include remediation costs related to lost, stolen, or compromised data, repairs to information technology and data processing systems, increased cyber security protection costs, adverse effects on our compliance with regulatory and environmental laws and regulations, including standards for water and wastewater utility providers, and litigation. We feel we have adequate cybersecurity insurance coverage to mitigate the cost of any such cyberattack; however, a possible cyberattack could affect our operations and have a material adverse effect on our business and results of operations. We have implemented, and will continue to internally monitor and manage, business processes to support our cybersecurity program. For additional information concerning the Company's cybersecurity program, see Item 1C - Cybersecurity.

***Risk Associated with Managing our Business, Including Employees and Our Reputation***

<u>Turnover in our management team could have an adverse impact on our business or the financial market's perception of our ability to continue to grow.</u>

Our success depends significantly on the continued contribution of our management team both individually and collectively. The loss of the services of any member of our management team or the inability to hire and retain experienced management personnel could harm our operating results. In addition, turnover in our management team could adversely affect the financial market's perception of our ability to continue to grow.

<u>We depend on our ability to attract and retain qualified, skilled employees and independent contractors.</u>

We depend on our ability to attract and retain qualified talent, including full-time and part-time employees, managers, management team, and independent contractors. If we are unable to attract and retain such individuals, we may be unable to maintain our ability to meet performance targets, customer demands and expectations or successfully expand and grow our business. Changes in the job market may increase labor costs and could adversely affect our business, results of operations, cash flows and financial condition.

<u>Employee and independent contractor misconduct could harm us by subjecting us to legal liability and reputational harm.</u>

There is a risk that our employees or independent contractors engage in misconduct that adversely affects our business. Misconduct could subject us to regulatory investigations, legal liabilities or penalties and we could suffer harm to our reputation, financial position, and the trading price of our common stock. We also face the risk that our employees engage in workplace misconduct, despite our implementation of policies and training to prevent and detect misconduct. Such misconduct could negatively harm our reputation or impair our ability to attract and retain qualified, skilled employees. If our employees engage in misconduct, our business could be materially adversely affected.

***Risks Related to Our Common Stock***

<u>There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.</u>

Dividends on our common stock will only be paid if and when declared by our Board of Directors. Our earnings, financial condition, capital requirements, applicable regulations and other factors, including the timeliness and adequacy of rate increases, will determine both our ability to pay dividends on common stock and the amount of the dividends declared by our Board of Directors. There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.

<u>Holders of Class A Non-Voting Common Stock have no voting rights. As a result, holders of Class A Non-Voting Common Stock will not have any ability to influence stockholder decisions and the principal holders of Class B Common Stock have significant control over the outcome of most fundamental corporate matters.</u>

We have two classes of common stock, Class A Non-Voting Common Stock and Class B Common Stock. Under our Restated Certificate of Incorporation, the right to vote for the election of directors and other stockholder matters is exercised exclusively by the holders of Class B Common Stock. The holders of our Class A Non-Voting Common Stock do not have voting rights on any matters that are submitted to a vote of stockholders, including with respect to the election of directors and other matters voted upon by stockholders, except as required by the Delaware General Corporation Law. As a result, the principal stockholders of Class B Common Stock have significant control over the outcome of most fundamental corporate matters. There are no agreements among the holders of Class B Common Stock or with the Company that restrict the transfer of shares of Class B Common Stock which could result in significant ownership of shares of Class B Common Stock being held by others who are not currently principal holders.

<u>The price of our common stock may be volatile and may be affected by market conditions beyond our control.</u>

The trading price of our common stock may fluctuate in the future based on a variety of factors, many of which are beyond our control and unrelated to our financial results. Factors that could cause fluctuations in the trading price of our common stock include but are not limited to volatility of the general stock market or the utility stock index, regulatory developments, general economic conditions and trends, actual or anticipated changes or fluctuations in our results of operations, actual or anticipated changes in the expectations of investors or securities analysts, actual or anticipated developments in our competitors' businesses or the competitive landscape generally, litigation involving us or our industry, major catastrophic events or sales of large blocks of our stock. Furthermore, we believe that stockholders invest in public utility stocks in part because they seek reliable dividend payments. If there is an oversupply of stock of public utilities in the market relative to demand by such investors, the trading price of our common stock may decrease. Additionally, if interest rates rise above the dividend yield offered by our common stock, demand for our stock and its trading price may also decrease.

------

[**Table of Contents**](#tableOfContents0)

***Risk Related to Pandemics***

<u>Our business, results of operations, financial condition, cash flows and stock price may be adversely affected by pandemics, epidemics or other public health emergencies.</u>

Our business, results of operations, financial condition, cash flows and stock price may be adversely affected by pandemics, epidemics or other public health emergencies. We are considered an essential utility service company, as defined by the U.S. Department of Homeland Security. We believe we will continue to operate our business consistent with any federal guidelines or state and local orders, however, the outbreak of pandemics, epidemics or other public health emergencies and any preventive or protective actions taken by governmental authorities may have an adverse effect on our operations.

**ITEM 1B.**

**UNRESOLVED STAFF COMMENTS**

None.

**ITEM 1C. CYBERSECURITY**

There have been an increasing number of cyberattacks on companies around the world, which have caused operational failures, compromised sensitive corporate or customer data, and/or resulted in significant financial damages. These attacks have occurred over the internet, through malware, viruses or attachments to e-mails, or through inside actors with access to systems within the organization. In addition, there have been reports of other water utility companies being subjected to such attacks, resulting in widespread operational outages.

Risk Management and Strategy

We have implemented security measures and will continue to devote resources to address security vulnerabilities in an effort to prevent cyberattacks. All employees receive cybersecurity training and other education regarding their use of computers, information technology, and sensitive data. We utilize third parties to support our information technology, or IT, resources, including disaster recovery intended to safeguard our ability to access and use our IT resources during a disaster or cyber incident. Our business continuity plans are evaluated against evolving security and service level standards, which includes evaluating those cybersecurity threats associated with our use of key third party service providers.

Our cybersecurity management process consists of utilizing a combination of employee education, preventative controls, detective controls, and periodic third-party cybersecurity testing. We have installed and utilize enterprise scale technology to support an appropriate cybersecurity posture including: endpoint detection and response, firewalls, security information and event management, email security, multifactor authentication, and vulnerability management. We receive cybersecurity related alerts from our membership in a number of industry groups. These alerts are evaluated and in the event an alert requires action within our environment, such actions are taken promptly. Our process and cybersecurity posture are refined based on the results of periodic third-party cybersecurity assessments. We engage with the Cybersecurity and Infrastructure Security Agency through their cyber hygiene service offerings. Cybersecurity is addressed in IT's reports to the Corporate Automation Steering Committee, which consists of all Officers and the Director of Customer Service, as well as in IT's reports to the Board of Directors. Should a cyber event occur, depending on the severity of an event, our cyber incident reporting process includes informing, as early as practicable, our senior corporate management.

Governance

The Audit Committee of the Board of Directors, as overseen by the full Board of Directors, is responsible for oversight of cybersecurity risk. Our IT executives report on our cybersecurity practices and risks at each meeting of the Audit Committee of our Board of Directors. In addition, our IT executives provide periodic updates on cybersecurity risks to our management at regularly held executive committee meetings. Should any cybersecurity threat or incident be detected, our IT executives would timely report such threat or incident to the management executive committee and provide regular communications and updates to the executive committee throughout the incident and any subsequent investigation, in order that the impact, materiality, and reporting requirements of such incident are appropriately identified and assessed for further necessary or appropriate action to be taken. Any incident identified by the management executive committee as having a material impact would be promptly escalated to all members of the Board of Directors. Should there be an incident which does not rise to the level of being material, such incident would, at minimum, be included in the subsequent IT reports to both the management executive committee and the Board of Directors.

------

[**Table of Contents**](#tableOfContents0)

We believe we are appropriately staffed to support a healthy cybersecurity posture. All IT personnel have a combination of professional experience, education, and/or certifications for their area of responsibility. For IT leadership, our Chief Information Officer earned a Masters of Business Administration and also a Master of Science degree in Information Systems & Technology Management. Our Vice President of Information Technology earned a Bachelor of Science in Computer Science and Business and a Bachelor of Science in Business and Economics. The Vice President of Information Technology is also a Certified Public Accountant, a Certified Information Systems Auditor, and a Chartered Global Management Accountant. Our Director of Cybersecurity earned an Associates Degree in Computer Network Engineering and is a Certified Information Systems Security Professional.

To date, there have been no risks identified from cybersecurity threats or previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the company. However, despite all the aforementioned efforts, a cyberattack, if it occurred, could cause water or wastewater system operational problems, disrupt service to our customers, compromise important data or systems or result in an unintended release of customer or other confidential information. See "Item 1A. Risk Factors—Risks Related to Cybersecurity and Technology" for additional discussion of cybersecurity risks impacting our Company.

**ITEM 2.**

**PROPERTIES**

Our corporate headquarters are located at 664 Churchmans Road, Newark, Delaware and are owned by Artesian Water.

The Company owns approximately six acres of land in New Castle County, Delaware zoned for office development and two nine-acre parcels of land in Sussex County, Delaware for water and wastewater treatment facilities and an elevated water storage. The Company also owns an office facility located in Sussex County, Delaware. The facility consists of approximately 10,000 square feet of office space along with approximately 10,000 square feet of warehouse space.

The Company owns land, rights-of-way, easements, transmission and distribution mains, collection mains, pump facilities, treatment plants, lift stations, treatment/disposal facilities, storage tanks, meters, vehicles and related equipment and facilities. The following table indicates our utility plant as of December 31, 2025.

---

| | | |
|:---|:---|:---|
|  **Utility plant comprises**:  |  | |
|  *In thousands*  |  |  |
|  | Estimated Useful Life<br> (In Years) Effective |  |
|  | June 12, 2024 | **December 31, 2025** |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Utility plant at original cost  |  |  |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Utility plant in service-Water  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible plant  |  | $140 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Source of supply plant  | 45-85 | 33507 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pumping and water treatment plant  | 15-64 | 137543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transmission and distribution plant  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mains  | 73-81 | 416690 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Services  | 39-58 | 67999 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Storage tanks  | 70-76 | 42995 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Meters  | 16-26 | 28921 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hydrants  | 60-68 | 21738 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General plant  | 5-81 | 61191 |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Utility plant in service-Wastewater  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible plant  |  | 116 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Treatment and disposal plant  | 20-81 | 76509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Collection mains and lift stations  | 70-81 | 62909 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General plant  | 5-31 | 3041 |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property held for future use  |  | 4805 |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction work in progress  |  | 45667 |
|  |  | 1003771 |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Less – accumulated depreciation  |  | 202077 |
|  |  | $801694 |

---

Substantially all of Artesian Water's utility plant, except the utility plant in the town of Townsend, Delaware, is pledged as security for our First Mortgage Bonds. As of December 31, 2025, no other water utility plant has been pledged as security for loans. Two parcels of land held by Artesian Wastewater are pledged as security for a loan.

------

[**Table of Contents**](#tableOfContents0)

We believe that our properties are generally maintained in good condition and in accordance with current standards of good water and wastewater industry practice. We believe that all our existing facilities adequately meet current necessary production capacities and current levels of utilization.

**ITEM 3.**

**LEGAL PROCEEDINGS**

For a discussion of our legal proceedings, refer to Notes to Consolidated Financial Statements – Note 15 – Legal Proceedings.

**ITEM 4.**

**MINE SAFETY DISCLOSURES**

Not applicable.

**PART II**

**ITEM 5.**

**MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

*<u>Market Information for the Company's Common Equity</u>*

Artesian Resources' Class A Non-Voting Common Stock, or Class A Non-Voting Stock, is listed on the Nasdaq Global Select Market and trades under the symbol "ARTNA." On March 10, 2026, the last closing sale price as reported by the Nasdaq Global Select Market was $32.56 per share. As of March 10, 2026 there were 452 holders of record of the Class A Non-Voting Stock. The stockholders of Class A Non-Voting Stock are entitled to receive dividends when they are declared by the Board of Directors. The Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities. See the Consolidated Financial Statements for additional information regarding the Company's dividend history.

The intraday high and low Nasdaq Global Select Market prices on the Class A Non-Voting Stock for each quarter during the past two years were:

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp; **Stock Price** | &nbsp;&nbsp; **Stock Price** |
|  | &nbsp;&nbsp; **High** | &nbsp;&nbsp; **Low** |
| &nbsp;&nbsp; **2025**  |  |  |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Quarter  | $&nbsp;&nbsp;33.14 | $&nbsp;&nbsp;32.41 |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Quarter  | $&nbsp;&nbsp;33.97 | $&nbsp;&nbsp;33.30 |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Third Quarter  | $&nbsp;&nbsp;32.86 | $&nbsp;&nbsp;32.37 |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fourth Quarter  | $&nbsp;&nbsp;31.83 | $&nbsp;&nbsp;31.33 |
| &nbsp;&nbsp; **2024**  |  |  |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Quarter  | $&nbsp;&nbsp;41.73 | $&nbsp;&nbsp;33.84 |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Quarter  | $&nbsp;&nbsp;41.29 | $&nbsp;&nbsp;33.34 |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Third Quarter  | $&nbsp;&nbsp;41.29 | $&nbsp;&nbsp;34.96 |
| &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fourth Quarter  | $&nbsp;&nbsp;37.35 | $&nbsp;&nbsp;30.99 |

---

Our Class B Common Stock, or Class B Stock, is quoted on the OTC Bulletin Board under the symbol "ARTNB." There has been a limited and sporadic public trading market for the Class B Stock. As of March 10, 2026, the last reported trade of the Class B Stock on the OTC Bulletin Board was at a price of $33.51 per share on January 16, 2026. As of March 10, 2026, there were 133 holders of record of the Class B Stock. Shares of Class B Stock are paid the same dividend as the shares of the Class A Non-Voting Stock.

*Recent Sales of Unregistered Securities*

During the year ended December 31, 2025, we did not issue any unregistered shares of our Class A Non-Voting Stock or Class B Stock.

The following graph compares the yearly change in the cumulative shareholder return on the Company's Class A Non-Voting Stock with the Standard & Poor's 500 Stock Index and a Peer Group of water utility companies. The graph covers the period from December 2020 (assuming a $100 investment on December 31, 2020, and the reinvestment of any dividends) through December 2025:

------

[**Table of Contents**](#tableOfContents0)

![](image_2.gif)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | INDEXED RETURNS | INDEXED RETURNS | INDEXED RETURNS | INDEXED RETURNS | INDEXED RETURNS |
|  | Base Period | Years Ending December 31 | Years Ending December 31 | Years Ending December 31 | Years Ending December 31 | Years Ending December 31 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Company Name / Index  | 2020 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2021  | 2022 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2023  | 2024 | 2025 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Resources Corporation  | 100 | 128.22 | 165.77 | 119.97 | 94.54 | 98.16 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; S&P 500 Index  | 100 | 128.71 | 105.40 | 133.10 | 166.40 | 196.16 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Peer Group  | 100 | 123.98 | 106.13 | 91.26 | 87.34 | 92.61 |

---

The Peer Group includes American States Water Company, American Water Works Company, Inc., Essential Utilities, Inc., H2O Water, California Water Service Group, Middlesex Water Company, SJW Group and York Water Company.

------

[**Table of Contents**](#tableOfContents0)

**ITEM 6.**

**RESERVED** 

**ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

***OVERVIEW***

Our profitability is primarily attributable to the sale of water and wastewater services in our regulated utility business. Our regulated utility segment comprised 93.2% of total operating revenues for the year ended December 31, 2025 and 93.5% for the year ended December 31, 2024. Water sales are subject to seasonal fluctuations, particularly during summer when water demand may vary with rainfall and temperature. In the event temperatures during the typically warmer months are cooler than expected or rainfall is greater than expected, the demand for water may decrease and our revenues may be adversely affected. We believe these effects of weather are short term and do not materially affect the execution of our strategic initiatives. Our wastewater services provide a revenue stream that is not affected by these changes in weather patterns. We continue to seek growth opportunities to provide wastewater services in Delaware and the surrounding areas.

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

*Inflation*

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

**Regulated Water Subsidiaries**

Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide water service to residential, commercial, industrial, governmental, municipal and utility customers. Increases in the number of customers contribute to increases, or help to offset any intermittent decreases, in our operating revenue. As of December 31, 2025, the number of metered water customers in Delaware increased approximately 1.8% compared to December 31, 2024. The number of metered water customers in Maryland increased approximately 1.8% compared to December 31, 2024. The number of metered water customers in Pennsylvania remained consistent compared to December 31, 2024. For the year ended December 31, 2025, approximately 9.4 billion gallons of water were distributed in our Delaware systems and approximately 103.7 million gallons of water were distributed in our Maryland systems.

**Regulated Wastewater Subsidiaries**

Artesian Wastewater and TESI own wastewater collection and treatment infrastructure and provide regulated wastewater services to customers in Sussex County, Delaware. Artesian Wastewater Maryland is able to provide regulated wastewater services to customers in Maryland. It is not currently providing these services in Maryland. The majority of our residential and commercial wastewater customers are billed a flat monthly fee, and our large industrial wastewater customer is billed monthly based on wastewater flow, which contributes to providing a revenue stream unaffected by weather. As of December 31, 2025, the number of Delaware wastewater customers increased approximately 6.5% compared to December 31, 2024.

------

[**Table of Contents**](#tableOfContents0)

**Non-Utility Subsidiaries**

Artesian Utility provides contract water and wastewater operation services to private, municipal, and governmental institutions. Artesian Utility also offers protection plans to customers: the WSLP Plan, the SSLP Plan, and the ISLP Plan. SLP Plan customers are billed a flat monthly or quarterly rate, which contributes to providing a revenue stream unaffected by weather. There has been consistent customer growth over the years. As of December 31, 2025, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 4.1%, 2.0% and 5.7%, respectively, compared to December 31, 2024. The Company discontinued enrolling new customers in the ISLP Plan, effective January 2026.

**Strategic Direction and Recent Developments**

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

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

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

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

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

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

------

[**Table of Contents**](#tableOfContents0)

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

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

***CRITICAL ACCOUNTING ESTIMATES***

Management has reviewed our financial policies and determined that there are no critical accounting estimates requiring disclosure. Our accounting policies do not require management to make difficult, subjective, or complex judgments about matters that are highly uncertain, and therefore, no significant estimates are deemed critical to the portrayal of our financial condition or results of operations. Note 1 (Summary of Significant Accounting Policies) to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.

***Results of Operations***

**2025 Compared to 2024**

**Operating Revenues**

Revenues totaled $112.9 million for the year ended December 31, 2025, an increase of $5.0 million, or 4.6%, over the revenues for the year ended December 31, 2024.

Water sales revenue increased $2.8 million, or 3.2%, for the year ended December 31, 2025 from the corresponding period in 2024, primarily the result of two temporary rate increases as permitted under Delaware law, until permanent rates are determined by the DEPSC, as well as an increase in the number of customers served and DSIC revenue. The first temporary rate increase of 2.88% was placed into effect on June 3, 2025 at which time the DSIC rate of 1.66% was set to zero. The second temporary rate increase of 6.82% was placed into effect on November 6, 2025. A portion of the revenue from the November 6, 2025 temporary rate increase was recorded as a reserve for refund and is not reflected in income. We realized 80.5% and 81.6% of our total operating revenue for the years ended December 31, 2025 and December 31, 2024, respectively, from the sale of water.

Other utility operating revenue increased approximately $1.5 million, or 11.2%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This increase is primarily due to an increase in wastewater revenue associated with customer growth.

Non-utility operating revenue increased approximately $0.7 million, or 10.2%, for the year ended December 31, 2025 compared to the same period in 2024, primarily due to an increase in SLP Plan revenue, primarily the result of an increase in rates that were placed into effect on December 1, 2024 and increase in the number of customers participating in the SLP Plans.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Operating Revenues** | | | | | | |
| *in thousands* | **2025** | **2025** | 2024 | 2024 | 2023 | 2023 |
| Water Sales  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Residential  | $**61821** | **54.8%** | $60390 | 55.9% | $55062 | 55.8% |
| &nbsp;&nbsp;&nbsp; Non-residential | **26461** | **23.4** | 25149 | 23.3 | 22773 | 23.0 |
| &nbsp;&nbsp;&nbsp; Resale | **2625** | **2.3** | 2540 | 2.4 | 2198 | 2.2 |
| Other utility operating revenues  | **14599** | **12.9** | 13129 | 12.2 | 12195 | 12.3 |
| Non-utility operating revenues  | **7435** | **6.6** | 6744 | 6.2 | 6633 | 6.7 |
| &nbsp;&nbsp;&nbsp; Total  | $**112941** | **100.0%** | $107952 | 100.0% | $98861 | 100.0% |

---

------

[**Table of Contents**](#tableOfContents0)

**Operating Expenses** 

Operating expenses, excluding depreciation and amortization and income taxes, increased $2.7 million, or 4.4%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Utility operating expenses increased $2.6 million, or 5.3%. The increase in utility operating expenses consists of a $0.9 million increase in payroll and employee benefit costs, a $0.8 million increase in administrative costs, a $0.4 million increase in purchased power costs, a $0.4 million increase in supply and treatment costs, and a $0.3 million increase in transmission, distribution and collection system costs. The increase in utility operating expenses is partially offset by a $0.1 million decrease in purchased water costs.

Property and other taxes increased $0.1 million, or 1.2%, primarily due to a reassessment and tax rate changes in New Castle County, Delaware partially offset by an increase in utility plant subject to taxation. Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, and hydrants.

---

| | | | |
|:---|:---|:---|:---|
| **Percentage of utility and non-utility operating expenses**  |  |  |  |
|  | **2025** | 2024 | 2023 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payroll and Associated Expenses  | **47.0%** | 47.7% | 49.5% |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Administrative  | **17.4** | 16.7 | 16.9 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Supply and Treatment  | **13.3** | 13.3 | 11.9 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchased Power  | **6.3** | 5.8 | 5.7 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Transmission, Distribution and Collection  | **5.3** | 5.1 | 4.6 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Purchased Water  | **2.4** | 2.8 | 2.7 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Non-utility Operating  | **8.3** | 8.6 | 8.7 |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total  | **100.0%** | 100.0% | 100.0% |

---

The ratio of operating expense, excluding depreciation and amortization and income taxes, to total revenue was 56.2% for the year ended December 31, 2025, compared to 56.4% for the year ended December 31, 2024.

Depreciation and amortization expense increased $0.2 million, or 1.3%, primarily due to additional depreciation from continued investment in utility plant related to providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers, partially offset by a decrease in depreciation expense related to an increase in utility plant funded by Contributions in Aid of Construction, or CIAC. Artesian Water offsets depreciation recorded on utility plant by depreciation on utility property funded by CIAC.

Federal and state income tax expense increased $0.5 million, or 7.1%, primarily due to higher pre-tax income, partially offset by higher regulatory deferred income tax amortization in 2025 compared to 2024.

**Other Income**

Other income increased $0.7 million, primarily due to an increase in allowance for funds used during construction, or AFUDC, as a result of higher long-term construction activity subject to AFUDC.

**Interest Charges**

Interest charges decreased $0.1 million, primarily due to a decrease in long-term debt interest related to lower borrowing levels.

**Net Income**

Our net income applicable to common stock increased $2.4 million, or 11.9%. Total revenue increased $5.0 million, other income increased $0.7 million, and interest charges decreased $0.1 million, offset by a $3.4 million increase in total operating expenses.

------

[**Table of Contents**](#tableOfContents0)

**Part I, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report on Form 10-K includes a comparative discussion of the years ended December 31, 2024 and 2023 and is incorporated herein by reference.&nbsp;&nbsp;&nbsp;&nbsp;**

***Liquidity and Capital Resources***

**Overview**

The Company's primary sources of liquidity for the year ended December 31, 2025 were $40.3 million of cash provided by operating activities and $26.1 million in net contributions and advances from developers. Funds from these liquidity sources were used to invest $58.8 million in capital expenditures and to pay dividends of approximately $12.7 million. We depend on the availability of capital for expansion, construction and maintenance. We rely on our sources of liquidity for investments in our utility plant and to meet our various payment obligations.

We expect that our net investments in utility plant in 2026 will be approximately $64.3 million. Our total obligations related to interest and principal payments on indebtedness, rental payments, elevated storage tank agreements and water service interconnection agreements for 2026 are anticipated to be approximately $17.9 million.

**Operating Activities**

One of our primary sources of liquidity for the year ended December 31, 2025 was $40.3 million provided by cash flow from operating activities, compared to $36.8 million for the year ended December 31, 2024. The increase in cash flows from operating activities is primarily due to changes in net income, accounts receivable, and accounts payable. Cash flows from operating activities is primarily provided by our utility operations and is impacted by the timeliness and adequacy of rate increases and changes in water consumption as a result of year-to-year variations in weather conditions, particularly during the summer. A significant part of our ability to maintain and meet our financial objectives is to ensure that our investments in utility plant and equipment are recovered in the rates charged to customers. As such, from time to time, we file rate increase requests to recover increases in operating expenses and investments in utility plant and equipment. See Note 13 – Regulatory Proceedings. We will continue to borrow on available lines of credit in order to satisfy current liquidity needs. In addition, the Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities.

**Investment Activities**

The primary focus of our investment in 2025 was to continue to provide high quality, reliable service to customers and to grow service territory. Capital expenditures during 2025 were $58.8 million compared to $45.9 million invested during the same period in 2024. During 2025, these investments include renewals associated with the rehabilitation of aging infrastructure, installation of new mains, construction of a new wastewater treatment plant, upgrading elevated storage tanks, upgrading and replacing our meter reading equipment, and upgrading existing pumping and treatment stations, including PFAS treatment upgrades, to better serve our customers.

The following chart summarizes our investment in plant and systems over the past three fiscal years as well as our projected capital expenditures for the year 2026.

---

| | | | | |
|:---|:---|:---|:---|:---|
| *In thousands* |  |  |  |  |
|  | Projected |  |  |  |
|  | 2026 | **2025** | 2024 | 2023 |
| Supply and treatment | $33000 | $**15802** | $12576 | $17454 |
| Transmission, distribution and collection | 45176 | **40592** | 32226 | 41389 |
| General plant  | 7350 | **4091** | 2275 | 4577 |
| AFUDC, equity portion | (971) | **(1640)** | (1135) | (1243) |
| &nbsp;&nbsp; Gross investment in plant | $84555 | $**58845** | $45942 | $62177 |
| Net contributions in aid of construction | (20274) | **(26087)** | (20436) | (22519) |
| &nbsp;&nbsp; Net investment in plant | $64281 | $**32758** | $25506 | $39658 |

---

Supply and treatment includes investments to construct, upgrade, and replace infrastructure for water and wastewater treatment plants, pump stations, disposal equipment and wells. Transmission, distribution and collection includes investments to extend new infrastructure, renew aging infrastructure, and increase storage capacity to deliver water to customers and collect wastewater as well as relocate infrastructure due to government mandates. General plant includes investments for transportation, construction, communications and lab testing equipment, as well as computer hardware and software and building renovations.

These investments are intended to improve efficiency, upgrade aging systems, accommodate growing populations, upgrade treatment capacity, apply advanced technologies, address environmental challenges and enhance resiliency. The actual amount and timing of our projected capital expenditures and other investments are subject to periodic review, and revision to reflect changes in economic conditions, project scheduling, continued refinement of project scope and costs and other factors. The Company believes the net investment in utility plant will continue to be recovered through rates charged to customers.

------

[**Table of Contents**](#tableOfContents0)

**Financing Activities**

For the year ended December 31, 2025, cash flows provided by financing activities were $17.3 million, compared to $7.1 million for the year ended December 31, 2024. Our primary source of liquidity from financing activities was $26.1 million in net contributions and advances from developers and $5.7 million in lines of credit borrowings. Cash flows provided by financing activities increased due to higher contributions in aid of construction and borrowings on lines of credit. We have several sources of liquidity to finance our investment in utility plant and other fixed assets. We estimate that future investments will be financed by our operations and external sources. We expect to fund our activities for the next twelve months using our projected cash generated from operations, bank credit lines, contributions from developers and settlement funds, government grants and capital market financing as needed to provide sufficient working capital to maintain normal operations, to meet our financing requirements and to expand through strategic acquisitions. We believe that our cash on hand and future cash generated from the foregoing activities will provide adequate resources to fund our short-term and long-term capital, operating and financing needs. However, there is no assurance that we will be able to secure funding on terms acceptable to us, or at all. Our cash flows from operations are primarily derived from water sales revenues and may be materially affected by changes in water sales due to weather and the timing and extent of increases in rates approved by state public service commissions.

***Material Cash Requirements***

*Lines of Credit and Long-Term Debt*

At December 31, 2025, Artesian Resources had a $40 million line of credit with Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources. As of December 31, 2025, there was $34.3 million of available funds under this line of credit. The interest rate is a one-month Daily Secured Overnight Financing Rate, or SOFR, plus 10 basis points, or Term SOFR, plus an applicable margin of 1.10%. Term SOFR cannot be less than 0.00%. This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time. The term of this line of credit expires on the earlier of May 18, 2026 or any date on which Citizens demands payment. The Company expects to renew this line of credit.

At December 31, 2025, Artesian Water had a $20 million line of credit with CoBank, ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland. As of December 31, 2025, there was $20.0 million of available funds under this line of credit. The interest rate for borrowings under this line is either a daily SOFR rate plus 1.45% option or a term SOFR rate plus 1.45% option that is locked in for either one or three months. The term of this line of credit expires on October 31, 2026. Artesian Water expects to renew this line of credit.

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Material Cash Requirements**  | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** | **Payments Due by Period** |
|  | Less than | 1-3 | 4-5 | After 5 |  |
| *In thousands*  | 1 Year | Years | Years | Years | Total |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First mortgage bonds (principal and interest)  | $7843 | $40610 | $12476 | $192089 | $253018 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; State revolving fund loans (principal and interest)  | 1065 | 2130 | 2130 | 8597 | 13922 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Promissory note (principal and interest)  | 962 | 1924 | 1927 | 7725 | 12538 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset purchase contractual obligation (principal and interest)  | 326 | 320 |  |  | 646 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lines of credit  | 5719 |  |  |  | 5719 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating leases  | 29 | 52 | 42 | 1337 | 1460 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating agreements  | 38 | 19 |  |  | 57 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unconditional purchase obligations  | 1031 | 114 | 114 | 198 | 1457 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tank painting contractual obligation  | 849 | 1273 |  |  | 2122 |
| &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total contractual cash obligations  | $17862 | $46442 | $16689 | $209946 | $290939 |

---

Artesian's long-term debt agreements and revolving lines of credit contain customary affirmative and negative covenants that are binding on us (which are in some cases subject to certain exceptions), including, but not limited to, restrictions on our ability to make certain loans and investments, guarantee certain obligations, enter into, or undertake, certain mergers, consolidations or acquisitions, transfer certain assets or change our business. As of December 31, 2025, we were in compliance with these covenants.

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

------

[**Table of Contents**](#tableOfContents0)

On March 13, 2026, Artesian Water Maryland and CoBank entered into a Master Loan Agreement, or the MLA, and supplement to the MLA, in which CoBank will make a single loan to Artesian Water Maryland in a principal amount not to exceed $10 million. Artesian Water Maryland agrees to pay interest on the unpaid principal balance of the loans at 6.14% per annum. Interest shall be calculated and paid quarterly in arrears on the thirtieth (30th) day of each of March, June, September and December. Artesian Water Maryland agrees to repay the loan in eighty consecutive quarterly installments, each due on the thirtieth (30th) day of each March, June, September, and December, with the first installment due on June 30, 2026, and the last installment due on March 13, 2046. The amount of each installment shall be the same principal amount that would be required to be repaid if the loan was scheduled to be repaid in level installments of principal and interest and such schedule was calculated utilizing 6.14% as the rate accruing on the loan; provided, however, that the last installment of the loan shall be in an amount equal to the then unpaid principal balance of the loan. Closing on the debt financing was approved by the Maryland Public Service Commission on March 2, 2026. The foregoing summary is qualified in its entirety by reference to the text of the MLA and the Supplement and the Guarantee of Payment, copies of which are filed as Exhibit 4.26 and Exhibit 4.27, respectively, hereto and are incorporated by reference.

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

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

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

In order to control purchased power costs and avoid fluctuations in electricity rates that happen due to the change of seasons, energy supply changes, or other outside factors, we utilize contracts with electric suppliers that provide a fixed rate. In April 2025, Artesian entered into an electric supply contract with Constellation NewEnergy, Inc. that is effective from May 2025 to May 2029 for Delaware operations. The supply rate was increased approximately 25% starting in May 2025. The total estimated annual increase in electric supply expense beginning in May 2025 is approximately $0.5 million. In April 2025, Artesian Water Maryland entered into an electric supply agreement with WGL Energy that is effective from November 2025 through November 2029 for Maryland operations. The fixed rate was increased 5.5% starting in November 2025. These fixed rate electric supply contracts are for normal purchases and are not derivative instruments.

***IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS***

See Note 17 (Impact of Recent Accounting Pronouncements) to our Consolidated Financial Statements for a full description of the impact of recent accounting pronouncements.

**ITEM 7A.**

**QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

The Company's business operations give rise to market risk exposure due to changes in interest rates and commodity prices. To manage such risks effectively, the Chief Financial Officer, with support from the Executive Officers, Audit Committee and Board of Directors, evaluates strategies to mitigate these risks by limiting variable rate exposure and by monitoring the effects of market changes in interest rates. The Company's financial risk management evaluations are designed to protect against risk arising from extreme adverse market movements on our key exposures.

The Company is subject to the risk of fluctuating interest rates in the normal course of business. Our policy is to manage interest rates through the use of fixed rate long-term debt and, to a lesser extent, short-term debt. The Company's exposure to interest rate risk related to existing fixed rate, long-term debt is due to the term of the majority of our First Mortgage Bonds and the term of the promissory note, which have final maturity dates ranging from 2028 to 2049, and interest rates ranging from 4.24% to 5.96%, which exposes the Company to interest rate risk as interest rates may drop below the existing fixed rate of the long-term debt prior to such debt's maturity. In addition, the Company has interest rate exposure on $60 million of variable rate lines of credit with two banks. As of December 31, 2025, there was approximately $5.7 million outstanding on the lines of credit. Increases in variable interest rates result in an increase in the cost of borrowing on these variable rate lines of credit. We are also exposed to market risk associated with changes in commodity prices. Our risks associated with price increases in chemicals, electricity and other commodities are mitigated by our ability to recover our costs through rate increases to our customers. We have also sought to mitigate future significant electric price increases by signing multi-year supply contracts at fixed prices.

------

[**Table of Contents**](#tableOfContents0)

 **ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

**CONSOLIDATED BALANCE SHEETS**

*In thousands*

---

| | | |
|:---|:---|:---|
| **<u>ASSETS</u>** | December 31, 2025 | December 31, 2024 |
| Utility plant, at original cost less accumulated depreciation | $801694 | $747186 |
| Current assets |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | 52 | 1147 |
| &nbsp;&nbsp;Accounts and other receivables (less provision for expected credit loss 2025 - $340; 2024 - $343) | 9489 | 11339 |
| &nbsp;&nbsp;Income tax receivable | 769 | 624 |
| &nbsp;&nbsp;Unbilled operating revenues | 1910 | 1861 |
| &nbsp;&nbsp;Materials and supplies | 3716 | 4278 |
| &nbsp;&nbsp;Prepaid property taxes | 1808 | 2188 |
| &nbsp;&nbsp;Prepaid expenses and other | 3673 | 3091 |
| Total current assets | 21417 | 24528 |
| Other assets |  |  |
| &nbsp;&nbsp;Non-utility property (less accumulated depreciation 2025-$1,146; 2024-$1,116) | 3541 | 3603 |
| &nbsp;&nbsp;Other deferred assets | 9571 | 6525 |
| &nbsp;&nbsp;Goodwill | 1939 | 1939 |
| &nbsp;&nbsp;Operating lease right of use assets | 414 | 414 |
| Total other assets | 15465 | 12481 |
| Regulatory assets, net | 12653 | 14428 |
| Total Assets | $851229 | $798623 |
| **<u>LIABILITIES AND STOCKHOLDERS' EQUITY</u>** |  |  |
| Stockholders' equity |  |  |
| &nbsp;&nbsp;Common stock | $10316 | $10300 |
| &nbsp;&nbsp;Preferred stock |  |  |
| &nbsp;&nbsp;Additional paid-in capital | 144492 | 143920 |
| &nbsp;&nbsp;Retained earnings | 95114 | 84969 |
| Total stockholders' equity | 249922 | 239189 |
| Long-term debt, net of current portion | 174276 | 176509 |
|  | 424198 | 415698 |
| Current liabilities |  |  |
| &nbsp;&nbsp;Lines of credit | 5719 |  |
| &nbsp;&nbsp;Current portion of long-term debt | 2132 | 2167 |
| &nbsp;&nbsp;Accounts payable | 14018 | 11228 |
| &nbsp;&nbsp;Accrued expenses | 4601 | 5336 |
| &nbsp;&nbsp;Overdraft payable | 103 | 31 |
| &nbsp;&nbsp;Accrued interest | 916 | 930 |
| &nbsp;&nbsp;Income taxes payable | 389 | 500 |
| &nbsp;&nbsp;Customer and other deposits | 3474 | 3347 |
| &nbsp;&nbsp;Other | 2370 | 2054 |
| Total current liabilities | $33722 | $25593 |
| Commitments and contingencies (Note 11) |  |  |
| Deferred credits and other liabilities |  |  |
| &nbsp;&nbsp;Net advances for construction | $374 | $1582 |
| &nbsp;&nbsp;Operating lease liabilities | 407 | 404 |
| &nbsp;&nbsp;Regulatory liabilities | 26301 | 30267 |
| &nbsp;&nbsp;Deferred investment tax credits | 395 | 409 |
| &nbsp;&nbsp;Deferred income taxes | 54756 | 52265 |
| Total deferred credits and other liabilities | $82233 | $84927 |
| Net contributions in aid of construction | 311076 | 272405 |
| Total Liabilities and Stockholders' Equity | $851229 | $798623 |

---

*The notes are an integral part of the consolidated financial statements*.

------

[**Table of Contents**](#tableOfContents0)

**CONSOLIDATED STATEMENTS OF OPERATIONS**

*In thousands, except per share amounts*

---

| | | | |
|:---|:---|:---|:---|
|  | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, |
|  | 2025 | 2024 | 2023 |
| Operating revenues |  |  |  |
| &nbsp;&nbsp;Water sales | $90907 | $88079 | $80033 |
| &nbsp;&nbsp;Other utility operating revenue | 14599 | 13129 | 12195 |
| &nbsp;&nbsp;Non-utility operating revenue | 7435 | 6744 | 6633 |
| Total Operating Revenues | 112941 | 107952 | 98861 |
| Operating expenses |  |  |  |
| &nbsp;&nbsp;Utility operating expenses | 52411 | 49796 | 46205 |
| &nbsp;&nbsp;Non-utility operating expenses | 4715 | 4743 | 4428 |
| &nbsp;&nbsp;Depreciation and amortization | 13806 | 13629 | 13335 |
| &nbsp;&nbsp;Taxes |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;State and federal income tax expense |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current | 6638 | 6737 | 2962 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred | 1193 | 578 | 3386 |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and other taxes | 6396 | 6318 | 6099 |
| Total Operating Expenses | 85159 | 81801 | 76415 |
| Operating income | 27782 | 26151 | 22446 |
| Other income, net |  |  |  |
| &nbsp;&nbsp;Allowance for funds used during construction (AFUDC) | 2379 | 1643 | 2002 |
| &nbsp;&nbsp;Miscellaneous | 1347 | 1379 | 1407 |
| Total Other Income, net | 3726 | 3022 | 3409 |
| Income before interest charges | 31508 | 29173 | 25855 |
| Interest charges | 8686 | 8779 | 9156 |
| **Net income applicable to common stock** | $22822 | $20394 | $16699 |
| Net Income per common share: |  |  |  |
| &nbsp;&nbsp;Basic | $2.21 | $1.98 | $1.67 |
| &nbsp;&nbsp;Diluted | $2.21 | $1.98 | $1.67 |
| Weighted average common shares outstanding: |  |  |  |
| &nbsp;&nbsp;Basic | 10309 | 10294 | 10018 |
| &nbsp;&nbsp;Diluted | 10312 | 10296 | 10022 |
| Cash dividends per share of common stock | $1.23 | $1.18 | $1.14 |

---

*The notes are an integral part of the consolidated financial statements.*

------

[**Table of Contents**](#tableOfContents0)

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

*In thousands*

---

| | | | |
|:---|:---|:---|:---|
|  | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, |
|  | 2025 | 2024 | 2023 |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |  |
| Net income | $22822 | $20394 | $16699 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |  |
| &nbsp;&nbsp;Depreciation and amortization | 13806 | 13629 | 13335 |
| &nbsp;&nbsp;Amortization of debt expense | 352 | 353 | 355 |
| &nbsp;&nbsp;Amortization of deferred income tax regulatory liability | (1299) | (916) | (444) |
| &nbsp;&nbsp;Provision for expected credit loss | 140 | 233 | 92 |
| &nbsp;&nbsp;Deferred income taxes, net | 2477 | 1480 | 3813 |
| &nbsp;&nbsp;Stock compensation expense | 246 | 219 | 254 |
| &nbsp;&nbsp;AFUDC, equity portion | (1640) | (1135) | (1243) |
| Changes in assets and liabilities, net of acquisitions: |  |  |  |
| &nbsp;&nbsp;Accounts and other receivables | 5026 | (257) | 807 |
| &nbsp;&nbsp;Income tax receivable | (145) | 1175 | (167) |
| &nbsp;&nbsp;Unbilled operating revenues | (49) | 73 | (348) |
| &nbsp;&nbsp;Materials and supplies | 562 | 1705 | (1281) |
| &nbsp;&nbsp;Income taxes payable | (111) | 498 | (4) |
| &nbsp;&nbsp;Prepaid property taxes | 380 | 81 | (83) |
| &nbsp;&nbsp;Prepaid expenses and other | (582) | 206 | (419) |
| &nbsp;&nbsp;Other deferred assets | (485) | 1945 | 1998 |
| &nbsp;&nbsp;Regulatory assets | 152 | (206) | (497) |
| &nbsp;&nbsp;Regulatory liabilities | (2918) | (2800) | (2724) |
| &nbsp;&nbsp;Accounts payable | 1748 | 305 | 284 |
| &nbsp;&nbsp;Accrued expenses | (686) | 552 | 614 |
| &nbsp;&nbsp;Accrued interest | (14) | (1345) | 1286 |
| &nbsp;&nbsp;Customer deposits and other, net | 564 | 634 | (476) |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 40346 | 36823 | 31851 |
| **CASH FLOWS USED IN INVESTING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;Capital expenditures (net of AFUDC, equity portion) | (58845) | (45942) | (62177) |
| &nbsp;&nbsp;Proceeds from sale of assets | 129 | 623 | 99 |
| NET CASH USED IN INVESTING ACTIVITIES | (58716) | (45319) | (62078) |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;Repayments under lines of credit agreements | (2343) |  | (23477) |
| &nbsp;&nbsp;Borrowings under lines of credit agreements | 8062 |  | 3303 |
| &nbsp;&nbsp;Increase (decrease) in overdraft payable | 72 | 22 | (34) |
| &nbsp;&nbsp;Proceeds from contributions in aid of construction and advances | 30206 | 23983 | 24747 |
| &nbsp;&nbsp;Payouts for contributions in aid of construction and advances | (4119) | (3547) | (2228) |
| &nbsp;&nbsp;Net proceeds from issuance of common stock | 342 | 347 | 37073 |
| &nbsp;&nbsp;Equity issuance cost |  |  | (317) |
| &nbsp;&nbsp; Issuance of long-term debt |  | 758 | 5608 |
| &nbsp;&nbsp;Dividends paid | (12677) | (12168) | (11242) |
| &nbsp;&nbsp;Debt issuance costs |  |  |  |
| &nbsp;&nbsp;Principal repayments of long-term debt | (2268) | (2257) | (2010) |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 17275 | 7138 | 31423 |
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1095) | (1358) | 1196 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 1147 | 2505 | 1309 |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | $52 | $1147 | $2505 |
| Non-cash Investing and Financing Activity: |  |  |  |
| &nbsp;&nbsp;Utility plant received as construction advances and contributions | $10618 | $8718 | $3492 |
| &nbsp;&nbsp;Contractual amounts of contributions in aid of construction due from developers included in accounts receivable and class action settlement funds included in other deferred assets (See Note 15 - Legal Proceedings) | $6577 | $641 | $1695 |
| &nbsp;&nbsp;Change in amounts included in accounts payable and accrued payables related to capital expenditures | $875 | $2577 | $(3384) |
| Supplemental Cash Flow Information: |  |  |  |
| &nbsp;&nbsp;Interest paid | $8348 | $9771 | $7515 |
| &nbsp;&nbsp;Income taxes paid | $7066 | $5732 | $3590 |
| &nbsp;&nbsp;Income taxes refunded | $162 | $701 | $- |

---

*The notes are an integral part of the consolidated financial statements*.

------

[**Table of Contents**](#tableOfContents0)

**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

*In thousands*

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Common Shares Outstanding | Common Shares Outstanding | $1 Par Value | $1 Par Value |  |  |  |
|  | Class A Non-Voting (1) (3) (4) | Class B Voting (2) | Class A Non-Voting | Class B Voting | Additional Paid-in Capital | Retained Earnings | Total |
| Balance as of December 31, 2022 | $8621 | 881 | $8621 | $881 | $107142 | $71286 | $187930 |
| Net income |  |  |  |  |  | 16699 | 16699 |
| Cash dividends declared |  |  |  |  |  |  |  |
| Common stock |  |  |  |  |  | (11242) | (11242) |
| Issuance of common stock |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Public offering, net of costs | 763 |  | 763 |  | 35464 |  | 36227 |
| &nbsp;&nbsp;Dividend reinvestment plan | 8 |  | 8 |  | 373 |  | 381 |
| &nbsp;&nbsp;Employee stock options and awards<sup>(4)</sup> | 12 |  | 12 |  | 390 |  | 402 |
| &nbsp;&nbsp;Employee Retirement Plan<sup>(3)</sup> |  |  |  |  |  |  |  |
| Balance as of December 31, 2023 | $9404 | 881 | $9404 | $881 | $143369 | $76743 | $230397 |
| Net income |  |  |  |  |  | 20394 | 20394 |
| Cash dividends declared |  |  |  |  |  |  |  |
| Common stock |  |  |  |  |  | (12168) | (12168) |
| Issuance of common stock |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Public offering, net of costs |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Dividend reinvestment plan | 10 |  | 10 |  | 337 |  | 347 |
| &nbsp;&nbsp;Employee stock options and awards<sup>(4)</sup> | 5 |  | 5 |  | 214 |  | 219 |
| &nbsp;&nbsp;Employee Retirement Plan<sup>(3)</sup> |  |  |  |  |  |  |  |
| Balance as of December 31, 2024 | $9419 | 881 | $9419 | $881 | $143920 | $84969 | $239189 |
| Net income |  |  |  |  |  | 22822 | 22822 |
| Cash dividends declared |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Common stock |  |  |  |  |  | (12677) | (12677) |
| Issuance of common stock |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Dividend reinvestment plan | 11 |  | 11 |  | 331 |  | 342 |
| &nbsp;&nbsp;Employee stock options and awards<sup>(4)</sup> | 5 |  | 5 |  | 241 |  | 246 |
| &nbsp;&nbsp;Employee Retirement Plan<sup>(3)</sup> |  |  |  |  |  |  |  |
| Balance as of December 31, 2025 | $9435 | 881 | $9435 | $881 | $144492 | $95114 | $249922 |

---

*(1) At December 31, 2025, 2024, and 2023, Class A Stock had 15,000,000 shares authorized. For the same periods, shares issued, inclusive of 28,970 treasury shares, were 9,434,370, 9,447,848 and 9,433,288, respectively.*

*(2) At December 31, 2025, 2024, and 2023, Class B Stock had 1,040,000 shares authorized and 881,452 shares issued.*

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

*(4) Under the 2015 Equity Compensation Plan, effective December 9, 2015, and the 2025 Equity Compensation Plan, effective October 31, 2025, Artesian Resources Corporation authorized up to *331,500 shares and 263,932, respectively,* of Class A Stock for issuance of grants in forms of stock options, stock units, dividend equivalents and other stock-based awards, subject to adjustment in certain circumstances as discussed in the Plan. *The 2025 Equity Compensation Plan replaces the 2015 Equity Compensation Plan, outstanding grants under the 2015 Equity Compensation Plan shall continue in effect according to their terms, consistent with the 2015 Equity Compensation Plan.* Includes stock compensation expense for the years ended December 31, 2025, 2024, and 2023. See Notes to Consolidated Financial Statements - Note 9 - Stock Compensation Plans.*

*The notes are an integral part of the consolidated financial statements.*

------

[**Table of Contents**](#tableOfContents0)

**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

*Basis of Presentation*

The audited consolidated financial statements are presented in accordance with the requirements of Form 10-K and accounting principles generally accepted in the United States and consequently include all the disclosures required in the consolidated financial statements included in the Company's Annual Report on Form 10-K. The accompanying consolidated financial statements include the accounts of Artesian Resources Corporation and its subsidiaries and all intercompany balances and transactions between subsidiaries have been eliminated.

*Reclassification*

Certain accounts in the prior year financial statements have been reclassified for comparative purposes to conform with the presentation in the current year financial statements. These reclassifications had no effect on net income or stockholders' equity.

*Regulated Utility Accounting*

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

*Use of Estimates in the Preparation of Consolidated Financial Statements*

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

*Utility Plant*

All additions to utility plant are recorded at cost. Business combinations pursuant to ASC 805, Business Combinations, may result in a purchase price allocation and the acquired assets are required to be evaluated by the applicable regulatory agency.

Cost includes direct labor, materials, AFUDC (see description below) and indirect charges for such capitalized items as transportation, supervision, pension, medical, and other fringe benefits related to employees engaged in construction activities. When depreciable units of utility plant are retired, the historical costs of plant retired is charged to accumulated depreciation. Any cost associated with retirement, less any salvage value or proceeds received, is charged to the regulated retirement liability. Maintenance, repairs, and replacement of minor items of utility plant are charged to expense as incurred.

Allowance for Funds Used during Construction, or AFUDC, is a non-cash credit to income with a corresponding charge to utility plant that represents the cost of borrowed funds or a return on equity funds devoted to plant under construction. Presented in the table below is AFUDC for the years ended December 31:

*In thousands*

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
| AFUDC - Debt | $739 | $509 | $759 |
| AFUDC - Equity | $1640 | $1135 | $1243 |

---

------

[**Table of Contents**](#tableOfContents0)

**Utility plant comprises:**

*In thousands*

---

| | | | |
|:---|:---|:---|:---|
|  | Estimated |  |  |
|  | Useful Life |  |  |
|  | (In Years) |  |  |
|  | Effective |  |  |
|  | June 12, 2024 | December 31, 2025 | December 31, 2024 |
| Utility plant at original cost |  |  |  |
| &nbsp;&nbsp;Utility plant in service-Water |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible plant |  | $140 | $140 |
| &nbsp;&nbsp;&nbsp;&nbsp;Source of supply plant | 45-85 | 33507 | 30320 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pumping and water treatment plant | 15-64 | 137543 | 130226 |
| &nbsp;&nbsp;&nbsp;&nbsp;Transmission and distribution plant |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mains | 73-81 | 416690 | 390741 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Services | 39-58 | 67999 | 63613 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Storage tanks | 70-76 | 42995 | 39760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Meters | 16-26 | 28921 | 30223 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hydrants | 60-68 | 21738 | 20158 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General plant | 5-81 | 61191 | 59634 |
| &nbsp;&nbsp;Utility plant in service-Wastewater |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible plant |  | 116 | 116 |
| &nbsp;&nbsp;&nbsp;&nbsp;Treatment and disposal plant | 20-81 | 76509 | 71332 |
| &nbsp;&nbsp;&nbsp;&nbsp;Collection mains and lift stations | 70-81 | 62909 | 57084 |
| &nbsp;&nbsp;&nbsp;&nbsp;General plant | 5-31 | 3041 | 2632 |
| Property held for future use |  | 4805 | 3742 |
| Construction work in progress |  | 45667 | 39718 |
|  |  | 1003771 | 939439 |
| Less – accumulated depreciation |  | 202077 | 192253 |
|  |  | $801694 | $747186 |

---

*Depreciation and Amortization*

For financial reporting purposes, depreciation is recorded using the straight-line method at rates based on estimated economic useful lives, which range from 5 to 85 years. Composite depreciation rates for water utility plant were 1.91%, 1.93% and 2.13% for 2025, 2024 and 2023, respectively. In a rate order issued by the DEPSC, the Company was directed, effective June 12, 2024, to begin using revised depreciation rates for utility plant in Artesian Water, which are based on the estimated useful life years noted in the table above. Artesian Water offsets depreciation recorded on utility plant by depreciation on utility property funded by Contributions in Aid of Construction, or CIAC, and Advances for Construction, or Advances. This reduction in depreciation expense is also netted against outstanding CIAC and Advances on the Consolidated Balance Sheet. Regulatory assets are amortized using the straight-line method over future periods, which range from 5 to 80 years.

*Regulatory Assets*

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

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

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

------

[**Table of Contents**](#tableOfContents0)

Affiliated interest agreement deferred costs relate to the regulatory and administrative costs resulting from efforts necessary to secure water allocations in Artesian Water Pennsylvania's territory for the provision of service to the surrounding area and interconnection to Artesian Water Pennsylvania's affiliate regulated water utility Artesian Water. These costs were specifically included for cost recovery pursuant to an Affiliated Interest Agreement between Artesian Water and Artesian Water Pennsylvania and were approved for recovery by the PAPUC and were reclassified from deferred costs to a regulatory asset in 2022. Amortization of these deferred costs began in the fourth quarter of 2023.

Deferred acquisition adjustments represent the excess payment for purchases of utility plant from Delaware municipalities over the determined original cost net of depreciation. Deferred acquisition costs represent the closing cost associated with the acquisitions. Costs of $3.7 million were reclassified from net utility plant and $0.1 million were reclassified from contributions in aid of construction, which are being amortized over the periods noted in the table below and recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023.

Unrecovered reserve for depreciation of $4.3 million is the result of the implementation of a change in depreciation methods for certain general plant assets that are being amortized over five years and recovered in customer rates effective June 12, 2024 as part of the DEPSC approved settlement agreement for the Artesian Water rate application filed on April 28, 2023. Amortization of these deferred costs began in the third quarter of 2024.

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

---

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

---

#### Regulatory assets, net of amortization, comprise:
*(in thousands)*

---

| | | |
|:---|:---|:---|
|  | December 31, 2025 | December 31, 2024 |
| Deferred contract costs and other | $109 | $271 |
| Rate case studies | 105 | 141 |
| Delaware rate proceedings | 312 | 474 |
| Deferred income taxes | 403 | 423 |
| Debt related costs | 3617 | 3969 |
| Deferred costs affiliated interest agreement | 998 | 1054 |
| Goodwill | 243 | 251 |
| Deferred acquisition and franchise costs - Maryland | 352 | 389 |
| Deferred acquisition costs – Delaware | 219 | 231 |
| Deferred acquisition adjustments – Delaware | 3288 | 3359 |
| Unrecovered reserve for depreciation | 3007 | 3866 |
|  | $12653 | $14428 |

---

*Impairment or Disposal of Long-Lived Assets*

Our long-lived assets consist primarily of utility plant in service and regulatory assets. A review of our long-lived assets is performed in accordance with the requirements of FASB ASC Topic 360. In addition, the regulatory assets are reviewed for the continued application of FASB ASC Topic 980. The review determines whether there have been changes in circumstances or events that have occurred requiring adjustments to the carrying value of these assets. FASB ASC Topic 980 stipulates that adjustments to the carrying value of these assets would be made in instances where the inclusion in the rate-making process is unlikely. For the years ended December 31, 2025, 2024 and 2023, there was no impairment or regulatory disallowance identified in our review.

------

[**Table of Contents**](#tableOfContents0)

*Goodwill*

The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired. At December 31, 2025 and December 31, 2024, the Company had approximately $1.9 million of goodwill, respectively. The $1.9 million of goodwill arose from the January 2022 acquisition of Tidewater Environmental Services, Inc. Artesian Wastewater operates as the parent holding company of Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI, and is a subsidiary of our Regulated Utility segment. In accordance with the accounting guidance for testing goodwill for impairment, the Company performs an annual assessment. In 2025 and 2024, the Company used the optional qualitative assessment, "step zero", to identify and evaluate relevant events and circumstances to conclude whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. Relevant events and circumstances assessed included macroeconomic conditions, industry and market conditions, cost factors, financial performance, management and overall strategy. After evaluating and weighing these relevant events and circumstances, it was concluded that there was no impairment of goodwill and it was not necessary to perform quantitative testing.

*Other Deferred Assets*

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

**Other deferred assets at December 31, net of amortization, comprise:**

---

| | | |
|:---|:---|:---|
| *In thousands* | 2025 | 2024 |
| Investment in CoBank | $6889.0 | $6425 |
| Settlement receivable-long term | 2596.0 |  |
| Other deferred assets | 86.0 | 100 |
|  | $9571.0 | $6525 |

---

*Advances for Construction*

Cash advances to reimburse Artesian Water for its costs to construct water mains, services and hydrants are contributed to Artesian Water by real estate developers and builders in order to extend water service to their properties. The value of these contributions is recorded as Advances for Construction. Artesian Water makes refunds on these advances over a specific period of time based on operating revenues generated by the specific plant or as new customers are connected to the mains. After all refunds are made within the contract period, any remaining balance is transferred to CIAC.

*Contributions in Aid of Construction*

CIAC includes the non-refundable portion of advances for construction and direct contributions of water mains, services and hydrants, and wastewater treatment facilities and collection systems, or cash to reimburse our water and wastewater subsidiaries for costs to construct water mains, services and hydrants, and wastewater treatment and disposal plants. Effective with the Tax Cuts and Jobs Act, or TCJA, in 2017 CIAC was taxable and the DEPSC, MDPSC and PAPUC allowed the Company to collect additional CIAC to pay the associated tax. In 2021, legislation was enacted to amend the TCJA, which now exempts CIAC from income taxes for regulated water and wastewater utilities, effective for all of 2021 and forward.

***The DEPSC approved part of the settlement funds pursuant to the settlement agreements as discussed in Note 15 - Legal Proceedings to be included in CIAC. As of December 31, 2025, approximately $1.5 million of settlement funds received and approximately $5.1 million of additional settlement funds to be received over the next eight years are included in CIAC.***

*Regulatory Liabilities*

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

------

[**Table of Contents**](#tableOfContents0)

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

Deferred settlement refunds consisted of reimbursements from the Delaware Sand and Gravel Remedial Trust, or Trust, for Artesian Water's past capital and operating costs, totaling approximately $10.0 million, related to the treatment costs associated with the release of contaminants from the Site in groundwater that Artesian Water uses for public potable water supply, pursuant to the Settlement Agreement. The full amount of $10.0 million has been paid to us, in four installments of approximately $2.5 million each, in August 2022, July 2023, July 2024 and July 2025. Artesian Water received approval from the DEPSC in October 2022 to refund to its customers these reimbursements for past capital and operating costs. The refund for the reimbursements was applied to customer bills in annual installments. The refunds occurred in October 2022, August 2023, August 2024 and August 2025. The amount of the credit was calculated by dividing the amount of the reimbursement by the number of eligible customers. Beginning in 2022, Artesian Water began recording recovery of capital expenditures related to treatment of contaminants from the Site as Contributions in Aid of Construction and began recording expense recovery as an offset to operations and maintenance expense, with the intention that those recoveries will be available for inclusion and consideration in any future rate applications.

Deferred income taxes primarily represent tax benefits that will be returned to regulated utility customers through an approved rate making process, as described below. These tax benefits resulted from the TCJA. The TCJA required the Company to remeasure its deferred income tax balances to reflect the reduction in the corporate income tax rate from 34% to 21%. This remeasurement adjustment made to deferred income taxes was substantially offset by the recognition of a regulatory liability for excess accumulated deferred income taxes, or EADIT, and reflects the benefits customers will receive in future approved rates. Pursuant to a DEPSC rate order, Artesian Water is amortizing $25 million of the EADIT balance. The DEPSC has not issued a final order on the TCJA regulatory liability amount of $0.6 million for wastewater customers and the MDPSC has not issued a final order on the TCJA regulatory liability amount of $0.6 million for Maryland customers.

#### Regulatory liabilities comprise:

---

| | | |
|:---|:---|:---|
|  | *(in thousands)* | *(in thousands)* |
|  | **December 31, 2025** | December 31, 2024 |
| Utility plant retirement cost obligation | $**107** | $279 |
| Deferred settlement refunds |  | 2496 |
| Deferred income taxes (related to TCJA) | **26194** | 27492 |
|  | $**26301** | $30267 |

---

*Income Taxes*

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

Under FASB ASC Topic 740, an uncertain tax position represents our expected treatment of a tax position taken, or planned to be taken in the future, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company establishes reserves for uncertain tax positions based upon management's judgment as to the sustainability of these positions. These accounting estimates related to the uncertain tax position reserve require judgments to be made as to the sustainability of each uncertain tax position based on its technical merits. The Company believes its tax positions comply with applicable law and that it has adequately recorded reserves as required. However, to the extent the final tax outcome of these matters is different than the estimates recorded, the Company would then adjust its tax reserves or unrecognized tax benefits in the period that this information becomes known. The Company has elected to recognize accrued interest (net of related tax benefits) and penalties related to uncertain tax positions as a component of its income tax expense. For the full year 2024, the Company accrued approximately $17 thousand in penalties and interest related to positions taken on the 2022 corporate income tax return. For the full year 2025, the Company has accrued approximately $22 thousand in penalties and interest related to positions taken on the 2022 and 2024 corporate income tax return. The Company remains subject to examination by federal and state authorities for the tax years 2022 through 2024.

------

[**Table of Contents**](#tableOfContents0)

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

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

*Stock Compensation Plans*

See Note 9 (Stock Compensation Plans) to our Consolidated Financial Statements for a full description of our stock compensation plans.

*Revenue Recognition and Unbilled Revenues*

See Note 2 (Revenue Recognition) to our Consolidated Financial Statements for a full description of our revenue recognition.

*Leases*

The Company has agreements for land easements and office equipment under operating leases. Management makes certain estimates and assumptions regarding each lease agreement, renewal and amendment, including, but not limited to, discount rates and probable term, which can impact the escalations in payment that are taken into consideration when calculating the straight-line basis. The amount of rent expense and income reported could vary if different estimates and assumptions are used. Management also makes certain estimates and assumptions regarding the fair value of the leased property at lease commencement and the separation of lease and nonlease components. See Note 3 (Leases) to our Consolidated Financial Statements for a full description of our leases.

*Accounts Receivable*

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

A provision for expected credit loss is calculated as a percentage of total associated revenues based upon historical trends and adjusted for current and reasonable projections based upon expected economic conditions. We mitigate our exposure to credit losses by discontinuing services in the event of non-payment; accordingly, the related provision for expected credit loss and associated bad debt expense has not been significant. The provision for expected credit loss was $0.3 million and $0.3 million at December 31, 2025 and December 31, 2024, respectively. The corresponding expense for the years ended December 31, 2025 and 2024 was $0.2 million and $0.2 million, respectively, reported in Operating expenses – Utility and Non-utility operating expenses on the Company's Consolidated Statements of Operations. The following table summarizes the changes in the Company's accounts receivable balance. The reduction in the water customer accounts receivable balance as of December 31, 2025 is the result of a one time bill credit that was applied to Artesian Water's customer bills in December 2025 related to MDL settlement funds received as further discussed in Note 15 - Legal Proceedings.

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, | December 31, | December 31, |
| *In thousands* | **2025** | 2024 | 2023 |
| Customer accounts receivable – water | $**4366** | $6824 | $6573 |
| Customer accounts receivable – wastewater | **706** | 928 | 869 |
| Customer accounts receivable – SLP Plan | **371** | 470 | 409 |
| Settlement agreement receivable – short term | **2023** | 2523 | 2747 |
| Developer receivable | **2249** | 837 | 2089 |
| Miscellaneous accounts receivable | **114** | 100 | 471 |
|  | **9829** | 11682 | 13158 |
| Less provision for expected credit loss | **340** | 343 | 328 |
| Net accounts receivable | $**9489** | $11339 | $12830 |

---

------

[**Table of Contents**](#tableOfContents0)

The activities in the provision for expected credit loss are as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
| *In thousands* | **2025** | 2024 |
| Beginning balance | $**343** | $328 |
| &nbsp;&nbsp;Provision adjustments | **140** | 204 |
| &nbsp;&nbsp;Recoveries | **26** | 29 |
| &nbsp;&nbsp;Write off of uncollectible accounts | **(169**) | (218) |
| Ending balance | $**340** | $343 |

---

*Cash and Cash Equivalents*

For purposes of the Consolidated Statement of Cash Flows, Artesian Resources considers all temporary cash investments with an original maturity of three months or less to be cash equivalents. The Company utilizes its bank's zero balance account disbursement service to reduce the use of their lines of credit by funding checks as they are presented to the bank for payment rather than at issuance. If the checks currently outstanding, but not yet funded, exceed the cash balance on our books, the net liability is recorded as a current liability on the Consolidated Balance Sheet in the Overdraft Payable account.

*Inventories*

Inventories consist of materials and supplies related to water and wastewater utility plant. These materials and supplies are used for new construction and repairs and are recorded at the purchase cost. Usage costs are determined by the first-in, first-out method. The Company adjusts inventory value based on historical usage and forecasted demand.

**NOTE 2 – REVENUE RECOGNITION**

*Background* 

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

*Tariff Contract Revenues*

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

------

[**Table of Contents**](#tableOfContents0)

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

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

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

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

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

Artesian generates revenue from interim temporary rates. In Delaware, utilities are permitted by law to place rates into effect, under bond, on a temporary basis, pending resolution of an application for a base rate increase by the DEPSC. Temporary rate revenue is calculated as a percentage increase on tariff rates. We recognize this revenue based on the same guidelines as noted above depending on whether the additional rate was applied to consumption revenue or fixed-fee revenue. Until final rates are determined by the DEPSC, if it is probable that a refund of revenue associated with temporary rates will occur, a reserve would be recorded reducing revenue from temporary rates. The DEPSC approved and Artesian Water implemented temporary rate increases effective June 3, 2025 and November 6, 2025. As of December 31, 2025, a portion of the revenue from the November 6, 2025 temporary rate increase was recorded as a reserve for refund and is not reflected in revenue. Temporary rates that were previously effective as of November 28, 2023 were replaced with final rates approved by the DEPSC effective June 12, 2024, with no reserve or reduction to previously recorded revenue.

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

------

[**Table of Contents**](#tableOfContents0)

*Non-tariff Contract Revenues*

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

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

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

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

*Sales Tax*

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

*Disaggregated Revenues*

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

---

| | | | |
|:---|:---|:---|:---|
|  | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, |
| *(in thousands)* | **2025** | 2024 | 2023 |
| **Tariff Revenue** |  |  |  |
| &nbsp;&nbsp; Consumption charges | $**60183** | $58477 | $49051 |
| &nbsp;&nbsp; Fixed fees | **38106** | 36825 | 33074 |
| &nbsp;&nbsp; Service charges | **699** | 735 | 682 |
| &nbsp;&nbsp; DSIC | **534** | 136 | 4727 |
| &nbsp;&nbsp; Metered wastewater services | **842** | 809 | 602 |
| &nbsp;&nbsp; Industrial wastewater services | **1959** | 1859 | 1851 |
| Total Tariff Revenue | $**102323** | $98841 | $89987 |
| **Non-Tariff Revenue** |  |  |  |
| &nbsp;&nbsp; Service line protection plans | $**6527** | $5825 | $5632 |
| &nbsp;&nbsp; Contract operations | **1040** | 1047 | 1046 |
| &nbsp;&nbsp; Design and installation | **47** | 62 | 181 |
| &nbsp;&nbsp; Inspection fees | **748** | 410 | 424 |
| Total Non-Tariff Revenue | $**8362** | $7344 | $7283 |
| **Other Operating Revenue** | $**2256** | $1767 | $1591 |
| **Total Operating Revenue** | $**112941** | $107952 | $98861 |

---

------

[**Table of Contents**](#tableOfContents0)

*Contract Assets and Contract Liabilities* 

Our contract assets and liabilities consist of the following:

---

| | | | |
|:---|:---|:---|:---|
| *(in thousands)* | **December 31, 2025** | December 31, 2024 | December 31, 2023 |
| **Contract Assets – Tariff** | $**3265** | $3030 | $3043 |
| **Deferred Revenue** |  |  |  |
| &nbsp;&nbsp;Deferred Revenue – Tariff | $**1598** | $1385 | $1300 |
| &nbsp;&nbsp;Deferred Revenue – Non-Tariff | **573** | 714 | 539 |
| **Total Deferred Revenue** | $**2171** | $2099 | $1839 |

---

For the year ended December 31, 2025, the Company recognized revenue of $1.4 million from amounts that was included in Deferred Revenue – Tariff at the beginning of the year and revenue of $0.5 million from amounts that were included in Deferred Revenue – Non- Tariff at the beginning of the year. For the year ended December 31, 2024, the Company recognized revenue of $1.3 million from amounts that was included in Deferred Revenue – Tariff at the beginning of the year and revenue of $0.4 million from amounts that were included in Deferred Revenue – Non- Tariff at the beginning of the year.

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

*Remaining Performance Obligations*

As of December 31, 2025 and December 31, 2024, Deferred Revenue – Tariff is recorded partially within Unbilled operating revenues net against contract assets representing our remaining performance obligations for our fixed fee water services and partially within Other current liabilities representing our remaining performance obligations for our fixed fee wastewater services, all of which are expected to be satisfied and associated revenue recognized in the next three months.

As of December 31, 2025 and December 31, 2024, Deferred Revenue – Non-Tariff is recorded within Other current liabilities and represents our remaining performance obligations for our SLP Plan services, contract water operation services and wastewater inspections, which are expected to be satisfied and associated revenue recognized within the next three months, approximately four years and one year, respectively.

**NOTE 3 – LEASES**

The Company leases land and office equipment under operating leases from non-related parties. Our leases have remaining lease terms of 2 years to 71 years, some of which include options to automatically extend the leases for up to 66 years and are included as part of the lease liability and right-of-use assets as we expect to exercise the options. One of the leases for land was terminated in its entirety effective October 10, 2024. The remaining lease liability and right-of-use asset for the terminated lease was removed in the fourth quarter of 2024. The difference between the carrying amounts of the right-of-use asset and the lease liability was recorded in the statement of operations. Payments made under operating leases are recognized in the consolidated statement of operations on a straight-line basis over the period of the lease. The annual lease payment for the remaining land operating lease increases each year by the most recent increase in the Consumer Price Index and includes a provision to periodically adjust the annual lease payment based on the fair market value of the parcel of land. None of the operating leases contain contingent rent provisions. The commencement date of all the operating leases is the earlier of the date we become legally obligated to make rent payments or the date we may exercise control over the use of the land or equipment. The Company currently does not have any financing leases and does not have any lessor leases that require disclosure.&nbsp;&nbsp;&nbsp;&nbsp;

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

------

[**Table of Contents**](#tableOfContents0)

In October 1997, Artesian Water entered into a 33-year operating lease for a parcel of land with improvements located in South Bethany, a municipality in Sussex County, Delaware. The annual lease payments increase each year by the most recent increase in the Consumer Price Index for Urban Workers, CPI-U, as published by the U.S. Department of Labor, Bureau of Labor Statistics. At each eleventh year of the lease term, the annual lease payment shall be determined based on the fair market value of the parcel of land. Rental payments for 2025, 2024 and 2023 were $21,000, $20,000, and $19,000, respectively. The future minimum rental payment as disclosed in the following table is calculated using CPI-U from August 2025 as well as the adjustment for an appraisal conducted in 2019 to determine the fair market value of the parcel of land.

In March 2023, Artesian Water entered into a 5-year operating lease for office equipment. The quarterly lease payments under the lease agreement remain fixed throughout the term of the lease. Payments pursuant to the lease agreements for 2025, 2024 and 2023 were $8,000, $8,000 and $6,000, respectively.

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

---

| | | |
|:---|:---|:---|
|  | **For the Twelve Months Ended** | **For the Twelve Months Ended** |
| (in thousands) | **December 31,** | **December 31,** |
|  | **2025** | 2024 |
| Minimum rentals | $**29** | $35 |
| Contingent rentals | **-** |  |
|  | $**29** | $35 |

---

Supplemental cash flow information related to leases is as follows:

(in thousands)

---

| | | |
|:---|:---|:---|
|  | **Twelve Months Ended** | Twelve Months Ended |
|  | **December 31,** | December 31, |
|  | **2025** | 2024 |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |
| &nbsp;&nbsp;Operating cash flows from operating leases | $**29** | $35 |
| Right-of-use assets obtained in exchange for lease obligations: |  |  |
| &nbsp;&nbsp;Operating leases | $**-** | $- |

---

Supplemental balance sheet information related to leases is as follows:

(in thousands, except lease term and discount rate)

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | December 31, 2024 |
| Operating Leases: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | $**414** | $414 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | $**9**  | $8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | **407** | 404 |
| Total operating lease liabilities | $**416** | $412 |
| Weighted Average Remaining Lease Term |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating leases | **68 years** | 68 years |
| Weighted Average Discount Rate |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating leases | **5.0%** | 5.0% |

---

------

[**Table of Contents**](#tableOfContents0)

Maturities of operating lease liabilities that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2025 are as follows:

---

| | |
|:---|:---|
| Maturities of Operating Lease Liabilities |  |
|  | (in thousands) |
|  | Operating Leases |
| **Year** |  |
| 2026 | $29 |
| 2027 | 29 |
| 2028 | 23 |
| 2029 | 21 |
| 2030 | 21 |
| Thereafter | 1337 |
| &nbsp;&nbsp;Total undiscounted lease payments | $1460 |
| &nbsp;&nbsp;Less effects of discounting | (1044) |
| &nbsp;&nbsp;Total lease liabilities recognized | $416 |

---

As of December 31, 2025, we have not entered into finance leases that will commence at a future date.

**NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS**

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

 *Current Assets and Liabilities* 

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

*Other Deferred Assets*

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

 *Long-term Financial Liabilities* 

As of December 31, 2025 and December 31, 2024, all of the Company's outstanding long-term debt interest rates were a fixed rate. The fair value of the Company's long-term debt is determined by discounting their future cash flows using current market interest rates on similar instruments with comparable maturities consistent with ASC 825, Financial Instruments. Under the fair value hierarchy, the fair value of the long-term debt in the table below is classified as Level 2 measurements. Level 2 is valued using observable inputs other than quoted prices. The fair values for long-term debt differ from the carrying values primarily due to interest rates that differ from the current market interest rates. The carrying amount and fair value of Artesian Resources' long-term debt (including current portion) are shown below:

---

| | | |
|:---|:---|:---|
| *In thousands* | December 31, | December 31, |
|  | **2025** | 2024 |
| Carrying amount | $**176408** | $178676 |
| Estimated fair value | **156980** | 154795 |

---

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

------

[**Table of Contents**](#tableOfContents0)

**NOTE 5 – INCOME TAXES**

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

As of December 31, 2025, the Company has separate company state net operating loss carry-forwards aggregating approximately $17.9 million. Most of these net operating loss carry-forwards will not expire. The Company has recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized in the future. The valuation allowance increased to approximately $1,174,000 in 2025 from approximately $1,084,000 in 2024. Management believes that it is more likely than not that the Company will realize the benefit of these deferred tax assets, net of the valuation allowance.

**Components of Income Tax Expense**

---

| | | | |
|:---|:---|:---|:---|
| *In thousands* | &nbsp;&nbsp;For the Year Ended December 31, | &nbsp;&nbsp;For the Year Ended December 31, | &nbsp;&nbsp;For the Year Ended December 31, |
| Federal income taxes | &nbsp;&nbsp;**2025** | &nbsp;&nbsp;2024 | &nbsp;&nbsp;2023 |
| &nbsp;&nbsp;Current | $**4499** | $4733 | $1946 |
| &nbsp;&nbsp;Deferred | **510** | (104) | 1968 |
| Total federal income tax expense | $**5009** | $4629 | $3914 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | &nbsp;&nbsp;For the Year Ended December 31, | &nbsp;&nbsp;For the Year Ended December 31, | &nbsp;&nbsp;For the Year Ended December 31, |
| State income taxes | &nbsp;&nbsp;**2025** | &nbsp;&nbsp;2024 | &nbsp;&nbsp;2023 |
| &nbsp;&nbsp;Current | $**2139** | $2004 | $1016 |
| &nbsp;&nbsp;Deferred | **683** | 682 | 1418 |
| Total state income tax expense | $**2822** | $2686 | $2434 |

---

**Income Taxes Paid:**

---

| | | | |
|:---|:---|:---|:---|
|  | For the Year Ended December 31, | For the Year Ended December 31, | For the Year Ended December 31, |
| *In thousands* | **2025** | 2024 | 2023 |
| U.S. Federal | $**4819** | $4000 | $2355 |
| State: |  |  |  |
| &nbsp;&nbsp;Delaware | $**2061** | $1021 | $1233 |
| &nbsp;&nbsp;Other | **24** | 10 | 2 |
| State Subtotal | $**2085** | $1031 | $1235 |
| Total cash paid for income taxes (net of refunds) | $**6904** | $5031 | $3590 |

---

**Reconciliation of effective tax rate:**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 2025 | 2025 | 2024 | 2024 | 2023 | 2023 |
|  | Amount | Percent | Amount | Percent | Amount | Percent |
| Reconciliation of effective tax Rate |  |  |  |  |  |  |
| &nbsp;&nbsp;Income before federal and state income taxes | $30653 | 100.0% | $27709 | 100.0% | $23047 | 100.0% |
| Amount computed at statutory rate | 6437 | 21.0% | 5819 | 21.0% | 4840 | 21.0% |
| Reconciling items |  |  |  |  |  |  |
| &nbsp;&nbsp;State income tax-net of federal tax benefit(a) | 2210 | 7.2% | 2094 | 7.6% | 1918 | 8.3% |
| Nontaxable or nondeductible items |  |  |  |  |  |  |
| &nbsp;&nbsp; Share based payment awards | 3 | 0.0% | 21 | 0.1% | (43) | (0.2)% |
| &nbsp;&nbsp; Other | 72 | 0.2% | 164 | 0.5% | 69 | 0.3% |
| Regulatory liability adjustment | (937) | (3.0)% | (719) | (2.6)% | (449) | (1.9)% |
| &nbsp;&nbsp;Other | 46 | 0.2% | (64) | (0.2)% | 13 | 0.1% |
| Total income tax expense and effective rate | $7831 | 25.6% | $7315 | 26.4% | $6348 | 27.6% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) State taxes in Delaware made up the majority (greater than 50 percent) of the tax effect in this category for all years

------

[**Table of Contents**](#tableOfContents0)

**Deferred income taxes at December 31, 2025 and 2024 were comprised of the following:**

---

| | | |
|:---|:---|:---|
|  | For the Year Ended December 31, | For the Year Ended December 31, |
| *In thousands* | 2025 | 2024 |
| **Deferred tax assets related to:** |  |  |
| State operating loss carry-forwards | $1177 | $1086 |
| Allowance for credit losses | 95 | 96 |
| Stock options | 25 | 31 |
| Tax effect of regulatory liabilities | 7042 | 7408 |
| Other | 203 | 183 |
| &nbsp;&nbsp;Total deferred tax assets | $8542 | $8804 |
| Less: valuation allowance | (1174) | (1084) |
| &nbsp;&nbsp;Total deferred tax assets net of valuation allowance | $7368 | $7720 |
| **Deferred tax liabilities related to:** |  |  |
| Property plant and equipment basis differences | $(59547) | $(57296) |
| Bond retirement costs | (831) | (907) |
| Property taxes | (504) | (610) |
| Other | (1242) | (1172) |
| &nbsp;&nbsp;Total deferred tax liabilities | $(62124) | $(59985) |
| &nbsp;&nbsp;Net deferred tax liability | $(54756) | $(52265) |

---

**Schedule of Valuation Allowance**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Balance at | Additions Charged to |  | Balance at |
| *In thousands* | Beginning of Period | Costs and Expenses | Deductions | End of Period |
| Classification |  |  |  |  |
| For the Year Ended December 31, 2025 Valuation allowance for deferred tax assets | $1084 | $102 | $12 | $1174 |
| For the Year Ended December 31, 2024 Valuation allowance for deferred tax assets | $906 | $190 | $12 | $1084 |
| For the Year Ended December 31, 2023 Valuation allowance for deferred tax assets | $600 | $312 | $6 | $906 |

---

Under FASB ASC Topic 740, the Company establishes reserves for uncertain tax positions based upon management's assessment of whether the positions are more likely than not to be sustained upon examination. The Company recorded a liability related to the difference in the tax depreciation utilizing the half-year convention rather than the mid-quarter convention for 2022 and 2024.

------

[**Table of Contents**](#tableOfContents0)

#### The following table provides the changes in the Company's uncertain tax position:

---

| | | |
|:---|:---|:---|
|  | For the Year Ended December 31, | For the Year Ended December 31, |
| *In thousands* | 2025 | 2024 |
| Balance at beginning of year | $221 | $158 |
| &nbsp;&nbsp;Additions based on tax positions related to the current year |  | 46 |
| &nbsp;&nbsp;Additions based on tax positions related to prior years | 22 | 17 |
| &nbsp;&nbsp;Settlements with taxing authorities |  |  |
| &nbsp;&nbsp;Lapses in statutes of limitations |  |  |
| Balance at end of year | $243 | $221 |

---

**NOTE 6 – PREFERRED STOCK**

As of December 31, 2025 and 2024, Artesian Resources had no preferred stock issued or outstanding. Artesian Resources has 100,000 shares of $1.00 par value Series Preferred stock authorized, 10,868 shares of $25.00 par value 7% Prior Preferred stock authorized, and 80,000 shares of $25.00 par value Cumulative Prior Preferred stock authorized.

**NOTE 7 – COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL**

The Class A Non-Voting Common Stock, or Class A Non-Voting Stock, of Artesian Resources trades on the Nasdaq Global Select Market under the symbol ARTNA. The Class B Common Stock, or Class B Stock, of Artesian Resources trades on the Nasdaq's OTC Bulletin Board under the symbol ARTNB. The rights of the holders of the Class A Non-Voting Stock and the Class B Stock are identical, except with respect to voting.

Under Artesian Resources' dividend reinvestment plan, which allows for reinvestment of cash dividends and optional cash payments, stockholders were issued approximately 11,000, 10,000 and 8,000 shares at fair market value for the investment of $342,000, $347,000, and $381,000 of their monies in the years 2025, 2024, and 2023, respectively.

**NOTE 8 – DEBT**

At December 31, 2025, Artesian Resources had a $40 million line of credit with Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources. As of December 31, 2025, there was $34.3 million of available funds under this line of credit. The interest rate is a one-month Daily Secured Overnight Financing Rate, or SOFR, plus 10 basis points, or Term SOFR, plus an applicable margin of 1.10%. Term SOFR cannot be less than 0.00%. This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time. The term of this line of credit expires on the earlier of May 18, 2026 or any date on which Citizens demands payment. The Company expects to renew this line of credit.

At December 31, 2025, Artesian Water had a $20 million line of credit with CoBank, ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland. As of December 31, 2025, there was $20.0 million of available funds under this line of credit. The interest rate for borrowings under this line is either a daily SOFR rate plus 1.45% option or a term SOFR rate plus 1.45% option that is locked in for either one or three months. The term of this line of credit expires on October 31, 2026. Artesian Water expects to renew this line of credit.

CoBank may make an annual patronage refund based on the average line of credit and loan volume outstanding in the prior year. The $20 million line of credit, the First Mortgage Bonds and the promissory note are with CoBank. Patronage refunds earned by Artesian in 2025, 2024 and 2023 were $1.5 million, $1.6 million and $1.6 million, respectively.

The weighted average interest rate on the lines of credit discussed above paid by the Company was 5.56% for the year ended December 31, 2025. These lines of credit, as well as the long-term debt obligations shown below, require us to abide by certain financial covenants and ratios. As of December 31, 2025, we were in compliance with these financial covenants.

------

[**Table of Contents**](#tableOfContents0)

**Long-term debt consists of:**

---

| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
| *In thousands* | 2025 | 2024 |
| First mortgage bonds |  |  |
| &nbsp;&nbsp;Series R, 5.96%, due December 31, 2028 | $25000 | $25000 |
| &nbsp;&nbsp;Series S, 4.45%, due December 31, 2033 | 4800 | 5400 |
| &nbsp;&nbsp;Series T, 4.24%, due December 20, 2036 | 40000 | 40000 |
| &nbsp;&nbsp;Series U, 4.71%, due January 31, 2038 | 25000 | 25000 |
| &nbsp;&nbsp;Series V, 4.42%, due October 31, 2049 | 30000 | 30000 |
| &nbsp;&nbsp;Series W, 4.43%, due April 30, 2047 | 30000 | 30000 |
|  | 154800 | 155400 |
| State revolving fund loans |  |  |
| &nbsp;&nbsp;3.64%, due May 1, 2025 |  | 77 |
| &nbsp;&nbsp;3.41%, due February 1, 2031 | 1072 | 1246 |
| &nbsp;&nbsp;3.40%, due July 1, 2032 | 1142 | 1296 |
| &nbsp;&nbsp;1.187%, due November 1, 2041 | 529 | 559 |
| &nbsp;&nbsp;1.187%, due November 1, 2041 | 620 | 655 |
| &nbsp;&nbsp;1.187%, due November 1, 2041 | 966 | 1021 |
| &nbsp;&nbsp;2.00%, due February 1, 2043 | 758 | 793 |
| &nbsp;&nbsp; 2.00%, due February 1, 2043 | 1045 | 1095 |
| &nbsp;&nbsp; 2.00%, due June 1, 2043 | 917 | 960 |
| &nbsp;&nbsp; 2.00%, due June 1, 2043 | 934 | 978 |
| &nbsp;&nbsp; 2.00%, due January 1, 2043 | 932 | 978 |
| &nbsp;&nbsp; 2.00%, due February 1, 2044 | 2954 | 3086 |
|  | 11869 | 12744 |
| Notes Payable |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Promissory Note, 5.12%, due December 30, 2028 | 9111 | 9590 |
| &nbsp;&nbsp;&nbsp;&nbsp;Asset Purchase, 2.00%, due May 26, 2027 | 628 | 942 |
|  | 9739 | 10532 |
| Sub-total | 176408 | 178676 |
| Less: current maturities (principal amount) | 2132 | 2167 |
| Total long-term debt | $174276 | $176509 |

---

**Payments of principal amounts due during the next five years and thereafter:** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *In thousands* | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter |
| First Mortgage bonds | $600 | $600 | $25600 | $600 | $600 | $126800 |
| State revolving fund loans | 713 | 836 | 857 | 878 | 900 | 7685 |
| Asset Purchase-Contractual Obligation. | 314 | 314 |  |  |  |  |
| Promissory note | 505 | 532 | 559 | 590 | 621 | 6304 |
| Total payments | $2132 | $2282 | $27016 | $2068 | $2121 | $140789 |

---

Substantially all of Artesian Water's utility plant is pledged as security for our First Mortgage Bonds. As of December 31, 2025, no other water utility plant has been pledged as security for loans. Two parcels of land in Artesian Wastewater are pledged as security for the promissory note.

------

[**Table of Contents**](#tableOfContents0)

**NOTE 9 – STOCK COMPENSATION PLANS**

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

Compensation expenses for restricted stock awards were $246 thousand, $219 thousand and $254 thousand in 2025, 2024 and 2023, respectively. Costs were determined based on the fair value on the dates of the awards and those costs were charged to income over the service periods associated with the awards. As of December 31, 2025, there was $183 thousand total unrecognized expense related to non-vested awards of restricted shares granted under each of the 2015 Plan and the 2025 Plan.

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

The following summary reflects changes in the shares of Class A Non-Voting Stock under option:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | 2025 |  | 2024 |  | 2023 |
|  |  | Weighted |  | Weighted |  | Weighted |
|  |  | Average |  | Average |  | Average |
|  | 2025 | Exercise | 2024 | Exercise | 2023 | Exercise |
|  | Shares | Price | Shares | Price | Shares | Price |
| Plan options |  |  |  |  |  |  |
| &nbsp;&nbsp;Outstanding at beginning of year |  | $- |  | $- | 6750 | $21.86 |
| &nbsp;&nbsp;Granted |  |  |  |  |  |  |
| &nbsp;&nbsp;Exercised |  |  |  |  | (6750) | 21.86 |
| &nbsp;&nbsp;Expired | - | - | - | - | - | - |
| &nbsp;&nbsp;Outstanding at end of year |  | $- |  | $- |  | $- |
| Options exercisable at year end |  | $- |  | $- |  | $- |

---

The total intrinsic value of options exercised during 2025, 2024 and 2023 were $0, $0 and $137,000, respectively. During 2025, we received $0 in cash from the exercise of options, with a $0 tax benefit realized for those options.

As of December 31, 2025, there were no outstanding option shares.

The following summary reflects changes in restricted stock awards (RSA):

---

| | | |
|:---|:---|:---|
|  | Restricted Stock Awards | Restricted Stock Awards |
|  | Outstanding | Weighted |
|  | Restricted | Average Grant |
|  | Stock Awards | Date Fair Value |
| Restricted stock awards |  |  |
| Outstanding at January 1, 2025 | 5000 | $37.07 |
| &nbsp;&nbsp;Granted | 11000 | $33.18 |
| &nbsp;&nbsp;Exercised/vested and released | (5000) | $37.07 |
| &nbsp;&nbsp;Expired/cancelled |  | $- |
| Outstanding at December 31, 2025 | 11000 | $33.18 |
| Exercisable/vested at December 31, 2025 |  |  |

---

------

[**Table of Contents**](#tableOfContents0)

*Stock Options*

No options were granted in 2025, 2024 or 2023.

Shares of Class A Non-Voting Stock have been reserved for future issuance under the 2025 Plan.

*Stock Awards*

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

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

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

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

On May 6, 2024, 5,000 shares of Class A Non-Voting Stock were granted as restricted stock awards. The fair value per share was $37.07, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on May 6, 2024. These restricted stock awards were fully vested and released one year after the grant.

.

On May 9, 2023, 5,000 shares of Class A Non-Voting Stock, were granted as restricted stock awards. The fair value per share was $54.88, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on May 9, 2023. These restricted stock awards were fully vested and released one year after the grant date.

As of December 31, 2025, there was $183,000 of total unrecognized expense related to non-vested awards of restricted shares awarded under the 2015 Plan. The cost will be recognized over 0.51 years, the remaining vesting period for the restricted stock awards.

The total intrinsic value of awards released during 2025 was approximately $174,900.

**NOTE 10 – EMPLOYEE BENEFIT PLANS** 

*401(k) Plan*

Artesian Resources has a defined contribution 401(k) Salary Reduction Plan, or the 401(k) Plan, which covers substantially all employees. Under the terms of the 401(k) Plan, Artesian Resources contributed 2% of eligible salaries and wages and matched employee contributions up to 6% of gross pay at a rate of 50%. The 401(k) Plan also provides additional retirement benefits to full-time employees hired prior to April 26, 1994, allowing them to save for future retiree medical costs that will be paid by employees by providing additional cash resources to those employees upon a termination of employment or retirement to meet the cost of future medical expenses. These eligible employees receive an additional contribution of 6% of eligible salaries and wages. The 401(k) Plan expenses, which include Company contributions and administrative fees, for the years 2025, 2024 and 2023, were approximately $1.4 million, $1.2 million and $1.4 million, respectively.

**NOTE 11 – COMMITMENTS AND CONTINGENCIES**

*Leases*

The Company's leases are disclosed in Note 3 – Leases.

------

[**Table of Contents**](#tableOfContents0)

*Easements*

During 2003, Artesian Water Pennsylvania entered into a 40-year easement agreement to access, operate, maintain, repair, improve, replace and connect Artesian's water system to a well, including a parcel of land around the well. Management made certain estimates and assumptions regarding the separation of lease and non-lease components related to this easement agreement. It was determined that the majority of this easement agreement contained non-lease components. In October 2024, this easement agreement was terminated in its entirety. Easement payments, including both lease and non-lease components, for 2024 and 2023 were $34,000 and $45,000, respectively.

Artesian Wastewater entered into a perpetual agreement for the use of approximately 460 acres of land in Sussex County, Delaware for wastewater disposal. Beginning November 2016, Artesian Wastewater was required to pay a minimum of $40,000 per year for the use of this land. Once operations began in 2021, the monthly fee is based on the volume of wastewater disposed on the properties charged at a rate per one thousand gallons of wastewater, providing for a minimum monthly payment. Payments for 2025, 2024 and 2023 were $155,000, $119,000, $126,000, respectively. The agreement can be terminated by giving 180-day notice prior to the termination date. The future minimum annual payment related to this easement agreement for the years subsequent to 2025 is $22,000.

*Interconnections*

Artesian Water has one water service interconnection agreement with a neighboring utility, Chester Water Authority. The agreement is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a "take or pay" clause which currently requires us to purchase a minimum of 0.5 million gallons of water per day. Rates charged under this agreement are subject to change with notice.

Artesian Water Maryland has one interconnection agreement with the Town of North East that has a "take or pay" clause requiring us to purchase a minimum of 35,000 gallons of water per day. The agreement extends through June 2029. The agreement includes one remaining automatic five-year renewal term, unless terminated by either party.

The minimum annual purchase commitments for all interconnection agreements for 2026 through 2030, calculated at the noticed rates, are as follows:

*In thousands*

---

| | |
|:---|:---|
| 2026 | $1031 |
| 2027 | 57 |
| 2028 | 57 |
| 2029 | 57 |
| 2030 | 57 |
| Total | $1259 |

---

Expenses for purchased water were $1.4 million, $1.5 million and $1.3 million for 2025, 2024 and 2023, respectively.

*Other Commitments*

The total expenditure of $2.2 million pursuant to the four-year agreement between Artesian Water and Worldwide Industries Corporation to paint elevated water storage tanks, effective July 1, 2021, was fully paid to Worldwide Industries Corporation as of April 2025. In August 2025, Artesian Water entered into a new, three-year agreement with Worldwide Industries Corporation, effective September 1, 2025, to paint elevated water storage tanks. Pursuant to the agreement, the expected total expenditure for the three years is $2.5 million. Tank painting expense for 2025, 2024 and 2023 was $624,000, $735,000, and $689,000, respectively.

Budgeted mandatory utility plant expenditures, due to planned governmental highway projects, which require the relocation of Artesian Water's water service mains, expected to be incurred in 2026 through 2028 are as follows:

*In thousands*

---

| | |
|:---|:---|
| 2026 | $5970 |
| 2027 | 8570 |
| 2028 | 6520 |
| Total | $21060 |

---

The exact timing and extent of these relocation projects is controlled primarily by the Delaware Department of Transportation.

------

[**Table of Contents**](#tableOfContents0)

**NOTE 12 - GEOGRAPHIC CONCENTRATION OF CUSTOMERS**

Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide regulated water utility service to customers within their established service territory in all three counties of Delaware and in portions of Maryland and Pennsylvania, pursuant to rates filed with and approved by the DEPSC, the MDPSC and the PAPUC. As of December 31, 2025, Artesian Water was serving approximately 99,100 customers, Artesian Water Maryland was serving approximately 2,700 customers and Artesian Water Pennsylvania was serving approximately 40 customers.

Artesian Wastewater and TESI provide regulated wastewater utility service to customers within their established service territory in Sussex County, Delaware pursuant to rates filed with and approved by the DEPSC. As of December 31, 2025, Artesian Wastewater and TESI were serving approximately 9,100 customers combined, including one large industrial customer.

**NOTE 13 – REGULATORY PROCEEDINGS** 

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

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

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

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

* The PAPUC, regulates Artesian Water Pennsylvania.

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

Water and Wastewater Rates

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

Artesian Water filed an initial request with the DEPSC on April 28, 2023, further supplemented with a request filed on November 30, 2023, to implement new rates to meet a requested increase in revenue of approximately $16.7 million, on an annualized basis, or 22.7%. The DEPSC approved and Artesian Water implemented a temporary rate increase effective November 28, 2023 of approximately $10.8 million, on an annualized basis, or 14.6%, subject to refund, and reduced the DSIC previously in effect from approximately 7.5% to zero. On May 22, 2024, Artesian Water, the Staff of the DEPSC, and the Division of the Public Advocate, or DPA, (collectively, the Parties) entered into an agreement, or Settlement Agreement, to settle Artesian Water's April 2023 application to implement new rates. On June 12, 2024, a DEPSC order was issued approving the settlement agreement entered into on May 22, 2024 between the Parties. The Settlement Agreement authorized a total increase in the revenue requirement of $11.2 million, on an annualized basis, or approximately 15.2%, with a rate effective date of June 12, 2024, which encompassed a 9.5% return on common equity and an overall rate of return on rate base of 6.75%. Temporary rates that were in effect since November 28, 2023 were replaced with the final approved rates from the Settlement Agreement. Revised depreciation rates for utility plant and revised amortization rates for certain regulatory assets and liabilities were also approved effective June 12, 2024.

On April 4, 2025, Artesian Water filed a request with the DEPSC to implement new rates to meet a requested increase in revenue of 12.41%, or approximately $10.8 million, on an annualized basis. A supplemental filing was made on December 1, 2025 reducing the requested increase to 11.3%, or approximately $9.9 million, on an annualized basis. The actual effective increase would be less than 11.3% if the requested increase is granted in full by the DEPSC since Artesian Water has been permitted to recover specific investments made in infrastructure through the assessment of a 1.66% DSIC rate, which rate is set to zero once temporary rates are placed into effect. Temporary rates were placed into effect as noted below. The new proposed rates are designed to support Artesian Water's ongoing capital improvement program and to cover increased costs of operations, including chemicals and electricity for water treatment, water quality regulation compliance, taxes, labor and benefits. In accordance with applicable Delaware law, the DEPSC approved and Artesian Water implemented the first temporary rate increase effective June 3, 2025 of approximately $2.5 million in additional annual revenue, or 2.88%, subject to refund, and reduced the DSIC previously in effect from approximately 1.66% to zero, for a temporary rate increase of net 1.22%. Also, as permitted by law, on November 6, 2025 we placed into effect a second step of temporary rates designed to generate an increase in annual operating revenue of approximately 6.82%, or $5.8 million, on an annualized basis, until permanent rates are determined by the DEPSC. A portion of the revenue from the second step of temporary rates was recorded as a reserve for refund and is not reflected in income.

------

[**Table of Contents**](#tableOfContents0)

<u>Other Proceedings</u>

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

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

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Application Date  | 05/30/2024 | 11/22/2024 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DEPSC Approval Date  | 06/12/2024 | 12/18/2024 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effective Date  | 07/01/2024 | 01/01/2025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cumulative DSIC Rate  | 0.34% | 1.66% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Eligible Plant Improvements – Cumulative Dollars (in millions)  | $2.0 | $11.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eligible Plant Improvements – Installed Beginning Date  | 11/01/2023 | 11/01/2023 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eligible Plant Improvements – Installed Ending Date  | 04/30/2024 | 10/31/2024 |

---

On December 18, 2024, the DEPSC approved Artesian Water's application to implement a DSIC rate of 1.66%, effective January 1, 2025. Effective July 1, 2024, Artesian Water was permitted to recover specific investments made in infrastructure through the assessment of a 0.34% DSIC. The January 1, 2025 DSIC rate is still subject to audit by the DEPSC. The January 1, 2025 DSIC rate was reset to zero when the temporary base rate increase was placed into effect on June 3, 2025. For the year ended December 31, 2025, we earned approximately $0.5 million in DSIC revenue. For the year ended December 31, 2024, we earned approximately $0.1 million in DSIC revenue. For the year ended December 31, 2023, we earned approximately $4.7 million in DSIC revenue.

**NOTE 14 – NET INCOME PER COMMON SHARE AND EQUITY PER COMMON SHARE**

Basic net income per share is based on the weighted average number of common shares outstanding. Diluted net income per share is based on the weighted average number of common shares outstanding, the potentially dilutive effect of employee stock options and restricted stock awards. The following table summarizes the shares used in computing basic and diluted net income per share:

---

| | | | |
|:---|:---|:---|:---|
|  | For the Year Ended | For the Year Ended | For the Year Ended |
|  | December 31, | December 31, | December 31, |
|  | 2025 | 2024 | 2023 |
|  |  | *(in thousands)* |  |
| Weighted average common shares outstanding during the period for basic computation | $10309 | $10294 | $10018 |
| Dilutive effect of employee stock options and restricted stock awards | 3 | 2 | 4 |
| Weighted average common shares outstanding during the period for diluted computation | $10312 | $10296 | $10022 |

---

For the years ended 2025, 2024 and 2023, no shares of restricted stock awards were excluded from the calculations of diluted net income per share. For the years ended 2025, 2024 and 2023, no stock options were excluded from the calculations of diluted net income per share.

The Company has 15,000,000 authorized shares of Class A Non-Voting Stock, and 1,040,000 authorized shares of Class B Stock. As of December 31, 2025, 9,434,363 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding. As of December 31, 2024, 9,418,871 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding. As of December 31, 2023, 9,404,311 shares of Class A Non-Voting Stock and 881,452 shares of Class B Stock were issued and outstanding. The par value for both classes is $1.00 per share.

Equity per common share was $24.24, $23.24, and $23.00 at December 31, 2025, December 31, 2024, and December 31, 2023, respectively. These amounts were computed by dividing common stockholders' equity by the number of weighted average shares of common stock outstanding on December 31, 2025, December 31, 2024, and December 31, 2023, respectively.

------

[**Table of Contents**](#tableOfContents0)

**NOTE 15 - LEGAL PROCEEDINGS** 

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

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

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

**NOTE 16 - BUSINESS SEGMENT INFORMATION**

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

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

The accounting policies of the operating segments are the same as those described in Note 2 – Revenue Recognition. The measurement of depreciation, interest, and capital expenditures are predominately related to our Regulated Utility segment. These amounts in our non-utility business are negligible and account for approximately less than 1% of consolidated amounts as of December 31, 2025, December 31, 2024 and December 31, 2023.

------

[**Table of Contents**](#tableOfContents0)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Regulated** |  | **Regulated** |  | **Regulated** |  |
| In thousands | **Utility** | **Total** | **Utility** | **Total** | **Utility** | **Total** |
| Regulated Utility Revenues | $105506 | $105506 | $101210 | $101210 | $92228 | $92228 |
| **Reconciliation of revenue** |  |  |  |  |  |  |
| Other revenues |  | 7698 <sup>(a)</sup> |  | 7014 <sup>(a)</sup> |  | 6877 <sup>(a)</sup> |
| Inter-segment elimination |  | (263) |  | (272) |  | (244) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated revenues |  | 112941 |  | 107952 |  | 98861 |
| Less: (b)<sup>(b)</sup> |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payroll and Benefits (c) <sup>(c)</sup> | 26863 |  | 25975 |  | 25031 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Supply and Delivery (d)<sup>(d)</sup> | 15656 |  | 14704 |  | 12595 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administrative (e)<sup>(e)</sup> | 10156 |  | 9389 |  | 8823 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and Amortization | 13754 |  | 13578 |  | 13281 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes | 6793 |  | 6552 |  | 5216 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and other taxes | 6325 |  | 6255 |  | 6036 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regulated Utility Operating Income | $25959 | $25959 | $24757 | $24757 | $21246 | $21246 |
| **Reconciliation of operating income** |  |  |  |  |  |  |
| Other profit |  | 1823 <sup>(a)</sup> |  | 1394 <sup>(a)</sup> |  | 1200 <sup>(a)</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated operating income |  | $27782 |  | $26151 |  | $22446 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Regulated** |  | **Regulated** |  |
|  | **Utility** | **Total** | **Utility** | **Total** |
| Assets |  |  |  |  |
| Regulated Utility Assets | $846820 | $846820 | $793118 | $793118 |
| **Reconciliation of assets** |  |  |  |  |
| Other assets |  | 4409 |  | 5505 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated assets |  | $851229 |  | $798623 |

---

&nbsp;&nbsp;&nbsp;&nbsp; a. Other revenues and other profit:

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

* These businesses are primarily comprised of: Service Line Protection Plan services for water, sewer and internal plumbing; design, construction and engineering services; contract services for the operation and maintenance of water and wastewater 

* systems in Delaware and Maryland; and leased space to the Regulated Utility Segment 

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

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

&nbsp;&nbsp;&nbsp;&nbsp; b. *S*ignificant expense categories:

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

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

&nbsp;&nbsp;&nbsp;&nbsp; c. Payroll and Benefits:

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

&nbsp;&nbsp;&nbsp;&nbsp; d. Supply and Delivery:

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

&nbsp;&nbsp;&nbsp;&nbsp; e. Administrative expense:

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

------

[**Table of Contents**](#tableOfContents0)

**NOTE 17 - IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS**

In December 2023, FASB issued amended guidance on Income Taxes: Improvements to Income Tax. The amendments require the Company to provide further disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, as well as additional information about federal, state/local and foreign income taxes. The standard also requires the Company to annually disclose its income taxes paid (net of refunds received), disaggregated by jurisdiction. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be applied on a prospective basis, although optional retrospective application is permitted. The Company adopted this standard retrospectively effective with our December 31, 2025 year end reporting. The standard required additional disclosures related to the Company's income taxes and did not have an impact on the Company's results of operations or cash flows due to the adoption of this guidance.

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

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

**NOTE 18 – SUBSEQUENT EVENT**

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

------

[**Table of Contents**](#tableOfContents0)

**Report of Independent Registered Public Accounting Firm**

Shareholders and Board of Directors

Artesian Resources Corporation

Newark, Delaware

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of Artesian Resources Corporation (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, changes in stockholders' equity , and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025**,** in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

**Revenue Recognition – Water Sales**

As indicated in Note 2 to the consolidated financial statements, water sales revenue consists of tariff contract revenues from the sale of water, fixed fees for water services, and Distribution System Improvement Charges, or DSIC, billed to customers at rates outlined in the Company's tariffs. The Company recognizes revenues from the sale of water, and fixed fees for water services over time as water is consumed and as the customers simultaneously receive and consume the benefits of the Company remaining ready to provide them water services, respectively. DSIC revenue is a surcharge applied to tariff rates, and the Company recognizes DSIC revenue depending on whether the surcharge was applied to water consumption revenue or fixed-fee revenue. As indicated in the consolidated statements of operations, the Company recorded $91 million of water sales revenue for the year ended December 31, 2025.

We identified revenue recognition for water sales as a critical audit matter due to the large volume of customers and transactions. Auditing water sales revenue was especially challenging due to the extent of audit effort required to address the matter.

------

[**Table of Contents**](#tableOfContents0)

The primary procedures we performed to address this critical audit matter included:

* Testing the design and operating effectiveness of certain internal controls related to the Company's recognition of water sales revenue. 

* Testing
a sample of revenue transactions by inspecting source documents such as
invoices, cash receipts, approved tariff rates and recalculating the revenue
recognized. 

* Testing a sample of revenue transactions to verify that the customer's property is located within the Company's approved service territory. 

* Performing analytical procedures to reconcile cash received from customers to revenue recognized. 

---

| |
|:---|
| &nbsp;&nbsp; /s/ BDO USA, P.C.  |
| &nbsp;&nbsp; We have served as the Company's auditor since 2005.  |
| &nbsp;&nbsp; Philadelphia, Pennsylvania |
| &nbsp;&nbsp; March 16, 2026  |

---

------

[**Table of Contents**](#tableOfContents0)

**ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES**

None.

**ITEM 9A. CONTROLS AND PROCEDURES**

(a) Evaluation of Disclosure Controls and Procedures

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

(b) Management's Annual Report on Internal Control Over Financial Reporting

The Management of Artesian Resources Corporation is responsible for establishing and maintaining adequate internal control over its financial reporting. Artesian Resources Corporation's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Artesian Resources Corporation's Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2025 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in "Internal Control Integrated Framework (2013)." Based on this assessment, Management determined that at December 31, 2025, the Corporation's internal control over financial reporting was effective.

(c) Change in Internal Control over Financial Reporting

No change in the Company's internal control over financial reporting occurred during the fiscal quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Date: March 16, 2026

---

| | |
|:---|:---|
| CHIEF EXECUTIVE OFFICER:  | CHIEF FINANCIAL OFFICER:  |
| /s/ NICHOLLE R. TAYLOR  | /s/ DAVID B. SPACHT  |
| Nicholle R. Taylor  | David B. Spacht  |

---

**ITEM 9B. OTHER INFORMATION**

<u>Insider Adoption or Termination of Trading Arrangements:</u>

During the fiscal quarter ended December 31, 2025, none of our directors or officers informed us of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as those terms are defined in Regulation S-K, Item 408.

On March 13, 2026, Artesian Water Maryland and CoBank entered into a Master Loan Agreement, or the MLA, and supplement to the MLA, in which CoBank will make a single loan to Artesian Water Maryland in a principal amount not to exceed $10 million, as further discussed in Note 18 – Subsequent Events. Artesian Water Maryland agrees to pay interest on the unpaid principal balance of the loans at 6.14% per annum. Interest shall be calculated and paid quarterly in arrears on the thirtieth (30th) day of each of March, June, September and December. Artesian Water Maryland agrees to repay the loan in eighty consecutive quarterly installments, each due on the thirtieth (30th) day of each March, June, September, and December, with the first installment due on June 30, 2026, and the last installment due on March 13, 2046. The amount of each installment shall be the same principal amount that would be required to be repaid if the loan was scheduled to be repaid in level installments of principal and interest and such schedule was calculated utilizing 6.14% as the rate accruing on the loan; provided, however, that the last installment of the loan shall be in an amount equal to the then unpaid principal balance of the loan. Closing on the debt financing was approved by the Maryland Public Service Commission on March 2, 2026. The foregoing summary is qualified in its entirety by reference to the text of the MLA and the Supplement and the Guarantee of Payment, copies of which are filed as Exhibit 4.26 and Exhibit 4.27, respectively, hereto and are incorporated by reference.

**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS** 

Not applicable.

------

[**Table of Contents**](#tableOfContents0)

**PART III**

**ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE** 

---

| | | |
|:---|:---|:---|
| **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name**  | **Age**  | **Position**  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nicholle R. Taylor  | 58 | **Biography:** Chair of the Board of Directors of the Company, or the Board, commencing February 2025 and a director since 2007. Ms. Taylor has served as President and Chief Executive Officer since February 2025. Ms. Taylor previously served as Interim President and Chief Executive Officer between January 3, 2025 and February 2025 and served as Senior Vice President of the Company from May 9, 2012 until her appointment as the Company's President and Chief Executive Officer. She has also served as President of Artesian Water Company since August 16, 2021. Previously Ms. Taylor served as Chief Operating Officer of Artesian Water Company from August 2019 to August 2021. She was Vice President of the Company from May 2004 to May 2012. Ms. Taylor has been employed by the Company since 1991 and has held various management level and operational positions within the Company. Ms. Taylor is the niece of Dian C. Taylor and the cousin of John R. Eisenbrey, Jr. <br>**Qualifications:** Ms. Nicholle Taylor has over thirty years of experience with the Company in a variety of field, office, and managerial positions. The Board has determined that the range of her experience across various company functions gives her a clear perception of how the Company operates, thus enhancing the Board's ability to know the Company's current capabilities and limitations, and qualifies her to serve as a director. Ms. Taylor serves on the Board of Directors of the National Association of Water Companies, a trade organization of the investor-owned water utility industry. Ms. Taylor previously served on the Board of Directors and as President of the Committee of 100, which is a business organization that promotes responsible economic development in the state of Delaware. In 2019, Ms. Taylor was appointed to the Board of Directors of the Delaware Nature Society, a non- profit organization dedicated to connecting people with the natural world to improve the environment through education, advocacy, and conservation. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John R. Eisenbrey, Jr.  | 70 | **Biography:** Director since 1993 – Small Business Executive. For more than 40 years, Owner and President of Bear Industries, Inc., a contracting firm providing building fire sprinkler protection installations for businesses throughout the Delmarva Peninsula. Mr. Eisenbrey served on the Board of Trustees of St. Andrews School between 2021 and 2024. Mr. Eisenbrey is the nephew of Dian C. Taylor and the cousin of Nicholle R. Taylor. He serves on the Audit; Governance and Nominating; and Compensation Committees. <br> **<br>Qualifications:** The Board has determined that Mr. Eisenbrey's hands-on experience as a business owner in one of our primary geographic regions qualifies him to be a member of the Board. For more than 40 years, Mr. Eisenbrey has been the Owner and President of a privately held contracting firm providing fire sprinkler protection installations for businesses throughout the Delmarva Peninsula. Mr. Eisenbrey is a past President of the Delaware Contractors Association. Mr. Eisenbrey's operating business background provides experience with operational, technical, and regulatory matters also applicable to our water business. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Michael Houghton, Esq.  | 69 | **Biography:** Director appointed September 2018 – Mr. Houghton retired as of January 1, 2022 as Partner from the law firm of Morris Nichols Arsht & Tunnell in Wilmington, Delaware, and continued as special counsel to the firm until September 30, 2023. He was admitted to practice law in Delaware in 1982, before the U.S. District Court for the District of Delaware in 1983 and before the U.S. Court of Appeals for the Third Circuit in 1985. He served a clerkship with the Delaware Court of Chancery in 1982-1983. Mr. Houghton's legal expertise involved the representation of governmental entities, such as the Delaware River & Bay Authority. He has also represented banks, trust companies, insurance companies and public utilities in commercial transactions and before regulatory authorities and state, county, and local governments and in legislative and public policy matters before Delaware government. Mr. Houghton has also advised numerous entities, including Fortune 500 companies, on unclaimed property issues and has represented numerous companies in connection with unclaimed property audits and voluntary disclosure matters. He has been selected for inclusion in The Best Lawyers in America from 2009-2023. Mr. Houghton is a member of the Board of Governors of the Delaware State Chamber of Commerce and the Rockefeller Trust Company of Delaware. He is a past member of the Pete du Pont Freedom Foundation, the Board of the Delaware Bar Foundation, a Trustee of the Uniform Law Foundation, a Past President of the Delaware State Bar Association and a Past President of the National Conference of Commissioners on Uniform State Laws. He was appointed in 2017 by Delaware Governor John Carney to serve as Chair of the Delaware Economic and Financial Advisory Council and in 2023 to the Delaware Marijuana Appeals Commission and the Delaware Environmental Appeals Board and in December 2024 to the Delaware River and Bay Authority. Mr. Houghton serves on the Audit; Compensation; and Governance and Nominating Committees. <br>**<br>Qualifications:** Mr. Houghton's legal and regulatory experience and extensive involvement in Delaware legislative and public policy matters are attributes that provide valuable insight and benefit as the Company continues its growth in Delaware. The Board has determined that Mr. Houghton's more than 40 years of experience makes him well qualified to serve on the Board. |
| Salvatore J. Rossi, Jr. | 59 | **Biography**: Director since July 2025. Mr. Rossi retired June 2025 from Bank of America, where he served as head of Prepaid Card Unemployment Programs at Bank of America, N.A. from September 2021 through June 2025 and President of Bank of America Delaware from April 2010 through June 2025. He joined Bank of America full-time in 1989 and prior to his most recent role, starting in 2018, he held the position of Global Compliance and Operational Risk Operations executive. Previously, he was also Bank of America's Consumer and Global Wealth & Investment Management Chief Risk Officer. Mr. Rossi serves on the Boards of Delaware State University, Christiana Care, The Grand Opera House and REACH Riverside. He is also a member of the Delaware State Chamber of Commerce Board of Governors. <br>**<br>Qualifications:** The Board determined that Mr. Rossi's vast financial expertise, along with his extensive knowledge in risk management and understanding of the Delaware community, make him well qualified to serve on the Board. Mr. Rossi serves on the Company's Audit Committee, Compensation Committee and Governance and Nominating Committee. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dian C. Taylor  | 80 | **Biography:** Director since 1991 – Chair of the Board from July 1993 to February 2025. Ms. Taylor served as Chief Executive Officer of the Company from September 1992 to January 2025. Prior to joining the Company, Ms. Taylor had extensive marketing and small business ownership experience. She was formerly a consultant to the Small Business Development Center at the University of Delaware from February 1991 to August 1991 and Owner and President of Achievement Resources Inc. from 1977 to 1991. Achievement Resources, Inc. specialized in strategic planning, marketing, entrepreneurial and human resources development consulting. Ms. Taylor was a marketing director for SMI, Inc. from 1982 to 1985. Ms. Taylor is the aunt of John R. Eisenbrey, Jr. and Nicholle R. Taylor. <br>**<br>Qualifications:** Ms. Dian Taylor's experience as President and Chief Executive Officer of the Company for over 32 years gives her extensive knowledge regarding the Company and the complex issues facing smaller companies. Ms. Taylor has served as President of the National Association of Water Companies, a trade organization of the investor-owned water utility industry. Ms. Taylor also has served as a Commissioner for the Delaware River and Bay Authority, on the Delaware Economic and Financial Advisory Council, as a Regional Advisory Board Member for Citizens Bank, on the Board of Governors of the Delaware State Chamber of Commerce, on the Executive Committee of the Delaware Business Round Table, American Heart Association, Committee of 100 and the Delaware Council on Economic Education, and as a Trustee of the Delaware Grand Opera and the Christiana Care Hospital. The Board views Ms. Taylor's experience with various aspects of the utility industry and her demonstrated leadership roles in business and community activities as important qualifications, skills, and experiences for the Board's conclusion that Ms. Taylor should serve as a director of the Company. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David B. Spacht  | 66 | Chief Financial Officer of the Company since January 1995 and President of Artesian Wastewater Management, Inc. since August 2019. Mr. Spacht joined the Company in 1980 and has held various executive and management level positions. Mr. Spacht has worked closely with the Public Service Commission for over 40 years on developing rates and regulations in Delaware. He has also worked closely with the Maryland Public Service Commission developing rates and regulations as a result of filing for acquisitions. He was selected by the National Association of Regulatory Utility Commissioners Subcommittee on Education as an instructor for their semi-annual course on rate making. Mr. Spacht is a member of several national and local organizations, including the National Association of Water Companies, having served on their Finance Committee for 32 years, and most recently in 2015 joining the Rate and Regulatory Committee. He is also a member of the American Water Works Association; the National Association of Regulatory Utility Commissioners; the International Organization of Management Accountants; and Special Olympics Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Joseph A. DiNunzio, <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CPA, CGMA  | 63 | Prior to retirement on February 6, 2026, Executive Vice President and Secretary of the Company since May 2007 and President of Artesian Water Maryland, Inc. since May 2017. Mr. DiNunzio previously served as Senior Vice President and Secretary since March 2000 and as Vice President and Secretary since January 1995. He served as Secretary of Artesian Resources Corporation and Subsidiaries from July 1992 to January 1995. Prior to joining Artesian in 1989, Mr. DiNunzio was employed by PriceWaterhouseCoopers LLP. He earned a B.S. in Commerce, with concentration in accounting, from the McIntire School of Commerce at the University of Virginia. Mr. DiNunzio is Past Chairman of the Board of the Cecil County Chamber of Commerce and served on the Board of the Cecil Business Leaders from June 2013 to January 2023. He is Past Chairman of the Delaware Chapter of the National Association of Water Companies. Mr. DiNunzio is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jennifer L. Finch, CPA  | 57 | Senior Vice President of Finance & Corporate Treasurer of the Company since November 2020. Prior to that, Ms. Finch was the Assistant Treasurer and Vice President of Finance. Ms. Finch is responsible for the oversight of all aspects of accounting and tax-related matters, corporate financing, and serves as the principal accounting officer. Prior to joining the Company in 2008, Ms. Finch held various accounting positions for Handler Corporation, a homebuilder and developer located in Wilmington, Delaware, where she worked for 14 years. She also worked 4 years for a local certified public accounting firm and has more than 35 years of accounting, auditing, and tax experience. Ms. Finch is a member of the American Institute of Certified Public Accountants and the Delaware Society of Certified Public Accountants. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John M. Thaeder  | 67 | Prior to retirement on February 13, 2026, Senior Vice President of Operations of the Company since May 2007. Mr. Thaeder served as an officer since February 1998. Prior to joining the Company, Mr. Thaeder was with Hydro Group, Inc. from 1996 to 1998 as Southeastern District Manager of Sales and Operations from Maryland to Florida. During 1995 and 1996, he was Sales Manager of the Northeast Division with sales responsibilities from Maine to Florida. Previously, he served as District Manager of the Layne Well and Pump Division of Hydro Group. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Pierre A. Anderson  | 47 | Chief Information Officer and Senior Vice President of the Company since May 19, 2021. Mr. Anderson previously served as Vice President, Director, and Manager of Information Technologies since his December 2006 arrival to the Company. Prior to joining the Company, Mr. Anderson was employed by the Christina School District as Manager, Project & Support Services. From 2000 to 2005, while with MBNA (now Bank of America), he served in several information technology roles. He received his Bachelors of Science degree in Computer Science from Delaware State University and both an MBA and Masters of Science in Information Systems & Technology Management from the University of Delaware's Lerner College of Business & Economics. Mr. Anderson serves on the Boards of Easterseals of Delaware & Maryland's Eastern Shore (Chair), Delaware State Chamber of Commerce, Bancroft Construction Company, and the Delaware Economic & Forecasting Advisory Council (DEFAC). |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Courtney A. Emerson, Esq.  | 42 | General Counsel and Secretary of the Company since February 6, 2026. Previously, General Counsel and Assistant Secretary of the Company since November 2022. Prior to joining the Company in 2021, Ms. Emerson practiced law at Fox Rothschild LLP. She previously served as an emergency manager for the State of Delaware for nearly a decade and was an educator at a multinational bank. She earned her J.D. from the Delaware Law School of Widener University and her B.A. in Political Science from the University of Delaware. Ms. Emerson is a member of the General Counsel Section of the National Association of Water Companies, the American Bar Association, the Delaware State Bar Association, and the University of Delaware Alumni Lawyers Society. She has served as Vice Chair of the Environmental Section of the Delaware State Bar Association, as Vice Chair of the American Bar Association's Disaster Legal Services Team, and as Vice President of the University of Delaware Alumni Lawyers Society. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Raymond T. Kelly, CPA, CISA  | 41 | Vice President of Information Technology for the Company since November 4, 2022. Mr. Kelly joined Artesian in 2013 as Manager of Business Applications and was promoted to the Director of Information Technology in 2016. Prior to joining the Company he served as a Manager for PricewaterhouseCoopers, where he progressively advanced from an Associate; leading information technology audits, financial audits of publicly traded institutions, and utility meter to cash system engagements. During his time at Artesian, Mr. Kelly, who is responsible for all Information Technology functions, has directly led and overseen all enhancements to the technology portfolio including; enterprise applications, infrastructure, business process automation, analytics, and cybersecurity. Mr. Kelly earned both a Bachelor of Science in Computer Science and Business and a Bachelor of Science in Business and Economics from Lehigh University. He is a Certified Public Accountant, a Certified Information Systems Auditor, and a Chartered Global Management Accountant. He serves on the Finance Committee of the Boys & Girls Club of Delaware and is a member of the American Institute of Certified Public Accountants. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Daniel W. Konstanski  | 41 | Mr. Konstanski is a Board Certified, Professional Engineer since 2005 in the water and wastewater industry. He joined the Company in March of 2014 as a Senior Engineer, was appointed Manager of Engineering in 2019 and was named Vice President of Engineering in October 2022. Mr. Konstanski is responsible for managing and overseeing the Engineering Department's operation and staff as well as directly managing capital projects. His team includes engineers, project managers and subject matter experts who shepherd, analyze, and manage Artesian's extensive water and wastewater assets including treatment, pipeline hydraulics, system modeling, pumped networks, and regulatory matters. During his time at Artesian Mr. Konstanski has managed the permitting, design and construction of multiple new water and wastewater treatment plants as well as renovations of numerous existing facilities, overseen the development of state-of-the-art digital models for both the water and wastewater systems, led efforts to increase self-sufficiency by hundreds of millions of gallons per year and provided input on Artesian's purchase of multiple additional water and wastewater systems. Mr. Konstanski earned his Bachelor of Science in Civil Engineering from Michigan Technological University and his Board Certification from the American Academy of Environmental Engineers. He has been a Licensed Professional Engineer since 2010. Mr. Konstanski is a member of the American Water Works Association and the Water Environment Federation. |

---

------

[**Table of Contents**](#tableOfContents0)

**Corporate Governance**

The executive officers are elected or approved by our Board, or the Board of our appropriate subsidiary, to serve until his or her successor is appointed or shall have been qualified or until earlier death, resignation or removal.

In accordance with the provisions of the Company's By-laws, the Board is divided into three classes. Members of each class serve for three years and one class is elected each year to serve a term until his or her successor shall have been elected and qualified or until earlier resignation or removal. Mr. John R. Eisenbrey, Jr. and Ms. Dian C. Taylor have been nominated for election to the Board of Directors at the Annual Meeting of stockholders to be held on May 6, 2026, to serve for a term lasting until the annual meeting of stockholders to be held in 2029, or until his/her earlier resignation or removal.

The Board has established three standing committees: the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. Information with respect to the Audit, Compensation and Governance and Nominating Committees is set forth below. In addition, the charter for each of the three standing committees of the Board is available on our website, www.artesianwater.com. During the year ended December 31, 2025, the Board held 12 meetings. All incumbent directors attended at least 75% of the aggregate number of meetings of the Board and the committees on which they served, with the exception of Dian Taylor who attended 66.67% of the aggregate meetings.

Dian C. Taylor, the Company's former Chief Executive Officer, served as Chair of the Board until February 2025. Nicholle R. Taylor was appointed to serve as both Chief Executive Officer and Chair of the Board in February 2025. The Board, after considering the size of the Company and the composition of the Board, determined that the combined structure was appropriate. The Board determined that having one person serving as Chair of the Board and Chief Executive Officer ensured a unified leadership of the Board and management and provided potential efficiency in the execution of the strategies and visions of the Board and management. The Board believed that Ms. Taylor's experience and operational knowledge of the business enabled her to effectively perform both roles. Given the limited number of Board members and the practice of open communication with the entire Board, the Company does not have a lead independent director. The Board meets as often as needed and at least twice a year in executive session without any management or non-independent directors present. The Board believes this is an appropriate structure for the Company which provides the appropriate independent oversight. In addition, the Audit Committee and the Compensation Committee regularly consult with the Company's General Counsel to review the various types of risks that affect the Company and to consult on strategies to anticipate such risks. The Board believes this structure has been effective. The Board meets with management on a regular basis to review operational reports, financial updates, strategic development and other matters. Frequent meetings help to promote and ensure open communication with the management team. All Board members are engaged and remain actively involved in their oversight roles. The Board is responsible for oversight of the Company's risk management process. The senior management team is responsible for identifying risks, managing risks and reporting and communicating risks back to the Board.

*<u>Communications with Directors</u>*

Any stockholder wishing to communicate with a director may do so by contacting the Company's Secretary, which will pass to the director written, e-mail or phone communications. The Board has authorized the Secretary to screen frivolous or unlawful communications or commercial advertisements. You may reach the Secretary at Artesian Resources Corporation, 664 Churchmans Road, Newark, DE 19702.

*<u>Director Compensation</u>*

In May 2025, it was approved that each non-employee director shall receive an annual retainer fee of $95,000, to be paid quarterly, and to be prorated based on such director's date of election or retirement. Directors do not receive any additional meeting fees.

In 2025, our directors, other than Dian C. Taylor and Nicholle R. Taylor, whose fees as directors are included in the Summary Compensation Table, received the following compensation:

------

[**Table of Contents**](#tableOfContents0)

**2025 Non-Employee Director Compensation Table**

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br> Name | Fees Earned or<br> Paid in<br> Cash<br> ($) | Stock<br> Awards<br> ($)(1) | <br>All other Compensation <br> ($) | Total<br> ($) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Kenneth R. Biederman (retired in May 2025) | 23750 | 0 |  | 23750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John R. Eisenbrey, Jr.  | 95000 | 34270 |  | 129270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Michael Houghton  | 95000 | 34270 |  | 129270 |
| Salvatore J. Rossi, Jr. (director as of July 2025) | 55500 | 33960 |  | 89460 |

---

1) On May 5, 2025, John Eisenbrey and Michael Houghton each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. The fair market value per share was $34.27, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on May 5, 2025. Subject to continued service, the restricted shares vest May 6, 2026, one year from the date of grant. On July 1, 2025 Salvatore Rossi, Jr. received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. The fair market value per share was $33.96, the closing price of the Class A Non-Voting Stock as recorded on the Nasdaq Global Select Market on July 1, 2025. Subject to continued service, the restricted shares vest May 6, 2026. The number of restricted shares outstanding at December 31, 2025 for each non-employee director is:

---

| | | |
|:---|:---|:---|
|  | Option Shares Outstanding <br> at December 31, 2025 | Restricted Shares Outstanding at December 31, 2025 |
|  John R. Eisenbrey, Jr.  | --- | 1000 |
|  Michael Houghton  | --- | 1000 |
| Salvatore J. Rossi, Jr. | --- | 1000 |

---

*<u>Compensation Committee Interlocks and Insider Participation</u>*

During the year ended December 31, 2025, the members of our Compensation Committee were John R. Eisenbrey, Jr., Michael Houghton and Salvatore J. Rossi, Jr. None of our executive officers serves as a director or as a member of the Compensation Committee, or any other committee serving an equivalent function, of any entity that has one or more of its executive officers serving as members of our Compensation Committee or as a director of our Board. No member of our Compensation Committee has ever been our employee.

*<u>Independence</u>*

In 2025, the Board of Directors determined that Messrs. Eisenbrey, Houghton and Rossi, a majority of the Board, met the independence requirements prescribed by the listing standards of the Nasdaq Global Select Market.

*<u>Audit Committee</u>*

The Audit Committee reviews the procedures and policies relating to the internal accounting procedures and controls of the Company and provides general oversight with respect to the accounting principles employed in the Company's financial reporting. As part of its activities, the Audit Committee meets with representatives of the Company's management and independent accountants. The Audit Committee has considered the extent and scope of non-audit services provided to the Company by its outside accountants and has determined that such services are compatible with maintaining the independence of the outside accountants. The Audit Committee appoints and retains the Company's independent accountants.The Audit Committee consists of Salvatore J. Rossi, Jr., Michael Houghton, and John R. Eisenbrey, Jr., three independent directors. The Board has also determined that each member of the Audit Committee meets the independence requirements prescribed by the listing standards of the Nasdaq Global Select Market and the rules and regulations of the SEC. The Board has further determined that Mr. Rossi, a member of the Audit Committee, is an "audit committee financial expert" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated by the SEC. During 2025, the Audit Committee met 9 times.

------

[**Table of Contents**](#tableOfContents0)

*<u>Compensation Committee</u>*

The Compensation Committee reviews the compensation and benefits provided to key management employees, officers and directors and makes recommendations as appropriate to the Board. The Compensation Committee also determines whether and what amounts should be granted under the 2025 Equity Compensation Plan, or the 2025 Plan, and may make recommendations for amendments to the 2025 Plan. The Compensation Committee is comprised of Salvatore J. Rossi, Jr., John R. Eisenbrey, Jr. and Michael Houghton, three independent directors. The Board of Directors has also determined that each member of the Compensation Committee meets the independence requirements prescribed by the listing standards of the Nasdaq Global Select Market and the rules and regulations of the SEC. During 2025, the Compensation Committee met 5 times.

*<u>Consideration of Director Candidates</u>*

The Governance and Nominating Committee is comprised of Michael Houghton, John R. Eisenbrey, Jr. and Salvatore J. Rossi, Jr.; three independent directors. As part of the formalized nominating procedures, the committee makes recommendations for director nominations to the full Board. Director candidates nominated by stockholders are considered in the same manner, provided the nominations are submitted to the Secretary and copied to the Chairman of the committee on a timely basis and in accordance with the Company's By-laws. Nominations for the election of a directors for the 2026 Annual Stockholders' Meeting was approved by the Governance and Nominating Committee on February 2, 2026.

The Governance and Nominating Committee has determined that no one single criterion should be given more weight than any other criteria when it considers the qualifications of a potential nominee to the Board. Instead, it believes that it should consider the total "skills set" of an individual. In evaluating an individual's skills set, the Governance and Nominating Committee considers a variety of factors, including, but not limited to, the potential nominee's background and education, his or her general business experience, and whether or not he or she has any experience in positions with a high degree of responsibility. In addition, although the Governance and Nominating Committee does not have a policy with regard to the consideration of diversity in identifying director nominees, its charter includes in the Governance and Nominating Committee's duties and responsibilities that it seeks members from diverse backgrounds so that the Board consists of members with a broad spectrum of experience and expertise.

*<u>Code of Ethics</u>*

The Company has adopted a Code of Conduct applicable to all directors, officers (including the Company's chief executive officer, chief financial officer, controller or principal accounting officer, and any person who performs a similar function), and employees. This Code of Conduct satisfies the requirements of a "code of ethics" as defined by applicable rules of the Securities and Exchange Commission and replaces the Company's prior code of conduct for directors, code of conduct for employees, and code of ethics of senior financial officers.

The Code of Conduct is publicly available on the Company's website at www.artesianwater.com. If the Company makes any amendments to the Code of Conduct other than technical, administrative, or other non-substantive amendments, or grants any waivers, including implicit waivers, from a provision of the Code of Conduct to any of the Company's executive officers, the Company will disclose the nature of the amendment or waiver, its effective date, and to whom it applies on its website.

The information on the website listed above is not and should not be considered part of this Annual Report on Form 10-K. It is intended to be an inactive textual reference only and is not incorporated by reference herein.

*<u>Insider Trading Arrangements and Policy</u>*

We are committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules and regulations. As part of this commitment, we have adopted our Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by our directors, officers, employees, consultants and other non-directors or non-employees alike, that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the exchange listing standards applicable to us. A copy of our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.

------

[**Table of Contents**](#tableOfContents0)

**ITEM 11. EXECUTIVE COMPENSATION** 

**COMPENSATION DISCUSSION AND ANALYSIS**

This discussion describes the Company's compensation program for its named executive officers listed in the Summary Compensation Table that immediately follows this discussion. The named executive officers for 2025 are: Nicholle R. Taylor, current President, Chief Executive Officer and Board Chair since February 2025; Dian C. Taylor, former President and Chief Executive Officer until February 2025 who remains a member of the Board; David B. Spacht, Chief Financial Officer; Joseph A. DiNunzio, Executive Vice President & Secretary; John M. Thaeder, Senior Vice President; and Jennifer L. Finch, Corporate Treasurer and Senior Vice President of Finance.

**Objectives of the Company's Compensation Program**

The Compensation Committee believes that the compensation for the Company's executives should serve to attract, motivate and retain seasoned and talented executives responsible for successfully guiding and implementing the Company's strategy. Our strategy is to increase our customer base, revenues, earnings and dividends by expanding our services across the Delmarva Peninsula, thereby providing our stockholders with a long-term, satisfactory return on their investment.

To implement our strategy, it is critical that our executives remain focused on:

* ensuring superior customer service;

* continuously improving our efficiency and performance; 

* managing risk appropriately; 

* expanding our franchised service territory and customer base at a consistent and sustainable rate - including by acquisitions - where growth is strong and demand is increasing; 

* identifying and developing dependable sources of supply; 

* constructing and maintaining reliable treatment facilities and water delivery and wastewater collection systems; 

* developing and continuing positive relationships with regulators, municipalities, developers and customers in both existing and prospective service areas; and 

* developing a skilled and motivated work force that is adaptive to change.

To accomplish our strategy, our compensation program's objectives are to:

* provide compensation levels that are competitive with those provided by other companies with which we may compete for executive talent; 

* motivate and reward contributions and performance aligned with the Company's objectives; 

* attract and retain qualified, seasoned executives; and 

* ensure the Company maintains a pay-for-performance executive compensation program.

The compensation program rewards overall qualitative contributions and performance of each individual towards the Company's strategy. In reviewing the Company's overall compensation program in the context of the risks identified in the Company's risk management processes, the Compensation Committee does not believe that the risks the Company faces are correlated with the Company's compensation programs. Therefore, the Compensation Committee believes that there is an appropriate level of risk in the Company's compensation program design and does not believe that its approach to the design and administration of its incentive programs needs to change in order to mitigate compensation risk.

------

[**Table of Contents**](#tableOfContents0)

**Elements of the Company's Compensation Program**

The elements of the Company's compensation program include:

* Base Salary

* Cash Bonus Award

* Equity Compensation as may be awarded under the 2025 Equity Compensation Plan 

* Employee Benefits

The Company's executive compensation program does not provide for:

* Severance or post-termination agreements 

* Post-retirement benefits 

* Defined benefit pension benefits or any supplemental executive retirement plan benefits 

* Non-qualified deferred compensation 

* Change-in-Control agreements

*Compensation Process*

The Compensation Committee relies on various factors in determining executive compensation, including the overall financial performance of the Company, combined with an executive officer's individual performance, progress in meeting strategic corporate objectives, and changes in responsibilities, as well as the consideration of elements of compensation not provided for by the Company in comparison to its peers. The Compensation Committee generally exercises broad discretion in setting the compensation of the Chief Executive Officer and other executives and primarily considers the performance of the management team as a group, the Chief Executive Officer's assessment of other executives' performance and compensation recommendations with respect to the other executive officers as part of its process.

The Compensation Committee engaged Pearl Meyer & Partners as a compensation consultant during the years 2022 and 2023 to provide it with independent advice on executive compensation matters. The following peer group was utilized: American States Water Company; Chesapeake Utilities Corporation; Consolidated Water Company Ltd.; Fluence Corporation Limited; Global Water Resources, Inc.; Middlesex Water Company; RGC Resources Incorporated; SJW Group; The York Water Company; urban-gro, Incorporated; Williams Industrial Services Group; American Water Works Company, Inc.; California Water Service Group; and Essential Utilities, Inc.

*Base Salary*

Base salaries for Company executives are set at levels considered appropriate to attract and retain seasoned and talented personnel. In 2025, the Compensation Committee increased the base salary of Nicholle R. Taylor by 31% for her appointment to Chief Executive Officer. In 2025, the Compensation Committee increased the base salary of the Chief Financial Officer and the Senior Vice President and Treasurer by 3%. Dian C. Taylor no longer received a base salary following her retirement as Chief Executive Officer in February 2025, and the Compensation Committee did not increase the base salary of the other named executive officers.

The Compensation Committee determines actual base salaries for each executive other than the Chief Executive Officer based upon:

* recommendations provided by the Chief Executive Officer; 

* internal equity with other executives and Company personnel; 

* individual executive performance; and 

* individual contributions to the Company's strategic objectives.

The Compensation Committee considers the same factors in determining the base salary of the Chief Executive Officer, without any recommendation by the Chief Executive Officer. The Chief Executive Officer was not present during deliberations on her compensation.

------

[**Table of Contents**](#tableOfContents0)

*Cash Bonus and Equity Compensation Awards*

Annually, the Compensation Committee determines whether any Cash Bonus and/or Equity Compensation Awards should be granted to any of the executives. The Cash Bonus and Equity Compensation Awards are intended to reward executives for their contributions towards meeting the Company's strategic objectives. Cash Bonus and Equity Compensation Awards are entirely discretionary and are based upon a qualitative assessment conducted by the Compensation Committee in the case of the Chief Executive Officer and by the Compensation Committee and the Chief Executive Officer in the case of other executives. Recognizing both the executive team's and each individually named executive officer's contributions toward meeting the Company's strategic objectives, cash bonuses were awarded to the Chief Executive Officer and named executive officers in 2025, other than Dian C. Taylor.

**Other Compensation**

Prior to May 2025, both Dian C. Taylor and Nicholle R. Taylor received compensation for their services as Directors, which compensation was equivalent to that provided to all other directors for Stock Awards and less for retainers. See "2025 Non-Employee Director Compensation Table."

The Company's named executive officers receive a limited number of other benefits as part of a competitive compensation package, which constitutes in the aggregate only a small percentage of their total compensation. As discussed below, these benefits include:

* a Company contribution under our 401(k) Plan;

* participation in our group health plans, which is generally available to all employees, as well as reimbursements for eligible medical expenses not otherwise covered by the Company's medical insurance plan under the Officer's Medical Reimbursement Plan. 

Our executive officers do not receive tax reimbursement for imputed income derived from any of these benefits.

All amounts are included in the "All Other Compensation" column in the Summary Compensation Table and the accompanying footnotes to the table.

**The Role of Management in the Executive Compensation Process**

Our Director of Human Resources typically assists the Compensation Committee by preparing and providing information showing:

* current executive compensation levels; 

* executive compensation recommendations made by the Chief Executive Officer; 

* salary grade minimum, midpoint and maximums for each executive, based on information provided by the Company's compensation consultant retained in 2023, adjusted annually; and 

* actual base salary, cash bonus and equity compensation for each of the prior three years for each executive.

Our Chief Executive Officer meets with the Compensation Committee and provides input regarding the contributions of each executive towards the Company's strategic objectives and each executive's overall performance that formed the basis for her recommendations to the Compensation Committee. The final decisions regarding compensation for each executive are made by the Compensation Committee. Please refer to Compensation Committee Interlocks and Insider Participation section for more information.

**Compensation Committee Report**

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company's Annual Report on Form 10-K.

---

| |
|:---|
| The Compensation Committee, |
| John R. Eisenbrey, Jr, Chairman |
| Michael Houghton |
| Salvatore J Rossi, Jr. |

---

------

[**Table of Contents**](#tableOfContents0)

**CEO Pay Ratio**

The 2025 compensation disclosure ratio of the median annual total compensation of all Company employees to the annual total compensation of Nicholle R. Taylor, the Company's Chief Executive Officer is as follows:

---

| | |
|:---|:---|
|  | 2025 Total Compensation |
| Median employee total annual compensation | $&nbsp;&nbsp;83476 |
| Annual total compensation of Nicholle R. Taylor, our Chief Executive Officer as of the year ended December 31, 2025 | $&nbsp;&nbsp;719431 |
| Ratio of CEO to median employee compensation | 9:1 |

---

For simplicity, we identified the median employee by examining the base annual salary for all individuals, excluding our CEO, who were employed by us on October 31, 2025. We included all employees, whether employed on a full-time, part-time, or seasonal basis. We believe that the use of base annual salary compensation, excluding overtime, is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees and believe that it provides a reasonable estimate of the pay ratio calculated in a manner consistent with Item 402(u) of Regulation S-K. After identifying the median employee by examining base annual salary excluding overtime, we calculated annual total compensation, including overtime, for such employee using the same methodology we use for our named executive officers set forth in the 2025 Summary Compensation Table. Dian C. Taylor served as our Chief Executive Officer until February 2025, when she was succeeded by Nicholle R. Taylor. As permitted under Item 402(u) of Regulation S-K, we calculated our CEO Pay Ratio based on the annual total compensation, as reported in the Summary Compensation table, further adjusted by annualizing Nicholle R. Taylor's salary as Chief Executive Officer and removing her 2025 Board retainer fees, which she no longer receives as an employee-director.

**<u>Summary Compensation Table:</u>**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name and Principal Position  | Year | Salary ($) | Bonus ($) | Stock<br> Awards<br> ($)(1) | All Other<br> Compensation<br> ($)(2),(3),(4) | Total ($) |
|  Nicholle R. Taylor, Chair, President  | 2025 | 516204 | 75000 | 34980 | 61190 | 687374 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and Chief Executive Officer (5)  | 2024 | 419334 | 100000 | 39480 | 112637 | 671451 |
|  | 2023 | 410397 | 0 | 54520 | 106427 | 571344 |
| Dian C. Taylor, Former Chair, President | 2025 | 127592 | 0 | 34980 | 102035 | 264607 |
| and Chief Executive Officer (5) | 2024 | 648877 | 0 | 39480 | 193361 | 881718 |
|  | 2023 | 635787 | 0 | 54520 | 159227 | 849534 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David B. Spacht, Chief Financial  | 2025 | 463728 | 54500 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 39596 | 557824 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Officer  | 2024 | 451401 | 75000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 38216 | 564617 |
|  | 2023 | 426366 | 0 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 37444 | 463810 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Joseph A. DiNunzio, Executive Vice  | 2025 | 486054 | 75000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 43335 | 604389 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; President & Secretary (6) | 2024 | 472434 | 78500 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 40411 | 591345 |
|  | 2023 | 462371 | 0 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 38594 | 500965 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John M. Thaeder, Senior Vice | 2025 | 373547 | 75000 | N/A | 30939 | 479486 |
| President (6)  | 2024 | 363067 | 75000 | N/A | 24072 | 462139 |
|  | 2023 | 355333 | 2500 | N/A | 24653 | 382486 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jennifer L. Finch, Senior Vice  | 2025 | 400971 | 50000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 23091 | 474062 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; President & Treasurer  | 2024 | 386618 | 75000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 17510 | 479128 |
|  | 2023 | 378382 | 1500 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;N/A | 18159 | 398041 |

---

------

[**Table of Contents**](#tableOfContents0)

(1) On May 5, 2025, Nicholle R. Taylor and Dian C. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. The award was valued at the fair market value on the date of the award (last reported sale price on the date of award) of $34.27 per share. Subject to continued service the restricted shares vest one year from the date of grant. On May 6, 2024, Dian C. Taylor and Nicholle R.. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. Each award was valued at the fair market value on the date of the award of $37.07 per share. The restricted shares vested one year after the date of grant. On May 9, 2023, Dian C. Taylor and Nicholle R. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock. The award was valued at the fair market value on the date of the award of $54.88 per share. The restricted shares vested one year after the date of grant.

(2) Under the Company's defined contribution 401(k) Plan, the Company contributes two percent of an eligible employee's gross earnings. The Company also matches 50 percent of the first six percent of the employee's gross earnings that the employee contributes to the 401(k) Plan. In addition, all employees hired before April 26, 1994 and under the age of 60 at that date are eligible for additional contributions to the 401(k) Plan. Employees over the age of 60 at that date receive Company paid medical, dental and life insurance benefits upon retirement. The Company will not provide the additional 401(k) or medical, dental and life insurance benefits to any other current or future employees. In 2025, Company contributions to the 401(k) Plan under terms available to all other employees based upon their years of service and plan eligibility were made in the amounts of:

---

| | |
|:---|:---|
|  Nicholle R. Taylor  | $38500.0 |
| Dian C. Taylor | $14035.0 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David B. Spacht  | $38500.0 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Joseph A. DiNunzio  | $38500.0 |
|  John M. Thaeder | $17500.0 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jennifer L. Finch  | $17500.0 |

---

(3) Included in the "All Other Compensation" column in the table above are amounts received by Nicholle R. Taylor and Dian C. Taylor as compensation for Board retainers in 2025 of $16,750 and $88,000, respectively.

(4) Executive officers are reimbursed for eligible medical expenses not otherwise covered by the Company's medical insurance plan under the Officer's Medical Reimbursement Plan. Amounts reimbursed are included in the "All Other Compensation" column in the table above. In 2025, Joseph A. DiNunzio, John M. Thaeder and Jennifer L. Finch received reimbursements of $4,835, $10,347 and $5,591, respectively.

(5) In February 2025, the Board appointed Nicholle R. Taylor as the Company's Chair of the Board, President and Chief Executive Officer. Dian C. Taylor remains a member of the Board but is no longer serving as the Company's President and Chief Executive Officer.

(6) Joseph A. DiNunzio retired effective February 6, 2026 and John M. Thaeder retired effective February 13, 2026.

------

[**Table of Contents**](#tableOfContents0)

Grants of Plan-Based Awards Table

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Name | Grant Date | Vest Date | All Other<br> Stock Awards:<br> Number of <br> Shares of <br> Stock or Units<br> (#) | All Other Option<br> Awards: Number<br> of Securities<br> Underlying<br> Options (#) | Exercise or<br> Base Price<br> of Option<br> Awards<br> ($/share) | Grant Date Fair<br> Value of Stock &<br> Option Awards ($) |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nicholle R. Taylor  | 05/05/2025 | 05/05/2026 | 1000 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | 34270 |
| Dian C. Taylor&nbsp;&nbsp;&nbsp;&nbsp; | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;05/05/2025&nbsp;&nbsp;&nbsp;&nbsp; | 05/05/2026 | 1000 |  |  | 34270 |
| David B. Spacht | 09/16/2025 | 09/16/2026 | 750 |  |  | 24060 |
| Jennifer L. Finch | 09/16/2025 | 09/16/2026 | 750 |  |  | 24060 |

---

On May 5, 2025, Nicholle R. Taylor and Dian C. Taylor each received a restricted stock award of 1,000 shares of Class A Non-Voting Stock, as noted in the table above. The awards were valued at the fair market value on the date of the award (last reported sale price on the date of award) of $34.27 per share. The restricted stock award vests one year from the date of grant.

On September 16, 2025, David B. Spacht and Jennifer L. Finch each received a restricted stock award of 750 shares of Class A Non-Voting Stock, as noted in the table above. The awards were valued at the fair market value on the date of the award (last reported sale price on the date of award) of $32.08 per share. The restricted stock award vests one year from the date of grant.

Outstanding Equity Awards at Fiscal Year-End Table

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Option Awards  | Option Awards  | Option Awards  | Option Awards  |
| Name | Number of Securities<br> Underlying<br> Unexercised<br> Options(#)<br> Exercisable | Number of Securities<br> Underlying<br> Unexercised Options<br> (#) Unexercisable | Option Exercise Price($) | Option<br> Expiration<br> Date |
| Nicholle R. Taylor | 0 |  | 0 | 0 |

---

Option Exercises and Stock Vested Table

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Option Awards  | Option Awards  | Stock Awards  | Stock Awards  |
| <br> Name  | <br>Vest Date | Number of<br> Shares Acquired<br> on Exercise (#)  | Value<br> Realized on<br> Exercise ($)  | Number of<br> Shares Acquired<br> on Vesting (#)  | Value<br> Realized on<br> Vesting ($)  |
| Nicholle R. Taylor  | 05/06/2025 | 0 | 0 | 1000 | 34980 |
| Dian C. Taylor | 05/06/2025 | 0 | 0 | 1000 | 34980 |

---

**Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information**

In response to Item 402(x)(1) of Regulation S-K, the Company does not currently grant new awards of stock options, stock appreciation rights, or similar option-like instruments. Accordingly, the Company has no specific policy or practice on the timing of awards of such options in relation to the disclosure of material nonpublic information by the Company. In the event the Company determines to grant new awards of such options, the Board will evaluate the appropriate steps to take in relation to the foregoing.

------

[**Table of Contents**](#tableOfContents0)

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS&nbsp;&nbsp;&nbsp;&nbsp;**

**Security Ownership of Certain Beneficial Owners and Management**

The following table sets forth the beneficial ownership of the equity securities of the Company, as of March 10, 2026 for each director, each named executive officer, each beneficial owner of more than five percent (5%) of the outstanding shares of the Company's voting securities and all directors and executive officers as a group, based in each case on information furnished to the Company. Unless otherwise indicated, the address of each beneficial owner of voting securities listed below is c/o 664 Churchmans Road, Newark, Delaware 19702.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Class A Non-Voting Common Stock(1) | Class A Non-Voting Common Stock(1) | Class B Common Stock(1) | Class B Common Stock(1) |
|  | Shares | Percent(2) | Shares | Percent(2) |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dian C. Taylor (3) <br>| 149094 | 1.6 | 159509 | 18.1 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John R. Eisenbrey, Jr. (3)(4)(5) <br>| 56751 | \* | 45707 | 5.2 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nicholle R. Taylor (3)(6) <br>| 29481 | \* | 281719 | 32 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Michael Houghton (3) | 4000 | \* |  |  |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Joseph A. DiNunzio  | 15947 | \* | 203 | \* |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David B. Spacht  | 4519 | \* | 189 | \* |
| John M. Thaeder | 20980 | \* | 1350 | \* |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jennifer L. Finch  | 1998 | \* |  |  |
| Salvatore J. Rossi, Jr. (3) | 1000 | \* |  |  |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Louisa Taylor Welcher <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 219 Laurel Avenue <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Newark, DE 19711 <br>| 96308 | 1 | 135862 | 15.4 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Directors and Executive Officers as a Group (13 Individuals)(3)(4)(5) | 288080 | 3.1 | 488677 | 55.4 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* less than 1%  |  |  |  |  |

---

(1) The nature of ownership consists of sole voting and investment power unless otherwise indicated. The amount also includes all shares issuable to such person or group upon the exercise of options or vesting of restricted shares held by such person or group to the extent such options are exercisable or restricted shares vest within 60 days after March 10, 2026.

(2) The percentage of the total number of shares of the class outstanding is shown where that percentage is one percent or greater. Percentages for each person are based on the aggregate number of shares of the applicable class outstanding as of March 10, 2026, and all shares issuable to such person upon the exercise of options or vesting of restricted shares held by such person to the extent such options are exercisable or restricted shares vest within 60 days of that date.

(3) Includes vesting of restricted shares and options to purchase shares of the Company's Class A Non-Voting Stock, as follows: Ms. D. Taylor (1,000 shares); Mr. Rossi, Jr. (1,000 shares); Mr. Eisenbrey, Jr. (1,000 shares); Ms. N. Taylor (1,000 shares); Mr. Houghton (1,000 shares).

------

[**Table of Contents**](#tableOfContents0)

(4) 89,223 shares were pledged by Mr. Eisenbrey, Jr. as collateral for a loan.

(5) Includes 780 shares of the Class B Stock owned by a trust, of which Mr. Eisenbrey, Jr. is a trustee and has a beneficial ownership interest, and 1,555 shares of the Class B Stock held in custodial accounts for Mr. Eisenbrey, Jr.'s daughters.

(6) Includes 799 shares of the Class A Non-Voting Stock and 45 shares of the Class B Stock held in custodial accounts for Ms. N. Taylor's daughter and 311 shares of Class A Non-Voting Stock held by her spouse.

The following table shows all persons who are known by the Company, as of March 10, 2026, to be the beneficial owner of more than five percent (5%) of the outstanding shares of the Company's Class A Non-Voting Stock, and who do not otherwise own Class B Stock.

---

| | | |
|:---|:---|:---|
|  | Class A Non-Voting Common Stock | Class A Non-Voting Common Stock |
|  | Shares | Percent |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BlackRock, Inc. (1) <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 50 Hudson Yards <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; New York, NY 10001 <br>| 961054 | 10.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Vanguard Group (2) <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 100 Vanguard Blvd.<br> Malvern, PA 19355<br>| 530947 | 5.7 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; T. Rowe Price Investment Management, Inc. (3) <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101 E. Pratt Street <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Baltimore, MD 21201  | 884334 | 9.4 |

---

(1) Pursuant to a Schedule 13G/A filed by BlackRock, Inc., or BlackRock, with the SEC on February 6, 2026, BlackRock is the beneficial owner of 961,054 shares of Class A Non-Voting Stock, and, to the extent it has voting rights under Delaware law, BlackRock has reported having sole voting power with respect to 961,054 shares and shared voting power with respect to 0 shares, as well as sole dispositive power with respect to 961,054 shares and shared dispositive power with respect to 0 shares.

(2) Pursuant to a Schedule 13G filed by The Vanguard Group, or Vanguard, with the SEC on February 13, 2024, Vanguard is the beneficial owner of 530,947 shares of Class A Non-Voting Stock, and, to the extent it has voting rights under Delaware law, Vanguard has reported having sole voting power with respect to 0 shares and shared voting power with respect to 13,696 shares, as well as sole dispositive power with respect to 508,599 shares and shared dispositive power with respect to 22,438 shares.

(3) Pursuant to a Schedule 13G/A filed by T. Rowe Price Investment Management, Inc., or T. Rowe Price, with the SEC on November 11, 2024, T. Rowe Price is the beneficial owner of 884,334 shares of Class A Non-Voting Stock, and, to the extent it has voting rights under Delaware law, T. Rowe Price has reported having sole voting power with respect to 878,473 shares and shared voting power with respect to 0 shares, as well as sole dispositive power with respect to 884,334 shares and shared dispositive power with respect to 0 shares.

Securities Authorized for Issuance under Equity Compensation Plans

------

[**Table of Contents**](#tableOfContents0)

*<u>Equity Compensation Plan Information</u>*

The following table provides information on the shares of our Class A Non-Voting Stock that may be issued upon exercise of outstanding stock options and vesting of awards as of December 31, 2025 under the Company's stockholder approved stock plans.

---

| | | | |
|:---|:---|:---|:---|
| Equity Compensation Plan Information | Equity Compensation Plan Information | Equity Compensation Plan Information | Equity Compensation Plan Information |
| Plan category | Number of securities to be issued<br>upon exercise of outstanding options<br>(a) | Weighted-average exercise price of<br>outstanding options | Number of securities remaining<br>available for future issuance under<br>equity compensation plans (excluding<br>securities reflected in column (a)) |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Equity compensation plans approved by security holders  | 11000 | $0 | 263932 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total  | 11000 | $0 | 263932 |

---

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

We have three directors who are considered independent under the Nasdaq listing standards: John R. Eisenbrey, Jr., Michael Houghton, and Salvatore "Chip" Rossi, Jr.

**Review and Approval of Transactions with Related Persons**

As set forth in the Company's Audit Committee Charter, the Audit Committee is responsible for reviewing and, if appropriate, approving all related-party transactions between us and any officer, director, any person known to be the beneficial owner of more than 5% of any class of the Company's voting securities or any other related person that would potentially require disclosure. We expect that any transactions in which related persons have a direct or indirect interest will be presented to the Audit Committee for review and approval. While neither the Audit Committee nor the Board have adopted a written policy regarding related-party transactions, the Audit Committee considers such information as it deems important to determine whether the transaction is on reasonable and competitive terms and is fair to the Company. In addition, the Audit Committee makes inquiries to our management and our auditors when reviewing such transactions.

Related person transactions include any transaction in which (1) the Company is a participant, (2) any related person has a direct or indirect material interest and (3) the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company's total assets at year-end for the last two completed fiscal years, but excludes certain type of transactions where the related person is deemed not to have a material interest. A related person means: (a) any person who is, or at any time since the beginning of the Company's last fiscal year was, a director, an executive officer or a director nominee; (b) any person known to be the beneficial owner of more than 5% of any class of the Company's voting securities; (c) any immediate family member of a person identified in items (a) or (b) above, meaning such person's spouse, parent, stepparent, child, stepchild, sibling, mother- or father-in-law, son- or daughter-in-law, brother- or sister-in-law or any other individual (other than a tenant or employee) who shares the person's household; or (d) any entity that employs any person identified in (a), (b) or (c) or in which any person identified in (a), (b) or (c) directly or indirectly owns or otherwise has a material interest.

------

[**Table of Contents**](#tableOfContents0)

In its review and approval or ratification of related person transactions (including its determination as to whether the related person has a material interest in a transaction), the Audit Committee will consider, among other factors:

* the nature of the related person's interest in the transaction;

* the material terms of the transaction, including, without limitation, the amount and type of transaction;

* the importance of the transaction to the related person;

* the importance of the transaction to the Company;

* whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the Company; and

* any other matters the Audit Committee deems important or appropriate.

The Audit Committee intends to approve only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders.

**Related Party Transactions**

There were not any related party transactions during the years ended December 31, 2025 and December 31, 2024.

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES** 

**Fees Billed by Independent Registered Public Accounting Firm**

The following table sets forth the aggregate contract fees billed to the Company for the fiscal year 2025 and 2024 by the independent registered public accounting firm, BDO USA, P.C.

---

| | | |
|:---|:---|:---|
| *(In thousands)* | **2025** | 2024 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Audit Fees  | $**570** | $470 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Audit-Related Fees  | **40** | 38 |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tax Fees  |  |  |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All Other Fees  |  |  |
|  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Fees  | $**610** | $508 |

---

*Audit Fees:* consist primarily of fees for the audits of our financial statements included in our Annual Report on Form 10-K; the reviews of the financial statements included in our Quarterly Reports on Form 10-Q; and fees billed for assurance, services related to registration statements and other documents issued in connection with securities and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements. In 2025 the independent registered public accounting firm provided services related to the Company's Form S-8 Registration Statement.

*Audit-Related Fees*: consist of fees for services related to the audit of the Company's 401(k) Plan.

*Tax Fees:* consist of fees for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance, return preparation and tax audits. The independent registered public accounting firm did not provide any tax services to the Company in 2025 and 2024.

*All Other Fees:* consist of fees for services other than described above. The independent registered public accounting firm did not provide any other services to the Company in 2025 and 2024.

Pursuant to our policy, the Audit Committee pre-approves audit and tax services for the year as well as non-audit services to be provided by the independent registered public accounting firm. Any changes in the amounts quoted are also subject to pre-approval by the committee. Any audit related fees and tax fees paid are pre-approved by the committee.

The Audit Committee of the Company's Board of Directors has considered whether BDO's provision of the services described above for the fiscal year ended December 31, 2025 is compatible with maintaining its independence.

------

[**Table of Contents**](#tableOfContents0)

**PART IV**

**ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following documents are filed as part of this report: | Page(s)\* |
| (1) | Financial Statements: |  |
|  | [Reports of Independent Registered Public Accountants (BDO USA, P.C.; Philadelphia, PA; PCAOB ID# 243)](#Report_of_Independent) | 56 -57 |
|  | [Consolidated Balance Sheets at December 31, 2025 and 2024](#BS) | 28 |
|  | [Consolidated Statements of Operations for the three years ended December 31, 2025](#IS) | 29 |
|  | [Consolidated Statements of Cash Flows for the three years ended December 31, 2025](#CF) | 30 |
|  | [Consolidated Statements of Changes in Stockholders' Equity for the three years ended December 31, 2025](#SE) | 31 |
|  | [Notes to Consolidated Financial Statements](#Notes) | 32 - 55 |
| (2) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits: see the exhibit list below | 74 |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\* Page number shown refers to page number in this Annual Report on Form 10-K |  |

---

**ITEM 16. FORM 10-K SUMMARY**

Information with respect to this item is not required and has been omitted at our option.

------

[**Table of Contents**](#tableOfContents0)

ARTESIAN RESOURCES CORPORATION

FORM 10-K ANNUAL REPORT

YEAR ENDED DECEMBER 31, 2025

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **EXHIBIT LIST**  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Exhibit** <br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Number**  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Description**  |
| [3.1](https://www.sec.gov/Archives/edgar/data/863110/000086311024000044/ex3_html.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amended and Restated By-laws of Artesian Resources Corporation incorporated by reference to Exhibit 3.1 filed with the Company's Form 10-Q filed on November 8, 2024.  |
| [3.2](https://www.sec.gov/Archives/edgar/data/863110/000095011604001337/ex3-1.txt)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restated Certificate of Incorporation of the Company effective April 28, 2004 incorporated by reference to Exhibit 3.1 filed with the Company's Form 10-Q filed on May 3, 2004 for the quarterly period ended March 31, 2004. <br>|
| [4.1](https://www.sec.gov/Archives/edgar/data/863110/000086311022000069/ex4.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Amendment to Second Amended and Restated Revolving Credit Agreement between Artesian Water Company, Inc. and CoBank, ACB dated October 25, 2022. Incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q filed on November 4, 2022 for the quarter ended September 30, 2022.  |
| [4.2](https://www.sec.gov/Archives/edgar/data/863110/000086311022000022/exhibit4-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Twenty-Fifth Supplemental Indenture dated as of April 29, 2022, between Artesian Water Company, Inc. and Wilmington Trust Company, as trustee. Incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q filed on May 5, 2022 for the quarter ended March 31, 2022.  |
| [4.3](https://www.sec.gov/Archives/edgar/data/863110/000086311022000022/exhibit4-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bond Purchase Agreement, dated April 29, 2022, by and between Artesian Water Company, Inc., and CoBank, ACB.  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Incorporated by reference to Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q filed on May 5, 2022 for the quarter ended March 31, 2022.  |
| [4.4](https://www.sec.gov/Archives/edgar/data/863110/000086311019000025/exhibit4-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Twenty-Fourth Supplemental Indenture dated as of December 17, 2019, between Artesian Water Company, Inc., subsidiary of the Company, and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.1 filed with the Company's Form 8-K filed on December 19, 2019.  |
| [4.5](https://www.sec.gov/Archives/edgar/data/863110/000086311019000025/exhibit4-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bond Purchase Agreement, dated December 17, 2019 by and between Artesian Water Company, Inc., subsidiary of the Company, and the Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.2 filed with the Company's Form 8-K filed on December 17, 2019.  |
| [4.6](https://www.sec.gov/Archives/edgar/data/863110/000086311018000003/exhibit4-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Twenty-Third Supplemental Indenture dated as of January 31, 2018, between Artesian Water Company, Inc., subsidiary of the Company, and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.1 filed with the Company's Form 8-K filed on February 2, 2018.  |
| [4.7](https://www.sec.gov/Archives/edgar/data/863110/000086311018000003/exhibit4-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bond Purchase Agreement, dated January 31, 2018 by and between Artesian Water Company, Inc., subsidiary of the Company, and CoBank, ACB. Incorporated by reference to Exhibit 4.2 filed with the Company's Form 8-K filed on February 2, 2018.  |
| [4.8](https://www.sec.gov/Archives/edgar/data/863110/000086311017000002/exhibit4-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Twenty-Second Supplemental Indenture dated as of January 18, 2017, between Artesian Water Company, Inc., subsidiary of the Company, and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.1 filed with the Company's Form 8-K filed on January 20, 2017.  |
| [4.9](https://www.sec.gov/Archives/edgar/data/863110/000086311017000002/exhibit4-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bond Purchase Agreement, dated January 18, 2017 by and between Artesian Water Company, Inc., subsidiary of the Company, and CoBank, ACB. Incorporated by reference to Exhibit 4.2 filed with the Company's Form 8-K filed on January 20, 2017.  |
| [4.10](https://www.sec.gov/Archives/edgar/data/863110/000086311018000005/ex4-3.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Amendment to Indenture of Mortgage and to the Sixteenth, Eighteenth and Twentieth Supplemental Indentures dated as of January 18, 2017, between Artesian Water Company, Inc., subsidiary of the Company, and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.3 filed with the Company's Form 10-K for the year ended December 31, 2017 filed on March 15, 2018.  |
| [4.11](https://www.sec.gov/Archives/edgar/data/863110/000086311015000026/letteragreement.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Letter Agreement, dated as of September 15, 2015, by and between Artesian Water Company, Inc. and CoBank ACB. Incorporated by reference to Exhibit 4.1 filed with the Company's Form 8-K filed on September 18, 2015.  |
| [4.12](https://www.sec.gov/Archives/edgar/data/863110/000086311018000005/ex4-4.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Twenty-First Supplemental Indenture dated as of November 20, 2009, between Artesian Water Company, Inc., subsidiary of the Company, and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.4 filed with the Company's Form 10-K for the year ended December 31, 2017.  |
| [4.13](https://www.sec.gov/Archives/edgar/data/863110/000086311008000026/indenture_dec2008.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Twentieth Supplemental Indenture dated as of December 1, 2008, between Artesian Water Company, Inc., subsidiary of the Company, and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.1 filed with the Company's Form 8-K filed on December 4, 2008.  |
| [4.14](https://www.sec.gov/Archives/edgar/data/863110/000086311018000005/ex4-13.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Amendment to Bond Purchase Agreement, dated as of January 18, 2017 by and between Artesian Water Company, Inc., subsidiary of the Company, and CoBank, ACB. Incorporated by reference to Exhibit 4.13 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed on March 15, 2018.  |
| [4.15](https://www.sec.gov/Archives/edgar/data/863110/000086311008000026/bond_agreement-dec 2008.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Bond Purchase Agreement, dated December 1, 2008 by and between Artesian Water Company, Inc., subsidiary of the Company, and CoBank, ACB. Incorporated by reference to Exhibit 4.2 filed with the Company's Form 8-K filed on December 4, 2008.  |
| [4.16](https://www.sec.gov/Archives/edgar/data/863110/000095011605002701/ex10-1.txt)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Eighteenth Supplemental Indenture dated as of August 1, 2005, between Artesian Water Company, Inc., subsidiary of the Company, and Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 filed on August 9, 2005.  |
| [4.17](https://www.sec.gov/Archives/edgar/data/863110/000086311018000005/ex4-10.htm) | Indenture of Mortgage dated July 1, 1961, between Artesian Water Company, Inc., subsidiary of the Company, and the Wilmington Trust Company, as Trustee. Incorporated by reference to Exhibit 4.10 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed on March 15, 2018.. |
| [4.18](https://www.sec.gov/Archives/edgar/data/863110/000086311020000009/ex4-17.htm) | Second Amendment to Master Loan Agreement, dated as of November 13, 2019, by and between Artesian Wastewater Management, Inc. and CoBank, ACB. Incorporated by reference to Exhibit 4.16 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 13, 2020. |
| [4.19](https://www.sec.gov/Archives/edgar/data/863110/000086311020000009/ex4-17.htm) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; First Amendment to Master Loan Agreement, dated as of January 10, 2019, by and between Artesian Wastewater Management, Inc. and CoBank, ACB. Incorporated by reference to Exhibit 4.17 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 13, 2020.<br>|
| [4.20](https://www.sec.gov/Archives/edgar/data/863110/000086311018000021/exhibit4-3.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Guarantee of Payment, dated as of August 8, 2018, by and between Artesian Resources Corporation and CoBank, ACB. Incorporated by reference to Exhibit 4.3 filed with the Company's Form 10-Q filed on August 9, 2018.  |
| [4.21](https://www.sec.gov/Archives/edgar/data/863110/000086311018000021/exhibit4-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Master Loan Agreement, dated as of August 8, 2018, by and between Artesian Wastewater Management, Inc. and CoBank, ACB. Incorporated by reference to Exhibit 4.2 filed with the Company's Form 10-Q filed on August 9, 2018.  |
| [4.22](https://www.sec.gov/Archives/edgar/data/863110/000086311019000019/letteragreementl.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Lock Agreement, dated as of October 8, 2019, by and between Artesian Water Company, Inc. and CoBank, ACB, Incorporated by reference to Exhibit 4.1 filed with the Company's Form 8-K filed on October 11, 2019.  |
| [4.23](https://www.sec.gov/Archives/edgar/data/863110/000086311020000009/ex4-22.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of the Company's Securities. Incorporated by reference to Exhibit 4.22 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 13, 2020..  |
| [4.24](https://www.sec.gov/Archives/edgar/data/863110/000086311022000007/letteragree.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Lock Agreement, dated as of February 7, 2022, by and between Artesian Water Company, Inc. and CoBank, ACB. Incorporated by reference to Exhibit 4.1 filed with the Company's Form 8-K filed on February 10, 2022.  |
| [4.25](https://www.sec.gov/Archives/edgar/data/863110/000086311025000103/s-8october2025.htm)&nbsp;&nbsp;&nbsp;&nbsp; | Artesian Resources Corporation 2025 Equity Compensation Plan. Incorporated by reference to Exhibit 4.1 filed with the Company's Registration Statement on Form S-8 filed October 31, 2025. |
| [4.26](exhibit4-26.htm)&nbsp;&nbsp;&nbsp;&nbsp; | Master Loan Agreement, dated as of March 13, 2026, by and between Artesian Water Maryland, Inc. and CoBank, ACB.\* |
| [4.27](exhibit4-27.htm)&nbsp;&nbsp;&nbsp;&nbsp; | Guarantee of Payment, dated as of March 13, 2026, by and between Artesian Resources Corporation and CoBank, ACB.\* |
| [10.1](https://www.sec.gov/Archives/edgar/data/863110/000086311023000037/ex10.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amended and Restated Demand Line of Credit Agreement between Artesian Resources Corporation, and Citizens Bank, N.A. dated July August 3, 2023. Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q filed on November 7, 2023.  |
| [10.2](https://www.sec.gov/Archives/edgar/data/863110/000086311022000073/fal2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, Loan No. 22000032, dated as of December 9, 2022, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.3 filed with the Company's Form 8-K filed on December 12, 2022.  |
| [10.3](https://www.sec.gov/Archives/edgar/data/863110/000086311022000073/fa3.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2022E-DWSRF, dated as of December 9, 2022, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.4 filed with the Company's Form 8-K filed on December 12, 2022.  |
| [10.4](https://www.sec.gov/Archives/edgar/data/863110/000086311022000073/fa3.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, Loan No. 22000031, dated as of December 9, 2022, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.5 filed with the Company's Form 8-K filed on December 12, 2022.  |
| [10.5](https://www.sec.gov/Archives/edgar/data/863110/000086311022000073/ex102.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2022F-DWSRF, dated as of December 9, 2022, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.6 filed with the Company's Form 8-K filed on December 12, 2022.  |
| [10.6](https://www.sec.gov/Archives/edgar/data/863110/000086311022000050/fal.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, Loan No. 22000030, dated as of August 12, 2022, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K filed on August 15, 2022.  |
| [10.7](https://www.sec.gov/Archives/edgar/data/863110/000086311022000050/ga2022a.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2022A-DWSRF, dated as of August 12, 2022, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K filed on August 15, 2022.  |
| [10.8](https://www.sec.gov/Archives/edgar/data/863110/000086311022000050/fal2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, Loan No. 22000029, dated as of August 12, 2022, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.3 filed with the Company's Form 8-K filed on August 15, 2022.  |
| [10.9](https://www.sec.gov/Archives/edgar/data/863110/000086311022000050/ga2022b.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2022B-DWSRF, dated as of August 12, 2022, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.4 filed with the Company's Form 8-K filed on August 15, 2022.  |
| [10.10](https://www.sec.gov/Archives/edgar/data/863110/000086311022000050/fal3.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, Loan No. 22000028, dated as of August 12, 2022, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.5 filed with the Company's Form 8-K filed on August 15, 2022.  |
| [10.11](https://www.sec.gov/Archives/edgar/data/863110/000086311022000050/ga2022c.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2022C-DWSRF, dated as of August 12, 2022, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health., incorporated by reference to Exhibit 10.6 filed with the Company's Form 8-K filed on August 15, 2022.  |
| [10.12](https://www.sec.gov/Archives/edgar/data/863110/000086311022000041/setagree.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Settlement Agreement upon which The Chemours Company FC, LLC, Hercules, LLC, Waste Management of Delaware, Inc., SC Holdings, Inc., Cytec Industries, Inc., Zeneca Inc., and Bayer CropScience Inc., collectively the Percentage Settlors, and the Delaware Sand and Gravel Remedial Trust, on one hand, and Artesian Water Company, Inc., on the other hand, have agreed to resolve certain of Artesian Water's claims and issues relating to releases of contaminants from the Delaware Sand & Gravel Landfill Superfund Site, incorporated by reference to Exhibit 10.2 filed with the Company's Quarterly Report on Form 10-Q filed on August 5, 2022  |
| [10.13](https://www.sec.gov/Archives/edgar/data/863110/000086311022000041/ex101.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment to Asset Purchase Agreement, dated May 11, 2022, by and among Artesian Water Company, Inc., a Delaware corporation, and the Town of Clayton, a Delaware municipality, incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q filed on August 5, 2022.  |
| [10.14](https://www.sec.gov/Archives/edgar/data/863110/000086311021000035/ex10.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock Purchase Agreement, dated August 27, 2021, by and among Artesian Wastewater Management, Inc., a Delaware corporation, and Middlesex Water Company, a New Jersey corporation. Incorporated by reference to Exhibit 10.1 filed with the Company's Form 10-Q filed on November 5, 2021.  |
| [10.15](https://www.sec.gov/Archives/edgar/data/863110/000086311022000017/ex10-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset Purchase Agreement, dated February 16, 2022, by and among Artesian Water Company, Inc. a Delaware corporation, and the Town of Clayton, a Delaware municipality. Incorporated by reference to Exhibit 10.2 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 11, 2022.  |
| [10.16](https://www.sec.gov/Archives/edgar/data/863110/000086311020000022/exhibit10-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset Purchase Agreement, dated June 11, 2020 by and among Artesian Water Company, Inc., a Delaware corporation, and the City of Delaware City, a Delaware municipality. Incorporated by reference to Exhibit 10.1 filed with Company's Form 8-K filed on June 16, 2020.  |
| [10.17](https://www.sec.gov/Archives/edgar/data/863110/000086311020000003/exhibit10-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Asset Purchase Agreement, dated February 27, 2020 by and among Artesian Water Company, Inc., a Delaware corporation, and the Town of Frankford, a Delaware municipality. Incorporated by reference to Exhibit 10.1 filed with Company's Form 8-K filed on March 4, 2020.  |
| [10.18](https://www.sec.gov/Archives/edgar/data/863110/000086311020000014/ex10-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, dated as of April 28, 2020, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K filed on April 30, 2020.  |
| [10.19](https://www.sec.gov/Archives/edgar/data/863110/000086311020000014/ex10-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2020A-SRF, dated as of April 28, 2020, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K filed on April 30, 2020.  |
| [10.20](https://www.sec.gov/Archives/edgar/data/863110/000086311020000014/ex10-3.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, dated as of April 28, 2020, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.3 filed with the Company's Form 8-K filed on April 30, 2020.  |
| [10.21](https://www.sec.gov/Archives/edgar/data/863110/000086311020000014/ex10-4.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2020B-SRF, dated as of April 28, 2020, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.4 filed with the Company's Form 8-K filed on April 30, 2020.  |
| [10.22](https://www.sec.gov/Archives/edgar/data/863110/000086311020000014/ex10-5.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, dated as of April 28, 2020, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.5 filed with the Company's Form 8-K filed on April 30, 2020.  |
| [10.23](https://www.sec.gov/Archives/edgar/data/863110/000086311020000014/ex10-6.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2020C-SRF, dated as of April 28, 2020, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.6 filed with the Company's Form 8-K filed on April 30, 2020.  |
| [10.24](https://www.sec.gov/Archives/edgar/data/863110/000086311011000051/ex10-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Obligation Note (New Castle County Water Main Transmission Replacements Projects), Series 2011-SRF, dated as of July 15, 2011, issued by Artesian Water Company, Inc. in favor of Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K filed on July 19, 2011.  |
| [10.25](https://www.sec.gov/Archives/edgar/data/863110/000086311011000051/ex10-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement, dated as of July 15, 2011, between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K filed on July 19, 2011.  |
| [10.26](https://www.sec.gov/Archives/edgar/data/863110/000086311010000004/exhibit10-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financing Agreement and General Obligation Note dated February 12, 2010 between Artesian Water Company, Inc. and Delaware Drinking Water State Revolving Fund Delaware Department of Health and Social Services, Division of Public Health. Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K filed on February 17, 2010.  |
| [10.27](https://www.sec.gov/Archives/edgar/data/863110/000086311019000022/exhibit4-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Second Amended and Restated Revolving Credit Agreement between Artesian Water Company, Inc. and CoBank, ACB dated September 20, 2019. Incorporated by reference to Exhibit 4.2 filed with the Company's Form 10-Q filed on November 8, 2019.  |
| [10.28](https://www.sec.gov/Archives/edgar/data/863110/000086311010000002/exhibit10-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Demand Line of Credit Agreement dated January 19, 2010 between Artesian Resources Corporation and each of its subsidiaries and Citizens Bank of Pennsylvania, as amended or modified from time to time. Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K filed on January 25, 2010.  |
| [10.29](https://www.sec.gov/Archives/edgar/data/863110/000086311010000028/amend-agrmt.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment to Agreement for Purchase of Water Assets of the Town of Port Deposit and for the provision of Potable Water Services, dated November 1, 2010 by and among Artesian Water Maryland, Inc., a Delaware Corporation, Artesian Resources Corporation, a Delaware Corporation and the Mayor and Town Council of Port Deposit, Maryland, a body corporate and politic organized under the laws of the State of Maryland. Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K filed on November 4, 2010.  |
| [10.30](https://www.sec.gov/Archives/edgar/data/863110/000086311009000017/exhibit10-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Water Asset Purchase Agreement, dated December 1, 2009 by and among Artesian Water Maryland, Inc., a Delaware Corporation, Artesian Resources Corporation, a Delaware Corporation and the Mayor and Town Council of Port Deposit, Maryland, a body corporate and politic organized under the laws of the State of Maryland. Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K filed on December 2, 2009.  |
| [10.31](https://www.sec.gov/Archives/edgar/data/863110/000086311008000011/exhibit10-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Limited Liability Interest Purchase Agreement, dated May 5, 2008, by and among Artesian Maryland, Inc., a Delaware corporation, Mountain Hill Water Company, LLC, a Maryland limited liability company, Sunrise Holdings, L.P., a Pennsylvania limited partnership and Artesian Resources Corporation, a Delaware corporation. Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K filed on May 9, 2008.  |
| [10.32](https://www.sec.gov/Archives/edgar/data/863110/000086311003000063/q10june03.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amended and Restated Artesian Resources Corporation 1992 Non-Qualified Stock Option Plan, as amended. Incorporated by reference to Exhibit 10.4 filed with the Company's Form 10-Q for the quarterly period ended June 30, 2003 filed on July 31, 2003.\*\*\*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 10.33  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Resources Corporation Incentive Stock Option Plan. Incorporated by reference to Exhibit 10(e) filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1995.\*\*\*  |
| [10.34](https://www.sec.gov/Archives/edgar/data/863110/000086311002000004/k1001.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Officer's Medical Reimbursement Plan dated May 27, 1992. Incorporated by reference to Exhibit 10.6 filed with the Company's Annual Report on Form 10-K/A for the year ended December 31, 2001.\*\*\*  |
| [10.35](https://www.sec.gov/Archives/edgar/data/863110/000086311025000020/ex10.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Agreement and Mutual Release, dated as of March 16, 2025, by and between Dian C. Taylor and Artesian Resources Corporation.\*  |
| [10.36](https://www.sec.gov/Archives/edgar/data/863110/000086311015000035/ex4_1.htm)&nbsp;&nbsp;&nbsp;&nbsp; | Artesian Resources Corporation 2015 Equity Compensation Plan. Incorporated by reference to Exhibit 4.1 filed with the Company's Registration Statement on Form S-8 filed December 16, 2015.\*\*\* |
| [19.1](https://www.sec.gov/Archives/edgar/data/863110/000086311025000020/ex19.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Insider Trading Policy, dated March 25, 2025. Incorporated by reference to Exhibit 19.1 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2024. |
| [21](exhibit21.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subsidiaries of the Company as of December 31, 2025. \*  |
| [23.1](exhibit23-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Consent of BDO USA, P.C. \*  |
| [31.1](exhibit31-1.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. \*  |
| [31.2](exhibit31-2.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. \*  |
| [32](exhibit32.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. \*\*  |
| [97](https://www.sec.gov/Archives/edgar/data/863110/000086311024000011/ex97.htm)  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Resources Corporation Clawback Policy, effective as of August 7, 2023. Incorporated by reference to Exhibit 97 filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2023.\*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101.INS  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). \*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101.SCH  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inline XBRL Taxonomy Extension Schema Document. \*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101.CAL  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inline XBRL Taxonomy Extension Calculation Linkbase Document. \*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101.DEF  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inline XBRL Taxonomy Extension Definition Linkbase Document. \*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101.LAB  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inline XBRL Taxonomy Extension Label Linkbase Document. \*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 101.PRE  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inline XBRL Taxonomy Extension Presentation Linkbase Document. \*  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 104  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). \*  |

---

------

[**Table of Contents**](#tableOfContents0)

\* &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Filed herewith. 

\*\* &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Furnished herewith. 

\*\*\* &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Compensation plan or arrangement required to be filed or incorporated as an exhibit. 

------

[**Table of Contents**](#tableOfContents0)

SIGNATURES

ARTESIAN RESOURCES CORPORATION

Pursuant to the requirements of Section 13 or 15(d) 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.

---

| | |
|:---|:---|
| Date March 16, 2026  | By: /s/ DAVID B. SPACHT  |
|  | David B. Spacht  |
|  | Chief Financial Officer (Principal Financial Officer)  |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| <u>/s/ NICHOLLE R. TAYLOR</u>  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chair of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Nicholle R. Taylor  |  | March 16, 2026 |
|  | Chief Financial Officer (Principal Financial Officer) |  |
| <u>/s/ DAVID B. SPACHT</u>  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David B. Spacht  |  | March 16, 2026 |
|  | Corporate Treasurer and Senior Vice President of Finance (Principal Accounting Officer) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /<u>s/ JENNIFER L. FINCH</u>  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Jennifer L. Finch  |  | March 16, 2026 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /<u>s/ SALVATORE J. ROSSI, JR.</u>  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Salvatore J. Rossi, Jr | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Director  | March 16, 2026 |
| <u>/s/ JOHN R. EISENBREY, JR.</u>  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John R. Eisenbrey, Jr.  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Director  | March 16, 2026 |
| <u>/s/ MICHAEL HOUGHTON</u>  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Michael Houghton  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Director  | March 16, 2026 |
| <u>/s/ DIAN C. TAYLOR</u>  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dian C. Taylor  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Director  | March 16, 2026 |

---

## Ex-21

**EXHIBIT 21**

**ARTESIAN RESOURCES CORPORATION AND SUBSIDIARY COMPANIES**

**Subsidiaries of Registrant**

The following list includes the Registrant and all of its subsidiaries. All subsidiaries of the Registrant appearing in the following table are included in the consolidated financial statements of the Registrant and its subsidiaries.

---

| | |
|:---|:---|
| Name of Company  | State of Incorporation  |
| &nbsp;&nbsp; Artesian Resources Corporation  | Delaware  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Water Company, Inc.  | Delaware  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Water Pennsylvania, Inc.  | Pennsylvania  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Water Maryland, Inc.  | Delaware  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Development Corporation  | Delaware  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Wastewater Management, Inc.  | Delaware  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tidewater Environmental Services, Inc. dba Artesian Wastewater  | Delaware  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Wastewater Maryland, Inc.  | Delaware  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Artesian Utility Development, Inc.  | Delaware  |

---

## Exhibit 23.1

**EXHIBIT 23.1**

**Consent of Independent Registered Public Accounting Firm**

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-88531 and 333-266821) and Form S-8 (No. 333-05255, 333-31209, 333-78043, 333-126910, 333-208582 and 333-291186) of Artesian Resources Corporation (the Company) of our report dated March 16, 2026, relating to the consolidated financial statements, which appear in the Annual Report to Shareholders, which appears in this annual report on Form 10-K.

---

| |
|:---|
| &nbsp;&nbsp; /s/ BDO USA, P.C.  |
| &nbsp;&nbsp; Philadelphia, Pennsylvania |
| &nbsp;&nbsp; March 16, 2026  |

---

## Exhibit 31.1

**EXHIBIT 31.1**

**Certification of Chief Executive Officer of Artesian Resources Corporation, required** 

**by Rule 13a – 14(a) as adopted under the Securities and Exchange Act of 1934**

I, Nicholle R. Taylor, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1. I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2025 of Artesian Resources Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2. Based on my knowledge, this 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 report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| &nbsp;&nbsp; Date: March 16, 2026  | &nbsp;&nbsp; /s/ NICHOLLE R. TAYLOR  |
|  | &nbsp;&nbsp; Nicholle R. Taylor  |
|  | &nbsp;&nbsp; Chief Executive Officer (Principal Executive Officer)  |

---

## Exhibit 31.2

**EXHIBIT 31.2**

**Certification of Chief Financial Officer of Artesian Resources Corporation, required** 

**by Rule 13a – 14(a) as adopted under the Securities and Exchange Act of 1934**

I, David B. Spacht, certify that:

&nbsp;&nbsp;&nbsp;&nbsp; 1. I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2025 of Artesian Resources Corporation;

&nbsp;&nbsp;&nbsp;&nbsp; 2. Based on my knowledge, this 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 report;

&nbsp;&nbsp;&nbsp;&nbsp; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| &nbsp;&nbsp; Date: March 16, 2026  | &nbsp;&nbsp; /s/ David B. Spacht  |
|  | &nbsp;&nbsp; David B. Spacht  |
|  | &nbsp;&nbsp; Chief Financial Officer (Principal Financial Officer)  |

---

## Ex-32

**EXHIBIT 32**

**Certification of Chief Executive Officer and Chief Financial Officer**

**pursuant to 18 U.S.C. Section 1350**

I, Nicholle R. Taylor, Chief Executive Officer, and David B. Spacht, Chief Financial Officer, of Artesian Resources Corporation, a Delaware corporation (the "Company"), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on our knowledge:

* The Company's Annual Report on Form 10-K for the period ended December 31, 2025 (the " Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 USC Section 78m(a) or Section 78o(d)), as amended; and

* The information contained in the Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Report and results of operations of the Company for the period covered by the Report.

Date: March 16, 2026

---

| | |
|:---|:---|
| &nbsp;&nbsp; Chief Executive Officer:  | &nbsp;&nbsp; Chief Financial Officer:  |
| &nbsp;&nbsp; /s/ NICHOLLE R. TAYLOR  | &nbsp;&nbsp; /s/ David B. Spacht  |
| &nbsp;&nbsp; Nicholle R. Taylor  | &nbsp;&nbsp; David B. Spacht  |

---

These certifications accompany the Report to which they relate, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

## Exhibit 4.26

#### MASTER LOAN AGREEMENT
**THIS MASTER LOAN AGREEMENT** (this "<u>Agreement</u>") is entered into as of March 13, 2026, between **ARTESIAN WATER MARYLAND, INC.**, a corporation organized and existing under the laws of the State of Delaware (the "<u>Company</u>"), and **CoBANK, ACB**, a federally chartered instrumentality of the United States ("<u>CoBank</u>").

**BACKGROUND**

From time to time, CoBank may make loans and extend other types of credit to or for the account of the Company (each, a "<u>Loan</u>"). In order to facilitate the making of Loans, the parties desire to enter into a master agreement. Such is the purpose of this Agreement.

**NOW, THEREFORE**, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

#### Article 1 <br> DEFINITIONS AND RULES OF INTERPRETATION
SECTION 1.1

**Definitions.** Except as otherwise expressly provided in this Agreement, capitalized terms used in this Agreement and defined in **Exhibit A** hereto shall have the meanings set forth in such Exhibit.

SECTION 1.2

**Rules of Interpretation.** Except as otherwise expressly provided in this Agreement, the rules of interpretation set forth in **Exhibit A** shall apply to this Agreement.

#### Article 2 <br>THE SUPPLEMENTS
SECTION 2.1

**Supplements.** In the event the Company desires to borrow from CoBank and CoBank is willing to lend to the Company, the parties will enter into a supplement to this Agreement (each a "<u>Supplement</u>"). Each Supplement will set forth CoBank's commitment to make a Loan or Loans to the Company, the amount of the Loan(s), the purpose of the Loan(s), the interest and/or fee provisions applicable to the Loan(s), the repayment terms of the Loan(s), and any other terms and conditions applicable to the particular Loan(s). Each Loan will be governed by the terms and conditions contained in this Agreement and in the Supplement. In the absence of a Supplement hereto duly executed by CoBank, CoBank shall have no obligation to make a Loan to the Company under this Agreement.

SECTION 2.2

**Notice and Manner of Borrowing.** Except as otherwise provided in a Supplement: (A) Loans will be made available on any Business Day upon the written, telephonic, or, if provided by separate agreement between the parties, electronic request of an officer or employee of the Company; provided, however that any request made telephonically shall, if required by CoBank, be promptly confirmed in writing; (B) requests for Loans must be received by CoBank not later than 12:00 Noon Mountain Time on the date the Loan is to be made; and (C) Loans will be made available by wire transfer of immediately available funds to such account or accounts as may be authorized by the Company on forms supplied or approved by CoBank.

SECTION 2.3

**Promissory Notes.** The Company's obligation to repay the Loan(s) made under each Supplement shall be evidenced by a promissory note in form and content acceptable to CoBank (each, as amended or restated from time to time, a "<u>Promissory Note</u>").

SECTION 2.4

**Security and Guarantees**.

(A) **Security**. The Company's obligations under the Credit Documents shall be secured by a: (1) statutory first priority Lien on all equity which the Company may now own or hereafter acquire in CoBank; (2) a first priority Lien on all real and other personal property of the Company (other than property specially excepted by CoBank in writing), whether now existing or hereafter acquired; and (3) all proceeds thereof (collectively, the "<u>Collateral</u>"). The Company agrees to take such steps (including the execution and recording of such instruments and documents) as CoBank may from time to time reasonably require in order to enable CoBank to obtain, perfect and maintain its Lien on the Collateral.

(B) **Guarantee of Payment.** In addition to the above, the Company's obligations under the Credit Documents shall be guaranteed by Artesian Resources Corporation (the "<u>Guarantor"</u>) pursuant to a continuing guarantee of payment in form and content acceptable to CoBank (as amended or restated from time to time, the "<u>Guaranty</u>").

SECTION 2.5

**CoBank Books and Records**. CoBank will keep a record of: (A) the date and amount of each Loan; (B) the interest rate elections and/or interest rates applicable to all Loans, and the effective dates of all changes thereto; (C) all fees and expenses due and payable to CoBank hereunder and under the other Credit Documents; and (D) the date and amount of all principal, interest, and fees paid by the Company to CoBank hereunder and under the other Credit Documents. To the extent permitted by Applicable Law, such record (and all computer printouts thereof) shall be presumed correct absent proof of error as to the obligations of the Company therein recorded; provided, that the failure of CoBank to maintain such record, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) any Loan hereunder in accordance with the terms of this Agreement and the other Credit Documents.

SECTION 2.6

**Business Days**. Notwithstanding the terms of any Supplement, Promissory Note, or other Credit Document, if any date on which principal, interest, fees, or other amount is due and payable is not a Business Day, then such payment shall be due and payable on the next Business Day and, in the case of principal, interest shall continue to accrue on the amount thereof until paid.

SECTION 2.7

**Method of Payment.** The Company shall make all payments to CoBank under this Agreement and the other Credit Documents by wire transfer of immediately available funds or, if specified by separate agreement between the Company and CoBank, by automated clearing house or other similar cash handling processes. Wire transfers shall be made to ABA No. 307088754 for advice to and credit of "CoBANK" (or to such other account as CoBank may direct by notice). In the event that the Company intends to make any payment on a date other than a scheduled payment date, then the Company shall give CoBank telephonic notice no later than 12:00 Noon Mountain Time of its intent to pay by wire, and funds received after 3:00 P.M. Mountain Time shall, in CoBank's discretion, be credited on the next Business Day. The Company agrees that CoBank shall not be obligated to present any Promissory Note for payment as a condition for receiving payment thereon.

#### Article 3 <br>CONDITIONS PRECEDENT
SECTION 3.1

**Conditions to this Agreement and Initial Supplement.** This Agreement and the Supplement hereto dated as of the date of this Agreement (the "<u>Initial Supplement</u>") are subject to the following conditions precedent (which in the case of instruments and documents, must be in form and content acceptable to CoBank):

(A) **This Agreement**. CoBank and the Company shall have duly executed and delivered this Agreement.

(B) **The Initial Supplement and Promissory Note**. CoBank and the Company shall have duly executed and delivered the Initial Supplement hereto, and the Company shall have duly executed and delivered the Promissory Note evidencing the Company's obligation to repay the Loan made under the Initial Supplement hereto.

(C) **Secretary's Certificate.** CoBank shall have received a certificate of the Secretary or Assistant Secretary of the Company dated as of the date of this Agreement (or as of such other date as may be acceptable to CoBank) attaching and certifying as to each of the following (which certificate and attachments must be in form and content acceptable to CoBank): (1) the resolutions of the Company's board of directors authorizing the execution and delivery of this Agreement, the Initial Supplement hereto, the Promissory Note related thereto, and all Credit Documents contemplated hereby or by the Initial Supplement (collectively, the "<u>Initial Credit Documents</u>"); (2) a certificate of incumbency setting forth the names and true ink signatures of each officer of the Company authorized to sign the Initial Credit Documents; (3) a copy of the certificate of incorporation of the Company, as amended to the date of this Agreement, certified by the Secretary of State (or equivalent) of the State of Delaware within thirty (30) days of the date of this Agreement; (4) a certificate issued by the Secretary of State (or equivalent) of Delaware dated within thirty days of the date of this Agreement (or within such other number of days as may be agreeable to CoBank), attesting to the good standing of the Company in such state; and (5) the bylaws of the Company, as amended to the date of this Agreement.

(D) **Guaranty and Related Documents.** CoBank shall have received: (1) a duly executed Guaranty; (2) a certificate of the Secretary or Assistant Secretary of the Guarantor dated as of the date of this Agreement (or as of such other date as may be acceptable to CoBank) attaching and certifying as to each of the following (which certificate and attachments must be in form and content acceptable to CoBank): (1) the resolutions of the Guarantor's board of directors authorizing the execution and delivery of the Guaranty; (2) a certificate of incumbency setting forth the names and true ink signatures of each officer of the Guarantor authorized to sign the Guaranty; (3) a copy of the certificate of incorporation of the Guarantor, as amended to the date of this Agreement, certified by the Secretary of State (or equivalent) of the Guarantor's state of incorporation or formation within thirty (30) days of the date of this Agreement; (4) a certificate issued by the Secretary of State of the State of Delaware dated within thirty days of the date of this Agreement (or within such other number of days as may be agreeable to CoBank), attesting to the good standing of the Guarantor in such state; and (5) the bylaws of the Guarantor, as amended to the date of this Agreement.

(E) **Consents and Approvals.** CoBank shall have received such evidence as CoBank may reasonably require that all filings, consents and approvals required to be obtained by the Company and the Guarantor in order for the Company and the Guarantor to be able to enter into the Initial Credit Documents to which it is a party and in order for the Company to use the Loan as provided in the Initial Credit Documents, have been obtained, are in full force and effect, and are final and not subject to appeal, including any approvals required to be obtained by the Company from the Public Service Commission of the State of Maryland.

(F) **Opinion of Counsel.** CoBank shall have received an opinion of counsel to the Company and the Guarantor (which opinion and counsel must be acceptable to CoBank).

(G) **Fees and Other Charges.** CoBank shall have received all fees or other charges provided for herein.

(H) **Insurance.** CoBank shall have received such evidence as CoBank may require that the Company is in compliance with Section 6.14 hereof (other than flood insurance requirements thereof).

(I) **Officer's Certificate**. CoBank shall have received an original certificate from an officer of the Company acceptable to CoBank dated as of the date hereof and in form and substance acceptable to CoBank.

SECTION 3.2

**Conditions to Each New Supplement.** CoBank's obligation to make the initial Loan under each Supplement executed after the date hereof (which, for the avoidance of doubt, does not include the Initial Supplement), is subject to the following conditions precedent (which in the case of instruments and documents, must be in form and content acceptable to CoBank):

(A) **Supplement.** CoBank and the Company shall have duly executed and delivered the Supplement.

(B) **Promissory Note**. CoBank shall have received an original Promissory Note, duly executed by the Company.

(C) **Other Loan Documents.** CoBank shall have received duly executed originals of all other Credit Documents contemplated by the Supplement.

(D) **Security**. (1) The Company and CoBank shall have entered into a supplemental mortgage in form and content reasonably satisfactory to CoBank (the "<u>Supplemental Mortgage</u>"); and (2) CoBank shall have received such evidence as may be satisfactory to CoBank that (a) the Supplemental Mortgage and one or more UCC-1 financing statements or amendments to the existing UCC-1 financing statements have been recorded in each place required by Applicable Law in order for the Mortgage, as supplemented by the Supplemental Mortgage, to accord CoBank a duly perfected and recorded Lien on the Collateral as security for the additional obligations then being incurred; (b) there are no tax, judgment, or other Liens on the Collateral, other than Liens permitted by this Agreement and the Mortgage; and (c) to the extent permitted by Applicable Law, all taxes and recording fees arising in connection with the new Credit Documents have been paid in full.

(E) **Secretary's Certificate**. CoBank shall have received a certificate of the Secretary or Assistant Secretary of the Company, and each other Person, if any, (other than CoBank) that is party to the Credit Documents, dated as of the date of the Credit Documents then being executed (or as of such other date as may be acceptable to CoBank), attaching and certifying as to each of the following (which certificate and attachments must be in form and content acceptable to CoBank): (1) the resolutions of the Company's board of directors (or, if applicable, the board of directors or other governing body of such other Person) authorizing the execution and delivery of the Credit Documents then being entered into in connection with such Supplement; (2) a certificate of incumbency setting forth the names and true ink signatures of each officer of the Company (and, if relevant, each other Person) authorized to sign such Credit Documents; (3) the certificate of incorporation of the Company (and, if relevant, each other Person that is a party to any of the Credit Documents), as amended to the date of the Supplement; (4) a certificate issued by the Secretary of State (or equivalent) of the Company's state of incorporation or formation (or, if relevant, of each other Person that is a party to the Credit Documents) dated within thirty days of the date of the Supplement (or within such other number of days as may be agreeable to CoBank), attesting to the good standing of the Company (or such other Person) in such state; (5) the bylaws of the Company (and, if relevant, each other Person), as amended to the date of the Supplement; and (6) such other instruments and documents as CoBank may require.

(F) **Consents and Approvals.** CoBank shall have received such evidence as CoBank may reasonably require that all consents and approvals that are required to be obtained by the Company and each other Person in connection with the Credit Documents or the project or activity then being financed, have been obtained and are in full force and effect, including any approvals required to be obtained from the Public Service Commission of the State of Maryland.

(G) **Fees and Other Charges.** CoBank shall have received any fees or other charges provided for herein or in such Supplement.

(H) **Insurance.** CoBank shall have received such evidence as CoBank may require that the Company is in compliance with Section 6.14 hereof (including the flood insurance requirements thereof) and any additional requirements set forth in such Supplement.

(I) **Opinion of Counsel**. CoBank shall have received a duly executed original opinion of counsel to the Company (which opinion and counsel must be reasonably acceptable to CoBank).

(J) **Officer's Certificate.** CoBank shall have received an original certificate from an officer of the Company acceptable to CoBank dated as of the date of the Supplement and in form and substance acceptable to CoBank.

(K) **Other Matters.** CoBank shall have received such additional certificates and other documents as CoBank shall have required, and all legal matters incident to the consummation of the transactions contemplated by the Supplement shall be reasonably satisfactory to CoBank and its counsel in all respects.

SECTION 3.3

**Conditions to Each Loan.** CoBank's obligation under each Supplement to make any Loan to the Company thereunder, including the initial Loan thereunder, is subject to the conditions that: (A) each of the representations and warranties made or deemed made by the Company herein, in the Supplement, and in each other Loan Document, shall be true and correct in all material respects as of the date of the Loan; and (B) the Company shall have satisfied all conditions precedent set forth in the Supplement. Without limiting clause (A) above, CoBank's obligation under a Supplement to make any Loan to the Company thereunder is subject to the condition precedent that no Default or Event of Default shall have occurred and be continuing.

#### Article 4 <br>REPRESENTATIONS AND WARRANTIES
To induce CoBank to enter into each Supplement hereto and make each Loan to the Company thereunder, the Company represents and warrants that, except as provided below or in any officer certificate delivered in connection with the Supplement:

SECTION 4.1

**Organizations and Good Standing.** The Company: (A) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (B) is duly qualified to do business and is in good standing in each jurisdiction in which the transaction of its business makes such qualification necessary; and (C) has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, and to enter into and perform the Credit Documents to which it is a party.

SECTION 4.2

**Ownership and Subsidiaries.** The Company is owned 100% by the Guarantor and has no Subsidiaries.

SECTION 4.3

**Financial Statements**.

(A) The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied and the applicable provisions of the regulatory authorities having jurisdiction in the premises, are correct and complete, and present fully and fairly the financial position of the Company and the Guarantor as of the dates thereof and the results of their operations and changes in its financial position for the periods covered thereby.

(B) Since the date of the Annual Financial Statements: (1) there has been no material adverse change in the condition (financial or otherwise), business or operations of the Company or the Guarantor from that presented in the Annual Financial Statements; and (2) except as may have arisen in the ordinary course or as may have been disclosed in any officer's certificate submitted in connection with such Supplement, there are no liabilities of the Company or the Guarantor, fixed or contingent, which are material but not reflected in the Annual Financial Statements.

(C) All budgets, projections, feasibility studies, and other similar documentation submitted by the Company to CoBank in connection with such Supplement were based upon assumptions that were reasonable at such time and no fact has come to light, and no event has occurred, that would cause any such assumption not to be reasonable.

SECTION 4.4

**Litigation**. Except as set forth in the officer's certificate furnished in connection with a Supplement or pursuant to Section 5.05, there are no actions, suits or proceedings pending or, to the best of the knowledge of the Company, threatened against or affecting the Company at law or in equity or before or by any Governmental Authority, that would reasonably be expected to involve the possibility of any material judgment or liability against the Company or otherwise have a Material Adverse Effect. The Company is not in default with respect to any order of any court or Governmental Authority.

SECTION 4.5

**Taxes**. The Company has filed prior to delinquency all required tax returns and paid all applicable federal, state and local taxes, other than taxes not yet due or that may hereafter be paid without penalty, and the Company has no knowledge of any material deficiency or additional assessment in connection therewith not provided for on the books of the Company.

SECTION 4.6

**Liens.** Except for Liens in favor of CoBank there are no Liens on any property of the Company other than Permitted Encumbrances.

SECTION 4.7

**Title to Properties**. The Company has good title to all its property and assets reflected in its Annual Financial Statements (other than property or assets subsequently disposed of in the normal and ordinary course of business).

SECTION 4.8

**Consents and Approvals.** Except for such as shall have been made or obtained and are in full force and effect, no filing with and no consent, permission, authorization, order or license or other action of or by any Governmental Authority or of any party to any agreement to which the Company is a party or by which it or any of its property may be bound or affected (collectively, "<u>Consents</u>"), is necessary in connection with (A) the execution, delivery, performance or enforcement of the Credit Documents; and (B) the project, acquisition, or other activity being financed with the proceeds of the Credit Documents, other than Consents which are customarily obtained at a later date (such as occupancy permits).

SECTION 4.9

**Calamities, Strikes, Etc.** The business, properties and assets of the Company have not been adversely affected in any substantial way as the result of any fire, explosion, accident, windstorm, strike, labor disturbance, lockout, combination of workmen, requisition or taking of property by the United States or any agency thereof or by any state or any municipality or any agency thereof, flood, drought, embargo, riot, war or act of God or the public enemy.

SECTION 4.10

**Restrictions on the Company**. The Company is not a party to or bound by any contract, indenture, agreement or instrument, or any law, rule or regulation, any judgment or order of any court or Governmental Authority that restricts or limits the right or ability of the Company to enter into and perform any of the Credit Documents. No action on the part of any shareholder of the Company is necessary in connection with the execution and delivery by the Company of and the performance by the Company of its obligations under the Credit Documents.

SECTION 4.11

SECTION 4.12

**No Defaults**. The Company is operating its business in compliance with the terms of the Credit Documents, and no Default or Event of Default exists.

SECTION 4.13

**Compliance with Laws**.

(A) The Company is not (i) in default with respect to any order, writ, injunction or decree of any court or (ii) in default in any material respect under any law, ordinance, order, regulation, license or demand (including ERISA, the Occupational Safety and Health Act of 1970 and laws and regulations establishing quality criteria and standards for air, water, land and toxic waste) of any Governmental Authority, default under which would have consequences that could reasonably be expected to have a Material Adverse Effect.

(B) The Company is not in violation of any applicable Federal, state or local laws, statutes, rules, regulations, ordinances, permit, licenses or authorizations relating to public health, safety or the environment, including, without limitation, relating to releases, discharges, emissions or disposals to air, water, land or ground water, to the withdrawal or use of ground water, to the use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, to the treatment, storage, disposal or management of hazardous substances (including, without limitation, petroleum, crude oil or any fraction thereof or other hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous or other controlled, prohibited or regulated substances which violation could reasonably be expected to have a Material Adverse Effect. The Company does not know of any liability or class of liability of the Company under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et seq.).

SECTION 4.14

**Validity; Enforceable Obligations**. This Agreement and the other Credit Documents have been duly executed and delivered and constitute legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as may be limited by bankruptcy or insolvency laws or similar laws affecting creditors' rights generally or by general equitable principles.

SECTION 4.15

**Full Disclosure**. The Financial Statements referred to in Section 4.03 of this Agreement do not, nor does any other written statement furnished to CoBank by the Company in connection herewith, contain at the time made any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading. There is no fact peculiar to the Company that the Company has not disclosed to CoBank in writing that materially affects adversely nor, so far as the Company now can reasonably foresee, will materially affect adversely the properties, business, prospects, profits or condition (financial or otherwise) of the Company.

SECTION 4.16

**Use of Proceeds**. None of the transactions contemplated by this Agreement or any Supplement (including, without limitation, the use of proceeds from the Loans) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulation issued pursuant thereto, including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Company does not intend to purchase, with the proceeds of the Loans, any "margin stock" within the meaning of said Regulation G. None of the proceeds from the Loans will be used to purchase, or refinance any borrowing the proceeds of which were used to purchase, any "security" within the meaning of the Securities Exchange Act of 1934, as amended.

SECTION 4.17

**ERISA.** The consummation of the transactions provided for in the applicable Supplement and compliance by the Company with the provisions thereof will not involve any prohibited transaction within the meaning of ERISA or Section 4975 of the Code. Each "Plan" (as hereinafter defined) complies in all material respects with all applicable statutes and governmental rules and regulations, and (i) no "Reportable Event" (as hereinafter defined) has occurred and is continuing with respect to any Plan, (ii) the Company has not withdrawn from any Plan or instituted steps to do so, and (iii) no steps have been instituted to terminate any Plan. No condition exists or event or transaction has occurred in connection with any Plan that could result in the incurrence by the Company of any material liability, fine or penalty. No Plan maintained by the Company, nor any trust created thereunder, have incurred any "accumulated funding deficiency" as defined in Section 302 of ERISA nor does the present value of all benefits vested under all Plans exceed, as of the last annual valuation date, the value of the assets of the Plans allocable to such vested benefits. The Company does not have any contingent liability with respect to any post-retirement "welfare benefit plans" (as such term is defined in ERISA) except as has been disclosed to CoBank.

SECTION 4.18

**Principal Place of Business; Records**. The principal place of business and chief executive office of the Company and the place where the records of the Company are kept is at the address of the Company shown in Schedule 8.02 of this Agreement.

SECTION 4.19

**Rate Matters.** The Company's current rates for the provision of water services have been approved by all necessary Governmental Authorities, including, without limitation, the Maryland Public Service Commission. There are no pending, nor to the Company's knowledge, any threatened, proceedings before any Governmental Authority the objective or result of which is or could be to materially reduce or otherwise materially change adversely any of the Company's rates for the provision of water services or otherwise have a Material Adverse Effect.

SECTION 4.20

**System Condition**. The Company's utility facilities reasonably meet present demand in all material respects, are constructed in a good and workmanlike manner, are in good working order and condition, and comply in all material respects with all Applicable Laws. The Company has all permits that are necessary adequately to service the present and reasonably anticipated needs of its customers (other than permits to be obtained in the ordinary course of business upon completion of any project being financed by CoBank under a Supplement).

SECTION 4.21

**[Intentionally Omitted]** 

SECTION 4.22

**Investment Company Act**. The Company is not an "investment company" as that term is defined in, or otherwise subject to regulation under, the Investment Company Act of 1940, as amended.

SECTION 4.23

**No Default Under Other Agreements**. The Company is not in default in any respect under any contract, lease, loan agreement, indenture, mortgage, security agreement or other agreement or obligation to which it is a party or by which any of its properties is bound which default has had or would be reasonably expected to have a Material Adverse Effect.

SECTION 4.24

**Indebtedness.** As of the date of the Supplement, the Company has no Indebtedness other than Indebtedness permitted by this Agreement or the other Credit Documents.

SECTION 4.25

**Solvency.** The Company is and, after the consummation of the transactions contemplated by this Agreement and the other Credit Documents, will be Solvent.

SECTION 4.26

**Insurance.** The Company maintains insurance for the benefit of the Company with responsible and reputable insurance companies or associations in such amounts and covering such risks as are required by Section 6.14 hereof. In addition, effective upon execution and delivery of the Mortgage, all policies insuring the Collateral have endorsements thereto naming CoBank as mortgagee and loss payee as required by Section 6.14 hereof.

SECTION 4.27

**Franchise, Licenses, Etc**. The Company possesses all material franchises, certificates, licenses, permits and other authorizations necessary for the operation of its businesses.

SECTION 4.28

**Sanctions**. None of the Company, any of its Subsidiaries or, to the knowledge of the Company, any director, officer, employee, agent or affiliate of the Company or any of its Subsidiaries is a Person that is, or is owned or controlled by Persons that are: (A) the subject/target of any sanctions administered or enforced by the U.S. Department of the Treasury's Office of Foreign Assets Control ("<u>OFAC</u>"), the U.S. Department of State, or other relevant sanctions authority (collectively "<u>Sanctions</u>") or (B) located, organized or resident is a country or territory that is, or whose government is, the subject of Sanctions.

#### Article 5 <br>FURNISHING FINANCIAL AND OTHER INFORMATION
The Company hereby covenants and agrees that so long as this Agreement is in effect and until the Loans, together with interest, fees and other monetary obligations hereunder have been paid in full and all commitments have expired or been terminated:

SECTION 5.1

**Annual Financial Statements of Company**. The Company will furnish, or cause to be furnished, to CoBank as soon as available, and in any event within 120 days after the close of each fiscal year of the Company:

(i) a Company prepared balance sheet of the Company as of the close of such fiscal year, and

(ii) Company prepared statements of income, retained earnings and cash flow of the Company for such fiscal year,

in each case setting forth in comparative form the figures for the preceding fiscal year, all in reasonable detail and prepared in conformity with GAAP consistently applied.

SECTION 5.2

**Financial Statements of the Guarantor**.

(i) **<u>Quarterly Statements</u>**. As soon as available and in any event within forty-five (45) days after the end of each quarterly fiscal period (except the last) of each fiscal year of the Guarantor, the Company will deliver to CoBank copies of:

(A) consolidated balance sheets of the Guarantor and its subsidiaries as of the close of such quarterly period, and

(B) consolidated statements of income, retained earnings and cash flows of the Guarantor and its subsidiaries, for such quarterly period and for the portion of the fiscal year ending with such period,

in each case setting forth in comparative form the figures for the corresponding period of the preceding fiscal year, all in reasonable detail prepared in conformity with GAAP consistently applied.

(ii) **<u>Annual Statements</u>.** As soon as available and in any event within one hundred twenty (120) days after the close of each fiscal year of the Guarantor, the Company will deliver to CoBank, copies in duplicate of:

(A) consolidated balance sheets of the Guarantor and its subsidiaries as of the close of such fiscal year, and

(B) consolidated statements of income, retained earnings and cash flow of the Guarantor and its subsidiaries for such fiscal year,

in each case setting forth in comparative form the consolidated figures for the preceding fiscal year, all in reasonable detail and accompanied by the consolidating schedules related thereto and an opinion thereon of a firm of independent certified public accountants of recognized national standing selected by the Guarantor to the effect that the consolidated financial statements have been prepared in conformity with GAAP and present fairly the financial condition of the Guarantor and its subsidiaries as of the end of such fiscal year and the results of their operations for the fiscal year then ended and a written statement from such accountants that their examination in connection with such financial statements has been made in accordance with generally accepted auditing standards and auditing procedures as were considered necessary in the circumstances, and, to the extent applicable, disclosing all defaults by the Guarantor in the performance of any obligation or under its certificate of incorporation of which they have obtained knowledge in making the examination necessary to their opinion.

SECTION 5.3

**SEC and Other Related Reports**. The Company will deliver to CoBank, promptly upon their becoming available, copies of all registration and proxy statements and reports that the Company or the Guarantor shall file with the Securities and Exchange Commission or any successor and corresponding Governmental Authority, and copies of such financial statements, reports, proxy statements and returns as the Company, or the Guarantor, shall send to its or their stockholders or file with any securities exchange.

SECTION 5.4

**Requested Information**. The Company with reasonable promptness shall furnish to CoBank such other data and information as may reasonably be requested.

SECTION 5.5

**Officer's Annual Certificate**. Concurrently with delivery of the financial statements referred to in Section 5.01 hereof, the Company will deliver to CoBank a certificate of its President or its Treasurer or Chief Financial Officer in the form attached hereto as **Exhibit B**.

SECTION 5.6

**Inspection**. The Company will permit CoBank, or such person or persons as CoBank may designate in writing, to visit and inspect any of the properties of the Company and to examine its books of account and discuss its affairs, finances and accounts with its officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss with CoBank the finances and affairs of the Company), all at such reasonable times and as often as CoBank may desire; provided that, unless a Default or Event of Default exists, CoBank shall bear the cost of any such inspection.

SECTION 5.7

**Notice of Default**. Promptly after becoming aware thereof, the Company will deliver to CoBank notice of the occurrence of any Default or Event of Default.

SECTION 5.8

**Notice of Non-Environmental Litigation**. Promptly after the commencement thereof, the Company will deliver to CoBank notice of the commencement of all actions, suits, or proceedings before any court, arbitrator, or Governmental Authority affecting it that, if adversely determined, could have a Material Adverse Effect.

SECTION 5.9

**Notice of Environmental Matters**. Without limiting the provision of Section 5.08 hereof, promptly after receipt thereof, the Company will deliver to CoBank notice of its receipt of all pleadings, orders, complaints, indictments, or other written communications alleging a condition that would reasonably be expected to require the Company to undertake or to contribute to a cleanup or other response under any Environmental Law, or that seeks material penalties, damages, injunctive relief, or criminal sanctions related to alleged violations of any Environmental Law, or that makes any material claim for personal injury or property damage as a result of environmental factors or conditions or that, if adversely determined, could otherwise have a Material Adverse Effect.

SECTION 5.10

**ERISA Reportable Events**. Within 10 days after the Company becomes aware of the occurrence of any Reportable Event with respect to the Company, the Company will deliver to CoBank a statement describing such Reportable Event and the actions proposed to be taken in response to such Reportable Event.

#### Article 6 <br>COVENANTS
The Company hereby covenants and agrees that so long as this Agreement is in effect and until the Loans, together with interest, fees and other monetary obligations hereunder have been paid in full and all commitments have expired or been terminated:

SECTION 6.1

**Compliance With Laws and Agreements**. The Company will comply with (i) all Applicable Laws of all Governmental Authorities and of any court, arbitrator or grand jury, in respect of the conduct of its business and the ownership of its properties (including, without limitation, applicable statutes, rules, regulations, orders and restrictions relating to equal employment opportunities or Environmental Laws), the violation of which could reasonably be expected to have a Material Adverse Effect; and (ii) all agreements, indentures, mortgages and other instruments to which it is a party or by which it or any of its property is bound, the violation of which could reasonably be expected to have a Material Adverse Effect.

SECTION 6.2

**Capitalization**. The Company agrees to purchase such equity in CoBank as CoBank may from time to time require in accordance with its Bylaws and Capital Plan (as each may be amended from time to time), except that the maximum amount of equity that the Company may be required to purchase in CoBank in connection with a particular Loan may not exceed the maximum amount permitted by the CoBank's Bylaws at the time the Supplement relating to that Loan is entered into or such Loan is renewed or refinanced by CoBank. The rights and obligations of the parties with respect to such equity and any distributions made on account thereof or on account of Company's patronage with CoBank shall be governed by the CoBank's Bylaws and Capital Plan (as each may be amended from time to time). All such investments and all other equities that the Company may now own or hereafter acquire or be allocated in CoBank shall be subject to a statutory first Lien in favor of CoBank. CoBank shall not be obligated to set off or otherwise apply such equities to the Company's obligations to CoBank.

SECTION 6.3

**Licenses, Etc.** The Company will duly and lawfully obtain and maintain in full force and effect all licenses, certificates, permits, authorizations, approvals and the like that are material to the conduct of its business or that otherwise may be required by laws, to the extent the failure to do so could have a Material Adverse Effect.

SECTION 6.4

**Permits**. The Company will maintain and procure all permits that are necessary to serve the present and reasonably anticipated needs of its customers.

SECTION 6.5

**Loans and Investments**. The Company will not, after the date hereof, make any loan or advance to, invest in, purchase or make any commitment to purchase any commercial paper, stock, bonds, notes, or other securities of any person or entity (each, whether made directly or indirectly, an "<u>Investment</u>"), other than:

(A) commercial paper maturing not in excess of one year from the date of acquisition and rated "P1" by Moody's or "A1" by S&P on the date of acquisition;

(B) certificates of deposit in North American commercial banks rated "C" or better by Keefe, Bruyette & Woods, Inc., or "3" or better by Cates Consulting Analysts, maturing not in excess of one year from the date of acquisition;

(C) securities or deposits issued, guaranteed, or fully insured as to payment by the United States government or any agency thereof, and equity or investments in CoBank;

(D) repurchase agreements of any bank or trust company incorporated under the laws of the United States of America or any state thereof and fully secured by a pledge of obligations issued or fully and unconditionally guaranteed by the United States government;

(E) stocks and other voting securities that are not included within the scope of clauses (A) through (D) above and are issued by corporations or other entities not engaged in any business other than the water or wastewater utility business and that are incorporated or organized under the laws of the United States of America or any state thereof; provided that prior to or as a result of such investment the Company holds not less than seventy five percent (75%) of the voting securities of such corporation or entity; and

(F) commercial paper, bonds, stocks or other securities that are not included within the scope of clauses (A) through (E) above and are issued by corporations or other entities incorporated or organized under the laws of the United States of America or any state thereof (collectively, "<u>Other Investments</u>"); provided that the aggregate amount (calculated based on cost) of all such Other Investments shall not at any time exceed One Million Dollars ($1,000,000).

SECTION 6.6

**Guarantees**. The Company will not guarantee, assume or otherwise become obligated or liable with respect to the Indebtedness or other obligations of any person or entity.

SECTION 6.7

**Mergers, Acquisitions, Etc**. The Company will not: (A) merge or consolidate with any other entity unless the Company shall be the continuing and surviving corporation and, after such merger or consolidation, there shall exist no Default or Event of Default; or (B) commence operations under any other name, organization or entity, including any joint venture.

SECTION 6.8

**Transfer of Assets**. The Company will not sell, transfer, lease, enter into any contract for the sale, transfer or lease of, or otherwise dispose of, any of its assets, except in the ordinary course of its business.

SECTION 6.9

**Change in Business**. The Company will not engage in any business activity or operation different from the business of providing water services to its customers.

SECTION 6.10

**Distributions**. The Company will not make, declare or pay, directly or indirectly, any dividend or other distribution of assets to shareholders of the Company, or retire, redeem, purchase or otherwise acquire for value any shares of stock of the Company, if at the time thereof or after giving effect thereto a Default or Event of Default exists or would exist.

SECTION 6.11

**Preservation of Existence, Franchise and Assets**. The Company will do all things necessary to preserve and keep in full force and effect its existence, rights, franchises and authority. The Company shall generally maintain its properties, real and personal, in good condition, and the Company shall not waste or otherwise permit such properties to deteriorate, reasonable wear and tear excepted.

SECTION 6.12

**Books and Records**. The Company will keep complete and accurate books and records of its transactions in accordance with good accounting practices on the basis of GAAP (including the establishment and maintenance of appropriate reserves).

SECTION 6.13

**Payment of Taxes and Other Indebtedness**. The Company will pay, settle or discharge (a) all taxes, assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become delinquent, (b) all lawful claims (including claims for labor, materials and supplies) which, if unpaid, might give rise to a Lien upon any of its properties, and (c) all of its other Indebtedness as it shall become due (to the extent such repayment is not otherwise prohibited by this Agreement); provided, however, that the Company shall not be required to pay any such tax, assessment, charge, levy, claim or Indebtedness which is being contested in good faith by appropriate proceedings and as to which adequate reserves therefore have been established in accordance with GAAP, unless the failure to make any such payment (i) would give rise to an immediate right to foreclose or collect on a Lien securing such amounts or (ii) would have or would reasonably be expected to have a Material Adverse Effect.

SECTION 6.14

**Insurance**. The Company will at all times maintain in full force and effect insurance (including worker's compensation insurance, liability insurance, casualty insurance and business interruption insurance) with responsible and reputable insurance companies in such amounts, covering such risks and liabilities and with such deductibles or self-insurance retentions as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Company operates. In addition, in the event any property of the Company is located in a flood zone, the Company will maintain such flood insurance as may be required by CoBank in accordance with law. The Company agrees to deliver to CoBank such proof of compliance with this Section as CoBank may from time to time require.

SECTION 6.15

**Performance of Obligation**. The Company will perform in all material respects all of its obligations under the terms of all material agreements, indentures, mortgages, security agreements or other debt instruments to which it is a party or by which it is bound.

SECTION 6.16

**[Reserved]**

SECTION 6.17

**[Reserved]**

SECTION 6.18

**Arm's-Length Transactions**. The Company will not enter into any transaction or series of transactions, whether or not in the ordinary course of business, with any officer, director or Affiliate other than on terms and conditions substantially as favorable to the Company as would be obtainable in a comparable arm's-length transaction with a Person other than an officer, director or Affiliate.

SECTION 6.19

**Fiscal Year; Organization Documents**. The Company will not (a) change its fiscal year or (b) change its form of organization from a corporation organized under the laws of the State of Delaware.

SECTION 6.20

**Liens.** The Company will not contract, create, incur, assume or permit to exist any Lien with respect to any of its property or assets of any kind (whether real or personal, tangible or intangible), whether now owned or after acquired, except for the Lien of the Mortgage and Liens permitted by the Mortgage.

SECTION 6.21

**Indebtedness**. The Company will not, nor will it permit any of its Subsidiaries to incur, assume, guarantee or in any other manner become liable, with respect to any Indebtedness, except for: (A) debt to CoBank; (B) accounts payable to trade creditors incurred in the ordinary course of business; (C) current operating liabilities (other than for borrowed money) incurred in the ordinary course of business; (D) debt to the Guarantor subordinated to all Company Obligations pursuant to the Guaranty, and debt to other Persons approved by CoBank, provided, however, that Indebtedness to such other Persons is subordinated to all Company Obligations pursuant to a subordination agreement in form and content acceptable to CoBank; and (E) unsecured debt not to exceed $40,000,000 outstanding principal amount pursuant to the Amended and Restated Demand Line of Credit Agreement dated as of May 20, 2022 by and between Artesian Resources Corporation, Artesian Water Company, Inc., Artesian Water Pennsylvania, Inc., the Company, Artesian Wastewater Management, Inc., Artesian Wastewater Maryland, Inc., Artesian Utility Development, Inc., Artesian Development Corporation, Tidewater Environmental Services, Inc. and Citizens Bank, N.A., as amended.

SECTION 6.22

**Debt Service Coverage Ratio.** Commencing with the fiscal year beginning on January 1, 2027 and ending on December 31, 2027, and for each fiscal year thereafter, the Company will have a Debt Service Coverage Ratio of not less than 1.25 to 1.00.

SECTION 6.23

**Total Debt to Capitalization Ratio**. Commencing with the fiscal year beginning on January 1, 2026 and ending on December 31, 2026, the Company will have at the end of each fiscal year of the Company, a Total Debt to Total Capitalization Ratio of not greater than 65%.

SECTION 6.24

**Sanctions, Etc.** The Company will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person, to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of any sanctions administered or enforced by the U.S. Department of the Treasury's Office of Foreign Assets Control, the U.S. Department of State, or other relevant sanctions authority. In addition, the Company agrees that: (1) it will not become a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order, or knowingly engage in any dealings or transactions with any such Person; and (2) no part of the proceeds of the Loans will be used, directly or indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any applicable anti-corruption law.

SECTION 6.25

**Post-Closing Items.** On or before July 11, 2026 , the Company agrees to:

(A) **Mortgage**. Enter into a mortgage and security agreement in the form and content acceptable to CoBank (as amended or restated from time to time, the "<u>Mortgage</u>") granting to CoBank a first priority Lien on the Collateral;

(B) **Proof of Recoding, Etc**. Furnish to CoBank such evidence as may be satisfactory to CoBank that: (a) the Mortgage and one or more UCC-1 financing statements in form and content acceptable to CoBank have been recorded in each place required by law in order to render effective the Lien of the Mortgage; (b) all taxes and fees arising in connection therewith or in connection with the Loans contemplated hereby have been paid; (c) there are no Liens on any property of the Company other than Liens permitted by this Agreement or the Mortgage; and (d) the Company is in compliance with all insurance requirements contained in the Mortgage and Section 6.14 of this Agreement; and

(C) **Post-Closing Opinion of Counsel**. Furnish to CoBank an opinion of counsel to the Company (which opinion and counsel must be reasonably acceptable to CoBank) to the effect that: (a) the mortgage lien granted pursuant to the Mortgage creates in favor of CoBank a valid lien on: (1) the real property described in the Mortgage (except that any after acquired property provision contained in the Mortgage will not give rise to a perfected lien on subsequently acquired real property or interests therein (other than fixtures) without recordation of an instrument specifically describing such real property and the interests of the CoBank in such real property and subjecting such interest to the lien created under the Mortgage); and (2) the personal property described in the Mortgage in which a Lien can be obtained under the Uniform Commercial Code in the State of Delaware; (b) UCC-1 financing statements in proper form have been duly filed in all places as are required by law in order to perfect the Lien of the Mortgage on that portion of the Collateral in which a Lien can be perfected by filing a UCC-1 financing statement; (c) the Mortgage and all other necessary filings have been duly filed in such places as are required by law in order to perfect the mortgage lien of the CoBank on the real property described in the Mortgage (except that any after acquired property provision contained in the Mortgage will not give rise to a perfected lien and subsequently acquired real property or interests therein without recordation of an instrument specifically describing such real property and the interests of the CoBank in such real property and subjecting such interests to the lien created under the Mortgage); and (d) no transfer, excise, mortgage, intangible, documentary stamp or other similar taxes are or will be payable to any governmental authority upon the execution, delivery, recording or filing of the Mortgage, or the creation of the indebtedness and obligations evidenced or secured thereby, except for those that have been paid.

(D) **Flood Insurance.** CoBank shall have received such evidence as CoBank may require that the Company is in compliance with the flood insurance requirements of Section 6.14 hereof.

#### Article 7 <br>EVENTS OF DEFAULT
SECTION 7.1

**Events of Default**. An Event of Default shall exist upon the occurrence of any of the following specified events (each an "<u>Event of Default"</u>):

(A) **Payment**. The Company shall default in the payment when due of any principal of any of the Loans or in the payment when due of any interest on the Loans or of any fees or other amounts owing hereunder or under any of the other Credit Documents.

(B) **Representations**. Any representation, warranty or statement made or deemed to be made by the Company herein, in any of the other Credit Documents, or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was made or deemed to have been made.

(C) **Certain Covenants**. The failure by the Company to perform or comply with any covenant or agreement set forth in this Agreement (excluding Sections 5.07, 5.08, 5.09, 6.21, 6.22, and 6.23), and such failure continues for thirty (30) days after written notice thereof shall have been delivered by CoBank to the Company;

(D) **Other Covenants**. The failure by the Company to perform or comply with Sections 5.07, 5.08, 5.09, 6.21, 6.22**,** or 6.23 of this Agreement or to use the proceeds of any Loan for a purpose other than the purpose(s) set forth in the Supplement relating to the Loan.

(E) **Cross-Default**. The occurrence of any event of default under, or lapse of or failure on the part of the Company to observe, keep, or perform any covenant or agreement contained in any other Credit Document or any other agreement between the Company and CoBank, including, without limitation, any guaranty, loan agreement, security agreement, pledge agreement, indenture, mortgage or other agreement.

(F) **Other Indebtedness.** The Company should fail to pay when due any Indebtedness to any other Person for borrowed money or any long-term obligation for the deferred purchase price of property (including any capitalized lease), or any other event occurs which, under any agreement or instrument relating to such Indebtedness or obligation, has the effect of accelerating or permitting the acceleration of such Indebtedness or obligation, whether or not such Indebtedness or obligation is actually accelerated or the right to accelerate is conditioned on the giving of notice, the passage of time, or otherwise.

(G) **Judgment.** The rendering against the Company of a judgment for the payment of moneys in excess of Five Hundred Thousand Dollars ($500,000) and the continuance of such judgment unsatisfied and without stay of execution thereon for a period of forty-five (45) days after the entry of such judgment, or the continuance of such judgment unsatisfied for a period of forty-five (45) days after the termination of any stay of execution thereon entered within such first mentioned forty-five (45) days.

(H) **Bankruptcy, Etc**. The occurrence of any of the following with respect to the Company (i) a court or governmental agency having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or for any part of its property or order the winding up or liquidation of its affairs; or (ii) an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect is commenced against the Company and such petition remains unstayed and in effect for a period of 60 consecutive days; or (iii) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any substantial part of its property or make any general assignment for the benefit of creditors; or (iv) the Company shall become insolvent or shall admit in writing its inability to pay its debts generally as they become due or any action shall be taken by the Company in furtherance of any of the aforesaid purposes.

(I) **ERISA**. The occurrence of any of the following events or conditions if the same, individually or in the aggregate, would be reasonably expected to result in a liability of an amount greater than or equal to $500,000: (A) any "accumulated funding deficiency," as such term is defined in Section 302 of ERISA and Section 412 of the Code, whether or not waived, shall exist with respect to any Plan, or any Lien shall arise on the assets of the Company or any ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination Event shall occur with respect to a Single Employer Plan, which is, in the reasonable opinion of CoBank, likely to result in the termination of such Plan for purposes of Title IV of ERISA; (C) a Termination Event shall occur with respect to a Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable opinion of CoBank, likely to result in (i) the termination of such Plan for purposes of Title IV of ERISA, or (ii) the Company or any ERISA Affiliate incurring any liability in connection with a withdrawal from, reorganization of (within the meaning of Section 4241 of ERISA), or insolvency (within the meaning of Section 4245 of ERISA) of such Plan; or (D) any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility shall occur which would be reasonably expected to subject the Company or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(1) of ERISA or Section 4975 of the Code, or under any agreement or other instrument pursuant to which the Company or any ERISA Affiliate has agreed or is required to indemnify any person against any such liability.

(J) **Events Relating To Guarantor**. The Guaranty shall, at any time, cease to be in full force and effect, or shall be revoked or declared null and void, or the validity or enforceability thereof shall be contested by the Guarantor, or the Guarantor shall deny any further liability or obligation thereunder, or shall fail to perform its obligations thereunder, or any representation or warranty set forth therein shall be breached, or the Guarantor shall breach or be in default under the terms of any other agreement with CoBank (including any loan agreement or security agreement), or a default set forth in Subsections (F) through (I) hereof shall occur with respect to the Guarantor.

SECTION 7.2

**Acceleration; Remedies**. Upon the occurrence and during the continuance of a Default or an Event of Default, CoBank shall have no obligation to make any Loan to the Company and may discontinue doing so at any time without prior notice. In addition, upon the occurrence of an Event of Default and at any time thereafter unless and until such Event of Default has been waived by CoBank, CoBank may, by written notice to the Company, take any of the following actions:

(A) **Termination of Commitments**. Declare all commitments terminated whereupon the commitments shall be immediately terminated; provided, however, that upon the occurrence of an Event of Default under Section 7.01(H) hereof, all commitments shall automatically terminate without the need to provide notice of any kind, which is hereby waived by the Company.

(B) **Acceleration of Loans**. Declare the unpaid amount of all Company Obligations to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company; provided, however, that upon the occurrence of an Event of Default under Section 7.01(H) hereof, the Company Obligations shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company.

(C) **Enforcement of Rights**. Enforce any and all rights and interests created and existing under the Credit Documents, including, without limitation, all rights of set-off.

(D) **Other Rights**. Exercise all other rights provided in this Agreement, any other Credit Document, or under law.

In addition to the foregoing, upon the occurrence and during the continuance of an Event of Default the unpaid principal balance of the Loans, together with any overdue payments of interest, fees or other charges hereunder, shall automatically accrue interest at the Default Rate.

SECTION 7.3

**Application of Payments After Event of Default**. Notwithstanding any other provisions of this Agreement, after the exercise of any remedies by CoBank pursuant to <u>Section 7.02</u> (or after the commitments shall automatically terminate and the Loans (with accrued interest thereon) and all other amounts under the Credit Documents shall automatically become due and payable in accordance with the terms of such Section), all amounts collected or received by CoBank on account of amounts outstanding under any of the Credit Documents shall be applied as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable Attorney Costs) of CoBank in connection with administering and enforcing the rights of CoBank under the Credit Documents;

SECOND, to payment of any fees or surcharges owed to CoBank;

THIRD, to the payment of all accrued interest payable to the CoBank hereunder and under the Supplements and Promissory Notes;

FOURTH, to the payment of the outstanding principal amount of the Loans;

FIFTH, to all other obligations which shall have become due and payable under the Credit Documents and not repaid pursuant to clauses "FIRST" through "FOURTH" above; and

SIXTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.

In carrying out the foregoing, amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category.

#### Article 8 <br>MISCELLANEOUS
SECTION 8.1

**Broken Funding Surcharge.** Notwithstanding the terms of any Supplement or Promissory Note, the Company agrees to: (A) give CoBank not less than three (3) Business Days' prior notice in the event it desires to repay any Loan balance bearing interest at a fixed rate prior to the last day of the fixed rate period; and (B) pay to CoBank a broken funding surcharge in the amount set forth below in the event the Company: (1) repays any fixed rate balance prior to the last day of its fixed rate period (whether such payment is made voluntarily, as a result of an acceleration, or otherwise); (2) converts any fixed rate balance to another fixed rate or to a variable rate prior to the last day of the fixed rate period applicable to such balance; or (3) fails to borrow any fixed rate balance on the date scheduled therefor. The surcharge shall be in an amount equal to the greater of (i) the sum of the present value of: (A) any funding losses imputed by CoBank to have been incurred as a result of such payment, conversion or failure; plus (B) a per annum yield of ½ of 1% of the amount repaid, converted or not borrowed for the period such amount was scheduled to have been outstanding at such fixed rate, or (ii) $300.00. Such surcharge shall be determined and calculated in accordance with methodology established by CoBank, a copy of which will be made available upon request. Notwithstanding the foregoing, in the event of a conflict between the provisions of this subsection and of the broken funding charge section of a forward fix agreement between CoBank and the Company, the provisions of the forward fix agreement shall control.

SECTION 8.2

**Notices and Other Communications; Facsimile Copies**.

(A) **<u>General</u>**. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All written notices and all other communications expressly permitted hereunder to be given by telephone shall be made to the applicable address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 8.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (C) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (C) below), when delivered.

(B) **Effectiveness of Facsimile Documents and Signatures**. Credit Documents may be executed in counterparts (and by different parties in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single agreement. In addition, if authorized by CoBank, Credit Documents may be delivered by electronic means. The effectiveness of any such documents and signatures shall, subject to Applicable Law, have the same force and effect as manually-signed originals and shall be binding on the Company and CoBank. CoBank may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

(C) **Limited Use of Electronic Mail.** Electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Sections 5.01 through 5.04, and to distribute Credit Documents for execution by the parties thereto, and, unless otherwise provided herein or authorized by CoBank in writing, may not be used for any other purpose.

(D) **Reliance by CoBank**. CoBank shall be entitled to rely and act upon any notices (including telephonic notices of borrowing and interest elections) given by or on behalf of the Company even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Company shall indemnify CoBank from all losses, costs, expenses and liabilities resulting from the reliance by CoBank on each notice given by or on behalf of the Company. All telephonic notices to and other communications with CoBank may be recorded by CoBank, and the Company hereby consents to such recording.

SECTION 8.3

**Rights of Set-Off.** In addition to any rights now or hereafter granted under Applicable Law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default and the commencement of remedies described in Section 7.02, CoBank is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of which rights being hereby expressly waived), to hold, set-off and appropriate and apply any and all proceeds of any equity in CoBank, any deposits (general or special), and any other indebtedness at any time held or owing by CoBank (whether or not due) to or for the credit or the account of the Company against the Company Obligations irrespective of whether CoBank shall have made any demand hereunder and although such Company Obligations, or any of them, may be contingent or unmatured; provided, however, that CoBank shall not be obligated to effect any such setoff. The Company hereby agrees that any Person purchasing a participation in the Loans and commitments hereunder pursuant to Section 8.03 may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a signatory hereto and a lender hereunder.

SECTION 8.4

**Successors and Assigns**.

(A) **Generally**. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of CoBank. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participation Purchasers to the extent provided in subsection (B) of this Section and, to the extent expressly contemplated hereby, the Indemnities) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(B) **Participations**. Without limiting the foregoing, CoBank may at any time, without the consent of, or notice to, the Company, sell participations to any Person (each, a "<u>Participation Purchaser</u>") in all or a portion of CoBank's rights and/or obligations under this Agreement and the other Credit Documents (including all or a portion of the commitments and/or the Loans); provided that (i) if such sale is other than to a Farm Credit System Institution, such sale shall be subject to the Company's consent, which shall not be unreasonably withheld or delayed, (ii) CoBank's obligations under this Agreement shall remain unchanged, (iii) CoBank shall remain solely responsible to the Company for the performance of such obligations and (iv) the Company and CoBank shall continue to deal solely and directly with CoBank in connection with CoBank's rights and obligations under this Agreement. Any agreement or instrument pursuant to which CoBank sells such a participation shall provide that CoBank shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that CoBank will not, without the consent of the Participation Purchaser, agree to any amendment, waiver or other modification described in Section 8.06 that directly affects such Participation Purchaser. To the extent permitted by law, each Participation Purchaser also shall be entitled to the benefits of Section 8.02 as though it were a signatory hereto and a lender hereunder, provided such Participation Purchaser agrees to share any amount received in excess of its pro rata share with CoBank and all other Participation Purchasers.

(C) **Nonrestricted Assignments**. CoBank may at any time pledge or assign a security interest in all or any portion of its rights under the Credit Documents (including under the Promissory Notes) to secure obligations of CoBank, including any pledge or assignment to secure obligations arising in connection with the issuance of notes by the Federal Farm Credit Banks Funding Corporation; <u>provided</u> that no such pledge or assignment shall release CoBank from any of its obligations hereunder or substitute any such pledgee or assignee for CoBank as a party hereto.

(D) **Information**. CoBank may furnish any information concerning the Company in the possession of CoBank from time to time to Participation Purchasers (including prospective Participation Purchasers).

SECTION 8.5

**No Waiver; Remedies Cumulative**. No failure or delay on the part of CoBank in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Company and CoBank shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which CoBank would otherwise have. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of CoBank to any other or further action in any circumstances without notice or demand.

SECTION 8.6

**Payment of Expenses, Etc**.

(A) The Company agrees (i) to pay or reimburse CoBank for all costs and expenses incurred in connection with the preparation, negotiation and execution of this Agreement and the other Credit Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (ii) to pay or reimburse CoBank for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Credit Documents (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Company Obligations and during any legal proceeding, including any bankruptcy or insolvency proceeding of the Company), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by CoBank and the cost of independent public accountants and other outside experts retained by CoBank. All amounts due under this Section 8.06(A) shall be payable within ten Business Days after written notice is provided to the Company demanding payment therefor. In addition, the Company will pay all taxes (including interest and penalties) that may be payable in respect of the execution and delivery of this Agreement or any other Credit Documents or of any amendment of, or waiver or consent under or with respect to, this Agreement or any other Credit Document, and will hold CoBank harmless against any loss or liability resulting from nonpayment or delay in payment of any such tax. The obligations of the Company under this Section 8.06 shall survive the payment of the Loans.

(B) Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify and hold harmless the Indemnities from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Credit Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any commitment or any Loan, (c) any actual or alleged presence or release of hazardous materials on or from any property currently or formerly owned or operated by the Company, any Subsidiary of the Company, or any liability resulting from any actual or alleged violation of Environmental Laws related in any way to the Company, any Subsidiary of the Company or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the "<u>Indemnified Liabilities</u>"), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee shall be liable for any indirect or consequential damages relating to this Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). All amounts due under this <u>Section 8.06(B)</u> shall be payable within ten Business Days after written notice is provided to the Company demanding payment therefor. The agreements in this Section shall survive the termination of any commitment provided under a Supplement and the repayment, satisfaction or discharge of all Company Obligations.

(C) **Payments Free of Taxes**. Any and all payments by or on account of any Company Obligation to CoBank under any Credit Document shall be made without deduction or withholding for any taxes, except as required by Applicable Law. If any Applicable Law requires the deduction or withholding of any tax from any such payment by the Company, then: (1) the Company shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law; and (2) the sum payable by the Company shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) CoBank receives an amount equal to the sum it would have received had no such deduction or withholding been made. The Company's obligations under this Section shall survive the repayment, satisfaction or discharge of all Company Obligations.

SECTION 8.7

**Amendments, Waivers and Consents**. Neither this Agreement, nor any other Credit Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing and signed by CoBank and the Company; provided that no such amendment, change, waiver, discharge or termination shall without the consent of each Participation Purchaser affected thereby:

(A) extend the maturity date of any Loan, or postpone or extend the time for any payment or prepayment of principal;

(B) reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) thereon or fees or other amounts payable hereunder;

(C) reduce or waive the principal amount of any Loan;

(D) increase or extend any commitment (it being understood and agreed that a waiver of any Default or Event of Default shall not constitute a change in the terms of any commitment);

(E) release the Company from its obligations under the Credit Documents;

(F) amend, modify or waive any provision of this <u>Section 8.07</u>, or <u>Sections 7.01(A), 8.03, 8.04</u> or <u>8.06</u>; or

(G) consent to the assignment or transfer by the Company of any of its rights and obligations under (or in respect of) the Credit Documents.

Any amendment or restatement hereto or hereof shall be applicable to all Supplements, regardless of when executed, and each Supplement shall be deemed to incorporate all of the provisions hereof.

SECTION 8.8

**Counterparts**. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

SECTION 8.9

**Headings**. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

SECTION 8.10

**Survival of Indemnification and Representations and Warranties**. All indemnities set forth herein and all representations and warranties made herein shall survive the execution and delivery of this Agreement, the making of the Loans, and the repayment of the Loans and other Company Obligations and the termination of any commitment made under a Supplement.

SECTION 8.11

**Governing Law**. **THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.** The Company irrevocably consents to the service of process out of any competent court in any action or proceeding with respect to this Agreement by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at the address for notices pursuant to <u>Section 8.02</u>, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of CoBank to serve process in any other manner permitted by law.

SECTION 8.12

**Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.**

SECTION 8.13

**Severability**. If any provision of any of the Credit Documents is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

SECTION 8.14

**Further Assurances**. The Company agrees, upon the request of CoBank, to promptly take such actions, as reasonably requested, as are necessary to carry out the intent of this Agreement and the other Credit Documents.

SECTION 8.15

**Entirety**. This Agreement together with the other Credit Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Credit Documents or the transactions contemplated herein and therein.

SECTION 8.16

**Binding Effect; Continuing Agreement**.

(A) This Agreement shall become effective at such time as all of the conditions set forth in <u>Section 3.01</u> have been satisfied or waived by CoBank and it shall have been executed by the Company and CoBank, and thereafter this Agreement shall be binding upon and inure to the benefit of the Company and CoBank and their respective successors and assigns.

(B) This Agreement shall be a continuing agreement and shall remain in full force and effect until all Loans, interest, fees and other Company Obligations have been paid in full and all commitments made under the Supplements shall have expired or have been terminated. Upon termination, the Company shall have no further obligations (other than the indemnification provisions that survive) under the Credit Documents; provided that should any payment, in whole or in part, of the Company Obligations be rescinded or otherwise required to be restored or returned by CoBank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, then the Credit Documents shall automatically be reinstated and all amounts required to be restored or returned and all costs and expenses incurred by CoBank in connection therewith shall be deemed included as part of the Company Obligations.

SECTION 8.17

**Confidentiality**. CoBank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any regulatory authority; (c) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process (provided, in the event of any disclosure pursuant to this clause (c), CoBank shall promptly notify the Company of its disclosure of such Information); (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this <u>Section 8.17</u>, to (i) any Participation Purchaser in, or any prospective Participation Purchaser in, any of its rights or obligations under this Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Company; (g) with the consent of the Company; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this <u>Section 8.17</u> or (ii) has been available or becomes available to CoBank on a nonconfidential basis from a source other than the Company; or (i) to the National Association of Insurance Commissioners or any other similar organization or any nationally recognized rating agency that requires access to information about CoBank's or its Affiliates' portfolio in connection with ratings issued with respect to CoBank or its Affiliates. For the purposes of this <u>Section 8.17</u>, "Information" means all information received from the Company relating to the Company or its Subsidiaries or business. Any Person required to maintain the confidentiality of Information as provided in this <u>Section 8.17</u> shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything herein to the contrary, "Information" shall not include, and CoBank and the Company may disclose to any and all Persons, without limitation of any kind, any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to CoBank or the Company relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Loans and transactions contemplated hereby.

SECTION 8.18

**USA PATRIOT ACT**. CoBank hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Publ. 107 56 (signed into law October 26, 2001)) (the "<u>Act</u>"), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow CoBank to identify the Company in accordance with the Act.

[Remainder of Page Intentionally Left Blank]

------

Each of the parties hereto has caused a counterpart of this Master Loan Agreement to be duly executed and delivered as of the date first above written.

**ARTESIAN WATER MARYLAND, INC.**

By:

Name:

David B. Spacht

Title:

Chief Financial Officer

**CoBANK, ACB**

By:

Name:

Title:

Signature Page – Master Loan Agreement (00162068MLA)

------

**<u>EXHIBIT A</u>**

**DEFINITIONS AND RULES OF INTERPRETATION**

**SECTION 1.01**

**Definitions.** As used in the Agreement, any amendment thereto, or in any other Credit Document, the following terms shall have the following meanings:

"**<u>Affiliate</u>**" means, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such corporation or (b) to direct or cause direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise.

"**<u>Agreement</u>**" shall have the meaning set forth in the introductory clause hereof, and shall be deemed to include all exhibits, schedules, and amendments hereto.

"**<u>Annual Financial Statements</u>**" shall mean: (1) in the case of the Initial Credit Documents, the Company prepared annual financial statements of the Company for the year ended December 31, 2024 and the annual audited financial statements of the Guarantor for the year ending December 31, 2024; (2) in the case of each subsequent Supplement, the latest annual financial statements furnished to CoBank under Sections 5.01 and 5.02(ii) hereof prior to the date of the Supplement.

"**<u>Applicable Law</u>**" means all laws, rules, regulations, codes, and ordinances applicable to the Person, conduct, transaction, covenant or contract in question.

"**<u>Attorney Costs</u>**" means all reasonable fees and disbursements of any law firm or other external counsel.

"**<u>Banking Day</u>**<u>"</u> shall mean a day that is both a Business Day and a day on which dealings between banks are carried on in U.S. dollar deposits in the London interbank market.

"**<u>Business Day</u>**" means any day other than a Saturday, a Sunday, a legal holiday or a day on which CoBank is closed for business.

"**<u>Closing Date</u>**" means the date hereof.

"**<u>CoBank</u>**" shall have the meaning set forth in the introductory clause hereof, and shall include its successors and assigns.

"**<u>CoBank Base Rate</u>**" shall mean the rate of interest established by CoBank from time to time as its CoBank Base Rate, which rate is intended by CoBank as a reference rate and not its lowest rate. The CoBank Base Rate will change on the effective date of each change in the rate.

"**<u>Code</u>**" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder.

"**<u>Collateral</u>**" shall have the meaning set forth in Section 2.04(A) hereof.

"**<u>Company</u>**" means Artesian Water Maryland, Inc.

"**<u>Company Obligations</u>**" means, without duplication, all of the obligations of the Company to CoBank, whenever arising, under this Agreement, the Supplements, the Promissory Notes or any of the other Credit Documents, including, without limitation, the obligation to pay principal, interest, fees, surcharges, premiums, expense, and other amounts owing hereunder.

"**<u>Consents</u>**" has the meaning specified in Section 4.08 hereof.

"**<u>Credit Documents</u>**" means this Agreement, the Supplements, the Promissory Notes, the Mortgage, and all instruments or documents executed or furnished in connection with this Agreement, any Supplement, or any Promissory Note, including the Mortgage, the Guaranty, and all officer certificates, opinions, and financial statements furnished hereunder or thereunder (as each may be amended or restated from time to time).

"**<u>Debt Service Coverage Ratio</u>**" shall mean the ratio of: (1) net income (after taxes and after eliminating any gain or loss on sale of assets or other extraordinary gain or loss), plus depreciation expense, non-cash income taxes, amortization expense, and interest expense, minus non-cash patronage, and non-cash income from Subsidiaries and/or joint ventures, and minus grant income; to (2) all principal payments due within the period on all Long Term Debt plus interest expense, but excluding non-cash interest expense payable to affiliates (all as calculated for the Company on an unconsolidated basis for the applicable fiscal year in accordance with GAAP consistently applied or the appropriate standards of the regulatory agency having jurisdiction over the Company).

"**<u>Default</u>**" means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

"**<u>Default Rate</u>**" shall mean: (1) in the case of principal, 2% per annum in excess of the rates otherwise in effect on such principal; and (2) in the case of other sums owing hereunder or under any other Credit Documents, the CoBank Base Rate plus 2% per annum.

"**<u>Dollars</u>**" and "<u>$</u>" means dollars in lawful currency of the United States of America.

"**<u>Environmental Laws</u>**" means any current or future legal requirement of any Governmental Authority pertaining to (a) the protection of health, safety, and the indoor or outdoor environment, (b) the conservation, management, or use of natural resources and wildlife, (c) the protection or use of surface water and groundwater or (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any hazardous or toxic substance or material or (e) pollution (including any release to land surface water and groundwater) and includes, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977,33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know Act of 1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or successor law, and any amendment, rule, regulation, order, or directive issued thereunder.

"**<u>ERISA</u>**" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections.

"**<u>ERISA Affiliate</u>**" means an entity, whether or not incorporated, which is under common control with the Company or any of its Subsidiaries within the meaning of Section 4001(a)(14) of ERISA, or is a member of a group which includes the Company or any of its Subsidiaries and which is treated as a single employer under Sections 414(b), (c), (m), or (0) of the Code.

"**<u>Event of Default</u>**" has the meaning specified in Section 7.01.

"**<u>Financial Officer</u>**" means any one of the chief financial officer, the chief accounting officer, the Senior Vice President, Finance or the Treasurer of the Company.

"**<u>Financial Statements</u>**" shall mean: (1) in the case of the Initial Credit Documents, (a) the Company prepared balance sheets of the Company for the year ended December 31 in each of the years 2023 and 2024 and the related Company prepared statements of income, retained earnings and cash flows for the years ended on said dates, copies of all of which have been furnished to CoBank; and (b) the annual audited financing statements for Guarantor and its consolidated subsidiaries for the fiscal years ending on December 31, 2023 and December 31, 2024, copies of which have been delivered to CoBank, and (2) in the case of each subsequent Supplement, (a) the latest annual and the most recent quarterly Company prepared financial statements of the Company furnished to CoBank under Section 5.01 prior to the date of the Supplement; and (b) the most recent annual audited financial statements of the Guarantor furnished to CoBank under Section 5.02(ii) hereof and, if more recent than those statements, the most recent quarterly financial statements of the Guarantor furnished under Section 5.02(i) hereof.

"**<u>GAAP</u>**" means generally accepted accounting principles in the United States applied on a consistent basis.

"**<u>Governmental Authority</u>**" means any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

"**<u>Guarantor</u>**" shall have the meaning set forth in Section 2.04(B) hereof.

"**<u>Guaranty Obligations</u>**" means, with respect to any Person, without duplication, any obligation (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation, whether or not contingent, (a) to purchase any such Indebtedness or other obligation or any property constituting security therefore, (b) to advance or provide funds or other support for the payment or purchase of such Indebtedness or obligation or to maintain working capital, solvency or other balance sheet condition of such other Person (including, without limitation, maintenance agreements, comfort letters, take or pay arrangements, put agreements or similar agreements or arrangements) for the benefit of the holder of Indebtedness of such other Person, (c) to lease or purchase property, securities or services primarily for the purpose of assuring the owner of such Indebtedness or (d) to otherwise assure or hold harmless the owner of such Indebtedness or obligation against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made.

"**<u>Indebtedness</u>**" of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person to the extent of the value of such property (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations, other than trade payables incurred in the ordinary course of business, of such Person issued or assumed as the deferred purchase price of property or services purchased by such Person which would appear as liabilities on a balance sheet of such Person, (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (f) all Guaranty Obligations of such Person, (g) the principal portion of all obligations of such Person under (i) capital lease obligations and (ii) Off Balance Sheet Indebtedness, (h) all obligations of such Person to repurchase any securities which repurchase obligation is related to the issuance thereof, including, without limitation, obligations commonly known as residual equity appreciation potential shares, (i) all net principal obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements, (j) the maximum amount of all performance and standby letters of credit issued or bankers' acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed); and (k) the aggregate amount of uncollected accounts receivable of such Person subject at such time to a sale of receivables (or similar transaction) regardless of whether such transaction is effected without recourse to such Person or in a manner that would not be reflected on the balance sheet of such Person in accordance with GAAP.

"**<u>Indemnified Liabilities</u>**" has the meaning set forth in <u>Section 8.06(B)</u>.

"**<u>Indemnities</u>**" means, collectively, CoBank and its respective Affiliates, directors, officers, employees, counsel, agents and attorneys- in-fact.

"**<u>Initial Credit Documents</u>**" shall have the meaning set forth in Section 3.01(C) hereof.

"**<u>Initial Supplement</u>**" shall have the meaning set forth in Section 3.01 hereof.

"**<u>Investment</u>**" shall have the meaning set forth in Section 6.05 hereof.

"**<u>Lien</u>**" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction or other similar recording or notice statute, and any lease in the nature thereof).

"**<u>Loan</u>**" **or** "**<u>Loans</u>**" shall have the meaning set forth in the Background clause to this Agreement.

**"<u>Long-Term Debt</u>"** means, for the Company, the sum of (1) all Indebtedness for borrowed money, (2) obligations that are evidenced by notes, bonds, debentures or similar instruments, and (3) that portion of obligations with respect to capital leases or other capitalized agreements that are properly classified as a liability on the balance sheet in conformity with GAAP or that are treated as operating leases under regulations applicable to them but that otherwise would be required to be capitalized under GAAP, in each case having a maturity of more than one year from the date of its creation or having a maturity within one year from such date but that is renewable or extendible, at the Company's option, to a date more than one year from such date or that arises under a revolving credit or similar agreement that obligates the lender(s) to extend credit during a period of more than one year from such date, including all current maturities in respect of such indebtedness whether or not required to be paid within one year from the date of its creation.

"**<u>Material Adverse Effect</u>**" means a material adverse effect on (a) the operations, business, assets, or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement or (c) the validity or enforceability of this Agreement, any of the other Credit Documents, or the rights and remedies of CoBank hereunder or thereunder.

"**<u>Moody's</u>**" means Moody's Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities.

"**<u>Mortgage</u>**" shall have the meaning set forth in Section 6.25 hereof.

"**<u>Multiemployer Plan</u>**" means a Plan covered by Title IV of ERISA which is a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.

"**<u>Multiple Employer Plan</u>**" means a Plan covered by Title IV of ERISA, other than a Multiemployer Plan, which the Company or any ERISA Affiliate and at least one employer other than the Company or any ERISA Affiliate are contributing sponsors.

"**<u>Net Worth</u>**" means total assets less total liabilities, both as determined in accordance with GAAP consistently applied, except that in determining Total Capitalization, contributions in aid of construction, advances for construction, customer deposits, or similar items reducing rate base calculations will be excluded.

"**<u>OFAC</u>**" shall have the meaning set forth in Section 4.28 hereof.

"**<u>Off Balance Sheet Indebtedness</u>**" means any obligation of a Person that would be considered indebtedness for tax purposes but is not set forth on the balance sheet of such Person, including, but not limited to, (a) any synthetic lease, tax retention operating lease, off balance sheet loan or similar off-balance sheet financing product of such Person, (b) the aggregate amount of uncollected accounts receivables of such Person subject at such time to a sale of receivables (or similar transaction) and (c) obligations of any partnership or joint venture that is recourse to such Person.

"**<u>Other Investments</u>**" shall have the meaning set forth in Section 6.05(F) hereof.

"**<u>Participation Purchaser</u>**" means any Person (other than a natural person or the Company or any of the Company's Affiliates or Subsidiaries) to whom CoBank sells a participation as specified in <u>Section 8.04(B)</u>.

"**<u>PBGC</u>**<u>"</u> means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor thereto.

"**<u>Permitted Encumbrances</u>**" shall mean:

(A) Liens for taxes or assessments or other governmental charges or levies that are not delinquent;

(B) Liens in favor of mechanics, landlords, material suppliers, warehouses, carriers, and like persons that secure obligations that are not past due or if past due: (1) no foreclosure or other action to enforce the Liens have been commenced or, if commenced, have been stayed; and (2) reserves have been established and are maintained on the books of the Company in an amount equal at all times to amount secured by the Lien;

(C) Deposits and pledges made under workers' compensation, unemployment insurance, Social Security, or similar legislation (other than ERISA);

(D) Deposits and pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), public and statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds, or other similar obligations, in each case arising in the ordinary course of business;

(E) Judgment and similar Liens arising in connection with court or other dispute resolution proceedings, provided that no Event of Default arises under Section 7.01(G) of this Agreement and such Lien is stayed and subordinate to the Lien of the Mortgage; and

(F) Easements, rights-of-way, restrictions, and other similar encumbrances which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment by the Company of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto.

"**<u>Person</u>**" means any individual, partnership, joint venture, firm, corporation, association, trust, limited liability company or other enterprise (whether or not incorporated), or any government or political subdivision or any agency, department or instrumentality thereof.

"**<u>Plan</u>**" means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which the Company or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" within the meaning of Section 3(5) of ERISA.

"**<u>Promissory Note</u>**<u>"</u> shall have the meaning set forth in Section 2.03 hereof.

"**<u>Regulation D, O, T, U or X</u>**" means Regulation D, O, T, U or X, respectively, of the Board of Governors of the Federal Reserve System as from time to time in effect, any amendment thereto and any successor to all or a portion thereof.

"**<u>Reportable Event</u>**" means a "reportable event" as defined in Section 4043 of ERISA with respect to which the notice requirements to the PBGC have not been waived.

"**<u>S&P</u>**" means Standard & Poor's Ratings Services, a division of McGraw Hill, Inc., or any successor or assignee of the business of such division in the business of rating securities.

"**<u>Sanctions</u>**" shall have the meaning set forth in Section 4.28 hereof.

"**<u>Single Employer Plan</u>**" means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.

"**<u>Solvent</u>**" means, with respect to the Company as of a particular date, that on such date (a) the Company is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (b) the Company does not intend to, and does not believe that it will, incur debts or liabilities beyond the Company's ability to pay as such debts and liabilities mature in their ordinary course, (c) the Company is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which the Company's assets would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which the Company is engaged or is to engage and (d) the fair value of the assets of the Company, taken as a whole on a going concern basis, is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of the Company. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed as the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

"**<u>Subsidiary</u>**" means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not, at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (b) any partnership, association, joint venture, limited liability company or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time.

"**<u>Supplemental Mortgage</u>**" shall have the meaning set forth in Section 3.02(D) hereof.

"**<u>Termination Event</u>**" means (a) with respect to any Single Employer Plan, the occurrence of a Reportable Event or the substantial cessation of operations (within the meaning of Section 4062(e) of ERISA), (b) the withdrawal of the Company or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan, (c) the distribution of a notice of intent to terminate or the actual termination of a Plan pursuant to Section 4041 (a)(2) or 4041A of ERISA, (d) the institution of proceedings to terminate or the actual termination of a Plan by the PBGC under Section 4042 of ERISA, (e) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (f) the complete or partial withdrawal of the Company or any ERISA Affiliate from a Multiemployer Plan.

"**<u>Total Capitalization</u>**" shall mean total Indebtedness plus Net Worth.

"**<u>Total Debt to Total Capitalization Ratio</u>** shall mean a ratio of total Indebtedness to the Total Capitalization.

**RULES OF INTERPRETATION**

**SECTION 2.01**

**Rules of Interpretation.** The following rules of interpretation shall apply to the Agreement, the other Credit Documents and all amendments to either of the foregoing:

**Accounting Terms.** Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to CoBank hereunder shall be prepared, in accordance with GAAP applied on a consistent basis.

**Number.** All terms stated in the singular shall include the plural, and all terms stated in the plural shall include the singular.

**Including.** The term "including" shall be construed as meaning "including, but not limited to".

**Default**. The expression "while any Default or Event of Default shall have occurred and be continuing" (or like expression) shall be deemed to include the period following any acceleration of the Company Obligations (unless such acceleration is rescinded).

**References** in this Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to this Agreement unless otherwise specifically provided.

**Renewal of Commitment.** References in the Agreement or any Supplement to the renewal of a Commitment shall not be construed as obligating CoBank to renew a Commitment, and no obligation to renew a Commitment shall arise unless contained in a writing signed by CoBank.

**Conflict.** In the event of any direct, explicit conflict between the terms of this Agreement and the terms set forth in a Supplement, the terms set forth in the applicable Supplement shall prevail; provided, however, that it is expected by the parties that any direct, explicit conflict be preceded with the words "notwithstanding Section <> of the MLA" (or words of similar import or words indicating that the MLA is being amended); it being understood that the MLA contains terms applicable to the Supplements (such as default interest, acceleration, and other provisions) that conflict the terms of a Supplement, and such additional terms shall not be deemed to fall within the meaning of this rule.

**Defined Terms.** Capitalized terms used in a Supplement or a Promissory Note and not defined therein shall have the meanings set forth in this MLA.

------

**EXHIBIT B**

**FORM OF ANNUAL COMPLIANCE CERTIFICATE**

**TO:**

**COBANK, ACB**

**FROM:**

**ARTESIAN WATER MARYLAND, INC.**

**DATE:**

**_______________, 20____**

**SUBJECT:**

**COMPLIANCE CERTIFICATE FOR FISCAL PERIOD ENDING ON ____________________, 20___.**

Reference is hereby made to that certain Master Loan Agreement dated as of March 13, 2026, as amended (the "<u>Credit Agreement</u>"), between **ARTESIAN WATER MARYLAND, INC.** (the "<u>Company</u>") and **COBANK, ACB** ("<u>CoBank</u>"). Capitalized terms used in this certificate and not defined herein shall have the meanings given to those terms in the Credit Agreement.

I am the _______________________________<sup>1</sup> of the Company and am furnishing this Certificate to you pursuant to Section 5.05 of the Credit Agreement.

Attached hereto are the annual financial statements required by Section 5.01 of the Credit Agreement. The undersigned hereby certifies that the annual financial statements present fairly, in all material respects, the financial conditions and results of operations of the Company, in accordance with GAAP consistently applied.

In addition to the above, attached hereto is a certificate calculating the financial covenants set forth in Sections 6.22 and 6.23 of the Credit Agreement. The undersigned hereby certifies that the financial covenants were calculated in a manner consistent with the requirements of the Credit Agreement.

I hereby certify that a review in reasonable detail of the activities of the Company during the period covered by the financial statements attached hereto has been made or caused to be made under my supervision and that [*please check one of the following boxes and, if the second box is checked, complete the information required thereunder*]:

[ ] Such review has not disclosed the existence during or at the end of the period covered by the financial statements of any condition or event which constitutes a Default or an Event of Default;

[ ] Such review has disclosed the existence of the following Default(s) and/or Event(s) of Default [*specify the nature and period of existence thereof and what action the Company has taken, is taking and proposes to take with respect thereto*]: ___________________________________________________.

(Signature)

(Print Name)

<u>________________________________</u>

(Title)

&nbsp;&nbsp;&nbsp;&nbsp; <sup>1</sup> Must be from the President, Treasurer or Chief Financial Officer.

------

**ARTESIAN WATER MARYLAND, INC.**

**FINANCIAL COVENANT CERTIFICATE**

For fiscal year ending on _______________

The undersigned hereby certifies to **COBANK, ACB** that set forth below are: (1) the financial ratios that the Company was required to achieve for the fiscal year end covered by this Certificate; and (2) the actual results achieved by the Company:

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp; **RATIO** <br>| &nbsp;&nbsp; **Required**  | &nbsp;&nbsp; **Achieved**  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Debt Service Coverage Ratio: <br>| &nbsp;&nbsp; Not less than 1.25 to 1.00  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total Debt To Capitalization Ratio <br>| &nbsp;&nbsp; Not greater than 65%  |  |

---

The amount of non-cash interest expense payable to affiliates used to determine the denominator of the Debt Service Coverage Ratio is $________________

All of the above ratios and amounts were calculated in accordance with the terms of the Credit Agreement.

**ARTESIAN WATER MARYLAND, INC.**

By:

Its:

Chief Financial Officer

------

**SCHEDULE 8.02**

**WRITTEN NOTICE AND TELEPHONIC COMMUNICATIONS**

**If to CoBank, to:**

CoBank, ACB

6340 S. Fiddlers Green Circle

Greenwood Village, Colorado 80111

Facsimile: (303) 224-6101

E-Mail: mhale@cobank.com

Attention: Credit Information Services

**If to the Company, to:**

Artesian Water Maryland, Inc.

664 Churchmans Road

Newark, DE 19702

Facsimile: (302) 453-6957

E-Mail: DSpacht@artesianwater.com

Attention: Chief Financial Officer

------

**Loan No. 00162068T01**

**SUPPLEMENT TO MASTER LOAN AGREEMENT**

**($10,000,000 Single Advance Term Loan)**

**THIS SUPPLEMENT TO MASTER LOAN AGREEMENT** (this "<u>Supplement</u>") is entered into as of March 13, 2026 between **ARTESIAN WATER MARYLAND, INC.**, a corporation organized and existing under the laws of the State of Delaware (the "<u>Company</u>"), and **CoBANK, ACB**, a federally chartered instrumentality of the United States ("<u>CoBank</u>"), and supplements the Master Loan Agreement dated as of the date hereof between the Company and CoBank (as amended or restated from time to time, the "<u>MLA</u>"). Capitalized terms used in this Supplement and not defined herein shall have the meanings given to those terms in the MLA.

**SECTION 1.**

**The Commitment**. On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make a single loan (the "<u>Loan</u>") to the Company on or before the expiration of the period set forth below in a principal amount not to exceed $10,000,000 (the "<u>Commitment</u>"). Under the Commitment, amounts borrowed and later repaid may not be reborrowed.

**SECTION 2.**

**Purpose**. The purpose of the Loan is to provide financing for capital expenditures and to refinance intercompany debt.

**SECTION 3.**

**Term of Commitment**. CoBank's commitment to make the Loan to the Company shall expire at 12:00 noon, mountain time, on the date of this Supplement, or such later date as CoBank may, in its sole discretion, authorize in writing.

**SECTION 4.**

**Availability**. The Loan will be made available as provided in Section 2.02 of the MLA.

**SECTION 5.**

**Interest**. The Company agrees to pay interest on the unpaid principal balance of the Loan at 6.14% per annum. Interest shall be calculated on the actual number of days the Loan is outstanding on the basis of a year consisting of 360 days. In calculating interest, the date the Loan is made shall be included and the date the Loan is repaid shall, if received before 3:00 p.m. mountain time, be excluded. Interest shall be calculated and paid quarterly in arrears on the thirtieth (30<sup>th</sup>) day of each of March, June, September and December.

**SECTION 6.**

**Underwriting Fee**. None.

**SECTION 7.**

**Repayment**. The Company promises to repay the Loan to CoBank in 80 equal consecutive quarterly installments of principal and interest, each due on the 30<sup>th</sup> day of each March, June, September and December, with the first installment due on June 30, 2026 and the last installment due on March 13, 2046; provided, however, that the final installment of the Loan shall be in an amount equal to the then unpaid principal balance of the Loan. If any date on which principal or interest is due is not a Business Day, then such payment shall be due and payable on the next Business Day and, in the case of principal, interest shall continue to accrue on the amount thereof.

**SECTION 8.**

**Prepayment**. Subject to Section 8.01 of the MLA, the Company may prepay the Loan in whole or in part upon three (3) business day's prior written notice.

**SECTION 9.**

**Promissory Note**. The Company's obligation to repay the Loan shall be evidenced by a promissory note (the "<u>Promissory Note</u>").

**SECTION 10.**

**Security**. The Company's obligations hereunder, under the MLA, and under the Promissory Note shall be secured as provided in Section 2.04(A) of the MLA. In addition, the Company's obligations shall be guaranteed by the Guarantor as provided in Section 2.04(B) of the MLA.

**SECTION 11.** 

**Conditions Precedent**. CoBank's obligation to make the Loan hereunder is subject to the conditions precedent set forth in Section 3.03 of the MLA.

**SECTION 12.**

**Counterparts and Electronic Delivery**. This Supplement may be executed in counterparts (and by different parties in different counterparts), each of which shall constitute an original, and all of which when taken together shall constitute a single agreement. In addition, this Supplement may be delivered by electronic means.

*Signature page follows*

------

**IN WITNESS WHEREOF**, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

**CoBANK, ACB**

By:

Name:

Title:

**ARTESIAN WATER MARYLAND, INC.**

By:

Name: David B. Spacht

Title: Chief Financial Officer

Signature Page to Supplement to Master Loan Agreement No. 00162068T01

------

**Loan No. 00162068T01** 

**PROMISSORY NOTE**

**ARTESIAN WATER MARYLAND, INC.**

**$10,000,000**

 **March 13, 2026**

FOR VALUE RECEIVED, **ARTESIAN WATER MARYLAND, INC.** (the "<u>Maker</u>") promises to pay to **CoBANK, ACB** (the "<u>Payee</u>") or its assigns in U.S. dollars and in immediately available funds, the principal sum of TEN MILLION DOLLARS AND 00/100 CENTS ($10,000,000) on the date provided in the "Supplement" (as hereinafter defined). The undersigned also promises to pay to the Payee interest on the unpaid principal balance hereof in like money at the rates of interest, at the times, and calculated in the manner set forth in the "Supplement" and the "Master Loan Agreement" (both as hereinafter defined). For purposes hereof, the term: (1) "<u>Supplement</u>" shall mean that certain Supplement to Master Loan Agreement ($10,000,000 Single Advance Term Loan) dated as of the date hereof and numbered Loan No. 00162068T01, as such Supplement may be amended or restated from time to time; and (2) "<u>Master Loan Agreement</u>" shall mean that certain Master Loan Agreement dated as of the date hereof and numbered MLA No. 00162068MLA, as that agreement may be amended or restated from time to time.

Subject to the payment of a premium calculated in accordance with Section 8.01 of the Master Loan Agreement, the Maker may, on three (3) business day's prior written notice, prepay this Promissory Note in whole or in part, together with accrued interest on the amount thereof. All partial prepayments shall be applied in the manner set forth in the Supplement.

Notwithstanding any other provision hereof: (1) if any date on which principal and interest are due is not a Business Day, then such payment shall be made on the next Business Day and interest on any principal amount not paid on the original installment due date shall continue to accrue until such payment is made; (2) if any installment of interest or principal is not paid when due, then such installment shall be due and payable on demand; and (3) upon the occurrence of an "Event of Default" (as defined in the Master Loan Agreement) until such Event of Default shall have been waived or cured in a manner satisfactory to CoBank, interest on the unpaid principal balance hereof shall accrue at 2% per annum in excess of the rate(s) of interest that would otherwise be in effect.

Payments on this Promissory Note shall be made as provided in Section 2.07 of the Master Loan Agreement. The Maker agrees that the Payee shall not be obligated to present this Promissory Note for payment.

This Promissory Note is given to evidence a loan made by the Payee to the Maker under the Master Loan Agreement and the Supplement, and is the Promissory Note referred to in the Master Loan Agreement and the Supplement. Capitalized terms used herein and not defined herein shall have the meanings given to those terms in the Master Loan Agreement or in the Supplement.

This Promissory Note is secured as provided in the first sentence of Section 2.04(A) of the Master Loan Agreement. In addition, this Promissory Note is guaranteed as provided in Section 2.04(B) of the Master Loan Agreement. Upon the occurrence of an Event of Default under the Master Loan Agreement (as modified by the Supplement), the principal amount hereof, together with accrued interest hereon and any premium owing under Section 8.01 of the Master Loan Agreement, may be declared to be due and payable in the manner, upon the conditions, and with the effect provided in the Master Loan Agreement.

The Payee will keep a record of: (A) the unpaid principal balance hereof; (B) the interest rate(s) applicable to the unpaid principal balance hereof and the effective dates of any changes thereto; (C) all fees and expenses due and payable hereunder; and (D) the date and amount of all principal, interest, and fees paid by the Maker. To the extent permitted by applicable law, such record (and all computer printouts thereof) shall be presumed correct absent manifest error as to the obligations of the Maker therein recorded; provided, that the failure of Payee to maintain such record, or any error therein, shall not in any manner affect the obligation of the Maker to repay (with applicable interest) any loan in accordance with the terms of this Promissory Note, the Supplement, and the Master Loan Agreement.

The Maker hereby waives presentment for payment, demand, protest and notice of dishonor and nonpayment of this Promissory Note, and all defenses on the grounds of delay or of any extension of time for the payment hereof which may be hereafter given by the holder or holders hereof, and it is specifically agreed that the obligations of the Maker shall not be affected or altered to the prejudice of the holder or holders hereof by reason of the assumption of payment of the same by any other person or entity.

Except to the extent governed by Federal law, this Promissory Note shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to choice of law doctrine.

*Signature on next page*

------

**ARTESIAN WATER MARYLAND, INC.**

By:

Name: David B. Spacht

Title: Chief Financial Officer

## Exhibit 4.27

**GUARANTEE OF PAYMENT**

**THIS GUARANTEE OF PAYMENT** ("<u>Guaranty</u>") is executed as of March 13, 2026 by **ARTESIAN RESOURCES CORPORATION**, a Delaware corporation (the "<u>Guarantor</u>"), to **COBANK, ACB,** a federally chartered instrumentality of the United States ("<u>Lender</u>").

**BACKGROUND**

Concurrently herewith, Artesian Water Maryland, Inc. (the "<u>Borrower</u>"), a Delaware corporation and a wholly-owned subsidiary of the Guarantor, and Lender are entering into, among other agreements, the following, each dated as of the date hereof: (1) a Master Loan Agreement; and (2) a Supplement to the Master Loan Agreement ($10,000,000 Single Advance Term Loan). Pursuant to those documents, Lender has agreed (subject to the terms and conditions therein) to make a loan to the Borrower. One of the conditions precedent to the Lender's obligation to make that loan, is that the Guarantor enter into this Guaranty. The Guarantor will derive substantial direct and indirect benefits from the loan, and therefore the Guarantor has agreed to enter into this Guaranty.

**NOW, THEREFORE,** in order to induce Lender to extend credit to the Borrower and for good and valuable other consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor agrees as follows:

1. **Guarantee of Payment.** The Guarantor hereby unconditionally and irrevocably guarantees to Lender the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all indebtedness, obligations and liabilities of the Borrower to Lender, whether now existing or hereafter incurred, arising under the "Loan Documents" (as hereinafter defined), including, but not limited to, those under or arising out of or in connection with any loans, advances, letters of credit, indemnities, or any other kind of contract or agreement under which the Company may be indebted to Lender in any manner under the Loan Documents, whether for principal, interest, fees, surcharges, expenses or otherwise. For ease of reference: (i) all such indebtedness, obligations and liabilities under the MLA or the other Loan Documents shall hereinafter be collectively referred to as the "<u>Guaranteed Obligations</u>"; and (ii) all instruments, documents and agreements evidencing or relating to the Guaranteed Obligations (including the MLA and any Supplements thereto, promissory notes, security agreements, mortgages and deeds of trust executed in connection therewith) shall hereinafter collectively be referred to as the "<u>Loan Documents</u>." Without limiting the foregoing, the term: (1) "Loan Documents" shall include, but shall not be limited to: (a) the Master Loan Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its provisions, the "<u>MLA</u>"), dated as of the date hereof, between the Borrower and Lender; (b) all "Supplements" (as such term is defined in the MLA) issued under and pursuant to the MLA, whenever executed, including, without limitation, the Supplement to Master Loan Agreement ($10,000,000 Single Advance Term Loan) dated as of the date hereof and numbered Loan No. 00162068T01; (c) all "Promissory Notes" (as such term is defined in the MLA) issued under and pursuant to the MLA or any Supplement thereto, whenever executed, including, without limitation, the Promissory Note dated the date hereof and numbered Loan No. 00162068T01; (d) all other loan and loan related documentation (including, without limitation, the "Mortgage" (and defined in the MLA) and all other security documentation) executed at any time in connection with the MLA and any Supplements thereto; and (e) all amendments to and restatements of the foregoing; and (2) "Guaranteed Obligations" shall include, but shall not be limited to, all indebtedness, obligations and liabilities of the Borrower to Lender arising under the: (a) MLA; (b) the Supplement to Master Loan Agreement ($10,000,000 Single Advance Term Loan) dated as of the date hereof and numbered Loan No. 00162068T01; and (c) the Promissory Note dated as of the date hereof and numbered Loan No. 00162068T01 (as each may be amended or restated from time to time), including the obligation to pay principal, interest, fees, costs, surcharges, premiums, and other amounts arising thereunder.

2. **Nature of Liability**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

2.1 This is a continuing guarantee of payment and performance, and not a guaranty of collection. The liability of Guarantor to Lender is separate and independent of the Guaranteed Obligations or of any liability of Borrower thereunder and any liability of any other guarantors of the Guaranteed Obligations. This is a continuing guarantee and Guarantor acknowledges and agrees that the Guarantor's obligations hereunder shall cover Guaranteed Obligations incurred on the date hereof and at any time in the future. If an Event of Default (as defined in the MLA or any other Loan Document) has occurred and any applicable cure period has expired, then Lender shall have the right to declare the Guaranteed Obligations immediately due and payable in full, regardless of whether Lender has accelerated all or any part of Borrower's indebtedness and regardless of whether Lender is prohibited from accelerating such indebtedness as a result of a bankruptcy, reorganization or like proceeding involving the Borrower. Without limiting the generality of the foregoing, if the Borrower should at any time (i) become insolvent, (ii) make a general assignment for the benefit of creditors, (iii) petition for or be subject to a receivership proceeding, or (iv) be subject to a petition in bankruptcy or any insolvency or reorganization proceeding, whether voluntary or involuntary, then Lender shall have the right to declare the Guaranteed Obligations hereunder immediately due and payable in full, regardless of whether Lender has accelerated (or is permitted to accelerate) all or any part of Guaranteed Obligations, and Lender shall have the right to demand and to collect from Guarantor payment in full of the Guaranteed Obligations hereunder, including all principal, interest, fees and charges, whether or not then due and payable by Borrower. In addition, in the event the Borrower fails to make any payment due to Lender under the Loan Documents, Lender shall also have the right to make a partial demand hereunder in the amount of the defaulted payment or any part thereof and at a later date make one or more additional demands for payment hereunder (whether for all or a portion of the balance of the same defaulted payment, another defaulted payment, or the entire Guaranteed Obligations), all without relieving Guarantor of its obligations hereunder; it being understood that until all Guaranteed Obligations are actually, finally, indefeasibly and unconditionally paid, performed or satisfied in full in accordance with the applicable terms of the Loan Documents, multiple demands may be made hereunder. In addition, the Lender may make a partial demand for payment hereunder with or without terminating the Lender's commitment to extend additional Guaranteed Obligations to the Borrower.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

2.2 The obligations of the Guarantor hereunder will remain in full force and effect and be enforceable until the Guaranteed Obligations are actually, finally, indefeasibly and unconditionally paid, performed or satisfied in full in accordance with the applicable terms of the Loan Documents. If, on account of the federal Bankruptcy Code, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, that may be or become applicable, Borrower will be or is relieved of or fails to perform any of the Guaranteed Obligations, Guarantor will nevertheless be and remain fully liable to pay or perform all Guaranteed Obligations pursuant to this Guaranty. If the Guaranteed Obligations are partially paid or discharged for any reason, including voluntary payment or prepayment accepted by Lender, application of insurance proceeds or condemnation awards, permitted additional financing or refinancing, or sale of any collateral pledged by Borrower for the Guaranteed Obligations or a portion thereof (the "<u>Collateral</u>"), with or without the consent or cooperation of Lender, this Guaranty will nevertheless remain in full force and effect, and Guarantor will remain liable for all remaining Guaranteed Obligations, even though there may be rights that Guarantor might have had against Borrower that are destroyed or diminished by the exercise of any remedy or right by Lender, or as the result of any inaction by Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

2.3 If at any time all or any part of any payment made by the Borrower or the Guarantor or received by Lender from the Borrower or the Guarantor under or with respect to the Guaranteed Obligations or this Guaranty is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of Guarantor or Borrower), then the obligations of Guarantor hereunder will, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Borrower or Guarantor, or receipt of payment by Lender, and the obligations of Guarantor hereunder will continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment had never been made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

2.4 Specifically, to the maximum extent permitted by applicable law, this Guaranty and Guarantor's liability hereunder will in no way be affected or impaired by reason of the happening from time to time of any of the following, whether or not any such event has occurred with or without notice to or consent of Guarantor:

(1) the waiver, compromise, settlement, termination or other release of the performance or observance by Borrower or Guarantor of any or all of the respective provisions, covenants, terms or conditions contained in the Loan Documents or this Guaranty;

(2) any failure, omission, delay or lack on the part of Lender to enforce, assert or exercise any right, power or remedy conferred on Lender in the Loan Documents or this Guaranty in accordance with their terms or the inability of Lender to enforce any provision of the Loan Documents or this Guaranty for any reason, or any other act or omission on the part of Lender;

(3) the transfer, assignment or mortgaging, or the purported transfer, assignment or mortgaging, of all or any part of the Collateral, or the invalidity, unenforceability or termination for any reason whatsoever (other than performance) of any Loan Document or any provision, covenant, term or condition thereof or any right or remedy thereunder or any defect in the title of the Collateral or any part thereof or any loss of possession, use or operation of the Collateral or any part thereof by Borrower;

(4) the modification or amendment (whether material or otherwise) of any provision, covenant, term or condition in any Loan Document;

(5) the voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the assets, marshalling of assets and liabilities, receivership, conservatorship, insolvency, bankruptcy, discharge, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting, Borrower or any of its assets or any allegation or contest of the validity of this Guaranty or any Loan Document in any such proceeding;

(6) the surrender or impairment of any Collateral as security for the performance or observance of any of the Guaranteed Obligations;

(7) any failure of Guarantor or Borrower to perform and observe any provision, covenant, term or condition, or to discharge any duty or obligation, arising out of or connected with the Guaranty or any Loan Document or the occurrence or pendency of any "Event of Default" (as defined in any Loan Document) or any proceedings or actions as a result of, or attendant upon, such Event of Default;

(8) the inability of Guarantor or Borrower to enforce any provision of any Loan Document for any reason;

(9) the failure to give notice to Guarantor or Borrower of the occurrence of any default under this Guaranty or any of the Loan Documents;

(10) the disposition by Guarantor of any ownership interest in Borrower or any permitted and permissible change, restructuring or termination of the organizational structure, ownership or existence of Borrower or of Guarantor;

(11) any set-off, counterclaim, reduction, or diminution of any Guaranteed Obligations, or any defense or discharge of any kind or nature whatsoever (other than performance), which Guarantor or Borrower may have or assert against Lender; or

(12) any other circumstance (other than full payment and performance of all Guaranteed Obligations) that might otherwise constitute a legal or equitable defense or discharge of Guarantor under this Guaranty or of Borrower under any of the Loan Documents.

3. **Specific Waivers by Guarantor.** To the fullest extent permitted by applicable law, Guarantor hereby waives and agrees not to assert or take advantage of (as a defense or set-off or otherwise):

(a) Any right to require Lender to proceed against Borrower or any other person or to proceed against or exhaust any Collateral or other security held by Lender at any time or to pursue any other remedy in Lender's power or under any other agreement before proceeding against Guarantor hereunder;

(b) The defense of any statute of limitations or statute of repose or of laches in any action hereunder;

(c) Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons;

(d) Any failure on the part of Lender to ascertain the extent or nature of the Collateral or any insurance or other rights with respect thereto, or the liability of any party liable for the Loan Documents or the Guaranteed Obligations;

(e) Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind, or the lack of any thereof, including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional Guaranteed Obligations or of any action or non-action on the part of Borrower, Lender, any endorser or creditor of Borrower or of Guarantor or on the part of any other person whomsoever under this or any other instrument in connection with any Guaranteed Obligations held by or due to Lender;

(f) Any defense based upon an election of remedies by Lender;

(g) Any right or claim or right to cause a marshalling of the assets of Guarantor;

(h) Any principle or provision of law, statutory or otherwise, which is or might be in conflict with the terms and provisions of this Guaranty;

(i) Any duty on the part of Lender to disclose to Guarantor any facts Lender may now or hereafter know about Borrower or the Collateral, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor or has a reasonable opportunity to communicate such facts to Guarantor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial condition of Borrower, of the condition of the Collateral and of any and all circumstances bearing on the risk that liability may be incurred by Guarantor hereunder;

(j) Any lack of notice of disposition or of any manner of disposition of any Collateral;

(k) Failure to properly record any document or any other lack of due diligence by Lender in creating or perfecting a security interest in or collection, protection or realization upon any Collateral or in obtaining reimbursement or performance from any person or entity now or hereafter liable for the Loan Documents or any obligation secured thereby;

(l) The inaccuracy of any representation or other provision contained in any Loan Document;

(m) Any sale or assignment of the Loan Documents, in whole or in part;

(n) Any sale or assignment by Borrower of the Collateral, or any portion thereof or interest therein, whether or not consented to by Lender;

(o) Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents;

(p) [Intentionally omitted.]

(q) Any deficiencies in the Collateral or any deficiency in the ability of Lender to collect or to obtain performance from any persons or entities now or hereafter liable for the payment and performance of any obligation hereby guaranteed;

(r) An assertion or claim that the automatic stay provided by 11 U.S.C. § 362 (arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or any other stay provided under any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, will operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any of its rights, whether now or hereafter required, which Lender may have against Guarantor or the Collateral;

(s) Any modifications of the Loan Documents or any obligation of Borrower relating to the Guaranteed Obligations by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise;

(t) The release of Borrower or of any other person or entity from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law, Lender's voluntary act or otherwise (other than by reason of the full payment and performance of the Guaranteed Obligations); and

(u) Without limiting the generality of the foregoing, any rights and benefits which might otherwise be available to any guarantor under law.

4. **Certain General Provisions**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.1 **Fully Recourse**. All of the terms and provisions of this Guaranty are recourse obligations of Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.2 **Condition of Borrower**. Guarantor warrants and represents that Guarantor is fully aware of the financial condition of Borrower and is executing and delivering this Guaranty based solely upon Guarantor's own independent investigation of all matters pertinent hereto, and that Guarantor is not relying in any manner upon any representation or statement of Lender. Guarantor warrants, represents and agrees that Guarantor is in a position to obtain, and Guarantor hereby assumes full responsibility for obtaining, any additional information concerning the financial condition of Borrower and any other matter pertinent hereto, and that Guarantor is not relying upon Lender to furnish, and will have no right to require Lender to obtain or disclose, any information with respect to the Guaranteed Obligations, the financial condition or character of Borrower or the ability of Borrower to pay or perform the Guaranteed Obligations, the existence of any Collateral or security for any or all of such indebtedness or obligations, the existence or nonexistence of any other guaranties of all or any part of such indebtedness or obligations, any actions or non-action on the part of Lender, Borrower or any other person or entity, or any other matter, fact or occurrence whatsoever. By executing this Guaranty, Guarantor acknowledges and knowingly accepts the full range of risks encompassed within a contract of guaranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.3 **Survival; Security**. This Guaranty will be deemed to be continuing in nature and will remain in full force and effect and will survive the exercise of any remedy by Lender under any of the Loan Documents, including, without limitation, any foreclosure or deed in lieu thereof, even if, as a part of such remedy, the Guaranteed Obligations are paid or satisfied in full; provided, however, this Guaranty shall terminate and be of no further force or effect upon the full and final indefeasible payment and performance in full of the Guaranteed Obligations and the termination of Lender's commitments under the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.4 **No Subrogation; No Recourse Against Lender**. Notwithstanding the satisfaction by Guarantor of any liability hereunder, Guarantor will not have any right of subrogation, contribution, reimbursement or indemnity whatsoever or any right of recourse to or with respect to the assets or property of Borrower or to any Collateral. In connection with the foregoing, Guarantor expressly waives any and all rights of subrogation to Lender against Borrower, and Guarantor hereby waives any rights to enforce any remedy which Lender may have against Borrower and any right to participate in any Collateral. In addition to and without in any way limiting the foregoing, Guarantor hereby subordinates any and all indebtedness of Borrower now or hereafter owed to Guarantor to all indebtedness of Borrower to Lender, and will not claim any offset or other reduction of Guarantor's obligations hereunder because of any such indebtedness and will not take any collateral for or on account of any such indebtedness. Further, Guarantor will not have any right of recourse against Lender by reason of any action Lender may take or omit to take under the provisions of this Guaranty, other than any action or inaction that would constitute a breach by Lender of the provisions of this Guaranty, or under the provisions of any of the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.5 **Consents by Guarantor**. Guarantor hereby consents and agrees that Lender may at any time, and from time to time, without notice to or further consent from Guarantor, either with or without consideration: release and surrender the Collateral or any portion thereof; substitute for any Collateral held by or on behalf of Lender other collateral of like kind, or of any kind; make other advances or increase the amount of the Guaranteed Obligations; agree to modify the terms of any one or more of the Loan Documents; extend or renew the Guaranteed Obligations for any period; grant releases, compromises and indulgences with respect to any one or more of the Loan Documents and to any persons or entities now or hereafter liable thereunder or hereunder; release any other guarantor or endorser of or other person or entity liable upon the Guaranteed Obligations or any other of the Loan Documents; or take or fail to take any action of any type whatsoever. No such action which Lender will take or fail to take in connection with the Loan Documents or any Collateral, nor any course of dealing with Borrower or any other person, will limit, impair or release Guarantor's obligations hereunder, affect this Guaranty in any way or afford Guarantor any recourse against Lender. Nothing contained in this section will be construed to require Lender to take or refrain from taking any action referred to herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.6 **Certain Bankruptcy Matters**. Guarantor covenants and agrees that, upon the commencement of a voluntary or involuntary bankruptcy proceeding by or against Borrower, Guarantor will not seek or cause Borrower or any other person or entity to seek a supplemental stay or other relief, whether injunctive or otherwise, pursuant to 11 U.S.C. § 105 or any other provision of the federal Bankruptcy Code, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise), of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any rights of Lender against Guarantor or the Collateral by virtue of this Guaranty or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.7 **Representations and Warranties by Guarantor**. To induce the Lender to accept this Guaranty, the Guarantor hereby makes the following representations and warranties:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4.7.1 This Guaranty has been duly authorized by all necessary corporate action on the part of Guarantor, and constitutes (and will constitute) legal, valid and binding obligations of Guarantor enforceable against Guarantor in accordance with its terms, except as such enforceability may be limited by: (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally; and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.7.2 The execution, delivery and performance by Guarantor of this Guaranty will not: (i) result in the creation of any lien in respect of any property of Guarantor under any indenture, mortgage, deed of trust, security agreement, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which Guarantor or any of its properties may be bound or affected, other than a lien in favor of Lender; or (ii) (1) contravene, result in any breach of, or constitute a default under, any indenture, mortgage, deed of trust, security agreement, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument by which Guarantor or any of its properties may be bound or affected; (2) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or governmental authority applicable to Guarantor; or (3) violate any provision of any statute or other rule or regulation of any governmental authority applicable to Guarantor, in each case to the extent such breach, conflict or violation would have a material adverse effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.7.3 No consent, approval or authorization of, or registration, filing or declaration with, any governmental authority is required in connection with the execution, delivery or performance by Guarantor of this Guaranty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

4.7.4 After executing and delivering this Guaranty, (i) Guarantor will not be insolvent in that the fair saleable value of its assets will be greater than the amount required to pay its total liabilities; (ii) Guarantor will not have incurred debts and other obligations in excess of its ability to pay such debts and obligations as they mature, and the cash flow of Guarantor (after taking into account the anticipated uses of the cash) will be sufficient to pay such debts and obligations when such amounts are required to be paid; and (iii) the capital of Guarantor will be sufficient and not unreasonably small for the business and transactions in which it is engaged.

5. **Ongoing Covenants of Guarantor to Lender.** Unless otherwise agreed to in writing by the Lender, while this Guaranty remains in effect, Guarantor:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5.1. **Requested Information**. Will furnish to Lender, with reasonable promptness, such information (including financial statements) about the Guarantor as Lender may from time to time reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

5.2. **Mergers, Acquisitions, Etc**. Will not merge or consolidate with any other entity or commence operations under any other name, organization or entity, including any joint venture.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

5.3 **Preservation of Existence, Franchise and Assets**. Will do all things necessary to preserve and keep in full force and affect its existence, rights, franchises and authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

5.4**.**

**Transfer of Assets**. Will not sell, transfer, lease, enter into any contract for the sale, transfer or lease of, or otherwise dispose of, any of its interest in any of its subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

5.5. **Payment of Taxes and Other Indebtedness**. Will pay, settle or discharge (a) all taxes, assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become delinquent, (b) all lawful claims (including claims for labor, materials and supplies) which, if unpaid, might give rise to a Lien upon any of its properties, and (c) all of its other Indebtedness as it shall become due.

6. **Reservation of Rights**. No waiver under this Guaranty is valid unless it is in writing and signed by the party giving the waiver. A waiver of a particular matter or remedy does not waive a subsequent or similar matter or remedy. No waiver will excuse a party from the performance of its other obligations to be performed under this Guaranty. The remedies conferred by this Guaranty are nonexclusive and cumulative of any other remedies now available or existing subsequently. No delay or forbearance by or on behalf of Lender in exercising any right, remedy, power or privilege under this Guaranty ("<u>Lender's Rights</u>") will operate as a waiver of such Lender's Rights, nor will the exercise or non-exercise of any particular Lender's Right preclude any other or further exercise of Lender's Rights pertaining to any current or subsequent default by Guarantor or Borrower. Nothing contained in this Guaranty will prevent or in any way diminish or interfere with any rights or remedies, including, without limitation, the right to contribution, which Lender may have against Borrower, Guarantor or any other party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title 42 U.S.C. § 9601 et seq.), as it may be amended from time to time, or any other applicable federal, state or local laws, all such rights being hereby expressly reserved.

7. **Fees and Costs**. In addition to the obligations provided above, in the event the Lender incurs any cost and expense in connection with the enforcement of this Guaranty, the Guarantor agrees to reimburse Lender for any and all such costs and expenses, including: (i) its reasonable attorneys' fees; (ii) all reasonable costs and expenses of collection or enforcement; and (iii) all reasonable costs of suit, including all proceedings in courts of original, appellate and bankruptcy jurisdiction.

8. **Notices and Other Communications.** Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing and shall be made to the following:

**If to Lender, to:**

CoBank, ACB

6340 S. Fiddlers Green Circle

Greenwood Village, Colorado 80111-1914

Facsimile: (303) 224-6101

Attention: Credit Information Services

**If to Guarantor, to:**

Artesian Resources Corporation

664 Churchmans Road

Newark, DE 19702

Facsimile: (302) 453-6957

Attention: Chief Financial Officer

or to such other address, facsimile number, or electronic mail address as shall be designated by such party in a notice to the other parties. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; and (B) if delivered by facsimile, when sent and receipt has been confirmed by telephone.

9. **Construction**. Captions and headings are for convenience and reference only and do not define, limit or affect the contents of this Guaranty. References to "paragraphs" or "sections" refer to this Guaranty unless stated otherwise. The terms "include" or "including" mean "without limitation by reason of enumeration." All grammatical usage will be deemed to refer to the masculine, feminine, neuter, singular or plural as the context and identity of any persons may require.

10. **Severability and Interpretation.** The invalidity or unenforceability of any provision of this Guaranty does not affect the other remaining provisions. This Guaranty will be construed as if it excluded any invalid or unenforceable provision, which will be severed from this Guaranty. Whenever possible, this Guaranty will be interpreted so as to be valid under applicable law, and will not be construed strictly in favor of or against any particular Party, including any Party who drafted or prepared this Guaranty, but instead according to its plain meaning to give effect to its intended purposes.

11. **Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE**. The Guarantor irrevocably consents to the service of process out of any competent court in any action or proceeding with respect to this Agreement by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at the address for notices pursuant to <u>Section 8</u>, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of CoBank to serve process in any other manner permitted by law.

12**.** 

**Waiver of Jury Trial. EACH OF THE PARTIES TO THIS GUARANTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.**

13. **Binding Effect**. This Guaranty is binding upon and inures to the benefit of the parties and their respective trustees, debtor(s)-in-possession, receivers, conservators and the like—if any of the same are ever so appointed, and their successors and assigns.

**Effective Date**. This Guaranty is executed and is to be effective as of the date first written above. The Guarantor hereby waives notice of acceptance hereof.

15. **Counterparts**. This Guaranty may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.

*Signature page follows*

------

GUARANTOR:

**ARTESIAN RESOURCES CORPORATION** 

By:_________________________________

Name: David B. Spacht

Title: Chief Financial Officer

------